Second Malayan Five Year Plan - Legacy

Legacy

At the end of the Second Malaysia Plan, the poverty rate was found to have declined from 49% to 43%. Unemployment improved slightly, decreasing from 7.5% to 7.4%. Great strides were made in increasing Bumiputra involvement in the private sector, however; the employment rate of Bumiputra in the manufacturing sector increased from 29% to 33%, and from 24% to 34% in the commercial sector. Bumiputra equity ownership more than doubled from 3% to 7.8%. However, this was considered unsatisfactory by many, especially as much of the progress had been made by government enterprises holding the equity in trust. Although the plan had initially targeted a GDP growth rate of 12.5% a year, only an average of 11% was managed. The growth was extremely uneven; while in 1973 GDP grew by 27%, in 1975, it grew a paltry 3% due to the global recession at the time. Despite the government's efforts to tackle unemployment, creating 600,000 new jobs during the Second Malaysia Plan, the number of unemployed actually increased between 1970 and 1975; in 1970, there were 275,000 unemployed, but by 1975, the number stood at 324,000.

The Second Malaysia Plan was also forced to confront an unexpected problem: inflation. Between 1972 and 1975, the consumer price index (CPI) unexpectedly increased by 40%. In 1974, the inflation rate averaged 18%, although it was reduced to 7% by 1975. This new conundrum was therefore considered by the government when it set out the Third Malaysia Plan (1976–1980).

Another overarching consequence of the Second Malaysia Plan was its efforts in crop diversification. Despite RISDA failing to meet its targets, the palm oil industry in Malaysia continued to grow. By 1998, palm oil was the second-largest contributor towards Malaysia's GDP, second only to electronics products.

Overall, the Second Malaysia Plan made much more substantial progress towards reducing the inequity in the economy than its predecessor had. However, the emphasis on improving the lot of the Malays greatly worried the non-Malays, and when the Third Malaysia Plan was launched, the government toned down its rhetoric on affirmative action and emphasised greater economic growth, which would benefit all.