Second Malaysia Plan - Economic Restructuring

Economic Restructuring

The Second Malaysia Plan stepped up government involvement in the economy, with the main goal of increasing Malay economic interests, especially in the areas of manufacturing and mining. In order to avoid directly hurting Chinese economic interests, the plan focused on huge economic growth, with the goal of expanding both the Malay and non-Malay shares of the economy in absolute terms, while increasing the Malay share in relative terms as well.

A sum of M$7.25 billion in total was allocated for the Second Malaysia Plan. Although this constituted a decrease from the First Malaysia Plan's allocation of M$10.5 billion, the Second Malaysia Plan hoped to achieve greater reduction in poverty and increase the involvement of the Malays in the private sector by imposing certain restrictions on private firms that would benefit Malay employment and economic ownership.

At the time the plan was announced, the non-Malays had, in the words of one commentator, "a virtual monopoly of private industrial and commercial employment", and were concentrated in the urban areas. However, foreign interests controlled most modern industries, including manufacturing, banking, finance, rubber, and tin. The Malays were largely involved in rural occupations such as rice farming, fishing, tending to rubber or oil palm smallholdings, and so on. They were conspicuously absent from even minor white collar jobs, such as clerical work, and only in the civil service, where they were guaranteed 80% of all government jobs, were they present in the upper portion of the hierarchy. Most members of some professions, such as medicine and law, were non-Malay. Ironically, government policies, such as those set out by Article 153, appeared to hinder Malay involvement in the private sector by giving them preference in only the public sector. Unemployment among all races was also rampant, largely due to poor education, with about 70% of the 275,000 unemployed in 1970 being aged between 15 and 25 years. It was all this that the NEP and the Second Malaysia Plan set out to change.

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