2 malaysia plan_wikipedia
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Crop diversification was introduced
during the Second Malaysia Plan,
phasing out rubber in favour of oil
palm.
Second Malaysia PlanFrom Wikipedia, the free encyclopedia
The Second Malaysia Plan (In Malay language:Rancangan
alaysia Kedua) was an economic development plan
introduced by the government of Malaysia with the goal ofimplementing the Malaysian New Economic Policy (NEP). It
lasted from 1971 to 1975 and aimed to "restructure" the
society of Malaysia and reduce Malaysian Chinese and
foreign dominance in the economy of Malaysia so as to
improve the economic position of the Malays.[1] It was the
successor to the First Malaysia Plan, which was also intended
to specifically tackle the problem of poverty among the
Malays. However, the First Malaysia Plan had limited
success, which may have been a factor in the May 13
Incident in 1969 when race riots broke out in Kuala Lumpur.
The Second Malaysia Plan was regarded by some as
excessive in its zeal to increase Malay participation in the
economy, and the government accordingly scaled back the
emphasis on restructuring the economy when the plan ended.
Contents
1 Background
2 Economic restructuring 3 Industrialisation
4 Mining 5 Agriculture
6 Health 7 Education 8 Transportation
9 Legacy 10 See also
11 Notes 12 References
Background
Although the Malays have nearly always comprised a majority of the Malaysian population, their
economic power has rarely been commensurate. In 1970, the Bumiputra controlled only 1.9% of the
Malaysian economy, while the non-Malays (mostly Chinese) held 37.4%, with the rest in foreign
hands.[2] Due to this wide disparity, Article 153 of the Constitution requires the government to set
quotas for the dispensation of scholarships, employment in the civil service, etc. targeted at
improving the economic status of the Malays.
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However, the First Malaysia Planwhose approach had been dependent on the Malays "availing
themselves of these facilities and services and putting them to good use"failed in addressing the
economic imbalance.[3]
Its policies also resulted in discontent among the non-Malays, who mostly
supported the opposition parties that favoured reducing or eliminating affirmative action for the
Bumiputra in the 1969 general election. A victory parade held on May 12 by supporters of the
opposition led to a retaliatory rally on May 13 by the United Malays National Organisation
(UMNO), a major party in the governing Alliance coalition. However, the rally soon turned into ariot which lasted two days. Officially, around 200 people diedalthough others have given much
larger estimateswith thousands left homeless, the majority of them Chinese. A state of emergency
was declared, and Parliament was suspended. The National Operations Council (NOC) governed
until 1971, when Parliament reconvened.[4]
The Second Malayan Five Year Plan (1961 1965) was an economic development plan launched
by the government of Malaya, and continued by the government of Malaysia (a new nation
comprising Malaya, Singapore, Sabah and Sarawak). This plan followed the First Malayan Five Year
Plan, which ran from 1956 to 1960. The Second Malayan Five Year Plan increased expenditure for
the development of agriculture and rural areas. Funding was markedly increased for landdevelopment schemes, physical infrastructure, and social services. The Plan's stated objective was
"to provide facilities and opportunities for the rural population to improve its level of economic and
social wellbeing." Some have attributed the greater expenditure of the Plan to the governing Alliance
political coalition's political woes; the coalition had only narrowly won the 1959 general elections
due to discontent among the rural Malay electorate over the lack of economic progress. [5]
While it held the reins of power, the NOC set out the NEP, with the ultimate aim of eradicating
poverty and eliminating "the identification of race with economic function" through a "rapidly
expanding economy"; the NEP aimed for a Bumiputra share of 30% of the economy within 20 years.[6] The Outline Perspective Plan was also approved, with similar goals to the NEP. Both the NEP and
the Outline Perspective Plan were set to expire in 1990, and the Second Malaysia Plan was passed by
Parliament to implement the goals of these policies.[7]
Economic restructuring
The Second Malaysia Plan stepped up government involvement in the economy, with the main goal
of increasing Malay economic interests, especially in the areas of manufacturing and mining.[8]
In
order to avoid directly hurting Chinese economic interests, the plan focused on huge economic
growth, with the goal of expanding both the Malay and non-Malay shares of the economy in absolute
terms, while increasing the Malay share in relative terms as well.
[9]
A sum of M$7.25 billion in total was allocated for the Second Malaysia Plan. Although this
constituted a decrease from the First Malaysia Plan's allocation of M$10.5 billion, the Second
Malaysia Plan hoped to achieve greater reduction in poverty and increase the involvement of the
Malays in the private sector by imposing certain restrictions on private firms that would benefit
Malay employment and economic ownership.[10]
At the time the plan was announced, the non-Malays had, in the words of one commentator, "a
virtual monopoly of private industrial and commercial employment", and were concentrated in the
urban areas. However, foreign interests controlled most modern industries, including manufacturing,
banking, finance, rubber, and tin. The Malays were largely involved in rural occupations such as ricefarming, fishing, tending to rubber or oil palm smallholdings, and so on. They were conspicuously
absent from even minor white collar jobs, such as clerical work, and only in the civil service, where
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At the beginning of the Second
Malaysia Plan, the private sector
employed mostly Malaysian Chinese;
however, they had no real ownership
stake in modern industries.
they were guaranteed 80% of all government jobs, were they present in the upper portion of the
hierarchy. Most members of some professions, such as medicine and law, were non-Malay.
Ironically, government policies, such as those set out by Article 153, appeared to hinder Malay
involvement in the private sector by giving them preference in only the public sector.
Unemployment among all races was also rampant, largely due to poor education, with about 70% of
the 275,000 unemployed in 1970 being aged between 15 and 25 years. It was all this that the NEP
and the Second Malaysia Plan set out to change.[11]
Industrialisation
Several government agencies that had been established prior to the advent of the Second Malaysia
Plan increased their participation in the economy during the Second Malaysia Plan. These agencies
included the Malaysian Industrial Development Authority (MIDA) and Majlis Amanah Rakyat
(MARA). Several more were also established under the plan, including the Perbadanan Nasional
(PERNAS, or the National Trading Corporation), State Economic Development Corporation and the
Urban Development Authority (UDA).[12]
PERNAS was established to purchase businesses and
participate in joint ventures with private companies, as well
as to develop nascent industries to be held in trust until the
Malays held sufficient capital to take them over. By the end
of the plan's tenure, PERNAS owned 100% of eight
companies involved in insurance, trading, construction,
properties, engineering, securities, and mining. Joint ventures
had also been formed with the private sector to develop the
mining, containerisation, tourism and consulting industries.[12]
Parliament passed the Industrial Coordination Act during the
Second Malaysia Plan, which required all new manufacturing
enterprises with RM100,000, or twenty-five or more workers,
to be licensed by the Minister of Trade and Industry. To
obtain such a licence, each firm had to meet certain
conditions set by the Ministry, which could vary. Malaysian
Chinese manufacturers were concerned about the act, as they
had operated with minimal control from the government
before. Nevertheless, the government stated the act was not
meant to be detrimental towards any group, and went ahead
with its implementation. Under the act, firms were divided
into three categories: firms approved after 1 January 1972,
firms approved before then, and firms operating without
approval from the Ministry. All firms subject to the act were
required to submit a proposal to the Ministry stating how they planned to achieve the long-term
target of achieving 30% Malay and 70% non-Malay Malaysian ownership in the company. Proposals
that were accepted then became the guidelines for how the relevant company would operate.[13]
Until the Second Malaysia Plan, industry was concentrated on the west coast of Peninsular Malaysia.
The plan thus moved to establish new industrial estates on the east coast, in order to curb rural-urbanmigrationthe east coast was considerably less urbanised than the west coast. [14]
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By 1975, manufacturing activities constituted 16% of the Malaysian Gross Domestic Product (GDP),
one per cent short of the target of the Second Malaysia Plan. Manufacturing grew negligibly in 1975,
attributed by the government to the global recession that year. This contrasted with the 15% growth
achieved in 1974, which well exceeded the target of 12.5% growth per year during the Second
Malaysia Plan. Food, wood products, and chemical products made up the majority of the
manufacturing sector. The substantial growth in manufacturing during this period has been attributed
to the government's establishment of free trade zones, where any goods brought in would not besubject to customs duties, and goods could be freely exported abroad or transferred to another free
trade zone. In 1974, such zones were declared in the states of Penang, Selangor, and Malacca. The
industries located in these zones were mostly electronics-, rubber product- and textile-based.[15]
Mining
Until the late 1970s, Malaysia was the world's foremost producer of tin, supplying roughly 40% of
the non-communist world's tin. Nevertheless, tin reserves were declining; mining's contribution to
the GDP was projected to fall 13% over the course of the Second Malaysia Plan, due to the
exhaustion of tin and iron reserves. However, bauxite and copper continued to contribute to themining sector in the early 1970s. Malay participation in the mining sector was minimal, and as much
as 70% of the industry remained under foreign control.[16] This was a legacy of the British colonial
era; many British firms, which had arrived in the 19th century to exploit Malaysian mineral
resources, had not departed yet. Malay participation in the mining sectorespecially in tinwas
further hampered by the British tendency in the 19th century to bring in cheap Chinese labour; most
of those employed in mining were still Chinese as late as 1970.[8][17]
Petroleum or crude oil began to significantly contribute to the Malaysian economy in the 1970s, as
new oil rigs and refineries were set up. By 1975, total production of crude oil stood at 90,000 barrels
per day (14,000 m3
/d), most of it produced by Shell. In 1974, the exclusive right to own, explore andexploit petroleum in Malaysia was vested in the government enterprise of Petronas. The following
year, Petronas was granted sole rights over the marketing and distribution of all petroleum products
and a provision to control other companies without taking an ownership stake in them, through the
issuance of management shares to Petronas.[18]
The number of Malays employed in the mining sector soared from 1970 onwards, as the
government's restructuring policies came into force. When the Second Malaysia Plan began, less
than 200,000 Malays were employed in the mining industry. By 1990, they numbered nearly a
million, well ahead of the target numbers originally outlined.[19] Licences for mining operations were
specially reserved for Malays as part of the drive to increase their ownership level in the miningindustry.[20] The government also ostensibly increased Bumiputra ownership by nationalising several
formerly foreign mining companiesby 1989, state corporations controlled 60% of the mining
industry.[21] The government was also aided by the fact that petroleum soon eclipsed other minerals
in the mining sectoras Petronas was a state-owned corporation, it was also considered a Bumiputra
enterprise. However, the government has been criticised for this practice, as it is argued nationalised
corporations belong to the public at large, and not only to the Bumiputra.[22]
Agriculture
The Second Malaysia Plan continued the initiatives that previous five year plans, such as the FirstMalayan Five Year Plan, had taken. Although expenditure on other development increased
substantially, by about M$1 million, funding for rural development was also increased. The Second
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Malaysia Plan focused on diversifying crops grown in Malaysia; the 1974 Green Book Program
aimed to make Malaysia self-sufficient in food production by encouraging farmers to grow
vegetables, such as long beans, chilies, etc., and rear livestockthe Veterinary Department going as
far as to distribute cattle. Fertilisers, seedlings, insecticides and herbicides were subsidised. Double-
cropping of rice was encouraged, so farmers could harvest twice in one year and effectively double
their output.[23][24][25] The Farmers' Organization Authority was established in 1973 with the goal of
coordinating agricultural cooperatives, farmers' associations, and government agricultural agencies.[26]
Growth in small-scale agriculture was viewed as crucial to creating jobs and reducing rural poverty,
and government agencies such as FELDA (the Federal Land Development Authority) vastly
increased the scope and size of their development programs. RISDA (the Rubber Industries
Smallholder Development Agency) was given the task of diversifying smallholder estates; RISDA
set itself the ambitious goal of developing 150,000 acres (610 km2) during the Second Malaysia
Plan. The main aim was to diversify into palm oil through the planting of oil palms. The Malaysian
economy relied heavily on rubber at the timeat its peak, Malaya (Peninsular Malaysia) alone
produced more than half of the world's rubber. However, the Great Depression, which depressedrubber prices, greatly set back the Malayan economy. The Malaysian government thus aimed to avert
another incident by diversifying the agriculture sector. However, RISDA overreached itself in
attempting to so quickly reappropriate land; by the end of the Second Malaysia Plan, only 40,000
acres (160 km2) had been developed, with only half this number comprising oil palm estates.[27][28]
The land development and resettlement policies instituted by the government, however, failed to
make an impact on rural poverty. The government managed to resettle only 40,000 people, despite
an estimated 535,000 families engaged in agriculture living below the poverty level. Due to
inefficiencies in the program, the beneficiaries of resettlement and development were not always
those with the greatest need. It was also alleged by some that there had been too much emphasis on
the difficult process of resettlement and development of new areas, instead of increasing productivityin existing farms. Matters were complicated by the Constitution, which gave the states much control
over land development, and thus requiring the federal government to negotiate with individual state
governments. Non-Malay rural families also did not benefit much due to this, as the Constitution
reserved portions of land for the Malays, and state governments were not anxious to receive destitute
non-Malays.[29]
Although the Second Malaysia Plan greatly modernised the "rice bowl" states of Kedah and Perlis
virtually eliminating the water buffalo by replacing it with tractorsmost smallholders and
individual farmers did not benefit technology-wise. In the corporate agriculture sector, the Malays
held only a 0.3% stake, as opposed to 70.8% held by foreign interests. In the noncorporate sector, theMalays held 47.1%. Due to limited capital, many Malays were still engaged in "lower productivity
activities" as the Second Malaysia Plan ended.[30]
Health
The Second Malaysia Plan continued past initiatives in raising nutritional levels through a number of
programs. These included incentives to grow nutritious food, instruction in nutrition and menu
planning, and provision of food for groups with the highest rates of malnutrition. However, these
programs were hindered by a lack of trained medical personnel.[31]
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Although family planning was established as a national goal in 1964, efforts during the Second
Malaysia Plan to promote it were hampered by government neglect. Much of the success achieved
by the National Family Planning Board occurred during the years of the First Malaysia Plan (1966
1970). The Second Malaysia Plan hoped to add 600,000 new users of family planning techniques,
but the facilities and personnel provided were inadequate. The topic was viewed as rather sensitive
by the government, and thus family planning was mostly ignored.[32] Ironically, in 1984 Malaysian
Prime Minister Mahathir bin Mohamad effectively eliminated family planning as a governmentpolicy by announcing the National Population Policy, which targeted a 70 million population by
2100up from 12.6 million in 1984.[33]
Education
Although education was mostly sidelined in favour of socieconomic restructuring programs during
the Second Malaysia Plan, some important initiatives were taken during its tenure.[34]
In 1970,
Malay, the national language, became the major medium of instruction from primary to tertiary
level, replacing English. British standardised examinations were replaced with local ones, and new
Malay-language textbooks were introduced. By the end of the plan, most formerly English-based
schools had converted the first four years of instruction entirely to the new Malay-medium
curriculum.[35]
In 1973, the Curriculum Development Centre was established. Its goal was to coordinate projects to
reform the curriculum that had previously been handled by varying government departments. It also
began revamping the curriculum for science and mathematics, and began a new program to review
the various social science curricula.[36]
The Second Malaysia Plan also hoped to increase the availability of vocational and technical
training. Despite some attempts, little progress was made in improving the curriculum, whichfocused on providing a general education and made little room for vocational or technical training.
Several new technical and vocational schools were built under the Second Malaysia Plan, with seven
institutions alone completed in 1975. It was hoped this would alleviate the problem of
unemployment, especially among the youth.[37]
Transportation
The Second Malaysia Plan aimed to modernise Malaysian railroads, which the government regarded
as crucial to development and industry. All trains were converted to use the more efficient diesel
fuel, and the government increased allocations for maintenance and modernisation of the railinfrastructure. In particular, emphasis was placed on upgrading existing rolling stock, roadbeds, and
repair facilities.[38]
Air service was expanded under the plan, which paid for the purchase of all-weather and night traffic
control equipment, as well as the training of staff to handle the equipment. The Second Malaysia
Plan also saw Malaysia-Singapore Airlines split into the Malaysia Airline System (MAS) and
Singapore Airlines (SIA).[39]
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The Second Malaysia Plan also saw the introduction of containerisation in Malaysia to better
facilitate transportation. The plan called for the establishment of a national haulage company to
handle inland transport; in August 1971, Kontena Nasional Berhad (National Containers Limited)
was established by the government. In December, M.V. Benavon became the first container vessel to
dock in Malaysia, at the North Terminal of Port Klang in Selangor.[40]
At the time of the Second Malaysia Plan, there were only two sea ports in Malaysia; one in Penang,and one in Klang. The plan called for the construction of two new ports, both in peninsular Malaysia;
one would be in Johor, and another would be in Kuantan, a major town in Pahang. The two main
objectives of these projects were to meet increasing demand for sea transportation of freight, and to
bring development to underdeveloped states. Johor Port was completed in 1977, while Kuantan Port
began full operations in 1984.[41]
Legacy
At the end of the Second Malaysia Plan, the poverty rate was found to have declined from 49% to
43%. Unemployment improved slightly, decreasing from 7.5% to 7.4%. Great strides were made inincreasing Bumiputra involvement in the private sector, however; the employment rate of Bumiputra
in the manufacturing sector increased from 29% to 33%, and from 24% to 34% in the commercial
sector. Bumiputra equity ownership more than doubled from 3% to 7.8%. However, this was
considered unsatisfactory by many, especially as much of the progress had been made by
government enterprises holding the equity in trust.[42] Although the plan had initially targeted a GDP
growth rate of 12.5% a year, only an average of 11% was managed. The growth was extremely
uneven; while in 1973 GDP grew by 27%, in 1975, it grew a paltry 3% due to the global recession at
the time.[43] Despite the government's efforts to tackle unemployment, creating 600,000 new jobs
during the Second Malaysia Plan, the number of unemployed actually increased between 1970 and
1975; in 1970, there were 275,000 unemployed, but by 1975, the number stood at 324,000.[44]
The Second Malaysia Plan was also forced to confront an unexpected problem: inflation. Between
1972 and 1975, the consumer price index (CPI) unexpectedly increased by 40%. In 1974, the
inflation rate averaged 18%, although it was reduced to 7% by 1975.[45] This new conundrum was
therefore considered by the government when it set out the Third Malaysia Plan (19761980).
Another overarching consequence of the Second Malaysia Plan was its efforts in crop diversification.
Despite RISDA failing to meet its targets, the palm oil industry in Malaysia continued to grow. By
1998, palm oil was the second-largest contributor towards Malaysia's GDP, second only to
electronics products.[46]
Overall, the Second Malaysia Plan made much more substantial progress towards reducing the
inequity in the economy than its predecessor had. However, the emphasis on improving the lot of the
Malays greatly worried the non-Malays, and when the Third Malaysia Plan was launched, the
government toned down its rhetoric on affirmative action and emphasised greater economic growth,
which would benefit all.[9]
See also
First Malaysia Plan Malaysian New Economic Policy
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Notes
1. ^ Shuid, Mahdi & Yunus, Mohd. Fauzi (2001). Malaysian Studies, p. 85. Longman. ISBN 983-74-2024-
3.2. ^ Henderson, John William, Vreeland, Nena, Dana, Glenn B., Hurwitz, Geoffrey B., Just, Peter, Moeller,
Philip W. & Shinn, R.S. (1977).Area Handbook for Malaysia, p. 323. American University, Washington
D.C., Foreign Area Studies. LCCN 771294.3. ^ Henderson, et al., pp. 147149, 322.
4. ^ Means, Gordon P. (1991).Malaysian Politics: The Second Generation, pp. 79. Oxford UniversityPress. ISBN 0-19-588988-6.
5. ^ Henderson, John William, Vreeland, Nena, Dana, Glenn B., Hurwitz, Geoffrey B., Just, Peter, Moeller,Philip W. & Shinn, R.S. (1977).Area Handbook for Malaysia, p. 293. American University, Washington
D.C., Foreign Area Studies. LCCN 771294.6. ^ Means, p. 24.
7. ^ Henderson, et al., p. 294.
8. ^ a b Henderson, et al., p. 324.
9. ^ a b Henderson, et al., p. 6.
10. ^ Shuid & Yunus, p. 86, 87.
11. ^ Henderson, et al., pp. 37, 9092.12. ^
a bHenderson, et al., p. 322.
13. ^ Henderson, et al., pp. 323, 325.
14. ^ Henderson, et al., p. 325.15. ^ Henderson, et al., pp. 331332, 339.
16. ^ Henderson, et al., pp. 325, 327.
17. ^ Mispari, Masariah binti, Abdul Wahab, Johara binti & Hasan, Ridzuan bin (2003). Sejarah Tingkatan2, pp. 141, 142. Dewan Bahasa dan Pustaka. ISBN 983-62-7831-1.
18. ^ Henderson, et al., pp. 329, 331.19. ^ Snodgrass, Donald R. (1991). "Successful Economic Development in a Multi-Ethnic Society: The
Malaysian Case" (http://www.cid.harvard.edu/hiid/503.pdf). Retrieved February 17, 2006.20. ^ Heng, Pek Koon (1997). "The New Economic Policy and the Chinese Community in Peninsular
Malaysia" (http://www.ide.go.jp/English/Publish/Periodicals/De/pdf/97_03_03.pdf). The DevelopingEconomies XXXV-3: 262292. Retrieved December 21, 2011.
21. ^ Aslam, Mohamed & Hassan, Asan Ali Golam (2003). "DEVELOPMENT PLANNING AND
REGIONAL IMBALANCES INMALAYSIA" (http://web.archive.org/web/20070929050311/http://www.cassey.com/fea2003-5.pdf).
Retrieved February 17, 2006.22. ^ Kamarudin, Raja Petra (March 22, 2005). "The need for a marriage
counsellor" (http://web.archive.org/web/20071218062116/http://www.malaysia-today.net/loonyMY/2005_03_22_MT_loonyMY_archive.htm).Malaysia Today.
23. ^ Kamil, Nik Fuad, Alwi, Syed Abdillah & Singh, Mukhtiar (1996)."MALAYSIA" (http://www.avrdc.org/pdf/dynamics/Malaysia.pdf). Retrieved February 16, 2006.
24. ^ Butz, William & DaVanzo, Julie (1998). "First Malaysian Family Life Survey, 1976
1977" (http://www.bsos.umd.edu/socy/vanneman/socy699J/mfls1smp.pdf). Retrieved February 16, 2006.25. ^ Mohd. Arshad, Fatimah & Shamsudin, Mad Nasir (1997). "Rural Development Model in
Malaysia" (http://www.econ.upm.edu.my/~fatimah/rural.pdf). Retrieved February 16, 2006.26. ^ Henderson, et al., pp. 307, 308.
27. ^ Henderson, et al., p. 309, 311.28. ^ Mispari, Abdul Wahab & Hasan, p. 131, 133.
29. ^ Henderson, et al., pp. 311312.30. ^ Henderson, et al., p. 313.
31. ^ Henderson, et al., p. 36.32. ^ Henderson, et al., p. 35, 36.
33. ^ Chin, Christine B.N. (1998). "In Service and
Servitude" (http://www.ciaonet.org/book/chin/chin06.html). Retrieved February 15, 2006.
34. ^ Henderson, et al., p. 165.35. ^ Henderson, et al., p. 171.36. ^ Henderson, et al., p. 170.
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37. ^ Henderson, et al., pp. 169170, 174.38. ^ Henderson, et al., p. 29.
39. ^ Henderson, et al., pp. 2930.40. ^ Tengku Mahmud Shah Al-haj, Tengku Jamaluddin Bin (2003). "LIBERALIZATION OF THE
CONTAINER HAULAGE INDUSTRY IN
MALAYSIA" (http://www.unescap.org/ttdw/Publications/TPTS_pubs/bulletin73/bulletin73_ch4.pdf).Retrieved February 17, 2006.
41. ^ Bajpai, Nirupam & Shastri, Vanita (1999). "Port Development in Tamil Nadu: Lessons from ChineseProvinces" (http://www.cid.harvard.edu/hiid/731.pdf). Retrieved February 17, 2006.
42. ^ Henderson, et al., pp. 295296.43. ^ Henderson, et al., p. 285.
44. ^ Henderson, et al., p. 37.45. ^ Henderson, et al., p. 150.
46. ^ "Crude Palm Oil Futures" (http://www.mdex.com.my/education/educpof.htm). Retrieved February 16,
2006.
References
Henderson, John William, Vreeland, Nena, Dana, Glenn B., Hurwitz, Geoffrey B., Just, Peter,Moeller, Philip W. & Shinn, R.S. (1977).Area Handbook for Malaysia. American University,
Washington D.C., Foreign Area Studies. LCCN 771294.
Retrieved from "http://en.wikipedia.org/w/index.php?
title=Second_Malaysia_Plan&oldid=559656101"
Categories: Economic history of Malaysia Economic planning
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