The Potentiality of National Unity in Malaysia

							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 feasible?


Can ethnic heterogeneity be an advantage to economic
growth?
Objective
 Analyze 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 cities
  Indian
  - lived on rubber plantations
Historical Background (2)
The Japanese Invasion

 Japan invades Malaya and British Borneo
 in 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 Policy
The 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 1971
Owner Amount     (million Malaysian   Ownership(%)
                 dollars)
Bumiputera           168.7            2.6
Public               110.9            1.7
Non-Bumiputera      2233.2            34.00
Foreigner           4051.3            61.7
The Bumiputera Policy
The Aim of the Policy
 Further economic imbalances between the
 Bumiputera and non-Bumiputera groups
 could result to national disaster.

 Bumiputera Policy
 The 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 Policy
The 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   37.5%   51.4%
services
Gini coefficient                 44%     59%
Bumiputera to Chinese mean      0.513   0.445
income
Real mean income of the           $76    $176
bottom 40% of the household
Bumiputera Policy
New 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    1998
GDP               9.3    9.4     8.6     7.5     -7.5
growth(%)
GDP/Person      3606    4220    4685     4517    3202
(US$)
Exports(million 58652   73865   78312   78519 73070
US$)
Imports(million 59395   73865   78413   78535 58177
US$)
Unemployment 2.9         3.4     3.5     2.7     5.3
The Reconstruction of the Economy
Emphasis 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 support
  For the sake of national unity
 IMF support = Reduction of economy

 Reduction of economy = Ethnic imbalance
 Lessons 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)



   National Stability           National Stability



                                   National Unity
                  Economic
National Unity                    Economic Growth
                   Growth
        Other Nations(IMF)   The Malaysian Policy
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 groups
 Strong leadership by the administration,
 particularly its Prime Minister, Mahathir
 Heterogeneous 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.