page_title: History of Malaysia
section_title: Modern Malaysia
hierarchical_section_title: History of Malaysia / Modern Malaysia
context_page_description: Malaysia is located on a strategic sea-lane that exposes it to global trade and various cultures. Strictly, the name "Malaysia" is a modern concept, created in the second half of the 20th century. However, contemporary Malaysia regards the entire history of Malaya and Borneo, spanning thousands of years back to Prehistoric times, as its own history, and as such it is treated in this page.
  An early western account of the area is seen in Ptolemy's book Geographia, which mentions a "Golden Khersonese," now identified as the Malay Peninsula. Hinduism and Buddhism from India and China dominated early regional history, reaching their peak during the reign of the Sumatra-based Srivijaya civilisation, whose influence extended through Sumatra, Java, the Malay Peninsula and much of Borneo from the 7th to the 13th centuries.
  Although Muslims had passed through the Malay Peninsula as early as the 10th century, it was not until the 14th century that Islam first firmly established itself. The adoption of Islam in the 14th century saw the rise of a number of sultanates, the most prominent of which were the Sultanate of Malacca and the Sultanate of Brunei.
context_section_description: In 1970 three-quarters of Malaysians living below the poverty line were Malays, the majority of Malays were still rural workers, and Malays were still largely excluded from the modern economy. The government's response was the New Economic Policy of 1971, which was to be implemented through a series of four five-year plans from 1971 to 1990. The plan had two objectives: the elimination of poverty, particularly rural poverty, and the elimination of the identification between race and prosperity. This latter policy was understood to mean a decisive shift in economic power from the Chinese to the Malays, who until then made up only 5% of the professional class.
  Poverty was tackled through an agricultural policy which resettled 250,000 Malays on newly cleared farmland, more investment in rural infrastructure, and the creation of free trade zones in rural areas to create new manufacturing jobs. Little was done to improve the living standards of the low-paid workers in plantation agriculture, although this group steadily declined as a proportion of the workforce. By 1990 the poorest parts of Malaysia were rural Sabah and Sarawak, which lagged significantly behind the rest of the country. During the 1970s and '80s rural poverty did decline, particularly in the Malayan Peninsula, but critics of the government's policy contend that this was mainly due to the growth of overall national prosperity (due in large part to the discovery of important oil and gas reserves) and migration of rural people to the cities rather than to state intervention. These years saw rapid growth in Malaysian cities, particularly Kuala Lumpur, which became a magnet for immigration both from rural Malaya and from poorer neighbours such as Indonesia, Bangladesh, Thailand and the Philippines. Urban poverty became a problem for the first time, with shanty towns growing up around the cities.
  The second arm of government policy, driven mainly by Mahathir first as Education Minister and then as Prime Minister, was the transfer of economic power to the Malays. Mahathir greatly expanded the number of secondary schools and universities throughout the country, and enforced the policy of teaching in Malay rather than English. This had the effect of creating a large new Malay professional class. It also created an unofficial barrier against Chinese access to higher education, since few Chinese are sufficiently fluent in Malay to study at Malay-language universities. Chinese families therefore sent their children to universities in Singapore, Australia, Britain or the United States – by 2000, for example, 60,000 Malaysians held degrees from Australian universities. This had the unintended consequence of exposing large numbers of Malaysians to life in Western countries, creating a new source of discontent. Mahathir also greatly expanded educational opportunities for Malay women – by 2000 half of all university students were women.
  To find jobs for all these new Malay graduates, the government created several agencies for intervention in the economy. The most important of these were PERNAS (National Corporation Ltd.), PETRONAS (National Petroleum Ltd.), and HICOM (Heavy Industry Corporation of Malaysia), which not only directly employed many Malays but also invested in growing areas of the economy to create new technical and administrative jobs which were preferentially allocated to Malays. As a result, the share of Malay equity in the economy rose from 1.5% in 1969 to 20.3% in 1990, and the percentage of businesses of all kinds owned by Malays rose from 39 percent to 68 percent. This latter figure was deceptive because many businesses that appeared to be Malay-owned were still indirectly controlled by Chinese, but there is no doubt that the Malay share of the economy considerably increased. The Chinese remained disproportionately powerful in Malaysian economic life, but by 2000 the distinction between Chinese and Malay business was fading as many new corporations, particularly in growth sectors such as information technology, were owned and managed by people from both e
caption: Petronas Twin Towers, Kuala Lumpur, the tallest building in Southeast Asia.
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