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CHAPTER
ENTREPRENEURSHIP
DEVELOPMENT IN MALAYSIA
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Objectives
The objectives of this chapter are:
To provide the history of entrepreneurial 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
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Oxford Fajar Sdn. Bhd. (008974-T), 2013
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Learning Outcomes
At the end of this chapter, students should be able to:
gain a better understanding of the historical perspective of
entrepreneurial development in Malaysia
appreciate and analyze the strengths, weaknesses,
successes and failures of past Malaysian government policies
on entrepreneurial development
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Pre-independence: The
Influence of British Colonization
Bumiputeras mainly include Malays, Kadazans, Ibans and
few others lagged behind the Chinese and Indians
communities in business, trade and commercial activities.
British colonization has been blamed as one of the factors for
the decline of Bumiputera entrepreneurship in Malaysia
(Ahmed, Mahajar & Alon, 2005).
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It is argued that long before the arrival of the British and the
other immigrant races, notably the Chinese, the Bumiputeras
had enjoyed a period of economic independence and were
involved in commerce with domestic traders as well as with
foreign traders like the Arabs and the Indians (Drabble,
2000).
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Post-independence: Achievements
and Issues
After independence, Malaysia made impressive progress in social
and economic developments benefits of the progress were not
evenly distributed among the different ethnic groups in Malaysian
society (Jesudason, 1990; Korff, 2001).
The Malays were still very poor and mainly concentrated in rural
areas depending on agricultural and fisheries activities as their
major sources of income (Mahathir, 1998).
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Post-independence: Achievements
and Issues (cont.)
The income disparities between the Malays and the other
ethnic groups, especially the Chinese, were wide. The
Malays were also underrepresented in the modern sector of
the economy, particularly in commerce and industrywhere
their presence was felt they were highly concentrated in the
lower levels of the occupation hierarchy; mainly in the
unskilled and semi-skilled categories (Mid-Term Review of
Second Malaysia Plan (MTR 2MP), 1973).
The mean monthly household income for the Malays in 1970
was RM179, compared to RM387 for the Chinese and
RM310 for the Indians (MTR 2MP, 1973).
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Post-independence: Achievements
and Issues (cont.)
The subservient nature of the Malay economic position,
despite the countrys independence, has created
dissatisfaction among the Malays and sowed the seeds of
distrust and discontentment in their relationship with the nonMalays, in particular the Chinese (Gomez, 1999).
Not long after Malaysias general election in 1969, a racial
clash erupted between the Malays and the Chinese, killing at
least 196 people with over 400 injured (Mahmud, 1981).
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Post-independence: Achievements
and Issues (cont.)
The racial riot of 13 May 1969 served as an eye-opener for
many regarding the fragility of Malaysias pluralistic society
(Jesudason, 1990; Mahathir & Jamaludin, 2004).
Recognizing the severity of the problems and the urgent
need to address them, the government through the National
Operations Council (NOC), introduced the far reaching
reforms of the New Economic Policy (NEP) (Crouch, 1996;
Monash, 2003).
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The government had targeted that by the 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 (MTR 2MP, 1973).
It intensified its efforts through the creation of trust agencies and
their subsidiaries like the National Equity Corporation Ltd. or
Perbadanan Nasional Berhad (PNB), Peoples Trust Council or
Majlis Amanah Rakyat (MARA), Urban Development Authority
(UDA) and State Economic Development Corporations (SEDCs),
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Of the 46.2 per cent achievement, the Chinese share accounted for
44.9 per cent, with the Indians and others holding 1 per cent and 0.3
per cent respectively (OPP2, 1991).
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In 2002, the ROB and the ROC merged to form a statutory body
called the Companies Commission of Malaysia (SSM).
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