The Colonial Economy, 1967: The Case of Malaysia

Abstract

One of most persistent and difficult problems faced by most developing countries is that of establishing an efficient and stable political system. It is generally conceded that one central aspect of solution to this problem is development of a viable economy on which a political system can be based. This article will focus on economic factor as manifested in Federation of Malaysia, pointing out several of economic problems encountered by Malaysia during 1967 as well as types of action being taken by government to handle these difficulties.' Most of economic problems faced by Malaysia in 1967 are similar to difficulties which continue to exist in virtually all former colonial areas. This does not mean that Malaysia is an average developing state or, for that matter, an average Southeast Asian state. In terms of per capita income it is highest in Southeast Asia except for Brunei and Singapore, and in South and East Asia it ranks second only to Japan. As Milne has pointed out, per capita income of Malaysia indicates a rather high standard of living compared with levels in most of rest of world.2 Therefore, when comparison between Malaysia and other developing countries breaks down, it is usually in sense that Malaysia's economic difficulties are minor compared to those of others. Malaysian Finance Minister Tun Tan Siew Sin commenced his economic review of year 1967 by stating that the general slackening of economic activity in major industrial countries and hence in growth of world trade in 1967 . . . adversely affected performance of Malaysian economy during past year.3 This statement suggests two basic characteristics of Malaysian economy, both of which are found in economies of most other developing countries: First, economic development is to a significant degree dependent upon ability to export products. Second,