Malaysian Economy Bachelor of Business Administration (BBA) Week #1 4/19/2017 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 Malaysian Economy (MPW ***2) @ UCTS

Today’s Agenda (Week #5) Industrial policy and Industrialization Phases of industrial policy Five-year Malaysian Plans (10 plans)

Industrial Policy Phases of Week #1 4/19/2017 In Slide Show mode, click the arrow to enter the PowerPoint Getting Started Center. Malaysian Economy (MPW ***2) @ UCTS

Introduction 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 of import- substitution policy, which was quite unsuccessful.

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 . . . LONG TERM PLANNING 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 MEDIUM TERM PLANNING Five-year development plans, such as the Ninth Malaysia Plan (2006-2010) Mid-term review (MTR) of the five-year Plans SHORT TERM PLANNING Annual Budget

Outline Perspective Plan (OPP1) Summary of Malaysian Development Policies RMK10 RMK9 RMK8 RMK7 RMK6 RMK5 RMK4 RMK3 RMK10 RMK9 RMK8 RMK7 RMK6 RMK5 RMK4 RMK3 RMK2 RMK1 OPP2 OPP1 RMK2 OPP3 RMK1 Vision 2020 OPP2 Outline Perspective Plan (OPP1) 66-70 71-76 77-80 81-85 86-90 91-95 96-00 01-05 06-10 11-15 16-20

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 Eradicating poverty by raising income levels and increasing employment opportunities for all Malaysians First 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. Second

Implementation NEP 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) 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 (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) 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.

ORIENTATION TOWARDS SCIENCE AND TECHNOLOGY RESOURCE DISTRIBUTION VISION 2020 NATION: United Malaysian Nation Common and Shared Destiny Territorially Integrated Ethnically Integrated Living in Harmony Full Partnership Fair Partnership One ‘Bangsa Malaysia’ Political Loyalty Desicated to Nation ECONOMY Competitive Dynamic Robust Resilient POLITICS Matured Democratic Society Consensual Community Oriented MORAL AND ETHICS Fully Moral and Ethical Society Strong in Religion Highest Ethical Standard WELFARE Fully Caring Society and Culture Society Comes Before Self Walfare – Family Responsibility THE SOCIETY ORIENTATION TOWARDS SCIENCE AND TECHNOLOGY Scientific and Progressive Society Innovative Forward Looking Contribute to Scientific and Technological Society RESOURCE DISTRIBUTION Just Fair and Equitable Distribution of Wealth Full Partnership in Progress MENTAL FRAMEWORK Psychological Liberated Psychological Secure Self Confident Justifiably Proud Robust in Facing Adversity Pursuit of Excellence Aware of its potentials

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: -Economically -Spiritually -Politically -Technologically -Socially -Culturally

Vision 2020 Vision 2020 United Malaysia objectives Just and caring society Mature democratic society Sustainable development Fully competitive, dynamic, and resilient economy Entrepreneurial Vision 2020

Vision 2020 9 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 . . ECONOMIC PERFORMANCE Average 1971- 80 7.5 % 2000 2001 2002 2003 2004 2005 2006e 7.5 % 5.8 % 7.1 % 4.5 % 8.5 % 0.3 % 4.4 % 5.4 % 5.3 % 6.0 %

DEVELOPMENT PLANNING MACHINERY PARLIAMENT Cabinet Ministers National Planning Council National Action Council National Economic Action Council (NEAC), National Economic Consultative Council (NECC) Draft Policy National Development Planning Committee Draft Secretariat Implementation & Coordination Unit Economic Planning Unit Private Sector Dialogue Proposal General framework Inter-Agency Planning Group (IAPG) Proposal Consultations Proposal Circulars Circulars Federal Ministries & Agencies State Governments Private Sector

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 Thrusts 3. Addressing persistent socio-economic inequalities constructively and productively 4. Improving the standard and sustainability of the quality of life To achieve the goals & objectives of Vision 2020

Week #1 4/19/2017 You Thank In Slide Show mode, click the arrow to enter the PowerPoint Getting Started Center. Malaysian Economy (MPW ***2) @ UCTS