MODULE 3

Entrepreneurship
Development in
Malaysia

Basic Entrepreneurship (ENT028)

Entrepreneurship
Development in Malaysia
Objectives

To provide the history of entrepreneurship

development in Malaysia
To discuss the difficulties and challenges that
Malaysia had to overcome in order to achieve
economic progress
To provide an understanding of the success and
failure of Malaysias development policy on
entrepreneurial development.
Learning outcomes
Gain a better understanding of the historical
perspective of entrepreneurial development in
Malaysia
Basic
Entrepreneurship
(ENT028)
Appreciate and
analyse
the strengths,
weaknesses,

Entrepreneurship
Development in Malaysia

Pre-Independence: The Influence of British

Colonization

Post-Independence: Achievement and Issues

The New Economy Policy(NEP)

Restructuring Racial Composition of Employment

Restructuring of Wealth Ownership

Creation of a Malay Commercial and Industrial

Community

The Successes and Limitations of NEP

Summary
Basic Entrepreneurship (ENT028)

Pre-Independence: The
Influence of British
Colonization

Bumiputras(sons of the soil) have been behind

in their economic fortunes
British colonisation-one of the factors for the
decline of Bumiputras as before British
colonisation-Bumiputra were involved in
economic activities in the era of the Melaka
Sultanate
The British rule;Malaysian s society was
segregated according to ethnic
identities,social status and economic status
British mercantile and colonial policies
discouraged Malays from being involved in
entrepreneurial activities
British allocated
different economic
roles for
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Malaysians Ethnic groups

Post-Independence:
Achievements and Issues

After independence, Malaysia made

impressive progress in social and economic
developments, but the benefits of this
progress were not evenly distributed among
the different ethnic groups in Malaysian
society
Malays in rural areas were very poor
Income disparities among ethnic groups
Levels of occupation hierarchy(MTR 2MP,1973)
Subservient nature of the Malay economic
position-13 May 1969
Reforms of New Economic Policy (NEP)
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THE NEW ECONOMIC

POLICY(NEP)

Started in 1971 as national blueprint for Malaysias

socio-economic development
Incorporated in the country s First Outline
Perspective Plan (OPPI) covering a period of 20 years
from 1971 to 1990
Rukunegara was introduced in 1970
Rukunegara and NEP to achieve national unity
through 2-pronged strategy of
1. Eradicating poverty
2. Accelerating the process of restructuring Malaysian
society in 3 important aspects:
I.
Restructuring of racial composition in
employment
II. Restructuring of wealth ownership
III. The creation of Malay Commercial and Industrial
Community , later known as Bumiputra Commercial
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Entrepreneurship
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and Industrial
Community
(BCIC)

RESTRUCTURING RACIAL
COMPOSITION OF
EMPLOYMENT

Malays were over represented in agriculture

sector while Chinese in more productive
sectors of the economy
Expanding the Malay share in of professional,
managerial and technical personnel
Providing better educational and training
opportunities especially in the area of science
and technology
Government agencies and institutions
encourage to accelerate the employment of
Malays
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RESTRUCTURING OF WEALTH
OWNERSHIP

Reduction of wide imbalances in the ownership of

the countrys wealth
Government targeted by end of the NEP period in
1990 Malays and other Bumiputeras would own and
control at least 30% per cent of the equity capital in
the corporate or business sector, with foreigners and
other Malaysians owning 30 per cent and 40 per cent
respectively
The creation of trust agencies and their subsidiaries
like National Equity Corporation Limited or
Perbadanan National Berhad (PNS), Peoples Trust
Council or Majlis Amanah Rakyat (MARA), Urban
Development Corporations (SEDCs)
Introduced ownership restructuring policies and
rules in considering and approving new and
expanded investments.
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Creation of a Malay
Commercial and Industrial
Community

The NEP targets were that within one generation or about

20years, the Malays would own, manage and control at least
30 per cent of the countrys commercial and industrial sectors
at all levels of economic activities.
Public enterprises played a crucial role in providing
opportunities to encourage Malay participation in
entrepreneurial and industrial activities through the provision
of support facilities and special assistance programmes.
The government stipulated that 30 per cent of works
contracted out by Public Works Department (PWD) be reserved
for Malay and other Bumiputera contractors.
The government made it compulsory for the new insurance
companies tp have at least 30 per cent Malay interest before
their licences could be approved
The Malays were also given preferential access to business and
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industrial facilities such as soft loans and the purchase of

The Successes and Limitations of

NEP

The NEP was quite successful in attaining its first objective of

eradicating poverty but less successful in attaining its second
objective for reducing economic imbalances in the country.
By the end of 1990, the income disparity between Malays and
other ethnic groups in Malaysia was successfully reduced and
a significant reduction in the poverty rate was also archived.
As a result of better educational opportunities provided by
NEP, the Malays were able to obtain employment in sectors
that previously eluded them such as in the medical,
engineering and information technology sectors.
The government through its agencies such as the Mara
Institute of Technology (UiTM) and National Productivity
Centre (NPC) provided business training for those Malays who
were interested to venture into business.
The Malays were also faced with discrimination when
obtaining employment in business organizations owned by the
Chinese and Foreigners.
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Might be attributed to the Malay entrepreneurial and

The Successes and Limitations of

NEP

The NEP also provided an avenue for the Malays to

mobilize their capital with savings through the
establishment of trust agencies such as the Pilgrims
Management Fund Board or Lembaga Urusan Tabung Haji
(LUTH) and PNB.
The NEP was successful to some extent in convincing the
Malays that the government was making a considerable
effort to help them improve their standard of living and
their economic position
NEP was successful in reducing the income gap among
the different ethnic groups, the intra-ethnic income
disparity, especially among the Malays has widened as
only a few have made it.
Despite the Malays impressive achievement in
professional and technical jobs where their participation
exceeded the 50 per cent target of the NEP, their
employment was mainly concentrated in the teaching
and nursing professions.
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Although the increase
in the equity
ownership of the
Malays was below the targeted level, its achievement in

Summary

Entrepreneurship development in Malaysia is

unique
There were successful and failures of initiative
taken to develop entrepreneurship in Malaysia
There are many lesson to be learned from the
history of developing entrepreneurship in
Malaysia

Basic Entrepreneurship (ENT028)