History of Malaysia - Challenges of Independence

Challenges of Independence

At the time of independence Malaya had great economic advantages. It was among the world’s leading producers of three valuable commodities, rubber, tin and palm oil, and also a significant iron ore producer. These export industries gave the Malayan government a healthy surplus to invest in industrial development and infrastructure projects. Like other developing nations in the 1950s and '60s, Malaya (and later Malaysia) placed great stress on state planning, although UMNO was never a socialist party. The First and Second Malayan Plans (1956–60 and 1961-65 respectively) stimulated economic growth through state investment in industry and repairing infrastructure such as roads and ports, which had been damaged and neglected during the war and the Emergency. The government was keen to reduce Malaya’s dependence on commodity exports, which put the country at the mercy of fluctuating prices. The government was also aware that demand for natural rubber was bound to fall as the production and use of synthetic rubber expanded. Since a third of the Malay workforce worked in the rubber industry it was important to develop alternative sources of employment. Competition for Malaya’s rubber markets meant that the profitability of the rubber industry increasingly depended on keeping wages low, which perpetuated rural Malay poverty.