Despite the significant growth of the agricultural sector in Malaysia over the last three decades, the incidence of poverty continues to remain high among the target agricultural groups of food crop farmers, export crop smallholders and fishermen. This is because the overall effect of macroeconomic policies promoted the growth of the industrial, mainly manufacturing, sector and to discourage the growth of the agricultural sector. Various measures have now been put in place by the government to dampen the unfavourable effect of industrialization on agricultural development and to create a favourable environment for greater capital investment in the primary sector These include technological improvement and mechanization; reducing over-dependence on foreign unskilled farm labour; removal of export duties on agricultural commodities; farm diversification and land reform. These will be supported further by strategies and programmes aimed at improving farm level conditions to enhance factor productivity and efficiency, commercially-oriented activities and high value enterprises. Introduction The quest for rapid economic growth and development constitutes a major policy objective of many developing countries including the emerging transitional economies of mainland Southeast Asia. In these countries agriculture and economic growth are inextricably linked. Since agriculture accounts for a significantly large share of national output and income, it plays a vital role in determining their rate of growth. The advent of the flying geese pattern of development has created further implications for agriculture in the developing countries. In this industrialization process a number of them appear to have successfully adopted a strategy of entering into sectors (predominantly industrial and service sectors) where they have a rising comparative advantage in some cost terms, and importing technology from an already mature economy whose comparative advantage in those sectors seems to be on the decline. This transformation is not always smooth but involves frictions in adjustment, in particular that of agriculture. In this context, a major policy concern would be to ensure that agricultural growth can be sustained in the light of economic adjustments following the changing dynamic comparative advantage. This article elucidates the economic reforms and agricultural development in Malaysia. Essentially, it attempts to determine how, and to what extent macro policies that have been implemented to support economic reforms through industrialization and economic diversification have implicated the agricultural sector. The manner in which these policies have impinged on agriculture, and the way their repercussions have been factored in agricultural development and planning would be of particular interest to other developing countries which are undergoing, or aspire to embark on, a similar process of economic reform. It is hoped that this article can provide useful lessons for the design of agricultural development policies that are commensurate with the national plans of these countries. Development Planning and Policy Malaysia adopted a laissez-faire economic system in the 1950s and the 1960s. The private sector constituted the engine of growth, while the government sector tended to undertake investment in social and physical capital. The inception of the New Economic Policy (NEP) in 1971 saw a more interventionist role of the government in the economy. The primary objective of the NEP was national unity and this was to be achieved via a two-pronged strategy of eradication of poverty and restructuring of society. The implementation of the NEP thus saw a more direct role of the public sector in agriculture, where the incidence of poverty was high. It also saw the implementation of a series of policies affecting equity, ownership and employment in the private sector as well as the establishment of public enterprises. …