This document summarizes Malaysia's economic and political conditions from its colonial era to the late 2000s. It describes Malaysia being divided into two main regions and its population demographics. It outlines Malaysia's transition from an economy dominated by agriculture and commodities to import substitution industrialization and export-oriented industrialization. Political tensions emerged from unequal economic opportunities along ethnic lines. Malaysia was impacted by the 1997 Asian Financial Crisis but began recovering in the late 1990s through financial reforms and consolidation.

1. SINDIKAT 5
M.Ridwan - 29112555
Machadi Dhana – 29112303
M. Khadafi – 29112324
Pedro Putu Wirya – 29112565
Seto Kusparyanti – 29112306
Yuliani Dewi - 29112321

2. Malaysia : People First ?
Profile
 Malaysia is divided into two main regions :
peninsular Malaysia, extending southward
from China and Thailand, and East
Malaysia, across the China Sea from the
mainland on the island of Borneo.
 In 2009, the population of Malaysia was
28.3 million people ; and there are three
largest ethnic groups, the native Malays
50.4 %, Chinese 23.7 %, and Indian 7.1 %.
 Malaysia's per capita income was $14.700
 Malaysia gained independence from Britain
colony in 1957

3. Economic Condition
 In Malaysia’s colonial era, the economy
was dominated by the primary sector;
agriculture, forestry, fishing, tin and
rubber.
 To free from erratic commodity prices set
in international market, the new
Malaysian state focused on diversifying
the economy.
 The country adopted an import
substitution industrialization (ISI) strategy,
promoting domestic production to
substitute for manufactured imports.

4. Economic Condition ... continue
 Overall, the 1960s saw moderate increases
in wages for capital-intensive industries, but
unemployment remained high and domestic
demand meager.
 However, the share of business owned by
native Malay (bumiputera)was only 24 %,
while Chinese and foreign ownership shares
amounted to 27.2 % and 63.4 %.
 Non-bumiputra groups felt that the
government was limiting their economic
opportunities, while the bumiputra were not
convinced their interests were being
adequately protected.

5. Economic Condition ... continue
 In 1971 the Free Trade Zone Act set up
special low-tariff zones to encourage
companies to manufacture for export.
 Price discrimination, quotas, fiscal
incentives, administrative support, and
government-linked corporations (GLCs)
were deployed to promote economic
activity and “balance” the economy.
 The GLCs produced “bloated
bureaucracy, high costs, low productivity
and limited innovation.

6. Politic Situation and Crisis
 The Policy of Prime Minister Najib Razak which
is presented on March 30, 2010 :
– Raising per capital income from $ 6,634 to
over $ 15,000 by 2020
– Measures to improve human capital, reduce
migration and privatize inefficient government-
linked corporations (GLCs)
– The dismantling of the new economic policy
(NEP)
NEP : an affirmative action program for native Malays
that had alleviated racial tensions and reduced
inter-racial income inequality over the previous 40
years.

7. The Situation Economy and Politic concerning the
New Economic Policy (NEP)
●The economy was in the midst of a deep
recession and investment had plunged from 45
% of GDP to 19 %
●The ruling political coalition, the Barisan
Nasional (BN), united three of the largest
political parties – UMNO, MCA and MIC
●The opposition coalition, PKR, DAP and PAS
was a close contender for the ruling coalition.
●In the March 2008 election BN had not won
two-thirds of the seats required to pass
constitutional amendments.

8. Asian Crisis
● In March 1996, the Thai Government had been forced
to purchased $4 billion in real estate developers' debt.
● In January 1997, the collapse of several major Korean
and Thai firms warned of danger.
● By November 1997, Indonesia, Korea, the Philippines,
and Thailand turned to the International Monetary Fund
(IMF).
● On July 14, 1997, the central bank, Bank Negara
Malaysia (BNM) stopped defending the currency and
helplessly watched as the ringgit depreciated from RM
2.5 against the U.S. Dollar to a record low of RM 4.88.

9. Recovery
● In facing the crisis, Malaysia had done some
financial reform to recover the crisis :
- In July 1999, BNM announced a bank consolidation
program with the objective of increasing the
efficiency of the banking sector.
- In May 2000, Dr. Zeti, was appointed as the seventh
governor of BNM, she set out to fortify Malaysia's
battered reserves and deepen the reform the
financial system to reduce exposure to future
contagion.
● Despite Malaysia had done financial reform, the
investment collapse