Second Malaysia Plan - Mining

Mining

Until the late 1970s, Malaysia was the world's foremost producer of tin, supplying roughly 40% of the non-communist world's tin. Nevertheless, tin reserves were declining; mining's contribution to the GDP was projected to fall 13% over the course of the Second Malaysia Plan, due to the exhaustion of tin and iron reserves. However, bauxite and copper continued to contribute to the mining sector in the early 1970s. Malay participation in the mining sector was minimal, and as much as 70% of the industry remained under foreign control. This was a legacy of the British colonial era; many British firms, which had arrived in the 19th century to exploit Malaysian mineral resources, had not departed yet. Malay participation in the mining sector—especially in tin—was further hampered by the British tendency in the 19th century to bring in cheap Chinese labour; most of those employed in mining were still Chinese as late as 1970.

Petroleum or crude oil began to significantly contribute to the Malaysian economy in the 1970s, as new oil rigs and refineries were set up. By 1975, total production of crude oil stood at 90,000 barrels per day (14,000 m3/d), most of it produced by Shell. In 1974, the exclusive right to own, explore and exploit petroleum in Malaysia was vested in the government enterprise of Petronas. The following year, Petronas was granted sole rights over the marketing and distribution of all petroleum products and a provision to control other companies without taking an ownership stake in them, through the issuance of management shares to Petronas.

The number of Malays employed in the mining sector soared from 1970 onwards, as the government's restructuring policies came into force. When the Second Malaysia Plan began, less than 200,000 Malays were employed in the mining industry. By 1990, they numbered nearly a million, well ahead of the target numbers originally outlined. Licences for mining operations were specially reserved for Malays as part of the drive to increase their ownership level in the mining industry. The government also ostensibly increased Bumiputra ownership by nationalising several formerly foreign mining companies—by 1989, state corporations controlled 60% of the mining industry. The government was also aided by the fact that petroleum soon eclipsed other minerals in the mining sector—as Petronas was a state-owned corporation, it was also considered a Bumiputra enterprise. However, the government has been criticised for this practice, as it is argued nationalised corporations belong to the public at large, and not only to the Bumiputra.