They launched a smear campaign against the PAP, accusing Lee and his government of mistreating the Malays in Singapore, and depriving them of the special rights enjoyed by their counterparts in Malaysia. The extremists used inflammatory language and appeals in Malay newspapers and rallies to stir up anti-PAP sentiment within the Malay community in Singapore. The accusations escalated until they erupted into racial violence in Singapore on 21 July and 2 September Tunku Abdul Rahman, who had become the Malaysian prime minister, was pressed to intervene to avoid a repeat of the communal clashes that had taken place in He communicated this to his deputy, Tun Abdul Razak, who was instructed to lay down the groundwork for separation.
Negotiations over the separation were conducted in complete secrecy. Barker at the end of July, along with other legal documents such as the Proclamation of Independence. Rajaratnam signed the document on 7 August. During the press conference, Lee explained the inevitability of separation despite his long-standing belief in the merger, and called on the people to remain resolute and calm.
From NewspaperSG 2. Call no. RSING A History of Singapore , ed. Ernest C. Lau, Moment of Anguish , 2. From NewspaperSG Lau, Moment of Anguish , 3—4. From National Archives of Singapore, document no. Lau, Moment of Anguish , Lau, Moment of Anguish , 10— Lee, Battle for Merger , — Straits Times , 28 May , 1.
Lau, Moment of Anguish , 12— RCLOS Lau, Moment of Anguish , 14— Gordon P. From NewspaperSG ; Singapore. Ministry of Culture, Merger Plan.
Printer, , — Lee, Battle for Merger , Lee, Battle for Merger , 62—63; Singapore. The driving force came from the Industrial Revolution in the West which saw the innovation of large scale factory production of manufactured goods made possible by technological advances, accompanied by more efficient communications e.
Industrializing countries required ever-larger supplies of raw materials as well as foodstuffs for their growing populations. Regions such as Malaysia with ample supplies of virgin land and relative proximity to trade routes were well placed to respond to this demand. What was lacking was an adequate supply of capital and wage labor. In both aspects, the deficiency was supplied largely from foreign sources.
As expanding British power brought stability to the region, Chinese migrants started to arrive in large numbers with Singapore quickly becoming the major point of entry. Most arrived with few funds but those able to amass profits from trade including opium used these to finance ventures in agriculture and mining, especially in the neighboring Malay Peninsula.
Crops such as pepper, gambier, tapioca, sugar and coffee were produced for export to markets in Asia e. China , and later to the West after when Britain moved toward a policy of free trade. These crops were labor, not capital, intensive and in some cases quickly exhausted soil fertility and required periodic movement to virgin land Jackson, Besides ample land, the Malay Peninsula also contained substantial deposits of tin.
International demand for tin rose progressively in the nineteenth century due to the discovery of a more efficient method for producing tinplate for canned food. At the same time deposits in major suppliers such as Cornwall England had been largely worked out, thus opening an opportunity for new producers.
Traditionally tin had been mined by Malays from ore deposits close to the surface. Difficulties with flooding limited the depth of mining; furthermore their activity was seasonal. From the s the discovery of large deposits in the Peninsula states of Perak and Selangor attracted large numbers of Chinese migrants who dominated the industry in the nineteenth century bringing new technology which improved ore recovery and water control, facilitating mining to greater depths.
By the end of the century Malayan tin exports at approximately 52, metric tons supplied just over half the world output. Singapore was a major center for smelting refining the ore into ingots. Tin mining also attracted attention from European, mainly British, investors who again introduced new technology — such as high-pressure hoses to wash out the ore, the steam pump and, from , the bucket dredge floating in its own pond, which could operate to even deeper levels.
These innovations required substantial capital for which the chosen vehicle was the public joint stock company, usually registered in Britain. Since no major new ore deposits were found, the emphasis was on increased efficiency in production. European operators, again employing mostly Chinese wage labor, enjoyed a technical advantage here and by accounted for 61 percent of Malayan output Wong Lin Ken, ; Yip Yat Hoong, While tin mining brought considerable prosperity, it was a non-renewable resource.
In the early twentieth century it was the agricultural sector which came to the forefront. The crops mentioned previously had boomed briefly but were hard pressed to survive severe price swings and the pests and diseases that were endemic in tropical agriculture.
The cultivation of rubber-yielding trees became commercially attractive as a raw material for new industries in the West, notably for tires for the booming automobile industry especially in the U.
Previously rubber had come from scattered trees growing wild in the jungles of South America with production only expandable at rising marginal costs. Cultivation on estates generated economies of scale. In the s the British government organized the transport of specimens of the tree Hevea Brasiliensis from Brazil to colonies in the East, notably Ceylon and Singapore. There the trees flourished and after initial hesitancy over the five years needed for the trees to reach productive age, planters Chinese and European rushed to invest.
The boom reached vast proportions as the rubber price reached record heights in see Fig. Average values fell thereafter but investors were heavily committed and planting continued also in the neighboring Netherlands Indies [Indonesia].
By the rubber acreage in Malaysia mostly in the Peninsula had reached hectares about 1. A distinctive feature of the industry was that the technology of extracting the rubber latex from the trees called tapping by an incision with a special knife, and its manufacture into various grades of sheet known as raw or plantation rubber, was easily adopted by a wide range of producers.
The larger estates, mainly British-owned, were financed as in the case of tin mining through British-registered public joint stock companies. For example, between and some companies were registered to operate in Malaya. Chinese planters for the most part preferred to form private partnerships to operate estates which were on average smaller.
These smallholders did not need much capital since their equipment was rudimentary and labor came either from within their family or in the form of share-tappers who received a proportion say 50 percent of the output. In Malaya in roughly 60 percent of the planted area was estates 75 percent European-owned and 40 percent smallholdings Drabble, , 1.
The workforce for the estates consisted of migrants. British estates depended mainly on migrants from India, brought in under government auspices with fares paid and accommodation provided. The flow of immigration was directly related to economic conditions in Malaysia. For example arrivals of Indians averaged 61 a year between and Substantial numbers also came from the Netherlands Indies.
Thus far, most capitalist enterprise was located in Malaya. Sarawak and British North Borneo had a similar range of mining and agricultural industries in the 19 th century. However, their geographical location slightly away from the main trade route see map and the rugged internal terrain costly for transport made them less attractive to foreign investment.
However, the discovery of oil by a subsidiary of Royal Dutch-Shell starting production from put Sarawak more prominently in the business of exports. As in Malaya, the labor force came largely from immigrants from China and to a lesser extent Java. The growth in production for export in Malaysia was facilitated by development of an infrastructure of roads, railways, ports e.
Penang, Singapore and telecommunications under the auspices of the colonial governments, though again this was considerably more advanced in Malaya Amarjit Kaur, , By the s the large inflows of migrants had created a multi-ethnic population of the type which the British scholar, J. Furnivall described as a plural society in which the different racial groups live side by side under a single political administration but, apart from economic transactions, do not interact with each other either socially or culturally.
Though the original intention of many migrants was to come for only a limited period say years , save money and then return home, a growing number were staying longer, having children and becoming permanently domiciled in Malaysia.
The economic developments described in the previous section were unevenly located, for example, in Malaya the bulk of the tin mines and rubber estates were located along the west coast of the Peninsula. In the boom-times, such was the size of the immigrant inflows that in certain areas they far outnumbered the indigenous Malays. In social and cultural terms Indians and Chinese recreated the institutions, hierarchies and linguistic usage of their countries of origin.
This was particularly so in the case of the Chinese. Not only did they predominate in major commercial centers such as Penang, Singapore, and Kuching, but they controlled local trade in the smaller towns and villages through a network of small shops kedai and dealerships that served as a pipeline along which export goods like rubber went out and in return imported manufactured goods were brought in for sale.
In addition Chinese owned considerable mining and agricultural land. This created a distribution of wealth and division of labor in which economic power and function were directly related to race. In this situation lay the seeds of growing discontent among bumiputera that they were losing their ancestral inheritance land and becoming economically marginalized. As long as British colonial rule continued the various ethnic groups looked primarily to government to protect their interests and maintain peaceable relations.
An example of colonial paternalism was the designation from of certain lands in Malaya as Malay Reservations in which only indigenous people could own and deal in property Lim Teck Ghee, Prior to World War II the international economy was divided very broadly into the northern and southern hemispheres. The former contained most of the industrialized manufacturing countries and the latter the principal sources of foodstuffs and raw materials.
Since relatively little processing was done on the former prior to export, most of the value-added component in the final product accrued to foreign manufacturers, e. It is clear from this situation that Malaysia depended heavily on earnings from exports of primary commodities to maintain the standard of living. Rice had to be imported mainly from Burma and Thailand because domestic production supplied on average only 40 percent of total needs.
As long as export prices were high for example during the rubber boom previously mentioned , the volume of imports remained ample. Profits to capital and good smallholder incomes supported an expanding economy.
However, the international economy was subject to strong fluctuations. The levels of activity in the industrialized countries, especially the U. Almost immediately following World War I there was a depression from Strong growth in the mid and lates was followed by the Great Depression As industrial output slumped, primary product prices fell even more heavily. For example, in rubber sold on the London market for about one one-hundredth of the peak price in Fig.
The aggregate value of imports fell on average by 60 percent. Estates dismissed labor and since there was no social security, many workers had to return to their country of origin. Smallholder incomes dropped heavily and many who had taken out high-interest secured loans in more prosperous times were unable to service these and faced the loss of their land.
The colonial government attempted to counteract this vulnerability to economic swings by instituting schemes to restore commodity prices to profitable levels. For the rubber industry this involved two periods of mandatory restriction of exports to reduce world stocks and thus exert upward pressure on market prices.
The first of these named the Stevenson scheme after its originator lasted from 1 October 1 November , and the second the International Rubber Regulation Agreement from 1 June Tin exports were similarly restricted from While these measures did succeed in raising world prices, the inequitable treatment of Asian as against European producers in both industries has been debated.
Malaysia had very few secondary industries before World War II. The little that did appear was connected mainly with the processing of the primary exports, rubber and tin, together with limited production of manufactured goods for the domestic market e.
Much of this activity was Chinese-owned and located in Singapore Huff, Among the reasons advanced are; the small size of the domestic market, the relatively high wage levels in Singapore which made products uncompetitive as exports, and a culture dominated by British trading firms which favored commerce over industry. Overshadowing all these was the dominance of primary production. When commodity prices were high, there was little incentive for investors, European or Asian, to move into other sectors.
Conversely, when these prices fell capital and credit dried up, while incomes contracted, thus lessening effective demand for manufactures. During the Japanese occupation years of World War II, the export of primary products was limited to the relatively small amounts required for the Japanese economy.
This led to the abandonment of large areas of rubber and the closure of many mines, the latter progressively affected by a shortage of spare parts for machinery. Businesses, especially those Chinese-owned, were taken over and reassigned to Japanese interests.
Rice imports fell heavily and thus the population devoted a large part of their efforts to producing enough food to stay alive. Large numbers of laborers many of whom died were conscripted to work on military projects such as construction of the Thai-Burma railroad.
Overall the war period saw the dislocation of the export economy, widespread destruction of the infrastructure roads, bridges etc. It also saw a rise in inter-ethnic tensions due to the harsh treatment meted out by the Japanese to some groups, notably the Chinese, compared to a more favorable attitude towards the indigenous peoples among whom Malays particularly there was a growing sense of ethnic nationalism Drabble, The returning British colonial rulers had two priorities after ; to rebuild the export economy as it had been under the OIDL see above , and to rationalize the fragmented administrative structure see General Background.
The first was accomplished by the late s with estates and mines refurbished, production restarted once the labor force had been brought back and adequate rice imports regained. The bargain was institutionalized as the Alliance, later renamed the National Front Barisan Nasional which remains the dominant political grouping.
In the Federation of Malaysia was formed in which the bumiputera population was sufficient in total to offset the high proportion of Chinese arising from the short-lived inclusion of Singapore Andaya and Andaya, Postwar two long-term problems came to the forefront. These were a the political fragmentation see above which had long prevented a centralized approach to economic development, coupled with control from Britain which gave primacy to imperial as opposed to local interests and b excessive dependence on a small range of primary products notably rubber and tin which prewar experience had shown to be an unstable basis for the economy.
The first of these was addressed partly through the political rearrangements outlined in the previous section, with the economic aspects buttressed by a report from a mission to Malaya from the International Bank for Reconstruction and Development IBRD in The rationale for the Federation was that Singapore would serve as the initial center of industrialization, with Malaya, Sabah and Sarawak following at a pace determined by local conditions.
The second problem centered on economic diversification. The IBRD reports just noted advocated building up a range of secondary industries to meet a larger portion of the domestic demand for manufactures, i. In the interim dependence on primary products would perforce continue. Each of the Malaysian territories had plans during the s. Malaya was the first to get industrialization of the ISI type under way. The Pioneer Industries Ordinance offered inducements such as five-year tax holidays, guarantees to foreign investors of freedom to repatriate profits and capital etc.
A modest degree of tariff protection was granted. The main types of goods produced were consumer items such as batteries, paints, tires, and pharmaceuticals. Just over half the capital invested came from abroad, with neighboring Singapore in the lead. Primary production, however, was still the major economic activity and here the problem was rejuvenation of the leading industries, rubber in particular. New capital investment in rubber had slowed since the s, and the bulk of the existing trees were nearing the end of their economic life.
However, the new trees required seven years to mature. Corporately owned estates could replant progressively, but smallholders could not face such a prolonged loss of income without support. To encourage replanting, the government offered grants to owners, financed by a special duty on rubber exports.
The process was a lengthy one and it was the s before replanting was substantially complete. Moreover, many estates elected to switch over to a new crop, oil palms a product used primarily in foodstuffs , which offered quicker returns.
Progress was swift and by the s Malaysia was supplying 20 percent of world demand for this commodity. Another priority at this time consisted of programs to improve the standard of living of the indigenous peoples, most of whom lived in the rural areas. Financial assistance repayable was provided to cover housing and living costs until the holdings became productive.
Rubber and oil palms were the main commercial crops planted. Steps were also taken to increase the domestic production of rice to lessen the historical dependence on imports. The markets were mainly in East Asia and Australasia. Here the largely untapped resources of Sabah and Sarawak came to the fore, but the rapid rate of exploitation led by the late twentieth century to damaging effects on both the environment extensive deforestation, soil-loss, silting, changed weather patterns , and the traditional hunter-gatherer way of life of forest-dwellers decrease in wild-life, fish, etc.
Other development projects such as the building of dams for hydroelectric power also had adverse consequences in all these respects Amarjit Kaur, ; Drabble, ; Hong, A further major addition to primary exports came from the discovery of large deposits of oil and natural gas in East Malaysia, and off the east coast of the Peninsula from the s.
Gas was exported in liquified form LNG , and was also used domestically as a substitute for oil. At peak values in , petroleum and LNG provided around 29 percent of Malaysian export earnings but had declined to 18 percent by The program of industrialization aimed primarily at the domestic market ISI lost impetus in the late s as foreign investors, particularly from Britain switched attention elsewhere.
An important factor here was the outbreak of civil disturbances in May , following a federal election in which political parties in the Peninsula largely non- bumiputera in membership opposed to the Alliance did unexpectedly well.
This brought to a head tensions, which had been rising during the s over issues such as the use of the national language, Malay Bahasa Malaysia as the main instructional medium in education. There was also discontent among Peninsular Malays that the economic fruits since independence had gone mostly to non-Malays, notably the Chinese.
The outcome was severe inter-ethnic rioting centered in the federal capital, Kuala Lumpur, which led to the suspension of parliamentary government for two years and the implementation of the New Economic Policy NEP.
The main aim of the NEP was a restructuring of the Malaysian economy over two decades, with the following aims:. The principle underlying these aims was that the redistribution would not result in any one group losing in absolute terms. Rather it would be achieved through the process of economic growth, i.
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