Sept. 16, 1963: Malaysia is founded

By David G. Mutch | Business and Financial Writer ofThe Christian Science Monitor

from the September 18, 1963 edition

Malaysia Federation Sends Hopes Soaring

Boston -

The white pigeons that flew above Kuala Lumpur, Malaysia, on Monday as a type of this new nation’s hopes for peace marked also a bid for prosperity.

One of the three major bonds between the various elements that went into the making of the Federation of Malaysia is economy. The other two are language and British forms of government.

Economic hopes are pinned to a common market, Merger in itself will help efforts toward diversification by broadening the economic base. But the establishment of a common market, with the consequent cooperation and protection for developing industries, it is hoped, will be a major stimulus for an increased tempo of economic growth.

STRONG CURRENCY

The four states of Malaysia - Malaya, Singapore, Sarawak, and Sabah(formerly North Borneo) share a common currency that is extremely sound, owing to more than a century of British protection and rule.

Considerable trade moves between the four states.  One of the basic components of a common market is the elimination of internal barriers to trade in Malaysian products destined for local consumption.  Another major component is the establishment of a common external tariff where necessary to protect these products, while still preserving the revenue producing entrepot trade in the area.

What the common market should facilitate is freer movement of capital, goods, labor and services, as the world’s most famous common market, the European Economic Community, was designed to do.

DIVERSIFICATION WANTED

The population pressure in Malaysia is the major force demanding faster economic development.  The total population now is growing at more than 3 percent per annum.  The population of Singapore is rising at 4.4 percent (including 0.9 percent due to immigration).

In order to feed, clothe, and house its people, the federation must diversify as quickly as is feasible an economy largely based on rubber and tin exports and the entrepot trade of Singapore and to some extent of Penang and Labuan.

The economic unification of these territories, although they have some sound ties, raises complicated problems.  To aid in the solution of these problems the International Bank of Reconstruction and Development (the World Bank) sent a mission of specialists to study the situation firsthand. The study was requested by the governments of Malaya and Singapore.

WORLD BANK STUDY

The report on the economic aspects of Malaysia, published recently by the World Bank, was ransmitted to the government of the Federation of Malaya, Sabah, Sarawak, and Singapore in July, 1963.  It went as the views of the mission rather than as “positive recommendations of the bank.”

This distinction, coupled with the solid documentation of this purely economic report, seems to have a quiet but important significance.

The primary aim of Malaysia is stability along the 1,300 mile arc from Thailand to the Phillippines.  But stability cannot be achieved, many Malays believe, without sound economic progress, coupled, of course, with other elements.

These include a nonpolitical military and a good civil service, including a sound judiciary which encourages a respect for law among the people.

CHINESE QUESTION

The political buffeting from Indonesia, Red China, and the Philippines on the outside and from overseas Chinese with strong leftist tendencies within Malaysia must be met with stability and economic progress.

The Chinese population in Malaysia makes up 42 percent of the total 10.5 million people.  Malays constitute 40 percent of the population. The Chinese control a majority of the business and commercial enterprises.

One of the major internal problems will be building up a national cohesiveness from this major fragmentation.

There are various shades of opinion as to how this will be done and how successful such an attempt can be.  One opinion is that economic progress is a key factor in generating a nationalistic feeling for Malaysia among the overseas Chinese.

ONE OF A SERIES