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History of Malaysia


Malaysia is a country in South East Asia whose strategic sea-lane position brought trade and foreign influences that fundamentally influenced its history. Hindu and Buddhist cultures imported from India dominated early Malaysian history. They reached their peak in the Sumatran-based Srivijaya civilization, whose influence extended through Sumatra, Java, the Malay Peninsula and much of Borneo from the 7th to the 14th centuries.

Although Muslims had passed through Malaysia as early as the 10th century, it was not until the 14th and 15th centuries that Islam first established itself on the Malayan Peninsular. The adoption of Islam by the 15th century saw the rise of number sultanates, the most prominent of which was the Melaka (Malacca). Islamic culture has had a profound influence on the Malay people, but has also been influenced by them. The Portuguese were the first European colonial powers to establish themselves in Malaysia, capturing Malacca in 1511, followed by the Dutch. However, it was the British, who after initially establishing bases at Jesselton, Kuching, Penang and Singapore, ultimately secured their hegemony across the territory that is now Malaysia. The Anglo-Dutch Treaty of 1824 defined the boundaries between British Malaya and the Netherlands East Indies (which became Indonesia). A fourth phase of foreign influence was immigration of Chinese and Indian workers to meet the needs of the colonial economy created by the British in the Malay Peninsula and Borneo.

Japanese invasion during World War II ended British domination in Malaysia. The subsequent occupation from 1942 to 1945 unleashed nationalism in Malaya and Borneo. In the Peninsula, the Malayan Communist Party took up arms against the British. A tough military response was needed to end the insurgency and bring about the establishment of an independent, multi-racial Federation of Malaya in 1957. On 31 August 1963, the British territories in North Borneo and Singapore were granted independence and formed Malaysia with the Peninsular states on 16 September 1963. Approximately two years later, Singapore was expelled from the Federation. A confrontation with Indonesia occurred in the early-1960s. Race riots in 1969 led to the imposition of emergency rule, and a curtailment of political life and civil liberties which has never been fully reversed. Since 1970 the "National Front coalition" headed by United Malays National Organisation (UMNO) has governed Malaysia. Economic growth dramatically increased living standards by the 1990s. This growing prosperity helped minimise political discontent

Modern Malaysia

In 1970 75 percent of Malaysians living below the poverty line were Malays, the majority of Malays were still rural workers, and Malays were still largely excluded from the modern economy. The government’s response was the New Economic Policy of 1971, which was to be implemented through a series of four five-year plans from 1971 to 1990. The plan had two objectives: the elimination of poverty, particularly rural poverty, and the elimination of the identification between race and prosperity.  This latter policy was understood to mean a decisive shift in economic power from the Chinese to the Malays,  who until then made up only 5% of the professional class.

Poverty was tackled through an agricultural policy which resettled 250,000 Malays on newly cleared farmland, more investment in rural infrastructure, and the creation of free trade zones in rural areas to create new manufacturing jobs. Little was done to improve the living standards of the low-paid workers in plantation agriculture, although this group steadily declined as a proportion of the workforce. By 1990 the poorest parts of Malaysia were rural Sabah and Sarawak, which lagged significantly behind the rest of the country. During the 1970s and ‘80s rural poverty did decline, particularly in the Malayan Peninsula, but critics of the government’s policy contend that this was mainly due to the growth of overall national prosperity (due in large part to the discovery of important oil and gas reserves) and migration of rural people to the cities rather than to state intervention. These years saw rapid growth in Malaysian cities, particularly Kuala Lumpur, which became a magnet for immigration both from rural Malaya and from poorer neighbours such as Indonesia, Bangladesh, Thailand and the Philippines. Urban poverty became a problem for the first time, with shanty towns growing up around the cities.

The second arm of government policy, driven mainly by Mahathir first as Education Minister and then as Prime Minister, was the transfer of economic power to the Malays. Mahathir greatly expanded the number of secondary schools and universities throughout the country, and enforced the policy of teaching in Malay rather than English. This had the effect of creating a large new Malay professional class. It also created an unofficial barrier against Chinese access to higher education, since few Chinese are sufficiently fluent in Malay to study at Malay-language universities. Chinese families therefore sent their children to universities in Singapore, Australia, Britain or the United States – by 2000, for example, 60,000 Malaysians held degrees from Australian universities. This had the unintended consequence of exposing large numbers of Malaysians to life in Western countries, creating a new source of discontent. Mahathir also greatly expanded educational opportunities for Malay women – by 2000 half of all university students were women.

To find jobs for all these new Malay graduates, the government created several agencies for intervention in the economy. The most important of these were PERNAS (National Corporation Ltd.), PETRONAS (National Petroleum Ltd.), and HICOM (Heavy Industry Corporation of Malaysia), which not only directly employed many Malays but also invested in growing areas of the economy to create new technical and administrative jobs which were preferentially allocated to Malays. As a result, the share of Malay equity in the economy rose from 1.5 percent in 1969 to 20.3 percent in 1990, and the percentage of businesses of all kinds owned by Malays rose from 39 percent to 68 percent. This latter figure was deceptive because many businesses that appeared to be Malay-owned were still indirectly controlled by Chinese, but there is no doubt that the Malay share of the economy considerably increased. The Chinese remained disproportionately powerful in Malaysian economic life, but by 2000 the distinction between Chinese and Malay business was fading as many new corporations, particularly in growth sectors such as information technology, were owned and managed by people from both ethnic groups.

Malaysia’s rapid economic progress since 1970, which was only temporarily disrupted by the Asian financial crisis of 1997, has not been matched by change in Malaysian politics. The repressive measures passed in 1970 remain in place. Malaysia has had regular elections since 1974, and although campaigning is reasonably free at election time, it is in effect a one-party state, with the UMNO-controlled National Front usually winning nearly all the seats, while the DAP wins some Chinese urban seats and the PAS some rural Malay ones. Since the DAP and the PAS have diametrically opposed policies, they have been unable to form an effective opposition coalition. There is almost no criticism of the government in the media and public protest remains severely restricted. The ISA continues to be used to silence dissidents, and the members of the UMNO youth movement are deployed to physically intimidate opponents. 

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