Following Malaysia's independence, the 1960s saw the country go through a period of reconstruction and growth, as efforts were made by the government to promote agricultural diversification and industrialisation.
In a little over half a century since, Malaysia is sitting at a tipping point, on its way to becoming a high-income nation and knowledge-based economy that is set to continue to grow and become a formidable presence across the globe.
At the time of independence, Malaysia had just emerged from a period of upheaval, economically as well as socially. Its economy and growth was highly dependent on the export of a narrow range of primary commodities, including rubber, tin and palm oil, making it extremely vulnerable to external shocks.
As competitive pressures intensified from the emergence of competing products like synthetic rubber, which offered improvements in quality over natural rubber, and low-cost competitors such as Indonesia, it became increasingly clear that the country's overdependence on agricultural products needed to be addressed.
Diversification efforts did not take place immediately, however, but with government intervention, the agricultural sector was able to make substantial gains, providing the necessary platform for the transition to industrial growth.
In a bid to support Malaysia's agricultural sector, the government introduced several policies and set up supporting agencies to address challenges faced by key industries.
Setting up the Federal Land Development Authority (Felda) was one such initiative, established to address issues such as land shortage.
Role of Felda
Following its formation in the late 1950s, Felda worked to open up virgin land in less-developed areas, while also providing financial services, housing, planting materials and technical advice to help support Malaysia's agricultural industries.
Other initiatives at the time included efforts to encourage rice planting so as to reduce Malaysia's dependence on imported rice, with the government continuing programmes dating back to the 1930s, aimed at making existing land conditions more conducive for paddy planning.
Irrigation schemes were implemented and a generous floor price for rice was also introduced. At this time, palm oil also became increasingly popular and efforts were taken to increase its prominence.
During this period, the government also focused its efforts on infrastructure development, recognising the importance of a well-developed infrastructure in ensuring that economic activities could be performed efficiently.
Policies to promote industrialisation were also notable, with the government encouraging private sector-led industrialisation. Funds were allocated to set up the Rural and Industrial Development Authority, which focused on the development of small-scale industrial enterprises in rural areas. An industrial development policy was also introduced.
The policy supported private sector-led growth through stimulating the interests of local and foreign entrepreneurs, and saw tariff protection for infant industries and tax incentives to accelerate capital formation introduced.
Government efforts during this time were successful, with gross domestic product (GDP) averaging 6.5 per cent between 1960 and 1970, according to the World Bank. Quality of life for Malaysians also improved during this time, with life expectancy, for example, increasing from about 59 years of age in 1960 to about 64 years of age in 1970.
In the late 1980s and through to the mid-1990s, Malaysia's economic performance was at its peak, with GDP growth averaging about 9.5 per cent. Dubbed one of the Asian Tigers, Malaysia's profile in the global landscape increased in prominence.
Today, Malaysia continues to enjoy strong and stable growth, supported by a diverse economy driven by high levels of both foreign and domestic investment. It has developed itself into a multi-sector economy based on services and manufacturing, and is one of the world's largest exporters of semiconductor components and devices, electrical goods, solar panels, and information and communication technology products.
The country's success has, no doubt, been the result of a combination of sound government efforts and a resilient people who have continued to persevere in good times and bad. Most recently, in 2010, the government introduced several initiatives aimed at transforming Malaysia into a knowledge-based and innovation-rich nation as it embarked on its next phase of growth.
Studies have shown that innovation, in particular, is key to the positive performance of any organisation, and that their knowledge assets are, in turn, positively associated with firm-level innovation.
Taking this to the national level, it becomes apparent that as Malaysia moves closer to achieving its 2020 vision of becoming a high-income nation, the two pillars of knowledge and innovation will become ever more important. This fact has not been lost on the Malaysian government, as through the years, it has focused on promoting both innovation and talent development.
Under the Economic Transformation Programme (ETP), for example, Entry Point Project (EPP) 9: Building an advanced engineering, science and innovation discipline cluster, under the Education National Key Economic Area (NKEA), seeks to enhance interdisciplinary collaboration between researchers, industry and investors so as to improve research capabilities in Malaysia, driving innovation and increasing opportunities to commercialise research.
In 2011, the Malaysian Innovation Agency (Agensi Inovasi Malaysia) was also set up to drive Malaysia's push towards becoming an “innovation economy”, helping to support the nation's 2020 vision.
The government's 2013 Budget also continued the country's 2012 Budget focus on innovation, with one of its goals being to “inculcate innovation and increase productivity” with a focus on creating an environment conducive for small and medium-sized enterprises (SMEs) to participate in research and development and innovative activities.
Five research universities have also been earmarked to receive funds to conduct research in strategic fields such as nanotechnology and biotechnology.
In the area of talent development, several EPPs have also been put in motion to elevate human capital in Malaysia, with the government building focused industry clusters in areas such as hospitality and tourism as well as Islamic finance.
The government is also working to grow the nation into a regional education hub, attracting students from around the region. Initiatives to facilitate talent development have not only been confined to the ETP.
Work being done by TalentCorp Malaysia since its launch in January 2011, for example, has successfully attracted both Malaysians abroad as well as foreign talent to Malaysia, including such notable names as Zainal Abidin Jalil, who is currently CEO of Malakoff Bhd; Dr Kenneth Pereira, CEO of Hibiscus Petroleum Bhd; and Rhoda Yap, who returned after working for McKinsey to become CEO of British India.
Malaysia is, therefore, on the right track as it approaches its 2020 vision. As the various government initiatives continue to bear fruit and the country increasingly elevates its profile as a destination of choice for business and leisure, Malaysians should take a moment to reflect on how far Malaysia has come in such a short period of time, and look forward to a future of endless possibilities.
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