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The Draft Development Plan of the Federation of Malaya 1950–55

Published online by Cambridge University Press:  24 August 2009

Martin Rudner
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Extract

Malaya's creditable economic performance prior to the Second World War was very much the product of growth without planning. It would be a mistake, to be sure, to attribute early Malayan economic growth solely to the initiative and enterprise of private individuals and firms acting independently of government. Certainly the British colonial administration, indirectly through fiscal measures and directly through the activities of an increasingly important public sector, had a significant role to play in determining the direction, and incidentally the magnitude, of pre-war economic expansion. Colonial government policy nevertheless remained compartmentalized and its objectives were defined narrowly. There was no idea of maximizing the development of Malaya's economy as a whole. Indeed, the Malayan economy during the decades before the War even lacked fundamental functional integration, for in the words of a World Bank mission, “… Malaya in many respects was rather a geographic region where capital and labor belonging to other economies found it convenient to carry on certain specialized operations, within the British monetary as well as political framework”. Whatever economic growth that did occur involved unplanned, and largely uneven, development.

Type
Articles
Information
Journal of Southeast Asian Studies , Volume 3 , Issue 1 , March 1972 , pp. 63 - 96
Copyright
Copyright © The National University of Singapore 1972

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References

1 A comprehensive economic history of Malaya remains to be written. In its absence reliance must be placed on historical monographs, especially those dealing with particular sectors of the economy, e.g. rubber, and contemporary works on economic analysis of Malaya. Among the latter are Yah, Lim Chong's Economic Development of Modem Malaya, Singapore, 1967Google Scholar; the International Bank for Reconstruction and Development's report, The Economic Development of Malaya, Baltimore and Singapore, 1955 (henceforth: IBRD Report)Google Scholar; and Silcock, T.H. (ed.), Readings in Malayan Economics, Singapore, 1964Google Scholar; all with valuable historical background. For a monographic study of pre-war colonial government policy towards the rubber industry of Malaya, see Bauer, P. T., The Rubber Industry. A Study in Competition and Monopoly, London, 1948Google Scholar.

2 IBRD Report, p. 645.

3 Colonial Development and Welfare, London: HMSO, 12 1945 (Cmd. 6713), para. 10Google Scholar.

4 Colonial Development and Welfare Acts, London: HMSO, 1955 (Cmd. 9375), para. 11Google Scholar.

5 Besar, Mentri, Johore, , Federation of Malaya, Legislative Council Proceedings, 2 09 1948Google Scholar. The then Mentri Besar of Johore was Dato Onn bin Ja'afar, a leading Malay politican and head of the United Malay Nationalist Organization.

6 Lt. Col. Fletcher, G.D.A. (rubber estates), L.C. Proc., 2 09 1948Google Scholar. See also statements by C.T. Pyke and Jules Martin at the same session.

7 Sir Adam B. Ritchie, Chairman's report to the Borneo Company Ltd. annual meeting, 7 December 1949. The Borneo Company was then and still is a major holding company for diverse economic activities in Malaya.

8 On the formulation of the Draft Development Plan, see the Progress Report on the Draft Development Plan, Office of the Member for Economic Affairs, The Treasury, Kuala Lumpur: Government Printer, 1953, pp. 1–2Google Scholar.

9 The deliberations on the income tax question are treated in detail in Rudner, M., The Inter-Relationships Between Economic Development and the Functions of the Political System in Malaya, 1945–1963, Oxford University thesis, 1968Google Scholar.

10 Cf. The Colombo Plan for Co-operative Economic Development in South and Southeast Asia, Report of the Consultative Committee, London: HMSO, 1950 (Cmd. 8080), pp. 40–1Google Scholar.

11 Financial Secretary, L.C. Proc., 26 July 1950.

12 On the basic principles of the DDP see the Draft Development Plan for the Federation of Malaya, Kuala Lumpur: Government Printer, 1950, paras. 56–8.Google Scholar

13 Federation of Malaya Annual Report (1950), p. 65.

14 Cf. Progress Report on the Draft Development Plan, pp. 4–5.

15 Colombo Plan: Consultative Committee Report (1950), pp. 40–1.

16 On the operational assumptions behind the DDP, see the Progress Report on the Draft Development Plan, pp. 5–10.

17 Economic Secretary, L. C. Proc., 26 July 1950.

18 Cf. Progress Report on the Draft Development Plan, para. 123, on these points.

19 Cf. Thuraisingham, E.E.C., L.C. Proc., 26 07 1950Google Scholar.

20 Seang, Heah Foo, L. C. Proc., 18 11 1954, Col. 1043Google Scholar. Other Chinese businessmen wanted “as little interference as possible from the Government”: cf. Sin, Tan Siew, L. C. Proc., 20 03 1953Google Scholar.

21 See L.C. Proc., 26 July 1950, statements by the Mentris Besar of Kelantan, Pahang, Selangor, Dato Hamzah and Tuan Sheikh Ahmad.

22 Mohammed Hashim, Tuan Shiekh Ahmad b., L.C. Proc., 26 07 1950Google Scholar.

23 Thornton, C., L.C. Proc., 26 07 1950Google Scholar.

24 Facer, H.H., L.C. Oroc., 11 07 1951Google Scholar.

25 On the constitutional and political and structure of the Federal government of Malaya, see Wight, M., British Colonial Constitutions, Oxford, 1952Google Scholar; Sheridan, L.A., Malaya and Singapore, Vol. 9 of Keaton, G.W., (ed.), The British Commonwealth, London, 1961Google Scholar; Constitutional Development of the Commonwealth, London: HMSO, 1954Google Scholar; and M. Rudner, The Inter-Relationships Between Economic Development and the Functions of the Political System in Malaya, 1945–1963, Part 2 (1).

26 Progress Report on the Draft Development Plan of the Federation of Malaya, Kuala Lumpur, 1953Google Scholar.

27 The “Briggs Plan” (devised by the then Director of Operations, Sir Harold Briggs) was designed to regroup Chinese squatters suspected of aiding Communist insurgents and relocate them in controlled “New Villages”. At first the colonial authorities considered deporting all rural Chinese as Communist supporters, but from June 1950 the resettlement scheme was put into effect and was officially treated as an item of rural development. On the squatter resettlement programme and New Village scheme see the Report on Resettlement and Development of New Villages, Kuala Lumpur, 1953Google Scholar; Purcell, V., Malaya: Communist or Free?, London, 1954, Chap. 6Google Scholar; and Gullick, J.M., Malaya, London, 1963, Chap. 10Google Scholar.

28 The rubber replanting scheme, begun in 1952, was intended to direct funds towards the replanting of obsolete rubber trees on estates and smallholdings in order to maintain the efficiency of Malaya's leading industry. For an account of the politics of post-war Malayan rubber development, including the adoption of the rubber replanting scheme, see Rudner, M., “The State and Peasant Innovation in Rural Development: The Case of Malaysian Rubber”, in Rudner, M. (ed.), Society and Development In Asia, Jerusalem, 1970Google Scholar.

29 For an analysis of colonial Malayan policy goals according to criteria of custody or development, see Ness, Gayl D., Bureaucracy and Rural Development in Malaysia, (Berkeley, 1967), Chaps. 1 and 2Google Scholar.

30 Federation of Malaya Annual Report (1948), Introduction.

31 High Commissioner Guerney, Inaugural Address, L.C. Proc., 18 November 1948. See also the statement by the Colonial Secretary, H.C. Deb., 3 June 1948, Col. 2489, and the Secretary of State's review of Malayan Affairs, H.C. Deb., 27 February 1951, Cols. 2037–7.

32 L.C. Proc., 19 March 1952, p. 8. This new spirit even transformed the Colonial Office, for by 17 July 1952 the Secretary of State was able to inform the House of Commons of his new-found belief that “We cannot dissociate the economic, social and political problems of this area (i.e. Malaya) from the military problem”. H.C. Deb., Col. 2355.

33 Colombo Plan: Second Annual Report of the Consultative Committee, London: HMSO, 1953, Cmd. 9016, p. 60, para. 8Google Scholar.

34 The High Commissioner, SirMacGillivray, Donald, L.C. Proc., 17 11 1954Google Scholar. This point was re-emphasized by the Financial Secretary in his budget address on the same day, when Emergency expenditure was accorded “top priority” in the 1955 Estimates.

35 Federation of Malaya Annual Report (1951), pp. 82–3Google Scholar.

36 Cf. Ness, G. D., Bureaucracy and Rural Development in Malaysia, pp. 112–6Google Scholar.

37 L.C. Proc., 20 March 1953. Dato Onn was then President of the Independence for Malaya Party and also Chairman of the Rural and Industrial Development Authority (RIDA), and still cut an influential figure amongst Malays, particularly in the Legislative Council.

38 See statements by the Mentri Besar, Johore; Mentri Besar, Kelantan; Tuan Sheikh Ahmad b. Mohammed Hashim; and CaptainAli, Mohammed, L.C. Proc., 19 05 1949Google Scholar. Khoo Teik Ee also reminded the Colonial Office of the funds Britain allegedly owed the Federation for depleting its wartime sterling reserves without sanction: L.C. Proc. 2 September 1948.

39 Sin, Tan Siew, L.C. Proc., 19 05 1949Google Scholar.

40 See statements by Wallich, A.W., Waring, D.T., Fletcher, Lt. Col. G.D.A., Lee, H.S., Ee, Khoo Teik, L.C. Proc., 2 09 1948Google Scholar.

41 Secretary for Defence, L.C. Proc., 26 11 1953Google Scholar. Actually, the Federation Government had officially argued that the Emergency was “carefully planned” by the World Federation of Democratic Youth Conference in Calcutta, February 1948, and was initiated by the Central Executive Committee of the Malayan Communist Party meeting in Singapore, March 1948 (Federation of Malaya Annual Report, 1948). This would seem to qualify the Emergency as an externally directed attack on the Federation, in the official definition at least. Moreover, the Colonial Office itself held that “The Communist campaign had nothing in common with the genuine nationalist movements in South East Asia — It was the work of a few thousand Chinese, mostly born outside Malaya”. (The Colonial Territories [1948–1949], London: HMSO, 1949, Cmd. 7715, para. 154)Google Scholar.

42 Attorney-General, L.C. Proc., 19 05 1949Google Scholar.

43 Financial Secretary, L. C. Proc., 3 09 1953Google Scholar.

44 Federation of Malaya Annual Report (1951), p. 289; Ness, Gayl D., Bureaucracy and Rural Development in Malaysia, pp. 50–56Google Scholar.

45 Gullkk, J. M., Malaya (London, 1963), pp. 111–2Google Scholar.

46 Cf. Tilman, Robert O., Bureaucratic Transition in Malaya (Durham, N.C., 1962), esp. pp. 60–62Google Scholar.

47 Trusted, H., Report of the Public Services Salaries Commission (Kuala Lumpur, 1949)Google Scholar states that only 31 of the 254 officers then on the MCS seniority list were Malays (at the time the only local community eligible for recruitment). The Malayan Establishment Staff List for 1950 reaffirms this pattern. It is interesting to note that locally-recruited MCS officers endured salary abatements of up to 20% under expatriate staff.

48 Report of the Committee on the Malayanization of the Government Service (Kuala Lumpur, 1954), p. 6Google Scholar.

49 See Rudner, M., The Inter-Relationship Between Economic Development and the Functions of the Political System in Malaya, 1945–1963, esp. pp. 144–48Google Scholar, for a consideration of this point.

50 Tilman, , Bureaucratic Transition in Malaya, p. 102Google Scholar; Gullick, J., Malaya, p. 109Google Scholar.

51 Cf. Ness, Gayl D., Bureaucracy and Rural Development in Malaysia, Chap. 4Google Scholar. For a theoretical treatment of the problem of bureaucratic values and organizational performance, see Riggs, Fred, Administration in Developing Countries: The Theory of Prismatic Society (Boston, 1964)Google Scholar, and Hoselitz, B.F., “Levels of Economic Performance and Bureaucratic Structures”, in LaPolambara, J., (ed.), Bureaucracy and Political Development, Princeton, 1964, esp. p. 181Google Scholar.

52 Colonial Under-Secretary, Rees-William, D., H.C. Deb., 22 07 1849, Col. 617Google Scholar.

53 Colombo Plan: First Report of the Consultative Committee, Government Printer: Colombo, 1952, p. 20Google Scholar.

54 Cf. The British Colonial Territories (1951–52), London: HMSO, 1952, Cmd. 8553, Para. 225Google Scholar.

55 See Schoenfield, Andrew's British Economic Policy Since the War (London, 1963)Google Scholar for a treatment of this point. See also The British Colonial Territories (1951–52), Para. 392.

56 The British Colonial Territories (1951–52), pp. 37–8. The Federation's Annual Report for 1952 states (p. 90) that supplies were made up “to a great extent” from the U.K. and other Commonwealth countries, but this must refer to orders placed rather than deliveries made, which tended to be late.

57 The British Colonial Territories (1951–52), Para. 256.

58 See Hazlewood, A.D., “Colonial External Balances Since the War”, Review of Economic Studies, XXI (12, 1953)Google Scholar; Wright, E.M., “Dollar Pooling in the Sterling Area”, American Economic Review, XLIV (09, 1954), pp. 559–78Google Scholar; Glauson, G.L.M., “The British Colonial Currency System”, Economic Journal, LIV (04, 1944), pp. 1–25CrossRefGoogle Scholar; and Greaves, I., Colonial Monetary Conditions, London: HMSO, 1953, Col. No. 10, p. 87Google Scholar, on this point. Whereas institutional ties bound Colonial currencies to sterling, post-war balance of payments problems and U.K. domestic policy greatly restricted the traditional role of London as the area's money market and limited the supply of goods available for intra-Commonwealth trade.

59 See Merican, A.M., Finance in Post War Malaya, Oxford University thesis, 1958, pp. 123–31Google Scholar. The Federation's sterling balances, exclusive of the Currency Board, stood at M$109 million in 1948 and by 1955 had reached M$558 million. This was made up mainly of increases in the Post Office Savings Bank holdings, including the Employees Provident Fund, and in the Government's Sinking Loan Funds.

60 See Hazlewood, A.D., “Sterling Balances and the Colonial Currency System”, Economic Journal, (09, 1954)CrossRefGoogle Scholar on this point. The retention of large sterling balances in London effectively countered the inflow of CDW Funds into the Federation, inhabited the development of a local money market and deprived Malayan public and private enterprise of needed capital. Although the Federal Government recognized the importance of creating a domestic capital market and therefore decided to invest a portion of Post Office Savings Bank, Employees Provident Fund, Sinking Loan Fund and Rubber Industry (Replanting) Fund balances in Malayan securities, by far the greater portion of these remained in London, as did Treasury and Currency Board balances, Cf. statements by the Member for Economic Affairs and Financial Secretary, L.C. Proc., 22 11 1951Google Scholar, 22 November 1952 and 19 March 1953.

61 Cf. The Colonial Development and Welfare Acts: Report on the Administration and Use of Funds, London, 1955, Cmd. 9375, Para. 92.

62 The Colonial Territories (1948–49), London: HMSO, 1949 (Cmd. 7715), Para. 229Google Scholar.

63 Ibid., Para. 224. This “short term shift of emphasis on Colonial development” was to last, however, right through the period 1948–1955

64 Mead, J.D., L.C. Proc., 5 10 1948Google Scholar. At the same time another British business representative, D.T. Waring, accused Britain of “exploiting” Malaya through the Sterling system.

65 Lee, H.S., L.C. Proc., 26 04 1951Google Scholar.

66 Sin, Tan Siew, L.C. Proc., 20 03 1953Google Scholar.

67 Cf. L.C. Proc., statements by Dato Onn (24 January 1951), D.T Waring (24 January 1951), Khoo Teik Ee (19 March 1953), Tan Siew Sin (19 March 1953), and the Resolution of the Federal Legislative Council of 19 March 1953.

68 Waring, D.T., L.C. Proc., 20 11 1952, p. 590Google Scholar.

69 L.C. Proc., statements by D.T. Waring (21 November 1951), and Wong Pak Choy (12 July 1951).

70 Letter by Ahmad, Masir to New Statesman, 30 05 1953Google Scholar.

71 Member for Economic Affairs, L. C. Proc., 21 11 1951Google Scholar.

72 That this was recognized by Federation Planners, see the Draft Development Plan, Para. 432.

73 Statement by Member for Economic Affairs, L. C. Proc., 20 03 1953Google Scholar.

74 Draft Development Plan, Para. 432. When the goods required were of “low priority” or their price differentials were “not very great” they had to be obtained only from Sterling area sources. See also statement by the Member for Economic Affairs, L. C. Proc., 20 03 1953Google Scholar.

75 Progress Report on the Draft Development Plan, p. 10. Shortages of capital goods from Britain prevailed up to well into 1952.

76 The British Colonial Territories (1951–52), Para. 40.

77 High Commissioner's address, L.C. Proc., 25 04 1951Google Scholar.

78 See The Colonial Territories (1951–52), Para. 257, on this point. It may be argued that a high U.K. bank rate also benefited the Colonies by raising the return on their sterling balances; this may be so, but it hardly overcame the retarding effects of a high rate of interest on current developmental investment, nor did it facilitate attempts to create local capital markets in the Colonies. Thus, for example, Federal Government loans remained undersubscribed while commercial bank and even Governmental reserve balances accumulated in London.

79 Some idea of the magnitude of the retarding effect of Sterling area linkages' on Malayan economic development may be obtained when it is considered that about one half of total gross capital formation in the Federation between 1948 and 1955 consisted of imported machinery and equipment (The Colonial Territories 1955–56, London: HMSO, 1956 [Cmd. 9769], Para. 561Google Scholar), which had been subjected to restriction on Sterling area account. Furthermore gross capital formation, was likewise curtailed as a result of import shortages of cement, steel and machinery. The restrictive effect of Federal Government deflationary policies had, of course, further limited capital investment.

80 Cf. Gullick, J.M., Malaya, p. 164Google Scholar. Mr. Gullick was at the time a senior officer in the Malayan Civil Service. It should be noted here that the Office of the Member for Economic Affairs, and its predecessor the Economic Branch of the Federal Secretariat, was concerned with the supervision of trade and production matters, while the Financial Secretariat looked after financial affairs.

81 See Silcock, T.H., The Economy of Malaya (Singapore, 1957)Google Scholar, on the relationship between the Government and Finance Committee: “The Financial Secretary is in the position of a Chancellor of the Exchequer having to submit his entire budget not to a cabinet of his colleagues but to a shadow cabinet of the opposition”, p. 50.

82 At the end of the Colonial period the Attorney-General remarked that the Budget which finally came before the Legislative Council was very much more the Finance Committee's budget than the Government's. Cf. L.C. Proc., 31 August 1955. This was, of course, something of an exaggeration, since the Finance Committee could only modify expenditure levels and did not initiate policy.

83 Statements on the budget were published in the press prior to the Legislative Council debates, a good indication of the Government image of the legislature's role in fiscal matters In Budget debates some of the most outspoken unofficials were British comaiercial representatives, who in all cases gave unqualified support to the principle of the balanced budget, equating it with good business practice. Their arguments were echoed by Malayan members, though some of these members later emerged as opponents to Government financial policy. In the dramatic 1954 Budget debate on the deficit, the only dissenting vote was cast by a British member.

84 Ramani, R., L.C. Proc., 19 11 1954Google Scholar.

85 The Colonial Territories (1948–49), Para. 224.

86 See also The British Survey, June 1952: “Without Malaya, the sterling system as we know it could not exist. Britain would have to halve her imports from the USA — Malaya is, in fact, financing Britain heavily in the present (sterling) crisis, not by way of dividends, but by way of building up sterling balances in London. Malaya owes much to Britain and realizes it, but in a cold monetary sense it is Britain who is in debt to Malaya”.

87 Cf. Secretary of State Nutting, A., H.C. Deb, 23 02 1953, Col. 1711Google Scholar.

88 Colombo Plan: Second Annual Report of the Consultative Committee (Cmd. 9016), London: HMSO, 1953, Para. 37Google Scholar.

89 Cf. Draft Development Plan, Para. 13. See also Ness, G.D., Bureaucracy and Rural Development in Malaysia, pp. 90–97, on this pointGoogle Scholar.

90 Acting Financial Secretary, L.C. Proc., 22 11 1950Google Scholar.

91 Financial Secretary, L.C. Proc., 21 11 1951, p. 429Google Scholar. This it was said, had “always” been the goal of the Financial Secretariat.

92 Cf. Memorandum on the Draft Estimates for 1949, Legislative Council Paper 43 of 48, Para. 15, and Report of the Standing Committee on Finance, Legislative Council by the Financial Secretary (15 November 1949) and Acting Financial Secretary (21 November 1950). Capital spending and new economic and social services were especially affected by this restraint. Surplus finance policy was further abetted by the Treasury's apparent inability to forecast rises in revenues, leading to its making “conservative” estimates even for “Boom” years; See Memorandum on the Draft Estimates for 1951, Legislative Council Paper 58 of 50.

93 Economic Secretary, L.C. Proc., 24 01 1951Google Scholar.

94 Financial Secretary, L.C. Proc., 25 11 1953Google Scholar, “The main plank of Government's present and future financial policy is to get rid of this deficit and bring the Budget back into balance” (emphasis supplied).

95 Cf. High Commissioner's address, L.C. Proc., 25 11 1953Google Scholar. The 1954 estimates imposed “stringent” economies on expenditure by holding departmental spending to 1953 levels and sanctioning increases only where they aid in prosecuting the Emergency or result in higher revenues; by transferring capital expenditure from current to loan account thereby restricting it to self-financing projects; by curbing State/Settlement spending on capital account to two-thirds the 1953 level; by ceasing all recruitment to vacant civil service posts; and by raising taxes especially on petrol and tobacco. Cf. Report of the Standing Committees on Finance, Legislative Council Paper 76 of 53, and Treasury Memorandum on the Draft Estimates for 1954, Legislative Council Paper 83 of 53. Social services were appropriated just sufficient funds “to maintain previous progress”: Financial Secretary, L.C. Proc., 25 11 1953Google Scholar.

96 Financial Secretary, L.C. Proc., 17 11 1954Google Scholar. Fortunately the Rubber Boom of 1955 averted the expected deficit and even yielded a revenue surplus.

97 Expenditure on the Emergency, apart from general defence, was classified separately only from 1954. A.M. Merican, in Finance in post-war Malaya, Table 7, isolates Emergency expenditure for the prior period, an admittedly difficult task. These figures on Emergency spending excluded indirect security expenditure such as resettlement and New Villages.

98 Federal Government sterling reserves totalled M$359 million at the end of 1955 while Federal and State/Settlement expenditure on social and economic services and development for 1955 totalled M$358 million according to Merican, Finance in post-war Malaya, p. 178, Table 6.

99 Cf. Ubaidallah, S.O.K., L.C. Proc., 7 10 1954Google Scholar.

100 Cf. speeches in the Legislative Council, Proceedings on 21 November 1951 by R.B. Carey; D.T. Waring; the Mentri Besar, Selangor; Dato Hamzah; Khoo Teik Ee. According to the arguments advanced, this reserve was to serve as a support for “lean years” although some would have used it to replace tin (wasting asset) revenues.

101 Mathison, J.C., L.C. Proc., 26 11 1953Google Scholar, and Facer, H.H., L.C. Proc., 25 11 1953Google Scholar.

102 See L.C. Proc., addresses by D.T. Waring (20 November 1952), Dato Haji Mohammed Eusoff (26 July 1950), S.O.K. Ubaidallah (15 November 1949), Khoo Teik Ee (19 November 1949).

103 L.C. Proc., 18 November 1954, addresses by C. Thornton and J.C. Mathison.

104 Cf. L.C. Proc., speeches by H.H. Monroe Scott (20 November 1952) and C. Thornton (18 November 1954).

105 Statement by the then Finance Committee member (later Tun) Sin, Tan Siew, L.C. Proc., 20 03 1953Google Scholar.

106 Report of the Standing Committee on Finance, Legislative Council Paper 76 of 53, Para. 8–12.

107 Report of the Standing Committee on Finance, Legislative Council Paper 70 of 54, p. 4.

108 L.C. Proc., addresses by Tuan Sheikh Ahmad (26 November 1953), Enche Mohammed Yusoff Noor (18 November 1954), Datoh Haji Mohammed Eusoff (18 November 1954).

109 L.C. Proc., 18 November 1954, addresses by the Mentris Besar of Kelantan, Pahang, Selangor and Trengganu, and representatives from Perlis, Tuan Sheikh Ahmad b. Mohammed Hashim, and the Settlement of Malacca, Tan Siew Sin.

110 L.C. Proc., addresses by C. Thornton, 18 November 1954; and J.C. Mathison, 26 November 1953.

111 Mathison, J.C., L.C. Proc., 18 11 1954Google Scholar. Some Malays also felt that Government should curtail all other expenditure to fight the Emergency. Cf. Mohammed Eusoff, Dato Haji, L.C. Proc., 27 11 1953Google Scholar.

112 Facer, H.H., L.C. Proc., 20 03 1953, Col. 209Google Scholar.

113 Ee, Khoo Teik, L.C. Proc., speech on debate on 1949 Estates, 18 11 1948, pp. 559–60Google Scholar, and keynote unofficial address in 1950 Budget debate, 15 November 1949.

114 Sopiee, Enche Mohammed, L.C. Proc., 18 11 1954Google Scholar.

115 Noor, Enche Mohammed (‘Labour Bloc’), L.C. Proc., 15 11 1954Google Scholar.

116 L.C. Proc., 20 November 1952, p. 582.

117 Cf. Abdul Rais, Enche Nasaruddin b., L.C. Proc., 20 11 1952Google Scholar.

118 Dato (later Tun) Razak, Abdul, L.C. Proc., 26 11 1954Google Scholar.

119 Menon, V.M.N., L.C. Proc., 20 11 1952Google Scholar.

120 See the IBRD Report, pp. 22–3, on this point. This devolution of powers took two forms: (1) where the State/Settlement Governments were permitted to expand their jurisdiction on matters jointly alloted by the Constitution to centre and regions, as in education, land use, agriculture, forestry, and health; and (2) where by administrative action executive authority was conferred upon State/Settlement Governments while financial and decision-making controls were retained by the Federal Government, e.g. Social Welfare Department. For a detailed study of the federal structure of post-war Malaya, see Simandjuntak, B., Malayan Federalism 1945–1963, (London, 1969)Google Scholar.

121 Cf. IBRD Report, pp. 163–84, which found that the State/Settlements were given to determining levels of expenditure in their fields without, of course, being fully responsible for finding means to defray expenditure. A further problem was the alleged improvidence of State/Settlement Governments since any remaining revenue balances automatically reverted back to the Federal Treasury.

122 Cf. Financial Secretary's address on the 1950 Estimates, L.C. Proc., 15 11 1949Google Scholar; Report of the Standing Committee on Finance, Legislative Council Paper 75 of 53; and Financial Secretary, L.C. Proc., 2 06 1955Google Scholar, on this point.

123 Cf. Report of the Standing Committee on Finance, Legislative Council Paper 70 of 54, pp. 5–6. The previous year's spending levels still remained the starting point for Federal consideration of State and Settlement budget proposals for 1955 even though that year saw Federal allocations based on the more refined per capita standard. Thus while State/Settlement “revenues” were not to be geared to some sort of “need” standard, their spending was still tied to arbitrarily the previous year's, mainly for reasons of Federal budgetary policy.

124 Financial Secretary, L.C. Proc., 2 June, Col. 666–7.

125 Cf. L.C. Proc., Khoo Teik Ee (20 November 1952), Enche Chik Mohammed Yusuf (16 November 1953).

126 Besar, Mentri, Selangor, , L.C. Proc., 15 11 1949Google Scholar.

127 Besar, Mentri, Selangor, , L.C. Proc., 20 11 1952, and 4 05 1955Google Scholar.

128 DrAbdul Rahman, Ismail b. Datoh, member of the Standing Committee on Finance of the State of Johore, L.C. Proc., 20 11 1952Google Scholar.

129 DrAbdul Rahman, Ismail b. Datoh, L.C. Proc., 20 11 1952Google Scholar. Dr. Ismail was at the time a member of the Johore State Finance Committee.

130 Onn, B.H., L.C. Proc., 2 06 1955Google Scholar.

131 Representative of Malacca Settlement Council, L.C. Proc., 20 11 1952Google Scholar.

132 Cf. Sin, Tan Siew, L.C. Proc., 18 11 1948Google Scholar.

133 Cf. MajorMahyidden, Mahmood, L.C. Proc., 26 04 1951Google Scholar.

134 Ahmad, Tuan Sheikh, L. C. Proc., 21 11 1951Google Scholar.

135 Cf. Sin, Tan Siew, Member of the Finance Committee, L.C. Proc., 26 11 1953Google Scholar.

136 CaptainHussein, , Member of the Finance Committee, L.C. Proc., 21 11 1951Google Scholar.

137 Financial Secretary, L.C. Proc., 20 11 1952Google Scholar.

138 Cf. L.C. Proc., 2 June 1955, addresses by the Mentri Besar, Johore; Haji Mohammed Noah.

139 MacLeod, W.M., Member of Finance Committee, L.C. Proc., 2 06 1955Google Scholar.

140 L.C. Proc., 2 June 1955, addresses by Dr Ismail b. Dato Abdul Rahman and Enche Sardon, both of UMNO from Johore. UMNO and the MCA generally abstained from participation in Colonial rule-making organs, preferring the halo of anti-colonialism to the taste of power.

141 Financial Secretary, L.C. Proc., 2 06 1955Google Scholar.

142 For an expansion of this strategy, see Hirschman, Albert O., The Strategy of Economic Development (New Haven, 1958)Google Scholar. Many of the assumptions regarding linkage effects, growth spread and regional equality have been subject to criticism. Cf. Myrdal, Gunnar's Economic Theory and Underdeveloped Regions (London, 1957)Google Scholar.

143 Draft Development Plan, Chapter 11, Para. 58 (b).

144 Draft Development Plan, Chapter 1, Para. 12.

145 The Colonial Empire, 1939–1947, Para. 107.

146 Colombo Plan Report (1950), pp. 40–1.

147 Financial Secretary, L.C. Proc., 26 07 1950Google Scholar.

148 Report of the Standing Committee on Finance, Legislative Council Paper 70 of 54, pp. 4–5.

149 Cf. Report of the Standing Committee on Finance, Legislative Council Paper 76 of 53, Para. 8.

150 J.K. Swaine, Chairman's report to annual general meeting of Sungei Kruit Rubber Estate Ltd., 24 July 1951.

151 Thornton, C., L.C. Proc., 26 07 1950Google Scholar.

152 Sin, Tan Siew, L.C. Proc., 20 03 1953, Col. 166Google Scholar.

153 Thornton, C., L.C. Proc., 18 11 1954, Col. 946Google Scholar.

154 Besar, Mentri, Selangor, , L.C. Proc., 26 07 1950Google Scholar.

155 Cf. L.C. Proc., addresses by Khoo Teik Ee (20 November 1952) and E.E.C. Thuraisingham (19 September 1951).

156 Cf. Yusoff Noor, Enche Mohammed (MTUC), L.C. Proc., 15 11 1954Google Scholar.

157 Cf. Mohammed Hashim, Sheik Ahmad b., L.C. Proc., 5 05 1955Google Scholar, and Resolution of Congress of Padi Planters of Kubang Sebrang, 1 January 1951.

158 Cf. An Economic Review of Malaya 1945–49 (London, 1950), pp. 35–6Google Scholar.

159 High Commissioner's address, L.C. Proc., 25 11 1953Google Scholar. See also Ness, Gayl D., Bureaucracy nad Rural Development in Malaysia, pp. 60 and 76Google Scholar.

160 Cf. Financial Secretary, L.C. Proc., 25 11 1953Google Scholar.

161 Cf. High Commissioner's address, L.C. Proc., 18 03 1953Google Scholar, and Treasury Memorandum on the 1955 Estimates, Legislative Council Paper 71 of 55, Para. 21.

162 Cf. L.C. Proc., addresses by the High Commissioner (25 April 1951) and Financial Secretary (25 November 1953, and 17 November 1954.

163 In the Federation, primary schools were distinguished communally and linguistically and were financed separately. English schools charged fees but had “generous” allocation of free places; Malay and Indian schools were fully maintained by the Government and were free; Chinese schools received some Government assistance but also charged fees. Secondary education was available in Chinese and English fee-charging schools. Specialized vocational and technical training was provided by teacher training institutes and colleges, technical schools and agricultural schools. Cf. Report of the Education Policy Committee, Legislative Council Paper 70 of 52, Para. 14. No study of educational development in Malaya has yet been published, but see the IBRD Report, Chap. 9.

164 Report of the Committee on Malay Education, Kuala Lumpur: Government Printer, 1951Google Scholar; The Report of a Commission Invited by the Federation Government to Study the Problem of the Education of Chinese in Malaya: Chinese Schools and the Education of Chinese Malayans, Kuala Lumpur: Government Printer, 1951Google Scholar. On communalism and education in Malaya, see also Ratnam, , Communalism and the Political Process in Malaya, pp. 133–6Google Scholar, and Purcell, , Malaya: Communist or Free?, pp. 153–61Google Scholar.

165 On National School policy see the Report of the Education Policy Committee, Legislative Council Paper 70 of 52, and IBRD Report, p. 441.

166 Cf. Colonial Secretary Oliver Lyttleton, H.C. Deb., 17 07 1952, Col 2379–83Google Scholar.

167 The Times, 12 December 1951.

168 Financial Secretary, L.C. Proc., 7 01 1953, pp. 817–9Google Scholar, Emphasis mine, M.R.

169 Report of Education Policy Committee, Legislative Council Paper 67 of 54, Para. 9.

170 On the revision of Federal educational policy, see the Report of the Education Policy Committee, and the address of the Member for Education, L.C. Proc., 6 October 1954. No additional public funds were, however, to be appropriated to the further expansion of purely vernacular schools.

171 Report of the Education Policy Committee, Para. 14.

172 Razak, Dato Abdul, L.C. Proc., 26 11 1953Google Scholar.

173 L.C. Proc., 26 November 1953.

174 Cf. Resolution of the Congress of Padi Planters of Kubrang Sebrang, 1 January 1955, and addresses by Malay agricultural representative Ahmad Rais, Enche Nasaruddin b., L.C. Proc., 20 11 1952Google Scholar, and Onn, Enche Hussain b., L.C. Proc., 21 11 1952Google Scholar.

175 Sopiee, Enche Mohamed, L.C. Proc., 6 10 1954Google Scholar.

176 Kong, Yeap Chong, Vice President of Malayan Teachers Union, L.C. Proc., 20 03 1953Google Scholar.

177 Hoe, Toe Eng, L.C. Proc., 7 10 1954Google Scholar.

178 Cf. Ramathan, K. (Malayan Indian Congress), L.C. Proc., 7 10 1954Google Scholar.

179 DrAriff, Kamil Mohammed (Party Negara), L.C. Proc., 26 11 1953Google Scholar.

180 Suleiman, Enche, L.C. Proc., 7 10 1954Google Scholar.

181 Cf. L.C. Proc., addresses by H.H. Facer (20 September 1951), and D.T. Waring (7 October 1954).

182 Department of Educational Report (1955), p. 22. By the end of 1955 only 33 Malay, 5 Indian, and 4 Chinese schools accepted National streams.

183 Federation of Malaya Annual Report (1955), p. 220.

184 According to the Department of Education Annual Reports, in 1949 566,000 out of 940,000 in the age group 6 to 11 were enrolled in primary schools, while in 1955 the figures were 870,000 out of 1 million. See also Report on Education Policy, Para. 4. The IBRD Report maintains an even lower figure of about 45% since a large proportion of those enrolled, estimated at 17%, were in fact overaged (p. 142).

185 Cf. Federation of Malaya Annual Report (1955), p. 220.

186 Cf. IBRD Report, pp. 473–4.

187 Teacher–Pupil Ratios, 1949 and 1955:

Source: Federal Legislative Council Paper 27 of 49: Department of Education Report (1955).

188 See Federation of Malaya Annual Report (1955), pp. 221–30; Department of Education Report (1955), statistical appendices; and IBRD Report, pp. 455–8, on this point.

189 Report on Education Policy, Para. 4.

190 Cf. Final Report of the Commission Appointed to Enquire into Certain Matters Connected with the Sultan Idris Training College, Legislative Council Paper 28 of 55, pp. 223–4. Rubber estate schools, the bastions of rural Indian education, were once described as “mere apologies for educational institutions” (Narayanan, P.P., L.C. Proc., 20 09 1951Google Scholar).

191 Cf. IBRD Report, pp. 467–8.

192 On the teacher supply problem, see the IBRD Report, pp. 455–8.

193 For expenditure on education in the Federation, see IBRD Report, Appendix 2(A). Aggregate capital spending on education over the period was $35 million, the amount estimated for “improvements” in the vernacular school system by the DDP.

194 Cf. Draft Development Plan, Chapter 1, Paras. 25–8.

195 Member for Health, L.C. Proc., 20 11 1952Google Scholar.

196 Medical Department Report (1952), p. 17Google Scholar.

197 Member for Health, L.C. Proc., 20 03 1953Google Scholar.

198 Medical Department Report (1953), p. 21. Finance for the scheme was to come from CDW Funds.

199 Medical Department Report (1955), p. 22. The 8 were either up for tender or under construction at the end of 1955.

200 High Commissioner's address, L.C. Proc., 15 11 1949Google Scholar.

201 Medical Department Reports (1954), p. 3; (1955), pp. 3–4.

202 Medical Department Report (1955), p. 24Google Scholar.

203 Cf. IBRD Report, p. 108; and Merican, , Finance in post-war Malaya, p. 185Google Scholar, on the supply of hospital services.

204 IBRD Report, p. 108; Medical Department Report (1955), p. 24.

205 See IBRD Report, p. 108, for conclusions on medical development in the Federation. While shortage of qualified staff may also have been responsible for plan shortcomings, the completion of training facilities as at Jitra, Kedah was delayed for reasons of finance; cf. Medical Department Report (1955), p. 22.

206 Cf. IBRD Report, p. 111. On Federal Social Welfare policy, see Legislative Council Paper 41 of 49. A strong critique of this policy as an essentially publicly organized dole was made by Labour Party representative Sopiee, Enche Mohammed, L.C. Proc., 18 11 1954Google Scholar.

207 Report on Community Development, Legislative Council Paper 39 of 54, esp. Para. 3.

208 See L.C. Proc., 18 November 1948, pp. B570–84, for the initial debate on social security.

209 Member for Home Affairs, L.C. Proc., 18 11 1954Google Scholar.

210 On housing in the Federation, see the IBRD Report, pp. 116–20. Although some 10–20,000 new dwelling places per year were required just to keep pace with urban population growth, construction lagged far behind and the Housing Trust (established 1951) was only able to complete a total of 311 houses for private sale through to the end of 1955, with 616 more under construction. The greater portion of public spending on housing (Table 1) was for housing government officers and could more properly be termed a “Government” rather than a “social” service (cf. IBRD Report, Statistical Appendix 2A, p. 486, classification). There was no slum clearing or low cost public housing scheme in the Federation, and the Housing Trust built only for immediate and cash sale.

211 The Colombo Plan (1950), Para. 42.

212 See Draft Development Plan, Chapter 2, esp. Para. 62, on this point.

213 Cf. L.C. Proc., statements by the High Commissioner (25 April 1951) and Financial Secretary (25 November 1953, 17 November 1954).

214 This was first mooted in a White Paper, Legislative Council Paper 13 of 49, in order to liberate funds for the Emergency and to rebuild the Federation's cash balances. It was in preparing the 1954 deficit estimates that loan funds were to be extensively employed to finance specific capital projects: Financial Secretary, L.C. Proc., 27 11 1953Google Scholar.

215 Cf. L.C. Proc., 23 July 1952, addresses by tin representative K.J. dimming; Col. H.S. Lee and Dato Hamzalk and Dato Hazi Mohammed Eusoff.

216 Ee, Khoo Teik, L.C. Proc., 23 07 1952, 20 11 1952Google Scholar. This reflected the view of the rubber estate interests. In the event the finance for the second stage of Connaught Bridge came from a Colonial Development Corporation 4 % loan, which provided for convertibility into debenture stock.

217 See statement on loan finance by Member for Economic Affairs, L.C. Proc., 22 11 1951Google Scholar.

218 Member for Economic Affairs, L.C. Proc., 11 09 1952Google Scholar. Government was thus prepared to perform the “saving” function for these public utilities.

219 Cf. Member for Economic Affairs, L.C. Proc., 10 09 1952Google Scholar. “I think it is legitimate for the government to buy and own the … (utility) … and not the consumer, by implication, and it is therefore legitimate for the Government to find the sinking fund contributions … rather than transfer that charge to the consumer by making them pay a bit more so as to make contributions to the sinking fund”.

220 The industries involved included the FMS Chamber of Commerce members advocating expansion of Port Swettenham and its low cost operation, and the tin interests favouring cheap electric power and cheap transport; cf. Cumming, K.J., L.C. Proc., 11 09 1952Google Scholar: “A public utility of the sort under consideration must be regarded from a long term point of view … and therefore it is not merely a question as to when we get our money back”.

221 Opponents included rubber interests refusing to shoulder the tax cost involved as well as Penang merchants rejecting a subsidy for Port Swettenham: L.C. Proc., addresses by Yong Shook Lin (10 September 1952); D.A. MacKay (10 September 1952); Khoo Teik Ee (11 September 1952).

222 Member for Railways and Ports, L.C. Proc., 10 09 1952Google Scholar. This view can only be justified if “economic” projects are regarded as investments while social facilities for education, health and public welfare are not.

223 Member for Railways and Ports, L.C. Proc., 9 11 1952, pp. 524–5Google Scholar, and 21 November 1952, p. 653.

224 Government equity in the Railways earned no return despite the small operating “profit” shown in 1953, 1954 and 1955.

Source: Malayan Railways Annual Reports, adapted.

It was argued that this “subsidy” was necessary to enable the railways to compete with road transport in bulk haulage, a point contested by the IBRD Report, p. 288, since revenues should be expected to meet operating costs plus depreciation and a return on capital if resources are to be properly allocated. The very extended loan time of 60 years constituted, of course, a second form of subsidy through the relatively small annual Sinking Fund contributions required out of current earnings.

225 This was disclosed in 1956, when the Minister of Works, Posts and Telecommunications pointed out that had telecommunications costs been calculated in normal accounting terms, an operating loss, and hence a Government subsidy, would have been apparent. L.C. Proc., 12 July 1956.

226 Central Electricity Board output rose from 159·4 million units in 1950 to 326·4 million units in 1955. Despite interruptions arising from Communist terrorism and difficulties in acquiring materials and loans, the second stage of the Connaught Bridge power station was under construction and initial surveys were being made for a Cameron Highlands hydro-electric station at the end of the period. Cf. Federation of Malaya Annual Report (1955), p. 324.

227 Although the DDP called for an increase in direct exchange lines from 13487 to 20,000 lines, actually 33,270 lines had been installed by 1955. The number of telephones rose from 20,362 to 52,173, and the number of trunk circuits from 245 to 625. Telecommunications Department Report (1955).

228 Railway route mileage and haulage and port handling capacities all showed due increases, but the planned east-west railway and the development of Port Swettenham and Prai lagged behind owing to planning difficulties. IBRD Report, pp. 274–89.

229 Financial Secretary, L.C. Proc., 17 11 1954Google Scholar. Although the DDP called for an increase of 430 miles of road, the actual mileage increase was only 324 miles.

230 Of “agricultural” investment totalling $155.6 million between 1951 and 1955, between $102–120 million pertained to resettlement of squatters; cf. Colombo Plan: Annual Reports of the Consultative Committee, between 1951 and 1955.

231 For a study of the agricultural sector under subsequent development plans see my article, “Malayan Quandary: Rural Development Policies Under the First and Second Five Year Plans”, Contributions to Asian Studies (Leiden), Vol. 1 (1971), pp. 190–204Google Scholar.