Malaysia’s economic landscape before the New Economic Policy: The role of Japanese investment

In more than a decade after 1945, because of Japan’s focus on national reconstruction after the Second World War there was no Japanese investment in the Federation of Malaya, North Borneo and Sarawak. By the end of the 1950s, Japan’s foreign policy regarding these countries shifted to a more active investment mode and oriented to the acquisition of raw materials and trade related to food, textile and ceramic industries . The investment flows did not grow fast until 1970 because the issue of war compensation remained an obstacle. By 1960s the manufacturing ventures had extended to toothpastes, asbestos, marine products, glutamic acids and iron ingots, and to conglomerate driven and export oriented ship building and repairing, watches and toys, electrical machineries, electrical parts and components. By 1970 Japanese investments had added a more heavy industrial touch to Malaysian industrial landscape with their petroleum and chemical industries, steel and metallurgy, wood , electronics, and transportation machineries. Thus, within a span of eight years Japanese join-ventures in Malaysia had multiplied by more than 2,300 per cent from eight in 1962 to 189 in 1970. Granted that the Japanese investments were geared more to the processing of local natural resources to supply the input needs of Japanese industry, yet in doing so they had practically shaped and developed modern Malaysia’s industrial landscape before the advent of the New Economic Policy.