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Industrialization in Malaysia

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1. British Colonial (1867-1957)2. After Independence (ISI1) (1957-1969)3. EOI1 (1970-1980)

4. ISI2 (1981-1986)5. EOI2 (1987-1996)6. Asian Crisis & the recovery period

(1997-2005)7. Towards Global Competitiveness

(2006-2020)

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Foreign capital had played a major mainly inthe agricultural and mining sectors.

Tin and rubber main pillars of the economy

Revenue generated from above used todevelop infrastruture

Industrial evolution of the west: increasedemand raw materials lack of capital and

wage labour Malaysia strategic position

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Increased migration of chinese

Indegeneous people also engaged in

commercial production (rice, tin) FDI important local producers and western

investors British, Americans, French & Dutch

The colonial state used this revenue tofinance infrastuctural development, railwaylines, roads and ports

Malaysias infrastruture was generally more

developed than in almost any other Bristishcolony

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Rural Industrial Development Authority (RIDA)was formed to promote rural industry andwelfare of the smallholders

Synthetic rubber seriously affects onmalaysian economy

Diversification of the economy exportagriculture into manufacturing

1955 signs of restructuring of the economywith the share of agriculture begining todecline

1957- independence turning point

significant structural changes in the economydue to serious govt. intervention

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IMP 12 sub-sectors were given a high priority

status

Export credit refinancing facilities

FDI latter half of 1980s Taiwan and HK

Malaysia economy grew very fast averaging6.4% btw 1980 to 1992

Wage increase even though wages grew inexcess of productivity

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New Development Policy was introduced East Asian Miricle (world bank, 1993) Technology had been the weakest point

failure of previous policies and incentives toencourage technology transfer but ratheremphasised on increased output,employment and exports by multinationals

1993: Human Resource DevelopmentCorporation to facilitate firm level trainingthrough the human resource developmentfund; Malaysian Business Council (MBC),

Malaysia Industry-Government Group forHigh Technology (MIGHT); MalaysiaTechnology Development Corporation (MTDC)

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1996: Small & Medium IndustriesDevelopment Corporation (SMIDEC)

Research institute- Malaysian Institute ofMicro Electronic Systems (MIMOS); Standard &Industrial Research Institute of Malaysia(SIRIM)

Global and domestic environment changingrapidly there was a need for malaysia tochange its strategy

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Shifted from traditional industrial base to clusterbased approach

The emphasis was on value addition throughincreased productivity

The Asian crisis was a set back but Malaysia wasbale to mitigate its effects through sound macroeconomic policies and get back on tract.

IMP2dubbed the manufacturing plus-plus increasing global competition and focused onincreasing productivity and competitiveness andbuilt upon the foundations of the IMP1.

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It emphasised the development of the industrialclusters, their key suppliers and the requisiteeconomic foundations such as human resources,

technology, physical infrastructure, supportiveand administrative rules and procedures, fiscaland non fiscal incentives and busness servicesupport.

It aimed to develop dynamic industrial clusters,and strengthen industry linkages, whilepromoting higher value added activities.

Move manufaturing operations from mereproduction to include R&D, design capability,

development of integrated supporting industries,packaging, distribution and marketing throughthe manufacturing ++strategy

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1996: Multimedia super corridor (MSC) enable malaysians to participate in andbenefir from the global informationrevolution.

It was planned to be a high-tech hub forgovt. And the private sector, based on the

concept of intelligence offices providing fastand easy transport of data domestically andinternationally through the use of a worldclass voice and data communication network.

Intent to act as a magnet to attract theworlds most advanced, high tech R&Dcompanies to Malaysia

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Govt. also established institutions to providedskilled workers in order to ensure that such

plans do not flatter Malaysia was however able to stop the slide in

its currency and stock markets without thehelp of the IMF

By 2000 the manufacturing sector hadbecome the most important contributor inMalaysia but started to show signs ofcontraction.

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By the end of IMP2, the govt had alreadyrealised the weakness and noted that the

economy did not met the targets as expected. IMP3 was outlined and intended to take fraom

2006-2020 in line with the Vision 2020launched in 1991 where Malaysia envisagedits transformation into a developed nation

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Govt of Malaysia is determined to steer thecountry to achieve the status of a fully developednation by 2020.

IMP3is a blue print for industrial development inMalaysia

It is expected to drive industrialisation towards ahigher level of globla competitivenessemphasizing on transformation and innovation in

the manufacturing and services sectors in anintegrated manner towards attaining developednation status under vision 2020.

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10 strategic thrusts and were classified in 3broad categories namely:

1. Development initiatives2. Promoting of growth areas

3. Enhancing the enabling environment

The govt identified 12 target growth

industries in the manufacturing sector as wellas 8 sercices sectors for further developmentand promotion given that these industries arestrategically important to contributing to

greater growth of the manufacturing as wellas export and strengthen sectoral-linkages.

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2008 world economic crisis there are signsof the sector bouncing back especially in E&E

industries and chemical industries Malaysia has also been able to comply with

WTO requirements especially in the exportoriented industry

With china being a member of WTO there isgreater opportunity for Malaysia but alsoincreased competition.

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