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P LANNING P ARADIGM
After the elections in 2008, the new
Democratic Party in Penang announced it
would do away with all reservations. Last
year, the Prime Minister of the country
announced several steps towards abolish-
ing the reservation for the sons of the soil
in the services sector. The equity quotas
and the compulsory local shareholding for
foreign companies too is on its way out.
The purpose of ensuring ownership of
equity for the local Malay achieved, it is
time for investment to be freed up so for-
eign funds could be attracted. In India,
this seemed to have escaped the policy
maker. The under privileged were given
reservations and they occupied lowly jobs,
never in ownership of wealth. Even in
96 THE IIPM THINK TANK
Malaysia, reservations must have bred
ineffi ciency and nepotism, but in India
they did not even seem to have empow-
ered the benefi ciary.
Malaysia embarked on reforms early.
By the early seventies, most ineffi cient
public sector was privatised. While India
was going full steam ahead with a spree of
nationalisation, Malaysia was inviting
private domestic and foreign investment.
Agriculture that was the main occupation
in Malaysia, accounted for over 42 percent
of the GDP in 1970 and ten years later was
down to nine percent. Manufacturing
rapidly grew and in 1980, more than 30
percent of the GDP would come from
industry and manufacturing. In contrast,
Indian manufacturing has contributed less
than 25 percent to the economy for more
than 40 years now and agriculture contin-
ues to employ more than half the working
population even today.
As the demand for tin fell, rubber plan-
tations grew. And then the country made
a switch to palm oil. Today exports of palm
oil contribute substantially to forex earnings.
Forests were sources of much of the
timber trade that Malaysia depended on
in the fi rst half of the twentieth century.
However, responsible forest policy has
ensured that even now more than 50 percent
of Malaysia is covered with forests.
In India, the fi gure is an exaggerated 18
percent today. Trade with Britain came