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THE CREATION AND IMPLEMENTATION OF THE NEW ECONOMIC POLICY: SUCCESS AND FAILURE, 1970 - 2008 DAIM ZAINUDDIN FACULTY OF ARTS AND SOCIAL SCIENCES UniversityUNIVERSITY OF ofMALAYA Malaya KUALA LUMPUR 2019 THE CREATION AND IMPLEMENTATION OF THE NEW ECONOMIC POLICY: SUCCESS AND FAILURE, 1970 - 2008 CHE ABDUL DAIM BIN HAJI ZAINUDDIN THESIS SUBMITTED IN FULFILMENT OF THE REQUIREMENT FOR THE DEGREE OF DOCTOR OF PHILOSOPHY FACULTY OF ARTS AND SOCIAL SCIENCES UNIVERSITY OF MALAYA UniversityKUALA LUMPUR of Malaya 2019 UNIVERSITY OF MALAYA ORIGINAL LITERARY WORK DECLARATION Name: CHE ABDUL DAIM BIN HAJI ZAINUDDIN Registration/ Matric. No.: AHA 070047 Name of Degree: DOCTOR OF PHILOSOPHY Title of Project Paper/Research Report/Dissertation/Thesis (“This Work”): THE CREATION AND IMPLEMENTATION OF THE NEW ECONOMIC POLICY: SUCCESS AND FAILURE, 1970 - 2008 Field of Study: HISTORY I do solemnly and sincerely declare that: (1) I am the sole author or writer of this work; (2) This work is original; (3) Any use of any work in which copywright exist was done by way of fair dealing and for permitted purpose and any excerpt or extract from, or reference to or reproduction of nay copyright work has been disclosed expressly and sufficiently and the little of the work and its authorship have been acknowledged in this work; (4) I do not have any actual knowledge nor I ought reasonable to know that the making of this work constitutes an infringement of any copyright work; (5) I hereby assign all and every rights in the copyright to this work to the University of Malaya (“UM”), who henceforth shall be owner of the copyright in this work and that any reproduction or use in any for or by any means whatsoever is prohibited without the written consent of UM having been first had and obtained; (6) I hereby declare that the work is based on my original work except for quotations and citation which have been duly acknowledge; (7) I also declare that it has not been previously or concurrently submitted for any other degree at UM or other constitutions. Candidate’sUniversity Signature of MalayaDate Subscribed and solemnly declared before, Witness Signature Date Name: Designation: ii ABSTRACT The scope of this research pivots around the New Economic Policy (NEP). The research looks into several aspects namely, historical background, circumstances, other examples and the perspective of both local and international personalities concerning the necessity and formulation of the NEP. This research also looked into the conception of the Independence Documents, the accommodation of racial intolerance and the conscious decision to proceed with an unpopular mechanism to create the quota system. There were further decisions to create a middle-class tier through education and a balanced economic policy. This research throws insight into the roles of the leaders of the time in implementing the ideals of a peaceful, tolerant Malaysian society, especially with the circumstances surrounding Tun Abdul Razak, the Second Prime Minister. Any discussion regarding NEP is a constitutional matter, focusing on Article 153 which talks about the rights of all Malaysians. In this respect, the roles of the political parties and leaders of the time is discussed with regard to their hidden and open agendas, most especially the communist undercurrent concerning the loyalty of the Chinese to Malaysia. The conclusion of this research shows the success of NEP in bridging the economic gap and putting Malaysia in the path of a highly developed society in terms of education, economic and social achievement and well-being. Keywords:University New Economic Policy, Malaysia, of Affirmative Malaya Action iii ABSTRAK Kajian ini memfokuskan kepada Dasar Ekonomi Baru (DEB) yang melibatkan beberapa aspek antaranya ialah latar belakang sejarah, halangan serta kepentingan Dasar Ekonomi Baru (DEB) daripada perspektif tempatan dan antarabangsa. Penyelidikan ini juga meneliti konsep Independence Document, toleransi antara kaum dan melihat kewujudan sistem kuota sebagai salah satu mekanisme perbincangan. Hal ini kemudiannya telah mendorong kepada usaha untuk mewujudkan golongan kelas pertengahan melalui peningkatan taraf pendidikan dan penstabilan dasar ekonomi. Penyelidikan ini turut membincangkan peranan yang dimainkan oleh pemimpin dalam membentuk masyarakat Malaysia yang aman dan bertoleransi terutamanya semasa zaman pemerintahan Tun Abdul Razak sebagai Perdana Menteri Malaysia yang kedua meskipun terdapat pelbagai halangan yang perlu ditempuh. Segala perbincangan berkenaan dengan DEB adalah tertakluk kepada perlembagaan dan memfokuskan kepada Artikel 153 perlembagaan persekutuan yang memperihalkan soal hak rakyat Malaysia. Justeru, peranan yang dimainkan oleh parti-parti politik dan pemimpin pada ketika itu dibincangkan tanpa menyembunyikan sebarang bentuk agenda terutamanya berkenaan dengan kekejaman komunis dan persoalan tentang tahap kesetiaan orang Cina kepada Malaysia pada ketika itu. Secara keseluruhannya, penyelidikan ini menonjolkan kejayaan DEB dalam merapatkan jurang ekonomi dan berhasil menempatkan Malaysia dalam kelasnya yang tersendiriUniversity dan membangunkan masyarakat ofdari segi pendidikan,Malaya ekonomi dan sosial. iv I dedicate this study to My parents and to my fellow Malaysians. University of Malaya v ACKNOWLEDGEMENTS After my retirement from government, I travelled a lot to Africa and Eastern Europe to learn more about these countries and their future. I got to know leaders there and they invited me to invest in their countries which I did in the banking sector, which I am familiar with. Because of my investments in these countries, they wanted to know more about Malaysia and how we managed our economy which in their eyes has been very successful. There were times I was asked to give speeches to civil servants or talks to ministers. ln my talks and speeches, I invariably touched on our New Economic Policy and most wanted to know more about this. South Africa is one country that was very keen to learn more. To be honest, after some time I got bored repeating the same story though to different audiences. I told my family I should stop talking on this subject but instead my family advised me to enrol with a university and write a thesis on this subject and send the copies of my research to those countries interested in the subject. I went to see the Vice Chancellor of the University of Malaya, YBhg Tan Sri Dr Rafiah Salim who encouraged me to enrol as a PHD student, which I did. That was in 2008. I wish to record my deep appreciation to her for the support. She introduced me to my supervisors namely Professor Dr Mohd Fauzi Yaacob and Professor Dato’ Mohamad Abu Bakar and l met them. They advised me how to go about doing my research. To them too, I wish to record my thanks. Then there is YBhg Datuk Professor Dr Roziah Omar whoUniversity took me under her care and gave aof lot of herMalaya time to guide me until she was transferred out from the university to the Ministry of Higher Education but before then, she placed me under Associate Professor Dr Hamidin Abdul Hamid. I wish to record my thanks to Professor Datuk Dr Roziah Omar. Associate Professor Dr Hamidin Abdul Hamid has been most helpful and without his advice, guidance and supervision, I don’t vi think I could complete this thesis. He was there whenever I needed advice. I owe this thesis to him and I thank him for all the support and faith in me. I must say after I finished my studies in 1959, I find it very hard today to go back to study. I was also travelling and spending about six months a year in Africa and Eastern Europe running my business. I found it very tough to handle business and studies at same time especially as l am no longer young. There was so much to read and the more you read, the more you find new things. Luckily I have Siti Rohani, my staff who could go to the library to get the books for me and my efficient Secretary, Chuan Mei Pheng who helped with the research and she did the typing of my draft but retired before I could complete the final version. I thank both of them. I wish to record my appreciation to those who gave me interviews and I apologise as I am not mentioning their names here. Lastly, I wish to record my thanks to my wife and family for being patient and supported me in my endeavour. Without their support, I don’t think I would have had the strength and patience to complete this thesis. Their sacrifice gave me the courage to complete this task. University of Malaya vii TABLE OF CONTENTS Original Literary Work Declaration ii Abstract iii Abstrak iv Acknowledgements vi Table of Contents viii List of Tables and Figures xiv List of Abbreviations xvi List of Appendices xvii University of Malaya viii CHAPTER 1: INTRODUCTION 1 1.1 Research Background 2 1.2 Literature Review 7 1.3 Problem Statement 21 1.4 Research Question 23 1.5 Research Objective 24 1.6 Methodology and Approach 26 1.7 Scope and Limitation 31 1.8 Significance of Research 32 1.9 Thesis Structure 33 CHAPTER 2: TRACING EARLY HISTORY 2.1 Introduction 37 2.2 Pre-Malaya 38 2.3 The Malay Peninsula Under the British Rule 43 2.4 The British Residents and Advisors 46 2.5 The Rubber and Tin Industry 52 2.6 Mass Immigration 52 2.7 The Federation of Malaya Agreement 1948 62 2.8 The Elections 66 2.9 Independence 68 2.10 Conclusion 70 CHAPTER 3: MAY 13, 1969 3.1 Introduction 72 3.2 Why Did May 13 Happen? 73 University3.3 Issues Pre-1969 Election of Malaya 74 3.4 Language 78 3.5 The Relationship With Singapore 83 3.6 Emerging Parties 88 3.7 Brewing

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