Malaysia’s Economic Structural Transformation: Whither The Agricultural Sector

Abstract

Malaysia‟s agricultural sector was unintentionally neglected when the country embarked on its economic structural transformation policy to leap frog into an industrialised nation by 2020. It was a logical move as commodities prices fluctuated, more often downwards. Rubber and tin once a major foreign exchange earner lost its momentum as the major foreign exchange earner. The national policy focus shifted to industrialisation in mid 1970s, starting with import substitution policies, later to export oriented and heavy industries activities. The agricultural sector moved to the backseat of development. Veiled efforts to maintain the sector was unconvincing. The National Agricultural Policy (NAP) was only introduced in 1984, almost three decades after achieving independence in 1957, but in 1986, Malaysia introduced the Industrial Master Plan. Several economic downturns later, Malaysia realised that the agricultural sector needed the same attention as enjoyed by the other sectors. The 1997/1998 crisis unfolded the fragile economic fundamentals and a structure, which was earlier believed to be laid on a solid ground. It is perhaps for this reason that the agricultural sector was revived and the third NAP was announced soon after the crisis. In the Ninth Malaysia Plan (2006-2010) the agricultural sector was identified as the third engine of growth after the industrial and the services sectors and rebranded the New Agriculture. The Ministry of Agriculture was renamed the Ministry of Agriculture and Agro-Based Industry to reflect its wider scope of responsibilities. This paper seeks to better understand the scenario and to do the following: (1) to critically investigate why agriculture is back in the development agenda of the country, (2) to look at empirical evidences to support this move and (3) to analyse the effectiveness of the new policies introduced to meet the national agenda.