Second Malaysia Plan
However, the First Malaysia Plan had limited success, which may have been a factor in the 13 May Incident in 1969 when race riots broke out in Kuala Lumpur.
[2] Due to this wide disparity, Article 153 of the Constitution requires the government to set quotas for the dispensation of scholarships, employment in the civil service, etc.
[3] However, the First Malaysia Plan—whose approach had been dependent on the Malays "availing themselves of these facilities and services and putting them to good use"—failed in addressing the economic imbalance.
[4] Its policies also resulted in discontent among the non-Malays, who mostly supported the opposition parties that favoured reducing or eliminating affirmative action for the Bumiputra in the 1969 general election.
A victory parade held on 12 May 1969 by supporters of the opposition led to a retaliatory rally on 13 May by the United Malays National Organisation (UMNO), a major party in the governing Alliance coalition.
The Plan's stated objective was "to provide facilities and opportunities for the rural population to improve its level of economic and social wellbeing."
[8] The Second Malaysia Plan stepped up government involvement in the economy, with the main goal of increasing Malay economic interests, especially in the areas of manufacturing and mining.
Although this constituted a decrease from the First Malaysia Plan's allocation of M$10.5 billion, the Second Malaysia Plan hoped to achieve greater reduction in poverty and increase the involvement of the Malays in the private sector by imposing certain restrictions on private firms that would benefit Malay employment and economic ownership.
[11] At the time the plan was announced, the non-Malays had, in the words of one commentator, "a virtual monopoly of private industrial and commercial employment", and were concentrated in the urban areas.
However, foreign interests controlled most modern industries, including manufacturing, banking, finance, rubber, and tin.
The Malays were largely involved in rural occupations such as rice farming, fishing, tending to rubber or oil palm smallholdings, and so on.
These agencies included the Malaysian Industrial Development Authority (MIDA) and Majlis Amanah Rakyat (MARA).
By the end of the plan's tenure, PERNAS owned 100% of eight companies involved in insurance, trading, construction, properties, engineering, securities, and mining.
Joint ventures had also been formed with the private sector to develop the mining, containerisation, tourism and consulting industries.
[15] By 1975, manufacturing activities constituted 16% of the Malaysian Gross Domestic Product (GDP), one per cent short of the target of the Second Malaysia Plan.
In 1974, the exclusive right to own, explore and exploit petroleum in Malaysia was vested in the government enterprise of Petronas.
[19] The number of Malays employed in the mining sector soared from 1970 onwards, as the government's restructuring policies came into force.
[22] The government was also aided by the fact that petroleum soon eclipsed other minerals in the mining sector—as Petronas was a state-owned corporation, it was also considered a Bumiputra enterprise.
However, RISDA over-reached itself in attempting to so quickly reappropriate land; by the end of the Second Malaysia Plan, only 40,000 acres (160 km2) had been developed, with only half this number comprising oil palm estates.
[28][29] The land development and resettlement policies instituted by the government, however, failed to make an impact on rural poverty.
The government managed to resettle only 40,000 people, despite an estimated 535,000 families engaged in agriculture living below the poverty level.
[30] Although the Second Malaysia Plan greatly modernised the "rice bowl" states of Kedah and Perlis—virtually eliminating the water buffalo by replacing it with tractors—most smallholders and individual farmers did not benefit technology-wise.
Due to limited capital, many Malays were still engaged in "lower productivity activities" as the Second Malaysia Plan ended.
[34] Although education was mostly sidelined in favour of socioeconomic restructuring programs during the Second Malaysia Plan, some important initiatives were taken during its tenure.
[35] In 1970, Malay, the national language, became the major medium of instruction from primary to tertiary level, replacing English.
[38] The Second Malaysia Plan aimed to modernise Malaysian railroads, which the government regarded as crucial to development and industry.
All trains were converted to use the more efficient diesel fuel, and the government increased allocations for maintenance and modernisation of the rail infrastructure.
The plan called for the construction of two new ports, both in peninsular Malaysia; one would be in Johor, and another would be in Kuantan, a major town in Pahang.
The two main objectives of these projects were to meet increasing demand for sea transportation of freight, and to bring development to underdeveloped states.
However, the emphasis on improving the lot of the Malays greatly worried the non-Malays, and when the Third Malaysia Plan was launched, the government toned down its rhetoric on affirmative action and emphasised greater economic growth, which would benefit all.
