AUG 0 8 1991 Rotch
Total Page:16
File Type:pdf, Size:1020Kb
MALAYSIA - THE FIFTH TIGER? INDUSTRIALIZATION AND ECONOMIC DEVELOPMENT IN A PLURALISTIC SOCIETY by MOHD SHUKRI HAJINOOR B.Sc., Urban and Regional Planning East Carolina University Ireenville, North Carolina, USA (1986) Submitted to the Department of Urban Studies and Planning in Partial Fulfillment of the Requirements of the Degree of Master in City Planning at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY Cambridge, Massachusetts, USA June 1991 @ Mohd Shukri Hajinoor, 1991. All rights reserved The author hereby grants to MIT permission to reproduce and to distribute copies of this thesis document in whole or in part. Signature of Author Department of Urban Studies and Planning May 10, 1991 Certified by Ralph Gakenheimer Professor, Urban Studies and Planning, and Civil Engineering Thesis Supervisor Accepted by M Phillip Clay Professor, Urban Studies and Planning Chairman, Master in City Planning Program MASSAChUSETTS INSTITUTE OF TECHNOLOGY AUG 0 8 1991 LIBRARIES Rotch TO MV PAREMTS HAJI NOOR HJ. MAMAT AND HAJIAH HASMAH SULAIMAN MV VOUNGER BROTHER AND SISTERS, AND AISVAH LEE MI-KVUNG NOTES AND ACKNOWLEDGEMENTS Bismillah-hirrahma-nirrahim walham-dulillah-hirabbil-a-lamin. This thesis has come a long, long way. Initially, I wanted to write about the causes and consequences of the "excessive" outflow of money across the border from Kelantan, Malaysia into Narathiwatt Province, Thailand. The topic sprang from my observations made during my childhood and adolescent periods when, every weekend, I used to accompany my father, who taught religion, to Sungei Kolok and Kok-Thai, Thailand. I observed that Kelantanese liked to spend money in Thailand most notably on food and apparel because they were cheaper there and because the Thai baht was cheap relative to the Malaysian ringgit. But the greater outflows were caused by peraih-peraih (business middle-men, but in Kelantan it applies only to women because, in Malaysia, only in Kelantan where we find women dominating the market place and women are active in commerce). The peraih-peraihgo to Thailand to buy goods and pay laborers to smuggle these goods into Kelantan for resale and distribution even as far as to Kuala Lumpur. Prof. Bennett Harrison made an inspiring comment about my observation. Prof. Eckaus (Head MIT Economics Dept.) told me that unless I conduct a field research the topic would not be doable because the outflows were "not in the book." The topic is being abandoned for now. But it will be an interesting research subject for my future endeavor. The thesis title "Malaysia: The Fifth Tiger?" is a product of my earlier attempt at learning from Korea even before Prime Minister Mahathir's call in late 1981 to "look east" (specifically to Japan and Korea). The articles "'The Koreans are Coming" (Business Week, Dec. 23, 1985) and "The Next Japans" (The Economist, July 30, 1988) which reiterated the success stories of the 4-Dragons prompted me to ask who would be the fifth. My using the label tiger has to do with the common trait which I found exist between the Korea and Malaysia, namely the symbolism of national pride with tigers. I acknowledge that my writing on the 4-Tigers has more detail on Korea because of my knowledge of Korean language, culture and history. Many people asked me "why Korea and Malaysia?" I have come to realize that it is because of my love for both Korea and Malaysia and their people that I chose the topic. I thank my advisor Dr. Alan M. Strout for his patience in reading and commenting my numerous thesis drafts. Professor Alice Amsden of Harvard Business School, a member of this thesis committee, helped refine my point on why trade subsidies (which are practiced in many countries) work well in Korea. I am grateful to Professor Ralph Gakenheimer who examined the final draft, who rendered his signature as thesis supervisor and in effect approved the thesis on behalf of Dr. Strout who was on an assignment overseas. Many thanks go Dr. Leticia Rivera-Torres and Dr. Lee Yang-Won who always wanted to make sure that I kept them in touch and would not disappear from them during my struggle to complete the thesis. Dr. Kim Young-Sook of Korean Institute, Inc., Cambridge advised me on how to survive from and overcome the pain of losing: do things that I need to do, otherwise I will lose everything. Ariff Abdullah Leong Yin Kit gave me brotherly support and comfort, the patience to listen and advice. Thanks also to Cho Kyung-Suk, Bassim Halabi, Tunggol Birowo, Moustafa Khemira, Mikail Corey, Ibrahim El-Sanhouri, Ameen Abdullah, AI-Hafiz Suheil Laher, Mahbub Majumdar, Youseff Shatilla, and Samer Wattar for their concern and encouragement. I am grateful to Dr. Mohamed Lotfi Hammour of the Economics Dept., Columbia Univ., New York who helped me clear my account with MIT on the last business day before graduation. Many thanks also to Abdel-Kader Khelifa who drove with me overnight to the Canadian border to secure my graduation. I am very grateful to Priscilla Lee Mi-Kyung whose presence, love, encouragement, and many support helped me see the light at the end of the tunnel, who demanded me to have my "two feet on the ground," who urged me to quit my failing Sanuri Investment Co. and get back to the thesis, and who posed me with the crucial challenge in the race against time and circumstances, and in whom and with whom I have a great hope. Lastly but not the least, I am grateful to my mother, brother and sisters who have always trusted me and who have looked at me as the hope of the family and who supported me in every possible way. It goes without saying that any errors that readers may detect in this thesis are solely my responsibility. MALAYSIA - THE FIFTH TIGER? INDUSTRIALIZATION AND ECONOMIC DEVELOPMENT IN A PLURALISTIC SOCIETY by MOHD SHUKRI HAJINOOR Submitted to the Department of Urban Studies and Planning on May 10, 1991 in partial fulfillment of the requirements for the Degree of Master in City Planning ABSTRACT The emergence of the so-called 4-Dragons (namely South Korea, Taiwan, Hong Kong, and Singapore) has spurred a renewed interest in East Asia. Many development economists and business writers from the West have looked at the success stories of these economies. In this thesis I shall make a case that the selection for research and the assembly of the four economies into a group (to the exclusion of others in the region) may have to do--besides their economic success--also with the convenience and the suitableness of grouping the four together based on the common traits which exist among them. It is striking to ask how today's "success story" would have been told if Bangladesh (which, unlike Korea, has little in common with "oriental" Singapore) were also a subject of admiration in international trade. Can dragon be applied to Bangladesh? This thesis seeks to present Malaysia as Asia's next newly industrialized country (NIC). As in the Bangladesh case, the label dragon is not applicable to Malaysia. Since Malaysia and Korea have something in common in tigers (Malaysia's national emblem includes two tigers and Hodori [a tiger cub] was the Seoul Olympic Games' official mascot), and since tigers are, to some extent, also a ceremonial animal in Chinese culture, the label tiger is used throughout this thesis. In addition, when it comes to trade, tiger is an appropriate choice because it symbolizes fierce competition and aggresiveness in exports. This thesis also makes a case that Western researchers of the "East Asian success stories" may have overlooked Malaysia. The two root causes worth noting here are Malaysia's relatively low profile on the international scene and the lack of emphasis on geography and foreign affairs in the education system of many Western countries. The U.S. is cited because it has a dominant position in the world and it is also a center for intellectual and communication exchanges. But most of its school children are geography-illiterate. There are fundamental differences between Malaysia and the 4-Tigers. Malaysia has rich natural-resource endowment. Helped initially by commodity exports, Malaysia has become relatively prosperous. As a result there was no urge to industrialize. In addition, the British colonial policy had caused what is termed "delayed industrialization." For the 4-Tigers, their lack of natural resources prevented them from becoming commodity exporter in the first place. With their then abundant labor supply it was logical for them to specialize in labor- intensive activities while their relatively small domestic market dictated to them the need for exporting. Another main distinction is the society. Each of the 4-Tigers is a relatively homogenous society. For Malaysia, its multiracial character has a profound impact on the development policy. The May 13 (1969) Incident led to the adoption of the New Economic Policy (NEP). Achieving national unity was recognized as the overriding goal of the country. Industrial and commercial development have been geared toward restructuring the society so as to eliminate the identification of race with vocation and location of residence. In order to ensure that no particular group will experience any loss or feel any sense of deprivation, the restructuring is to achieved within the context of a rapidly expanding economy. In early 1985 Malaysia was considered to become the next Tiger. But the 1985-86 recession did the damage. Within Southeast Asia, Thailand stood out as an attractive investment market after its economy (helped by the strong tourist sector and well diversified exports) had weathered the impact of the worldwide recession. Investment by capital surplus Japan led to the robust growth in Thailand.