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Malaysian Economy Bachelor of Business Administration (BBA). Professor Dr. Ahmad Bin Othman School of Business and Management University College of Technology Sarawak (UCTS) 96000 Sibu, Sarawak. Today’s Agenda (Week #5). Industrial policy and Industrialization

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malaysian economy bachelor of business administration bba

Malaysian EconomyBachelor of Business Administration (BBA)

Professor Dr. Ahmad Bin Othman

School of Business and Management

University College of Technology Sarawak (UCTS)

96000 Sibu, Sarawak

today s agenda week 5
Today’s Agenda (Week #5)

Industrial policy and Industrialization

Phases of industrial policy

Five-year Malaysian Plans (10 plans)


In the colonial period, Malaya was involved in production and processing of rubber and tin for export in return for imports of essential food and manufactured goods.

In the year of independence (1957-1960), the economy was still heavily dependent on rubber and tin exports.

Attempt to industrialize (1960s) was started with the implementation ofimport-substitution policy, which was quite unsuccessful.

framework of the economy
Framework of the economy

The Malaysia’s framework of the economy started when the First Malaysian Plan 1966-1970 was introduced.

The economic framework was continued with the implementation of the First Outline Perspective Plan 1971-1990(OPP1). The main policy formulated in OPP1 was the New Economic Policy (NEP)

Vision 2020 was launched in 1991 as the broad policy directions of Malaysia. It provides the much needed guidelines of becoming a fully developed & industrialized Malaysia by the year 2020.

In relations to vision 2020, the Second Outline Perspective Plan 1991-2000(OPP2) was introduced. The main policy implemented in OPP2 was the National Development policy(NDP).


In 1991, National Development Policy (NDP) was introduced to replace NEP.

Vision 2020 was also introduced in 1991. it is a long term vision (1991-2020=30 years) containing broad policy directions encompassing various dimensions, i.e.

  • Economically
  • Politically
  • Psychologically
  • Spiritually
  • culturally.

In summary, Malaysia’s key to economic success of the 1970s through the 1990s were;

  • Basic policy framework, &
  • Industrialization strategies.
planning horizon
Planning Horizon . . .
    • Vision 2020, 1991-2020
    • First Outline Perspective Plan (OPP1), 1971-1990
    • Second Outline Perspective Plan (OPP2), 1991-2000
    • Third Outline Perspective Plan (OPP3), 2001-2010
    • Five-year development plans, such as the Ninth Malaysia Plan (2006-2010)
    • Mid-term review (MTR) of the five-year Plans
    • Annual Budget

New Economic Policy (NEP) (1971-1990)

Establishment of new growth centers

The modernization of rural life

Rapid & balanced development of

urban activities

Provision of a wide range of social

especially designed to raise the living

standards of the low income group

  • Raising productivity & income of those in low productivity occupation
  • Expansion of opportunity for inter-sectoral movement from low productivity to higher productivity activity
  • The creation of a Malay commercial & industrial community in all categories & at all levels of operation
strategy of new economic policy
Strategy of New Economic Policy
  • Eradicating poverty by raising income levels and increasing employment opportunities for all Malaysians


Accelerating the process of restructuring Malaysia society to correct economic imbalance, to reduce & eventually

eliminate the identification of race with economic function, and to ensure that Malay & other indigenous people will become full partners in all aspects of the economic life of the nation.



New Economic Policy (NEP) (1971-1990)

Second Malaysia Plan (1971-1975)

Third Malaysia Plan (1976-1980)

Implementation NEP

Fourth Malaysia Plan (1981-1985)

Fifth Malaysia Plan (1986-1990)

evaluation of nep achievement
Evaluation of NEP (achievement)

Increase in GDP

  • Malaysia real GDP growth during 1971-1990; averaged 7.1% annually.
  • In the 60s; averaged 5.2%
  • Grew from RM22.2 billion in 1971 to RM1,109 billion in 1990 per capita GNP grew by 8 times from RM1,109 to RM8,856 (US$ 860 to US$3406)
  • The annual inflation rate remained low.

Fairer distribution of income

  • With the regard to the distribution of income, there has been an increasingly fairer distribution of income among the various income group.
evaluation of nep achievement1
Evaluation of NEP (achievement)

Increase employment opportunities

  • rapid economic growth; creation of job, from 3.4 million in 1970 to 6.7 million in 1990.
  • the unemployment rate dropped from 7.7% in 1970 to 5.1% in 1990

Change of economic structure

  • from agriculture to manufacturing sector.
  • the transformation had enabled more Bumiputera work in more productive sector of economy (secondary & tertiary sector
national development policy ndp 1991 2000
National Development Policy (NDP) (1991-2000)

With the aim to fulfill the objectives of Vision 2020, OPP2 was introduced in 1991.

OPP2 (1991-2000) was accomplished through the policies, strategies, and programs implemented in

-The sixth Malaysia Plan (1991-1995)

-The Seventh Malaysia Plan (1996-2000)

National Development Policy was the main policy during OPP2.




vision 2020
Vision 2020

Introduced in February 1991

Aims to achieve the status of a developed country that is distinctive and molded according to its own features without following:

Developed not only in the economic sense but it must be fully developed along all dimension:







vision 20201
Vision 2020

Vision 2020

United Malaysia objectives

Just and caring society

Mature democratic society

Sustainable development

Fully competitive, dynamic, and resilient economy


vision 20202
Vision 2020


  • challenges:
  • To establish a united Malaysian nation with a sense of common and shared destiny
  • To create psychologically liberated, secure and developed Malaysian Society
  • To foster and develop a mature democratic society
  • To establish a fully moral and ethical society
  • To establish a matured, liberal and tolerant society
  • To establish a scientific and progressive society
  • To establish a fully caring society and caring culture
  • to ensure an economically just society
  • To establish a prosperous society, with an economy that is fully competitive, dynamic, robust and resilient.

Real GDP Growth . .


Average 1971- 80

Average 1981- 90

Average 1991- 2000

Average 2001- 05








7.5 %

5.8 %

7.1 %

4.5 %

8.5 %

0.3 %

4.4 %

5.4 %

7.1 %

5.3 %

6.0 %

development planning machinery


Cabinet Ministers

National Planning Council

National Action Council

National Economic Action Council (NEAC), National Economic Consultative Council (NECC)



National Development

Planning Committee



Implementation & Coordination Unit

Economic Planning Unit

Private Sector Dialogue


General framework

Inter-Agency Planning Group (IAPG)






Federal Ministries & Agencies

State Governments

Private Sector


To achieve the goals & objectives of Vision 2020

Ninth Malaysia Plan, 2006 – 2010

The National Mission, 2006 – 2020

1. Moving the economy up the value chain

5. Strengthening the country’s institutional & implementation capacity ~ establish a more effective implementing & monitoring mechanism

2. Raising the capacity for knowledge and innovation, and nurturing “first class mentality”

Five Key


3. Addressing persistent socio-economic inequalities constructively and productively

4. Improving the standard and sustainability of the quality of life