Malaysia's Development Plans & Policies (1956 - Present)

A timeline of Malaysia's Five-Year Economic Plans, from 1966 to the present.

A timeline of all of Malaysia's Economic Plans, with charts on GDP, inflation, unemployment, and government spending during each five-year period, and speech as well as article excerpts.

1956-01-01 00:10:07

Malaysia's Planning Horizons

Malaysia has always subscribed to long-term economic plans. The first of these was the First Malaya Plan, introduced in 1956, and spanning five years.

1956-01-01 22:10:07

First Malaya Plan

The main emphasis of the plan was to develop the country's basic infrastructure and modernise agricultural production in rural areas.

1956-07-01 00:07:37

FELDA Established

Federal Land Development Authority (FELDA) was established on July 1, 1956 under the Land Development Ordinance of 1956 for the development of land and relocation of settlers with the objective of poverty eradication through the cultivation of oil palm and rubber.

1957-08-31 00:10:07

Tunku Abdul Rahman is the Prime Minister of independent Malaya

Tunku Abdul Rahman, the President of UMNO and one of the key negotiators for Malaya's independence negotiations with the British, became the first Prime Minister of independent Malaya in 1957, after the country was officially independent on 31st August 1957.

1957-09-09 07:44:28

The Red Book

Under the leadership of Tun Abdul Razak, who was the Deputy Prime Minister and Minister of Rural Development at the time of Malayan Independence in 1957, rural development took primary importance.

1957-10-01 00:10:07

Ministry of Finance Inc

The Ministry of Finance (MoF) Incorporated was established to act as the government's investment holdings company.

1957-10-01 07:44:28

Benefits of The Red Book

In a 1961 newsletter, Mr. Gayl D. Ness, a Fellow of Institute of Current World Affairs (ICWA) at the time (and now Professor Emeritus of Michigan University, US), wrote of the benefits of The Red Book in Malaya's rural development:

1960-01-01 12:39:54

Rural Development

"The three main focuses of rural development during the Tun Razak Period (1960s) were:-->1. Infrastructure development such as building roads, schools, bridges, clinics,irrigation schemes, mosques, community halls, water supply and electricity; --> 2.The opening up of new land schemes to resettle landless peasants; • Modernisation of agriculture and diversification of agricultural crops. --> 3. A few agencies related to rural development were established during this period in addition to the Rural and Industrial Development Authority (RIDA) and the Federal LandDevelopment Authority (FELDA), established a few years prior to independence. These include the Federal Land Consolidation and Rehabilitation Authority (FELCRA);Federal Agricultural Marketing Authority (FAMA), Agricultural Bank Malaysia (BPM),Malaysia Agricultural Research and Development Institute (MARDI), Council of Trustfor Indigenous People (MARA- replacing RIDA)." (Source: Rural Development in Malaysia, Assoc Prof Dr Ibrahim Ngah,Department of Urban and Regional Planning, Faculty of Built of Environment, Universiti Teknologi Malaysia)

1961-01-02 19:50:40

Second Malaya Plan

The Second Malaya Plan was implemented with input and assistance from The World Bank.

1965-01-01 00:00:40

Second Malaya Plan: Achievements

The Second Malayan Plan: -->1.created 344,000 jobs, --> 2.attained 6.4% annual output growth, surpassing the 4.4% target -->3.achieved 2.7% per capita income growth -->4.developed more than 40,000 hectares of land under the FELDA scheme (Source: Development Planning in Mixed Economies, ed. Miguel Uruta & Setsuko Yukawa, UN University)

1965-01-01 01:21:37

1st Malaysia Plan: Introduction & Overview

The First Malaysia Plan (1966–1970) was an economic development plan implemented by the government of Malaysia. It was the first economic plan for the whole of Malaysia—Sabah and Sarawak included—as opposed to just Malaya, which previous economic plans (such as the Second Malayan Five Year Plan) had confined themselves to. The Plan's objectives were to promote the welfare of all citizens, and improve the living conditions in rural areas, particularly among low-income groups.

1965-01-02 08:24:06

1st Malaysia Plan: Objectives

The First Malaysia Plan was designed to make a bold and imaginative attack on Malaysia's problems. The main objectives of the plan are: 1) To promote the integration of the people and the states of Malaysia. 2) To provide steady increases in income and consumption per head. 3) To increase the well-being of Malaysia's rural inhabitants and other lower income groups. 4) To generate employment opportunities. 5) To stimulate new kinds of economic activities, both agricultural and industrial. 6) To educate and train Malaysians to better equip them for better participation in the process and economic and social development. 7) To lay the groundwork for less rapid population growth. 8) To open for development sufficient new land. 9) To provide electricity, transportation facilities, and communication services. 10) To progress with health and social welfare development.

1965-12-09 01:02:55

Malaysia Five-Year Plan "For All"

"Deputy Prime Minister Tun Abdul Razak announced that the first Malaysia Five-Year Plan would provide plenty for all Malaysians, irrespective of race, creed or political affiliation. The newly published plan would see 360,000 new jobs created in Peninsular Malaysia and 80,000 in Sabah and Sarawak over five years." (Source: NST, 9/12.1965, as quoted in Chronicle of Malaysia, 1965 - 2013)

1965-12-15 06:01:53

1st Malaysia Plan: Speech by the Deputy Prime Minister, Tun Abdul Razak, at Dewan Rakyat on 15th December, 1965

“Mr. Speaker, Sir, almost every developing country in the world has a Five-Year Plan, but a plan in itself does not mean anything. A plan on paper without the will and energy to put it into practice does not bring any benefit to the people or to the country. However, I am glad to say, Sir, that as this historic day heralds the launching of our plan for the future, it also records the success in the implementations of the previous Five-Year Plan (Applause) which, in spite of defence commitments in countering confrontation and aggression, has nevertheless achieved the targets which this Government sets in line to achieve in 1961. I am proud to say, Sir, that in many sectors of our last Five-Year Development Plan, we exceeded the aims we set ourselves.”

1965-12-17 11:30:00

1st Malaysia Plan: Deputy Prime Minister Tun Razak Responding to the Opposition, December 1965

"One of the heritages of independence which we had was a very low level of manufacturing. Under the Malayan Second Five Year Plan, however, the output of this sector has increased by more that 11% per year. The present Han contemplates almost as fast a rate for the next five years..The Plan contemplates that manufacturing jobs will increase by more than 20% during the next five years, whereas agricultural employment will increase by less than 12%."

1966-12-09 06:01:53

1st Malaysia Plan: Press Conference by the Deputy Prime Minister, 1966

“In Malaya, the private investment target of $2,900 million set in the Second (Malayan) Five-Year Plan has been achieved and the public sector development expenditure target of $2,150 million was considerably exceeded and will reach a figure of about $2,650 million. Output and income grew more rapidly than planned while employment increased at about the projected rate. Both the rural people and urban dwellers have benefited substantially from the programmes under the present Second (Malayan) Five-Year Plan, initial steps towards diversification of the economy and improvement of productivity and incomes in the rural sector have already been taken. In the Borneo States, progress in development has been highly satisfactory. In other words, Malaysia experienced a period of rapid growth of output, income and employment in the last five years and this growth has been shared among its different regions among all sections of its Community.”

1967-02-10 07:16:11

FELDA Project to be Bigger

"Five more FELDA plantation schemes would be opened during the year, adding to the existing 62 covering 150,000 acres, Deputy Prime Minister Tun Abdul Razak announced. The new schemes were expected to benefit 60,000 previously landless families." (New Straits Times, 10th February 1967, as quoted in The Chronicle of Malaysia).

1968-07-11 01:17:01

Muda Irrigation Scheme

Deputy Prime Minister, Tun Abdul Razak during his two-day visit to Kedah to examine the construction of the Rancangan Pengairan Muda. The Muda Irrigation Scheme was one of the two irrigation schemes contained in the First Malaysia Plan.

1968-12-07 00:07:37

Fisheries Agreement between Malaysia and Germany

Malaysia's Chief Secretary to the Government, Tunku Tan Sri Mohd bin Tunku Besar Burhanuddin, and German Ambassador Tan Sri Dr. Horst Bochling formalising a supplemental Fisheries Agreement between Malaysia and Germany. Modernising fishing was one of the aims of the First Malaysia Plan, in efforts to tackle rural poverty.

1969-05-13 01:21:37

13th May Tragedy

Unresolved tension between the Chinese and the Malays led to a racial riot in Kuala Lumpur. It was a tragedy, as many Malaysians were killed and properties were destroyed. It's estimated that 196 people died, with more than three hundred injured. More than 700 buildings were razed and more than 200 cars destroyed. (May 13 Declassified Documents on the Malaysian Riots of 1969 by Kua Kia Soong).

1969-07-01 21:38:26

Department of National Unity established

The Department of National Unity was established in July, 1969, tasked to study ways and means of restoring inter-ethnic goodwill. It was later empowered to draft the Rukunegara (National Ideology).

1970-08-31 21:38:26

The Rukunegara

The Rukun Negara was formulated on 31st August 1970, on Malaysia’s 13th National Day. The decision to formulate this national ideology was triggered by the racial clash that took place on 13th May 1969.

1970-09-22 22:41:06

Tun Abdul Razak is Malaysia's 2nd Prime Minister

Tunku Abdul Rahman stepped down as Prime Minister and President of UMNO in 1970, as opposition against him grew following the racial riots of 13th May 1969. Tun Abdul Razak, the Deputy Prime Minister, became Malaysia's second Prime Minister, in September 1970.

1971-01-01 00:00:44

First Outline Perspective Plan (OPP1)

The Malaysian government formulates various plans for the country's development. There are long-term, medium-term, and short-term plans. The First Outline Perspective Plan covered the period 1971 - 1990, setting out the broad thrusts and strategies in the development agenda. Malaysia's OPPs wrapped around its medium-term five-year Malaysia Plans. Under OPP1 were the Second through to the Fifth Malaysian Plans. The major policy initiated under OPP1 was the New Economic Policy (NEP), a policy that aimed to eradicate economic imbalances among the major ethnic groups of Malaysia, and reduce poverty for all.

1971-01-01 01:03:47

1st Malaysia Plan: GDP per capita

Malaysia's GDP in current US Dollars rose from $319.33 at the start of the 1st Malaysia Plan to $354.23 by the end of the period.

1971-01-01 02:14:25

1st Malaysia Plan: Government Spending & Annual Growth Rate

The chart illustrates government spending (which includes current consumption expenditures and wages) against GDP growth rates. Government spending during the 1st Malaysia Plan remained fairly constant at between 15.5%-16.8% of GDP. Annual growth rates, however, fluctuated between as low as 3.9% (1967) and as high as 8% (1968). Malaysia's economic performance in 1967 was hurt by the slowdown in the global economy, which reduced demand for its natural resources. Britain, in particular, faced depressed economic conditions in 1967 that eventually led it to devalue the sterling in November 1967.

1971-01-01 03:19:35

1st Malaysia Plan: Population

Between 1966 and 1970, Malaysia's population grew from 9.8 million to 10.9 million.

1971-01-01 04:55:25

1st Malaysia Plan: Age Dependency

Age dependency = (people younger than 15 and older than 64) / (working age people ages 15-64). Data is in percentages. The age dependency ratio of Malaysia during the 1st Malaysia Plan fell from 98% in 1966 to 92.5% in 1970. This reflects Malaysia's young, growing population.

1971-01-01 05:03:47

1st Malaysia Plan: Inflation

Malaysia experienced deflation in 1968 and 1969, of -0.16% and -0.41%. This was the only time in Malaysia's economic history that it experienced deflation.

1971-02-01 00:58:58

2nd Malaysia Plan: Introduction & Overview

The Second Malaysia Plan (1971-1975) was introduced by the Federal Government of Malaysia, with the National Economic Plan (NEP) contained within. "The Plan is the result of an intensive review of the basic premise and priorities of development. The objectives, priorities and strategies of the Plan have all been shaped by the over-riding need to promote national unity." - Tun Abdul Razak, Malaysia's 2nd Prime Minister.

1971-02-04 12:00:48

New Economic Policy: An Overview

The New Economic Policy was launched by Malaysia’s Second Prime Minister, Tun Abdul Razak bin Dato’ Hussein in 1971. It aimed to tackle economic and social disparities, especially between races.

1971-02-04 13:48:48

Malaysia's New Economic Policy: Principles

In Malaysia there are deep-seated social and economic discriminations and disparities between its ethnic groups (Just Faaland, Mukhriz Mahathir & Khairy Jamaluddin, Malaysia's new economic policy: An overview, 2003). In economic life the ethnic inequity is most evident in the position of the Malays and other Bumiputera relative to other ethnic groups. The Malaysian tragedy of 13 May 1969, which followed the general election of that year, threw the country into a state of emergency and highlighted the earlier plans' failure to narrow the socio-economic gap between the Malays and the non-Malays. Following May 1969, a framework had been created that resulted in the declaration of Rukunegara and the design and adoption of the New Economic Policy (NEP).

1971-02-04 15:48:48

New Economic Policy: Objectives

As stated in Information Malaysia: Incorporating Malaysia Year Book (1975), the objectives of the New Economic Policy are to eradicate poverty regardless of race and to reorganize society so that the current identification of race by economic function and geographical location is reduced and ultimately eliminated.

1971-04-15 09:43:44

National Education Policy: Bahasa Malaysia

According to Tharmalingam (Language Policy Changes in Malaysia: Progressive or Regressive?, 2012), in 1956, the Razak Committee Report had suggested the formation of a national education system to meet the need to endorse their social, economic, political and cultural growth as a nation. Under this policy, Bahasa Malaysia acts as the country’s national language. This policy was included in Education Ordinance 1957 which was based on the Rahman Talib Report (1960). Then, the new Education Act 1961 was executed in January 1962.

1971-04-15 09:43:44

National Education Policy: Objective & Strategies

Mohamad Zaini Bin Abu Bakar (2014) has stated that in accordance with the Razak report 1956, the supreme objective of this policy is to gather children of all ethnicities under one national education system whereby the national language (Malay) is the main medium of instruction. ACCORDING to the Office of The Prime Minister of Malaysia (2013), there are thirteen strategies implemented under the National Education Policy.

1971-05-01 00:00:00

National Culture Policy

In 1971, a National Culture Congress was convened to determine the national culture of Malaysia. The congress, which had predominantly Malay attendees, proposed that the national culture of Malaysia be based on three items: a) That the national culture be based on the culture of the Malays and other indigenous peoples; b) That it incorporate "suitable" elements from other cultures, and c) That Islam be made an important component of the national culture.

1972-06-01 11:31:00

Oil & Gas in Malaysia

Malaysia's first oil well was discovered in 1910 in Miri. However, it was only in the 1960s that oil production ramped up, with oil extraction undertaken by foreign corporations. Petronas was established in the 1970s to better manage and control the country's oil and gas resources. ***The energy industry contributes to one-fifth of Malaysia’s gross domestic product. Shipments of crude petroleum, liquefied natural gas and petroleum products accounted for about 14% of Malaysia’s total exports in the first six months of 2016. According to Bloomberg, Malaysia is the only net oil-exporting country in Asia.

1973-01-23 11:06:34

Shell Strikes Oil Off Sabah

"Sabah Shell struck oil off the Sabah coast and in tests, a well named Erb West had produced 1,800 barrels of oil a day, Minister of Primary Industries Datuk Abdul Taib Mahmud said Shell had applied to convert the area into a mining lease." (Source: NST, 23 Jan 1973, quoted in Chronicle of Malaysia, ed. Philip Matthews, 2013)

1973-10-01 01:21:37

A Global Oil Crisis

In 1973, the world was confronted with a major oil crisis due to an oil embargo by major Arab oil exporting countries and Iran. This crisis caused oil prices to increase by as much as 200% in only 6 months. In order to reduce dependence on imported oil and also to obtain a bigger profit share, Malaysia established Petroliam Nasional Berhad (Petronas), via the Petroleum Development Act of 1974 (Ex-Post Critical Evaluation of Energy Policies in Malaysia: 1970 to 2010, A.A. Manan, A. Baharuddin & WC Lee, 2015).

1974-08-23 12:00:00

Malaysia - The Fast Learners (Commentary)

By Alan Walters, The Spectator magazine, UK (Pg. 12) "There is really no secret about Malaysia's successful economic policy. It is simple. There was little or no resort to deficit finance. In other words taking one year with another the Malaysian budget of the public sector displayed no large excess of expenditure over revenue."

1974-10-01 17:00:18

Petroleum Development Act 1974

Under the PDA, Petroliam Nasional Bhd (Petronas) was formed on Sept 6, 1974 to safeguard the country's oil and gas resources. Petronas is vested with the entire ownership of, as well as rights, privileges and benefits in relation to exploring and producing oil and gas, offshore and onshore in Malaysia. Petronas is also the responsible authority for licensing any third party contractors wishing to participate in upstream petroleum activities and licensing goods and service providers operating in the upstream sector, including providers of rigs and drilling services and supply of general goods and services related to upstream operations.A contractor wishing to participate in exploration and production activities must apply for and receive a licence from Petronas. The licence will normally take the form of a Production Sharing Contract (PSC) which will be entered into between the contractor and Petronas. (The Sun Daily, 5 January 2015).

1975-04-01 06:21:37

National Petroleum Policy 1975

The National Petroleum Policy was formulated to regulate Malaysia's oil and gas sector to ensure efficient, secure and environmentally sustainable supplies of energy. PETRONAS was given special rights of ownership, production and exploration. PETRONAS is responsible for its own development, investment and control of all upstream activities. The oil & gas corporate entity also came under the direct control of the Prime Minister (Energy Law in Malaysia. AH Ansari, 2011)..

1975-06-15 17:00:18

National Petroleum Policy 1975: Objectives

The National Petroleum Policy has three objectives: 1) To provide sufficient supplies of petroleum at affordable prices for the country’s economic growth. 2) To encourage a better Malaysian representation and offer a favourable investment environment which includes the formation of opportunities for downstream industries. To recognise petroleum as an exhaustible resource that requires regulation, and to protect the environment when deciding the optimum pace of resource development for socio-economic benefits.

1976-01-01 00:03:47

2nd Malaysia Plan: GDP per capita

Malaysia's GDP in current US Dollars almost doubled in five years, rising from $379.57 in 1971 to $755.28 in 1975.

1976-01-01 01:14:25

2nd Malaysia Plan: Government Spending & Annual Growth Rate

The chart illustrates government spending (which includes current consumption expenditures and wages) against GDP growth rates. During the 2nd Malaysia Plan, government spending was highest in 1972, at 20% of nominal GDP, but fell back to between 16% and 18% in the years thereafter. Economic growth was steadily rising from 1971 to 1973, hitting double digits in 1973 with 11.7% growth. Growth remained solid in 1974 but fell to 0.8% in 1975. However, some academics point out that real GDP growth in 1975 was highly positive, at 3.5% (Globalisation, Economic Policy, and Equity: The Case of Malaysia, Mohammed B. Yusoff, Fauziah Abu Hasan Suhaila Abdul Jalil).

1976-01-01 03:19:35

2nd Malaysia Plan: Population

Between 1971 and 1975, Malaysia's population grew from 11.2 million to 12.3 million.

1976-01-01 04:14:25

2nd Malaysia Plan: Age Dependency

Age dependency = (people younger than 15 and older than 64) / (working age people). Data is in percentages. Malaysia's age dependency ratio fell from 90.4% to 84.9% by the end of the 2nd Malaysia Plan, reflecting the young profile of the country's population.

1976-01-01 05:03:47

2nd Malaysia Plan: Inflation

Malaysia's inflation rose from 1.61 to hit double-digits in 1973 and 1974, fuelled by the world oil price increase before falling to below 5% in 1975.

1976-01-15 00:10:07

Tun Hussein Onn becomes Malaysia's Third Prime Minister

Tun Abdul Razak, the country's second Prime Minister, passed away from leukaemia in London on the 14th of January 1976. Following his death, his Deputy Prime Minister, Tun Hussein Onn, became Malaysia's third Prime Minister.

1976-02-05 12:14:07

3rd Malaysia Plan

The Third Malaysia Plan (1976-1980) continued with the main emphasis of the Second Malaysia Plan: socio-economic balance. "The Plan is a bold, imaginative and positive effort to meet the socio-economic and political challenges of our time. It is the biggest ever undertaken by the Government for all our people, designed specifically to consolidate the foundations already laid and the achievements attained to strengthen the unity and well-being of our people," said Tun Hussein Onn, Malaysia's third Prime Minister. Under the shadow of the 13th May racial clash, the 3rd MP carried on the New Economic Policy (NEP) with the same objectives; 1) Wiping out poverty; 2) Restructuring society, and 3) Strengthening national security.

Malaysia's Development Plans & Policies (1956 - Present)

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