Central Planning in the Era of Market Economy: A case of Malaysia

RY By RY, 17th Mar 2014 | Follow this author | RSS Feed | Short URL http://nut.bz/1-l2q63t/
Posted in Wikinut>Money>Economics

Malaysia is indeed an Islamic finance haven in the present era, but the nation's journey from being a British ruled colony to transforming into a thriving market-led economy is also an interesting one. Let's delve into the journey of this vibrant Asian economy from gaining independence in 1957 to its legitimization as a market economy.

Malaysia: The History of Independence

Malaysia, the twin-towers country, met its game changer Tunku Abdur Rehman, a Cambridge law graduate, who spearheaded the Alliance Party, won elections in 1955, earning the land of Malaysia a free country status by 1957. Gaining freedom from the British rule opened the lucrative avenues for development in the post-independence era and paved the way of the formation of a powerful institution named Malaysia's Economic Planning Unit that further launched the New Economic Policy in 1969. This maneuver gave the platform to the State to have its say in the allocation of its own resources.

The prime attraction of British rulers to colonize Malaysia was the presence of "tin" in the nation's rich resource base. Malaysia had discovered this opportunity long back in the 17th century itself. Later, the English rulers also found the climatic environment apt for growing rubber and palm too.

Malaysia: The Journey to Market Economy

In 2008, the quotas reserved for the respective Chinese, Muslim and the Indian populace, began to get abolished. This was an clear signal of opening the economy and foreign investments in the various sectors. Malaysia tactfully began privatizing the non-performing public sector units in the 70s itself.

This stream was further strengthened with the shift of the Malaysian economy from an agricultural economy, with 42% of GDP share of agriculture in the 1970s, to mere 9% in the 1980s. Consequently, the share of manufacturing and industrial sector increased to more than 30% of the GDP. Also, the shift from tin-trade to palm-oil trade occurred due to a fall in the demand for the former, whilst the latter stood to be a foreign exchange earnings magnet.

The trade game of Malaysia gained gradual positive momentum with the first active trade partner being Britain, followed by the United States, Japan and China.

Conclusion

The Malaysian economy, despite of experiencing a couple of hiccups, viz. racial issues, political disasters, and even xenophobia, managed the pertaining situations tactfully without causing any significant disruption to its economy. Even with the lethal currency devaluation in the mid-nineties, the emphasis on exports quickly managed the economy. Today, Malaysia is having one of the most healthy disclosure norms and investor protection frameworks.

Tags

Bhumiputras, Competition, Economics, Economy, Independence, Industrial Policy, Malaya, Malaysia, Market Economy, Muslim, New Economic Policy, Planning, Public Policy, Public Sector, Regulation, Resources

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Comments

author avatar AjaySinghChauhan
25th Oct 2014 (#)

good post and thanks for sharing it with us.

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