The Potentiality of National Unity in Malaysia

Yosuke Ogata

Proposition

In spite of the economic recession, due to the currency crisis,

is national unity still is national unity still feasible?feasible?

Can ethnic heterogeneity be an advantage to economic growth?

ObjectiveAnalyze the feasibility of national unity in Malaysia.

To make a future reference in national unity and economical development for other ethnically populated countries.

Historical Background(1)The Forming of an Heterogeneous Nation

Bumiputeras “sons of the soil”Malay - lived near the coastlines of Malaysia

Non-Bumiputeras – Brought in as mine and rubber plantation workers Chinese- lived in the citiesIndian- lived on rubber plantations

Historical Background (2)The Japanese Invasion

Japan invades Malaya and British Borneoin 1941 (just after the Japan-China War)

The brutalizing of Chinese The presentation of supremacy to Malays

Confliction in the ethnic relations

Historical Background(3)May 13, 1969

Communal tensions + confrontations with Indonesia

Economic recession and rise of anxiety in Malays(Bumiputera)

Coalition(Malay party) loses majority vote

Bumiputera PolicyThe Need for a New Policy (1)

Chart 1 Poverty by Ethnic groups in 1971

Ethnic group Poverty (%) Mean household income

Malay 64.8 172.00

Chinese 26.0 394.00

Indian 39.2 304.00

Others 44.8 813.00

Bumiputera Policy The Need for a New Policy(2)

Ownership in the Corporate Sector in 1971Owner Amount (million

Malaysian dollars)

Ownership(%)

Bumiputera 168.7 2.6Public 110.9 1.7Non-Bumiputera

2233.2 34.00

Foreigner 4051.3 61.7

The Bumiputera PolicyThe Aim of the Policy

Further economic imbalances between the Bumiputera and non-Bumiputera groups could result to national disaster.

Bumiputera PolicyThe eradication of poverty regardless of race, to eliminate the identification of occupation with race.

The economic elevation of the Bumiputera

Bumiputera Policy The Contents of the Policy

An ambitious affirmative action program

Legal priority in Bumiputeras’ economic participation.No doubt an unequal policy between ethnic groups

Bumiputera PolicyThe Non-Bumiputeras’ Reasons for Approval

Avoidance of another ethnic conflict leading to a national breakdown.The acknowledgement of the

benefit from the policy

For the policy to operate, the non-Bumiputeras’ technology and work skills were essential.

Bumiputera Policy The New Economic Policy

Contents- A more concrete policy of the Bumiputera Policy

Achievements - Improvements in income, living standards.Reduction of poverty and

higher Bumiputera employment. Improved income distribution without adversely affecting growth.

Bumiputera Policy Achievements of the NEP

1970 1990

National incidence of poverty

52.4% 17.1%

Share of Bumiputera em-ployment in manufacturing and services

37.5%

51.4%

Gini coefficient 44% 59%Bumiputera to Chinese mean income

0.513 0.445

Real mean income of the bottom 40% of the household

$76 $176

Bumiputera PolicyNew Development Policy

Contents – A broader policy framework which has the overall objective of attaining a balanced development.Achievements – Annual GDP growth of over 7.0% and an overall improvement in most sectors until the start of ’98.

Economic Recession resulted from currency crisis

Results from the Currency Crisis

1994 1995 1996 1997 1998GDP growth(%)

9.3 9.4 8.6 7.5 -7.5

GDP/Person(US$)

3606 4220 4685 4517

3202

Exports(millionUS$)

58652

73865

78312

78519

73070

Imports(millionUS$)

59395

73865

78413

78535

58177

Unemployment

2.9 3.4 3.5 2.7 5.3

The Reconstruction of the EconomyEmphasis on Domestic Economic Conditions

National Economic Recovery Plan(Aug.’98)

Exchange control measures(Sep.’98)

Restructuring of the financial sector(Oct.’98)

Rebuilding of economy without support from the IMF

The Reconstruction of the Economy For the Sake of Unity

The reasons for turning down IMF supportFor the sake of national unity

IMF support = Reduction of economy

Reduction of economy = Ethnic imbalanceLessons learned from Indonesia and Thai

The Reconstruction of the Economy The National Economic Recovery Plan

“Plan for Action”• Stabilizing the ringgit• Restoring market confidence• Maintaining financial market

stability• Strengthening economic

fundamentals

Conclusion(1)

Possibility of National Unity in Malaysia

|| The trend of the economy

This can be stated from the time The Bumiputera Policy

started

Conclusion(2)

Other Nations(IMF) The Malaysian Policy

National Stability

National UnityEconomic Growth

National Stability

National Unity

Economic Growth

Conclusion(2)The goal for economic growth and national unity(pertaining to multi-cultured nations) is the stabilization of the nation.

The Malaysian Policy has chosen the fastest, but also the most risk taking road in forming a stable nation.

Conclusion(3)Reasons for the Risk Taking Policy

The necessity to combine economic growth and national unity as one policy(Bumiputera Policy)

Necessity- the over imbalanced economic gap between ethnic groups

Conclusion(4)Reason for the success of the

Bumiputera policy

Economic foundation built from the Chinese ethnic groupsStrong leadership by the administration, particularly its Prime Minister, MahathirHeterogeneous Ethnic Society ?

Conclusion(5)Is an ethnically heterogeneous society

an advantage to economic development?

Though historical statistics show the odds, the answers are yet to be clear. In future years we may learn that affirmative action programs like those of the Malaysian policies is the key to changing ethnic heterogeneous from a liability to an asset for economical growth.