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Lessons from Malaysian development

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19th-Aug-2018       
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Umme Tahira Sumiya :
Malaysia's economy is on its way to achieve high-income status. Its economy is resilient and continues to grow at a sustained pace despite external shocks. It is one of the most successful developing economies in the Asia-Pacific region, having achieved continuous high economic growth over several decades. Many of us believe that Bangladesh can take Malaysia as a development model and should follow the path and process of Malaysia to achieve the ultimate success. Reason behind this opinion is- In 1970s, economic condition of both Malaysia and Bangladesh was nearly same. Within almost 50 years Malaysia has been able to rank as one of the influential country based on raw materials (rubber and tin) to one that is among the strongest most diversified, and fastest-growing in South-east Asia. It is going to achieve its three decades periodic vision in year 2020. On the other hand, Bangladesh is on the peak of becoming middle income country. Bangladesh will be recognized as a middle-income nation if it achieves at least an average per capita income of $1,045 for three consecutive years. Bangladesh now aspires to be a middle-income nation by 2021, when the country will celebrate its 50th year of independence. A big question in the present time is, Should Bangladesh follow the path of Malaysia? Will it be good for Bangladesh to take Malaysia as a development model? To what extent Bangladesh can take lessons from Malaysia? How Malaysian model can help Bangladesh to achieve progress?
Before Starting discussion, we need to know about economic history of Malaysia as a nation. And also need to know how the sociological factors, ethnic composition, political environment, government policy and other subjects have contributed to figure the economic development of Malaysia. Then we will be able grant the idea of pursuing Malaysia as a development model.
Both Bangladesh and Malaysia were the British colony. To understand the situation, firstly need to think about the economic history of both Bangladesh and Malaysia at the beginning of their journey as a nation- the early years following these two countries independence from British. It is considered, as these two countries have achieved independence almost at the similar time period, after the Second World War, their initial condition was same. But, this consideration is unacceptable. Malaysia, a federal constitutional monarchy in Southeast Asia, achieved its independence in 1957. On the contrary, Bangladesh was shadow colony of Pakistan after the termination of British colonial period. In the colonial period the British oppressed and picked out resources from Indian Subcontinent but invested in Malaysia, especially on rubber and tin. The British desire was to protect their harvesting commodity product by keeping peace and political stability. Their economic interest was the driving force rather than a desire to govern. So, after independence, Malaysia had a prepared ground for investment by using natural resources.
The economy of Malaysia was predominantly an agricultural one. Majority of the population lived in rural areas. Prevalence of the poverty in the rural areas was the utmost. After independence first government of Malaysia has focused the poverty lying in rural areas and tried to improve not only the standard living of the majority, but also to increase political stability and social harmony. Government first focused on the making the most out of the fertile soil and rich metal and mineral resources, as a means of securing economic development and political stability. It is a worthy of remark that the economic development policies of the British for the Malay States had substantial influence on the social constitution and microeconomic configuration of the independent Malaysia. Nowadays the economy of Malaysia is the 4th largest in Southeast Asia and is the 38th largest economy in the world. Malaysian labour productivity is significantly higher than neighboring Thailand, Indonesia, Philippines or Vietnam due to a high density of knowledge-based industries and adoption of cutting edge technology for manufacturing and digital economy. According to the Global Competitiveness Report 2017, the Malaysian economy is the 23rd most competitive country in the world in the period of 2017-18.
Elsewhere, Bangladesh experienced tyrannical rule of the British and Pakistan over two hundred years. After the end of colonial and shadow colonial period, Bangladesh was worn out. It was difficult for Bangladesh to regain its losses. From that situation, at present the market-based economy of Bangladesh is the 43rd largest in the world in nominal terms, and 30nd largest by purchasing power parity; it is classified among the Next Eleven emerging market middle income economies and a Frontier market. According to the IMF, Bangladesh's economy is the second fastest growing major economy of 2016, with a rate of 7.1%.
Many other countries with similar history and social composition have not experienced the same success that Malaysia had. Main reason behind this was sharing of political power. Malaysian Government system was mainly authoritarian. State interference was in every arena of life. Yet Strict and effective leadership is thought to be the formula of Malaysian miraculous progress. Bangladesh experienced stratocracy and a significant number of revolutions took place after independence, one party led authoritarian government has not been endured for a long period.
The vast majority (about 98.5%) of Bangladeshis are of the Bengali ethno-linguistic group.
This group also spans the neighboring Indian province of West Bengal. Minority ethnic groups include Meitei, Tripura, Marma, Tanchangya, Barua, Khasi, Santhals, Chakma, Garo, Biharis, Oraons, Mundas and Rohingyas. The Bangladesh economy has long been dominated by the country's majority group, Bengali.
Here, has taken some policies to assimilate and upgrade the life of minority ethnic groups. Contrary, special opportunity is given to the Malays and the Bhumiputras who constitute the majority (about 60%) of the population. Once Malaysian economy has long been dominated by the country's Chinese and South Asian minorities. Since the early 1970s the government has championed a social and economic restructuring strategy, first known as the New Economic Policy (NEP) and later as the New Development Policy (NDP) that has sought to strike a balance between the goals of economic growth and the redistribution of wealth. The goal of the NEP and the NDP has been to endow the Malays and other indigenous groups with greater economic opportunities and to develop their management and entrepreneurial skills.
Malaysia has to make balance among its region according to need. In spite of ethnic variations and rigidities they formed an all-party coalition. They did prioritize the ethnic and communal assimilation through forming one-party-led government system. All party alliance, Barisan National whose members are ethnic based political parties such as UMNO, MCA and MIC, champions the ethnic groups they represent. This ethnic aspirations and expectations about growth and development have become an important factor in Malaysian policy formation. Political parties' interests are different according to ethnicity. Though it appears the policies were subjective towards the Malays, other portion of ethnicity had not been excluded or if to some extent they were deprived of, strong and authoritative leadership didn't allow anyone to oppose federal constitutional monarchy system of government. The NEP had attempted to assist the Malays and Bumiputras for socio-economic development, also aim to expand and modernize the economy so as to benefit all ethnic groups.
Malaysia is a multi-ethnic society but non-communicative because of language, occupational and cultural segregation. Since the socio-economic structure of Malaysia before and after independence is ethnically divided, it is not surprising that politics, responding to this reality, is also organized on this basis. Malays are mainly farmer. On the contrary, to exploit the natural resources of Malaysia the British hired cheap labor from India to work in their rubber estates and from china to work in the various tin mines. Because of above differences competition in economic sector is rarely seen in. Certainly, Malaysian government has taken some privatization policies to enhance the competition among these tri-ethnic groups for the betterment of the country. In Bangladesh, because of language, occupational and cultural similarity competition in economic sector is a common incidence. Even so, government has occupied several privatization process to augment growth.
Total amount of GDP of Bangladesh (around $30bl) is very much lower than total amount of GDP of Malaysia (around $ 300bl). Following financial express, Income inequality in Bangladesh has widened further despite decline in the rate of poverty, dropping to 24.3 per cent last year from 31.5 per cent six years back. The BBS survey finds Bangladesh's extreme poverty having also declined to 12.9 per cent of the total population in 2016 from 17.6 per cent in 2010. According to the HIES 2016, the income inequality in the urban areas has risen faster than in the rural areas.
According to the UNDP 1997 Human Development Report and the 2004 United Nations Human Development (UNHDP) report Malaysia has the highest income disparity between the rich and poor in Southeast Asia, greater than that of Philippines, Thailand, Singapore, Vietnam and Indonesia. The UNHDP Report shows that the richest 10% in Malaysia control 38.4% of the economic income as compared to the poorest 10% who control only 1.7%. However, according to official statistics from the Prime Minister's Department, inequality has been decreasing steadily since 1970 and the Gini-coefficient dropping. Where the report of HIES shows that Gini co-efficient, which is used to measure income inequality, in Bangladesh has increased to 0.483 at national level in 2016 from 0.458 in 2010 meaning that the rich became richer while the poor poorer during the period.
Malaysia is an Islamic country. But Islamic party is not allowed in their alliance. Religion based conflict is not extreme in Malaysia like Bangladesh. Religion based politics is amalgamated with the birth history of Bangladesh. Religious conflict is a common phenomenon in here. But Malaysian government has forbidden this extremism, strongly handled ethnic tension. Rule of law, high rate of quality public expenditure, privatization process, strong political devise for controlling ethnic tension were some of the most important achievements of Malaysian policy. Malaysian government has also been condemned for negligible freedom of speech, Social tensions, crimes, extremism, patronization, polarization, for implementing trickle down process.
Bangladesh has its own history, tradition, demography, geography, ethnicity, socio-economic dimension. It has own development policy considering the overall scenario of country. If Bangladesh want to take Malaysia as a development model, What Bangladesh can take from Malaysian experiences are effective leadership, rule of law, quality public expenditure - especially in education and health, social stability, forbidding extremism. Only economic growth with high rate of income inequality cannot be the indicator of effective development policy. Envisaging the entire situations, Bangladesh can follow the positive features of Malaysia only if can accept Malaysian treatments in the framework of Bangladesh. If Bangladesh follow the Malaysian development blindly, instead of any judgment, will not be able to reach in the eventual destination and ultimately development will be considered as curse.

(Umme Tahira Sumiya is a 3rd year student of Development Studies, University of Dhaka)

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