Mid-term Review: Second Malaysia Plan

We have been given a glowing review of the Mid-Term performance of the Second Malaysia Plan.

According to the Mid-Term Review, the GNP expanded by 11% annually at current prices during 1971-73. This was brought about by the fortuitous high prices for Malay sia’s export commodities such as rubber, timber, oil, which caused the high growth rate of 20 4% in 1973, in contrast to the moderate expansion in 1971 and 1972 when the GNP gew by 56% and 7.5% respectively.

The Mid-Term Review computes the output in real terms as 6.9% per year, on the basis of an average of 4.1% price increase per year, as compared to the Plan target of 6.8%.

Real per capita income is estimated to have grown by 2.8%, reaching $1,166 in 1973, largely as a result of the exceptionally high growth in 1973.

Such figures and statistics can only be meaningful if the economic gains and increased per capita income have percolated down to all the disadvantaged groups, and not waylaid and siphoned off by the privileged and affluent strata.

Sad to say, there is nothing to show that the New Economic Policy that was launched with fanfare has been any more successful than previous Alliance Five-Year Plans to materially better the lot of the poor masses and bridge the gulf between the haves and have-nots.

The Second Malaysia Plan declares that the overriding objective of the New Economic Policy is the promotion of national unity through the two-pronged strategy of:

(a) eradicating poverty by raising income levels and increasing employment opportunities for all Malaysians, regardless of race;

(b) accelerating the process of restructuring Malaysian society to correct economic imbalance, so as to reduce and eventually eliminate the identification of race with economic function.

Let us appraise the progress that have been made in both these prong.

Eradication of poverty, irrespective of race

After 18 years of Alliance rule, and Four Five-Year Plans, the gulf between the haves and the have-nots have become wider. Although Malaysia boasts of a per capita income of $1,166, 90% of the people in Malaysia are still below this magic figure of $1,166.

The magnitude of the inequalities and maldistribution of income and wealth in Malaysia is graphically presented by Table 1-1 in the Mid-Term Review, which summarises the analysis of information on household incomes, collected in the Post Enumeration Survey of the 1970 Census of Population.

From the Table, it is clear that 27% of West Malaysian families had incomes below $100 per month, 58.5% of West Malaysian families had incomes below $ 200 a month. If we take an average of six persons per house-hold or family, this works out to 58.5% of the persons in West Malaysia having a per capita income of $ 400 per annum, which is only one-third of the $1,166 national per capita income. In other words, over half our population are subsisting at one -third the national per capita income.

It is indeed shocking and completely unacceptable that 16 years after Independence, the top one-tenth of all households accounted for nearly 40% of the total income earned in the economy, while the share of the lowest two-fifths of the households amounted to only about 12% of total income. (Para 5)

If we take into further consideration the living conditions of the poor of Malaysia, their plight is even more pathetic. Thus, Table 1-3 in the Mid-Term Review shows that 16 years after Independence, 52.5% of the households are without piped water, 31 % without adequate toilet facilities and 57% without electricity. Available information indicates that poor nutrition and lack of access to adequate health, housing, education and transportation facilities remain a sizable problem.

The present situation where the lowest 40 per cent of the households account for about 12% of the total income, in sub-human living conditions, is grossly inequitable and absolutely indefensible. It is eloquent proof that the development plans of the last decade and a half had failed to make any dent on Malaysian poverty, but only to make the rich richer.

The eradication of poverty, regardless of race, should be the first item of agenda for the country, and we will like to see this objective vigorously tackled in action, and not merely given lip-service in expensively and beautifully bound Five-Year Malaysia Plans and Mid -Term Reports.

I call on the Prime Minister to immediately instruct his planners to work out a programme whereby within the next 20 years from 1970 to 1990, the lowest 40 per cent of the Malaysian poor families would account for at least 30 per cent of total income, and let us have an initial report of this programme when the Prime Minister comes to winding up this debate next week.

Such a programme will be highly conducive to the promotion of national unity, for poverty is a socio-economic phenomenon associated with those who are unemployed, underemployed and those engaged in low income occupations, whose elimination must be strictly based on Socio-economic considerations.

Any attempt to identify poverty with race, especially by governmental agencies, can only complicate the problem of the eradication of poverty and the retardation of national unity in the country.

I have searched the Mid-Term Review of the Second Malaysia Plan and the Second Malaysia Plan, but I have yet to see concrete action and results in the alleviation and eradication of poverty, regardless of race; apart from the forecast that in 20 years time there will be only 4 % unemployment, to which I will come to later.

Call for radical land reforms to ensure that every padi farmer is an owner-operator of 10 acres of land

In para 9 of the Mid-Term Review, the low incomes of the poor agricultural workers, many of whom are Malays, are attributed to uneconomic sized holdings, agronomically poor or unsuitable plots of cultivation, traditional methods of farming and lack of access to modern agricultural inputs.

I am surprised that it has omitted reference to another basic cause of Malay rural poverty, namely the non-ownership of farms.

The Census of Agriculture of 1960 shows that for that year, $9 percent of all farms were under 4 acres. In the cultivation of rice, 54 percent of the farms were under 2½ acres.

At the same time 80 per cent of these rice farms were not owned by the cultivators.

Further fragmentation into smaller and more uneconomic lots, varying from ¼ acres to 2 acres and sale of land to absentee landlords must have proceeded apace since then as poverty and indebtedness breeds further poverty and indebtedness.

Despite the statement by the Prime Minister in the foreword that we have embarked upon d long-term development strategy to bring about ‘dynamic structural changes’ in our society and economy there have been no basic structural changes in our agrarian economy or basic land reforms to ensure that every farmer tills his own farm.

In the absence of these structural changes in the agrarian economy and basic land reforms, the hundreds of millions of dollars which the government had spent and is still spending,such as the multi-million dollar Muda Irrigation project, can only benefit the absentee landlords while the downtrodden farmers remain poor, landless and exploited.

The Alliance Government has five-year, and now 20-year, targets for all sorts of things. I think it would be more appropriate for the government to institute radical structural and land reforms in the traditional agricultural sector to ensure that by the end of this decade, every padi farmer is a owner-operator of 10 acres and free him from the clutches of the parasitic and unproductive absentee landlords.

Land Development Schemes

I have said in the debate on the Second Malaysia Plan that the problem of landlessness is a pressing one in the country. The landless should be given land, on the condition that they open up and cultivate them without all the formalities and the red tape which attend to them at present.

If we are going to wait for the Felda to spend over $20,000 ona settler, there will never be a solution to the problem of landlessness, for Felda schemes can only touch the surface of this problem.

In this connection, I wish to refer to the Felda achievements in the last three years. Although Felda developed 224,000 acres of land during 1971-1973, representing 81 % of its original Plan target, it settled 8,400 families in its schemes, which is 42% of its target.

We are told that the reason for the shortfall in the settlement of families is caused by the increased size of holdings per settler from 10 acres to 12 acres for rubber and from 10 acres to 14 acres for oil palm.

I would like the Minister concerned to explain the reasons for this revised size of holdings.

Felda as it is could only cope with only a small percentage of the landless in Malaysia, and with the increased size of holdings, it would be able to settle even less landless. Is this revised size of holdings caused by the awareness that the present Felda schemes are already running into difficulties despite the great public capitalisation?

At present, the Felda settlers are blessed with high world prices for their produce, but such boom prices are not eternal. Despite government boasts that every Felda settler will be able to get a monthly income of $300, this has been shown to be at times, more propaganda than reality.

The Mid-Term Review expects a slackening in the demand for Malaysia’s export commodities in the latter part of 1974 and in 1975, following the downswing of the world business cycle, resulting in lower export earnings and lower prices for our main export commodities.

This means that the earnings of the Felda settlers will not be at the present high level, and that the peak may have been reached.

If the world oil crises deteriorates, the world economic downturn will come even faster, and our own Felda settlers will be the sufferers.

Felda cannot break the back of landlessness in Malaysia. Only a radical land reform can do so.

Traditional Urban sector poverty

In the Second Malaysia Plan, the economy was classified into five sectors to show the economic imbalances in income, employment and ownership and control of wealth.

High incomes are enjoyed by the Modern Urban Sector, which comprises technically advanced manufacturing, construction, commerce, utilities, transport, communications and modern services including the professions and the tourist trade.

Medium incomes are enjoyed by the Modern Rural Sector, which comprises esta te agriculture, Felda schemes and double-cropped padi, commercial forestry, modern fishing and modern tin mining; and the Government Sector, which comprises Federal, State and Local Government Administration and Public Authorities as well as the Police and Armed Forces.

Low incomes govern the remaining two sectors, namely the Traditional Urban Sector, which comprises those parts of manufacturing, construction, commerce, transport and services, in which work is done with little benefit from modern equipment or techniques; including small artisans, petty traders, hawkers, small-holders, household servants, trishaw riders, and other persons pursuing a multitude of activities requiring little or no initial skill or training.

The other low income sector is the Traditional Rural Sector, which comprises uneconomic smallholder rubber, single-cropped padi, traditional livestock and other agriculture, gathering of jungle produce, inshore fishing and dulang washing and small gra vel-pump mining for tin.

About 60% of workers in West Malaysia are found in the Traditional Rural Sector and the Traditional Urban Sector.

According to the Second Malaysia Plan, Malays outnumber the non-Malays by a factor of nearly 3 to 1 in the Traditional Rural Sector, but in the Traditional Urban Sector, the position is reversed.

Despite government declarations that.the first prong of its New Economic Policy is to eradicate poverty, irrespe ctive of race, very little has been done in the last three years to eliminate poverty in the Traditional Urban Sector.

The Second Malaysia Plan aims to bring higher incomes, employment, education, housing, health and other social services within the reach of everyone.

Unemployment in the urban areas, especially among youths between the ages of 15-19, remain high. With the widening of the gap between the haves and the have-nots, basic social services have gone beyond the reach of the low income brackets.

A good example is the problem of housing, which constitutes, after food, the main household expenditure.

Housing today is simply beyond the means of the poor and the low-income groups. In Kuala Lumpur, 250,000 people or a quarter of the population continue to live in squatters, slums and hovels.

Prices of houses and land, throughout the country, have shot up by leaps and boun ds, in some areas by several hundred percent.

This is the land of opportunity for the speculators and gamblers, not for the hard-working Malaysians.

In any assault on urban poverty low-cost housing must form a central plank in the strategy of action. But what has the Second Malaysia Plan to offer in terms of low-cost housing?

A separate Ministry for Housing

Paragraph 632 states that during 1971-73, apart from the very substantial number of housing units built by the private sector in Peninsular Malaysia and the States of Sabah and Sarawak, the Government completed 6,357 units of public housing. This works out to 2,119 a year, or about 163 units per state.

This is a paltry figure when we consider the housing needs of the poor. Taking the population increase per year at 2.7%, the annual population increase for West Malaysia will be in the region of 270,000. Giving six to a housing unit, this will work out to some 45,000 houses. From the Table 1-1 on the distribution of household income which I referred to earlier, we can safely say that 80 per cent of the people do not have the capacity to own private sector housing. This will mean that some 35,000 low-cost housing units a year will have to be built if we are to house the рoor in Malaysia, just to meet the annual population increase, without including the big backlog of low-cost housing needs.

The situation has worsened these few years, with the rise in the price of land, building materials, houses, which made many midd le and lower middle income people financially incapable of buying private sector housing.

The government achievements in 1970-1973 of 2,119 houses a year is therefore a mere drop in the ocean.

Paragraph 274 said that public housing construction will be stepped up, with an increased allocation of 39.6% from $172 million to $240 million, to complement the private sector. A further 12,000 low-cost housing units are to be developed by the various government agencies involved.

In the first place, we cannot include private sector housing development in our calculations if we intend to eliminate poverty and squalid living conditions, for the private developers cater to the middle and high income groups.

In the second place, the increase of 39.6% allocation or increased $68 million will have to meet the increased construction costs since 1970, leaving little else for more low-cost housing units.

Thirdly, the allocation of $240 million for 1971-75 for public sector low-cost housing development is clearly too paltry to meet the grave housing needs. I know there are separate allocations for defence and government housing schemes, but these are also too little, and secondly, the houses which the government builds do not benefit the Division Three, Four or IMF workers, but the higher division groups.

Providing jobs, homes and land are the three basic functions of government, and I seriously suggest that further reappraisal of the place of public housing in the Second Malaysia Plan be conducted, and the allocations for low-cost housing should be at least trebled to break the back of housing shortage for the Malaysian poor.

The magnitude and gravity of the housing problem of the poor Malaysians warrants the establishment of a separate Ministry of Housing, and I commend this proposal for consideration by the Prime Minister.

Malacca Hospital deaths

In this Mid-Term Review, we are told that in many services and ministries, there have been over-fulfilment in the expenditure of the allocations made.

I want to stress here that it is a fallacy to think that surpassing the allocations for a particular service means increased service to the people. The standard and quality of a service need not necessarily be improved from over-fulfilment in expenditure of allocations.

The Malacca General Hospital is a good case in point. I understand that every year, the Malacca Hospital administration sends back to the Ministry of Health unspent allocations.

This does not mean that the Malacca General Hospital has more than enough allocations to run an excellent hospital service. On the contrary, the Malacca Hospital has acquired a most infamous reputation for its mismanagement and maladministration.

This is why in a period of one month from July 21 to August 20 this year, some 40 people died of poisoning arising from hospital negligence. Because of the breakdown of the hospital’s autoclave plant- and the gross mismanagement and maladministration of the Medical Superintendent who allowed this state of affairs to go on for a month, routine operations and minor surgeries, like Caesarian cases, ended up in the mortuary. There was one night in early August when the mortuary had not enough places for all the corpses.

As a result of my making public this scandalous affair, the Minister of Health has ordered a departmental inquiry when full house-cleaning should have been conducted to restore the confidence of the people of Malacca in the hospital service.

The administration has not changed, and the hospital management is as deplorable as ever. Only recently, the beam of the ceiling of the maternity clinic in the Malacca Hospital at Church Street collapsed on the examining table. It was fortunate that no patient was being examined at the time, and no one, whether doctor, nurse, staff or patient, was injured or killed.


Paragraph 147 of the Second Malaysia Plan made the laudable statement that in the development process, the government would give greater attention to “ensuring that Malays, other indigenous people and the poor of other races have greater access to higher education in the sciences and other disciplines essential for effective participation in modern activities”. It went on:”More scholarships and bursaries will be made available to these people to pursue courses of study in colleges and universities in Malaysia and abroad. Facilities for higher education will be expanded so that it will be possible for all Malaysians to have access to the kind of education suited to their talents and interests.

The Prime Minister, in his speech introducing this motion yesterday, gave figures to show the expansion in the number of Malay students in our colleges and universities, which he described as “most encouraging.” He said the proportion of Malay students in our Universities has grown from just under 40% in 1970 to 53% in the space of just three years.

As I am still on the first prong, i.e. the eradication of poverty, regardless of race, I will like the government to give a report to this House and the nation as to the progress made in this period to ensuring that “the poor of other races have greater access to higher education.”

If the government is really sincere in wanting to eradicate poverty regardless of race, then it must have these data, for otherwise, how can it control and monitor the progressive war against poverty and backwardness?

How much progress has the government, under the New Economic Policy, succeeded, in the words of the SMP, to make “higher education accessible to Malaysians suited to their talents and interests”?

It is no secret that in the years under review, there has been mounting-I hold no watching brief for the rich non-Malays because they have money to look after themselves because of the growing dimunition of educational opportunities, right up to the university level, although they possess the talents and the interests.

More and more Form Five students are denied pre-University classes or places in local Universities, or technical colleges. They cannot find jobs frustration among the poor of the non-Malays to become useful members of society.

It has oft been declared that the New Economic Policy will be implemented in a way so as to ensure that “no particular group experiences any loss or feels any sense of deprivation.”

Loss or sense of deprivation is created, not only from losing what you have or deprived of what you possess, but also from losing what you rightfully expected to have or deprived of what you had expected to enjoy.

In this case, therefore a student, who from his scholastic records and academic performance, had earned the right to believe that he would be able to proceed upwards through the educational process, and is subsequently denied this opportunity not for academic or scholastic reasons, is a person who has suffered a loss or felt a sense of deprivation.

If we are to succeed in the overriding objective of which the NEP is but an instrument, then the government must deal bravely and firmly with these and other problems.

Every poor Malaysian, regardless of race, who has the intelligence, scholastic ability and inclination, to pursue higher studies and develop his potential talents, so as to lead a fuller and more satisfying life, must be given the opportunity to do so. The reason is, if I may borrow the exact words of the Prime Minister in a different context, in his speech in moving this motion yesterday: “Fundamentally because it is the right and just thing to do so.”

I will be dealing with the other prong concerning the restructuring of society a while later. It is more unfortunate, however, that under the New Economic Policy, the problem of poverty and backwardness is treated in such thick racial terms, whereas it would be more correct, effective and in the long term, in the greater national interest, to handle it as a problem of classes rather than as a problem of races.

The Prime Minister, when moving this motion yesterday, said: “Let me state categorically that it is not our intention to transform the present racial imbalances of the Malays and other indigenous people into future imbalances which operate against other Malaysians which will be equally undesirable.”

I will take the Prime Minister at his word, but he will have to give substance to this assurance, and demonstrate through government policies and actions that the poor non-Malays have no reasons to fear for the morrow, and that they will not be penalised, whether in economics, education or other field of national life, either because of the wealth of a small percentage of non-Malay rich, or because they are not Malay poor. For otherwise, it will be the non-Malay poor who will be the losers on both counts. Whatever action is taken by the NEP will not affect materially the wealthy non-Malays, for firstly, they will enjoy political patronage, and secondly, they have the money’ to rise above these handicaps.

I will be dishonest if I do not say that the government has a long way to go to assure all Malaysians that under the New Economic Policy, there will be a place for every Malaysian in Malaysia.

I will give an instance. Thus, the Second Malaysia Plan talks of the special importance to rural dwellers of new secondary schools which emphasies science and technology. The Prime Minister mentioned yesterday that 10 residential schools have been built to provide intensive training for rural students in science, technical and vocational education.

But what does the government mean by rural students or rural people? Does it mean all those who live in the rural areas? Or is it some form of double-talk meaning only the Malays?

If the government is serious in its intent about the eradication of poverty, then it must mean rural students regardless of race.

The Mid-Term review reports that in the rural areas, the Malays comprise 65 per cent and the non-Malays 35%. This should be reflected in the student population in such residential schools. I hope the Minister concerned will be able to make a clarification on this.

It is important that the government, in implementing the New Economic Policy, must be able to match its words with deeds.

Table 11-4 provide figures of enrollments in tertiary education, for the years 1970-73.

For those taking university degree courses in the five Malaysian universities, for the year 1970, there were 3,237 Malays, 4,009 Chinese, 595 Indians, 307 others, making a total of 8,148 total undergraduates. For 1973, there are 6,188 Malays, 4,565 Chinese, 907 Indians, 89 others, making a total of 11,749.

This means that for 1970-73, Malay university students increasel by 2,951 or an increase of 89%, Chinese undergraduates by 556 or 14 percent increase, Indians by 312 or 69 percent.

These figures vividly explain the widespread feeling of uncertainty, insecurity and frustration among the Chinese about the educational future for their children.

Let me make myself clear. I, and for that matter, no one in the country grudge or oppose the doubling of the number of Malay undergraduates from 1970-73. However, this must not be done at the expense of denying to non-Malay studen ts opportunities for tertiary education.

This means that the government must allocate more funds for university places. Although this means a bigger bill for higher e ducation, in terms of nation-building, the cost is worth it – for the altermative is festering discontent and disunity in the country.

To assist the government in lightening the burden of higher education, the govemment should encoura ge private universities and colleges to be set up.

New Villages

I am glad, on reading the Mid-Term Review, to find that the Alliance Government has rectified the grave omission of the plight of the new villagers and estate and mining workers.

There was not a word of reference to either the new villagers or the estate and mining workers in the Second Malaysia Plan. We in the DAP championed their cause in Parliament, and although we were accused of all sorts of things in Parliament for doing so, and all these vituperation are in the Hansards – the government has received the message.

This was why the Ministry of New Villages was created, although devoid of powers, funds or man power to better the lot of the new villagers.

Up to now, the 750,000 new villagers have not benefitted, whether in terms of land for the new village landless, homes or jobs, and improved social and education al amenities and facilities. Only MCA politicians have benefited from the new village misery as it means a Ministerial post for one of them.

The Alliance government should cease to use the new village problem as a political football, but get down to the task of drawing up a blueprint for the comprehensive revolution of Iife in the new villages, give land to the landless, jobs to the jobless through dispersal of industries and the urbanisation of the new villages, homes for the homeless through a crash low-cost housing programme, and the provision and improvement of social, educational and cultural amenities an d facilities for all new villages.

Estate and Mining Sector

The Mid-Term Review gives half a paragraph to the plight of the workers in estates and mines.

One of the biggest problems facing estate workers is the problem of retrenchment. The Second Malaysia Plan, states that in 1962-1967 alone, some 54,000 workers, nearly 20 % of the estate work force, were displaced from the rubber estates.

In paragraph 97, of the Mid-Term Review, we are told that about 11,000 during 1971-73 were laid off from the rubber estates.

One of the saddest chapters in recent Malaysian history is the complete indifference of the Alliance government to the plight of the retrenched estate workers, of not taking the initiative and responsibility of drawing up a programme in association with the estate managements to re train or find alternative employment for the retrenched workers.

This is not a ne w problem, but a long outstanding one. Thus, in the 1967-1968 Socio-Economic Household Survey, it is reported that although the unemployment rate in terms of the labour force for each of the major races in Malaysia, namely Malays, Chinese and Indians was practically the same, vi. 6.0% in 1962, by 1967, this pattern has change d and the increase in unemployment has been mostly concentrated among the Chinese and Indians. In fact, by 1967, the unemployment rate among the Malays went down from 6.0% to 5.8 %, while that for the Chinese went up from 6% to 6.9% and the Indians from 6% to 10.3 %.

Since then, according to the Mid- term Review, “unemployment among Indians has worsened considerably” standing at 11% in 1970, and considerably higher today.

Further retrenchments in the rubber estate sector will continue in future, partly because of reduction in rubber estate acreage due to conversion to oil palm which requires less labour, and efforts by estates to introduce cost savings in production, so as better to compete with synthetic rubber.

According to one research study, longer cuts tapped every fourth day will, with particular clones, produce as much yield as cuts of half the length tapped every second day. This approach, if adopted widely on estates, will reduce tapping labour by at least 33 percent.

Experiments on the application of yield stimulan ts, such as prolonging the latex flow for several days instead of the usual 2-3 hours, will further reduce the labour input in tapping very considerably.

Substantial re trenchments in the rubber estate sector is therefore to be expected.

The government should appoint a task force to specially look into the grave socio-economic problem of the increasing displacement of estate workers, to find alternative means of livelihood for them


The Mid-Term Review reported that some 350,000 new jobs have been created during 1971-73, or 58% of the Five Year Plan target of 596,000 jobs in 60% of the Plan period.

The Govemment is confident that further 250,000 jobs will be created in 1974 and 1975, making a total of 600, 000 new jobs, bringing the rate of unemployment from 7.5 % to 7%.

The Alliance has persistently in the past under-estimated the level of unemployment, and it is for this reason that we must take the Mid-Term Review employment figures with caution and a pinch of salt.

The Alliance record of job creation has not been very successful. From the government’s own figures, the incidence of unemployment in Malaysia has risen from 2% in 1957 to 6.1% in 1965 (SMP) to an estimated 7.3 in 1970. (SMP) (Table 7-2).

Now we are told that revisions of Second Malaysia Plan figures are necessary, raising the unemployment rate in 1970 to 7.5%, and claiming that by 1975 the unemployment rate will be brought down to 7%, (Table 2-3 Review) instead of the original Plan target of holding the unemployment rate to 7.3%.

In the first place, the Government has been in the habit of juggling with figures whenever it suits them, without giving cogent reasons for revision of figures and data.

Thus a study of the First and Second Malaysia Plan shows that they give different employment levels for 1965 for the manufacturing sector. The First Malaysia Plan, page 53, for instance gave the following figures:

1965 (Actual) Projected for 1970 Projected increase
173000 jobs 209000 jobs 36000 jobs

For the Second Malaysia Plan, page 98, the figures are:

1965 (Actual) 1970 (Actual) Projected increase
217000 jobs 270000 jobs 53000 jobs

There is thus a big difference between the two sets of figures for 1965 base year to the tune of 44,000 which is bigger than the projected increase.

Although I raised this discrepancy in the debate on the Second Malaysia Plan in July 1971, no satisfactory explanation has been given, apart from the remark by the Prime Minister that different statistical surveys have given different figures.

I submit this explanation is not good enough, and cannot dispel the impression that figures are mere instruments to back up the government’s case.

There are other reasons to be cautious about the government’s optimistic figures.

Firstly, the actual state of unemployment is really more serious than that indicated by the unemployment figures. The ‘unemployed’, in the government’s definition, refers only to the actively unemployed i.e. ‘persons who are without work but are actively looking for work, and capable of accepting a job, if offered one.” (p. 27 Mid-Term Review)

The passively unemployed, that is, those who are not actively looking for work but will accept work if offered, has not been included. If this category of the unemployed were to be included then the overall incidence of unemployed in Malaysia would be considerably higher.

Take for example the situation in 1967-68. The total number of passively unemployed was 55,700, which constituted 2.2 percent of the total labour force. If this category of unemployment were included then the overall incidence of unemployment in West Malaysia 1967-68 would be 9 percent and not 6.8 percent, as is used by the government.

Furthermore, in the government’s definition, the ’employed’ includes the under-employed and those who work less than full time.

Underemployment is a very grave problem in Malaysia, The Economic Planning Unit in a 1967 study estimates that 25 per cent of all the agri cultural workers in West Malaysia are under-utilized to the point of being unemployed.

Secondly, it is worth noting that the Government is very brave in projecting employment achievements for 1971-73 when 1973 has not ended.

In actual fact, Malaysia has not achieved 350,000 jobs in 1971-73, but hopes to achieve this target.

We know from painful experience that hopes and reality can be very different things.

It is fortunate that we are debating the Mid-Term Review during boom prices for our export commodities, and higher levels of employment caused by them as the Malaysian economy is still very de pendent on the world economy.

But we must not be complacent and regard the present boom prices and high level of employment would be able to sustain for long.

In fact, the Second Malaysia Plan Mid-Term Review itself fore cast a downturn in world economic activity in the latter part of next year.

This may come faster, if the world oil crisis leads to decline in world economy and depression.

When this happens, regardless of whether we are a favoured Arab nation with regard to oil supply, our export commodities will face an unprecedented slump, prices will collapse, our industries will suffer, and unemployment will rise steeply.

When this happens, we will have to deal not only with rampant unemployment, but also with the 100,000 Malaysians who are now working in Singapore, for Singapore would also not be able to escape from the consequences of world depression.

Already the leaders of Singapore are warning their people to be prepared for lean times ahead, and the possibility of a decline in her industrial output, a layoff of workers and an increase in unemployment.

The government should therefore work out contingency plans, especially to provide jobs to the unemployed and the lay-offs, in such an eventuality, and study ways and means as to how the Malaysian workers now working in Singapore can be gainfully employed when they are forced to return by economic depression in Singapore.

We are probably reaching the peak of boom prices for our main export commodities, and responsible government leaders must not lead the people to live in euplhoria believing that such good times will last forever


It is fortunate that at a time when Malaysia is facing the worst inflation in history, our export commodities can fetch some boom prices in the world market.

I shudder to think what grave social consequences we would have to face if coupled with galloping inflation, we have a slump for our export commodities and mass unemployment.

Yet such times may not be far away.

However, although the high prices of our export commodities had in some way cushioned the effects of inflation to the low and fixed-income groups, the effects have been crippling.

In the last three years, inflation has become the most outstanding problem for the people of Malaysia. Price increases of all goods keep chasing one after another, some shooting up by more than 100% increase, while the purchasing power of the Malaysian dollar in the hands of the house wives and consumers continue to fall.

Inflation is highly inequitable and unjust as it bears heavily on those getting low and fixed incomes, thus widening the gap between the haves and have-nots.

It is regrettable but true that for the last three years, the Alliance Government has failed to work out an effective strategy to fight inflation.

The Alliance Government appeared to be completely helpless in the face of rising prices for all consumer products. In actual fact, it will be more correct to say that the Government does not have the will or determination to combat inflation. This is because while the majority of the people suffer from price inflation, there is a tiny minority which makes huge ‘windfall profits from it. And it is this tiny minority of people who have traditionally formed the financial backbone of the ruling party.

Inflation can be brought under control, not by words, statements and assurances, but only by firm and purposive government action.

I suggested yesterday the formation of a Prices Tribunal to check unjustified price increases. I would like to go further today and suggest the institution of a Fair Prices Tribunal.

The Fair Prices Tribunal should have power to investigate into the validity of any price increase, by calling up the manufacturer or importer, or hearing representations from consumers or consumer associations.

Every price increase must be notified to the Fair Prices Tribunal In advance. The Fair Prices Tribunal should have power not only to investigate into the legitimacy of any proposed price increase, but also whether existing prices are fair.

The Government wants to build a Masyarakat Adil, and this must mean that manufacturers, importers and distributors should not make unconscionable profits at the expense of the helpless consumers.

The Fair Prices Tribunal must conduct its proceedings in public and publicise the list of prices which it has investigated and ascertained to be fair. Wide distribution of such lists will go a long way to counter profiteering.

In cases of unconscionable price increases or price fixing, the Tribunal must have the power to make an order ruling against it, backed up with enforcement powers.

During the question hour yesterday, the Prime Minister denied that the government’s indirect taxation, especially the Sales Tax, has anything to do with inflation.

The Prime Minister’s statement is in variance with the expert views of government economists. Thus the Bank Negara Report for 1972, page 91, states that inflation in Malaysia is partly caused by government’s fiscal policies aimed at raising revenue and the protection of domestic industries.

The tariff protection given to domestic industries has ended up inmaking the consumers the captive victims of some favoured local manufacturers.

Recently, a glass factory in Shah Alam had barely commenced production when the government clamped down on imported glass, causing the prices to shoot up.

The government must cause a thorough review of its taxation measures and dismantle those which are highly inflationary in effect.

The Sales Tax should be abolished immediately, and I hope that this will be announced during the budget speech of the Finance Minister of Dec 5. Tariff protection to inefficient industries should be removed and imports restrictions lifted to help the poor of Malaysia tide over the difficult period.

The government’s COLA or special allow ance payment cannot do much to help the low income combat inflation.

Only last week, the pres5 reported rental increases from $20 to $80 for houses in Petaling Jay a for the new year. Such special allowance or COLA given by private sectors will not be able to meet the rental increases, let alone restore the purchasing power which they lost the last three years.

In this connection, the government should order a freeze on rentals in non rent-controlle d premises as one immediate measure to bring down the cost of living.

Two other steps which the government should consider in the fight against inflation are:

  1. Cutting down all waste and in efficiency in the government departments, and halt all unproductive and prestigious expenditures. Trips by MPs and State Assemblymen on pleasure trips abroad should be banned.
  2. Increase the overall economic productivity in both the public and private sectors to help stabilise prices and check inflation.

To ensure that workers in Malaysia have a place in Masyarakat Adil, the government should introduce legislation to enforce a minimum subsistence wage for every worker.

Restructuring of Malaysian society

The second prong of the NEP is to accelerate the process of restructuring Malaysian society to correct econ omic imbalan ce, so as to reduce and eventually eliminate the identification of race with economic function.

It is vital that if this second prong is to be accepted by all Malaysians that this should not be se en as a racial programme to the benefit of one race only. Even more important, it should not be seen as a programme not to benefit one race, but one small class of it.

(a) That it is not a racial programme

(i) Felda schemes: Felda has settled 29,000 families up till the end of 1973, but they are overwhelmingly weighted towards one racial group.

If we do not want to perpetuate the identification of one ethnic group with a particular vocation, should we not make real efforts to get non-Malays into agricultural schemes participating together with Malays?

Tan Sri Ghazalie Shafie, in his speech to the South East Asta Study Group on Cultural Relations for the Future in Kuala Lampur on Jun 17, 1971, expounded the strategy of decompartmentalisation as the road to build a new Malaysia.

But in settling Felda schemes with participants predominantly from one racial group, this is not to de-compartmentalise but further compartmentalise the various racial groups.

I will like to know whether the Felda schemes is part of the government strategy and instrument to restructure Malaysian society and break down the identification of race with economic function. If so, then I seriously suggest that the se ttlement policy be modified in the light of the aspirations of the NEP, and its settlement should re flect, if not the national population, at least the rural population, which is 65 % Malays and 35% non Malays.

If the Felda schemes, which involve a big chunk of public expenditure is to be excluded from the second-prong objective of the NEP, I would like to know why.

(ii) Armed forces: In pursuance of the government objective to restructure society and end the identification of race with vocation, determined efforts must be made to restructure the armed forces. This is particularly important, for Malaysia is a multi-racial society and its defence and protection should be the shared duty of all Malaysians.

(iii) Nurses recruitment: In September, the Public Services Commission released figures of recruitment of nurses and assistant nurses.

Thus, in the recruitment exercise for nurses in July/August 1972, out of a total of 407 nurses recruited, 362 were Malays and 81 non-Malays. This works out to a percentage intake of 80.1% for Malays an d 19.9% for non-Malays.

In the nurses recruitment exercise in September this year, the racial imbalan ce is even greater. Thus out of a total of 690 persons recruited, 606 were Malays and 84 non-Malays, or percentage wise, 87.8% Malay intake (as compared to 80.1% Malay intake the previous year) and 12.2% non-Malay intake (as compared to 19.9% in take the previous year).

The figures con cerning assistant nurses are equally disappointing, and at variance with the New Economic Policy objective of reflecting the racial population in the country in every sector of employment.

These are three of many other possible instances where the government must change its policy to show to the Malaysians that its programme to restructure society and end the idenification of race with vocation or economic function is not a racial programme, but involves the restructuring of all groups of Malaysians. I would like to have progresses reports in restructuring these arenas.

(b) That it is not to benefit the rich Malays only

What has sometimes made the New Economic policy to restructure society highly objectionable is the fact that this is used to benefit not the poor, have-not Malays but the rich Malays.

(i) Scholarships and buraries: Many scholarships and study awards are monopolised by children of well-to-do Malay families, depriving deserving Malay pupils from poor families of a chance to be tter themselves.

In fact. this is one reason why the Vice Chan cellor of the Universiti Malaya, Professor Ungku Aziz, proposed a revolving student loan fund, which I hope the govemment will give urgent consideration and approval.

(ii) Taxi licences

Taxi and other transport licences are given out to Malays who hard connections and strings to pull to defeated Alliance candidates, while the genuine taxi drivers are deprived of them.

Many Malays with proper connections with the Communications Ministry possess not one, but several taxi licences. They do not drive a single taxi, but rent out their licences, spawning a parasitic, unproductive class of Malays at the expense of both the poor Malays and non-Malays under the pretext of restructuring society. The taxi operators are exploited regardless of whether he is Malay or non-Malay.

(iii) Land, timb er and mining concessions

The sorry tale of state-sponsored middle men as mentioned with regard to taxi and other transport licences repeat itself in the granting of land, forest and mining concessions. It is the rich and well-to-do and well-connected who are given, while the genuinely poor Malays do not benefit

(iv) Reservation of private housing to Malays

Private housing developers are now required by some State Governments to reserve 30 per cent of their houses for Malays at 15% discount.

What will happen is that this 15% discount would not be absorbed by the developer, but would be passed on to the non-Malay purchaser.

The net result would be that the 70 per cent non-Malay purchasers would have to suhsidise the 30% Malay purchasers by 15% of their property value.

In the majority of these private housing schemes, the well to-do Malays would book these reserved houses, and the net result is that the poorer non- Malay house purchase rs would have to subsidise the house purchase of better off Malay house purchasers.

I do not think that this system will create goodwill and harmony in any housing estate.

I am not opposed to reserving a percentage of housing for Malays in every housing estate, or in helping the Malays to own houses at subsidized rates.

The subsidising of Malay home purchases in private housing estates must be borne directly by the government or government agency.

20-year perspective plan

In the debate on the Second Malaysia Plan on 14th July 1971, I said that statements like the target within 20 years to ensure that the Malays and the other indigenous people will manage and own at least 30 % of the total commercial and industrial activities in all categories and scales of operation is only meaningful if we know how much the Malays, the non-Malays, the foreigners own at present, and the estimate the Government has made of “commercial and industrial activities” in 20 years’ time. I had then asked for figures, but they were not forthcoming when the Ministers came to winding up.

Apparently, the question got the government to find the answer, and the result is the 20 years’ perspective plan.

The Prime Minister in his speech yesterday said that the government’s targets by 1990 are as follows:

– the Malays and other indigenous people will own 30% of all share capital;
– Other Malaysians will own 40% or nine times more than what they held in 1970;

Foreign investment will account for 30% of the total or five times than the absolute level in 1970.

The Prime Minister did not say by how many times more the Malays will have to increase their 1970 share capital if they are to achieve the 30% target. From my calculations the Malays must increase by 140 times what they own at present to reach this objective.

Reading the Chapter on the 20 year Perspective Plan, I am reminded of the inaugural Tun Abdul Razak lecture delivered by Professor Martin Bronfenbrenner in Kuala Lumpur on January 26 this year.

Professor Bronfenbrenner classifies Malaysian planning as a hybrid of indicative planning and exhortative planning, and more latter than former.

By exhortative planning, Professor Bronfenbrenner says it is “really little more than futurology” where “past trends are either extrapolated or modified in favourable directions and results are called projections and targets.”

I think it will be apt to describe the 20 year perspective plan as the flight into futurology. This is probably because the Mid-Term Review is written primarily with an eye to the next elections.

I do not think it is going to be very fruitful to turn the Dewan Rakyat into a forum for futurology.

(Speech by Ketua Pembangkang and DAP member of Parliament for Bandar Melaka, Lim Kit Siang, in the Dewan Rakyat on debate on Mid-Term Review of Second Malaysia Plan on November, 27, 1973)