Ooi-Malaysia-and-the-Cold-War-Era

216  Mat Zin Mat Kib

representatives of their company, the Overbeck and Dent Association, were
empowered to hand over these regions to any of their heirs, associates, suc-
cessors or representatives. This was reiterated in the document appointing
Baron Gustavus von Overbeck as Dato’ Bendahara and Rajah of Sanda-
kan91 by the Sultan of Sulu to address the issues raised by Lopez; it was
the absolute right of Britain to transfer the regions it owned to any party,92
which in this case, was Malaysia.

During the civil case judgement of ‘Dayang Dayang Hadji Piandao with
eight other family members vs the Government of North Borneo and oth-
ers’, Chief Judge C. F. C. Macaskie, who presided over the case, took into
consideration the issue of lease and surrender in arriving at his judgement
on 18 December 1939 in Sandakan. Macaskie ruled that ‘lease’, in this con-
text, could be interpreted as ‘surrender’, and had the same implication and
value as ‘cession’.93 Macaskie arrived at this judgement based on his under-
standing of ‘to grant of our own will and pleasure to Gustavus Baron de
Overbeck … and Alfred Dent Esquire … for ever all the rights and powers
belonging to us over all the territories and lands which are tributary to us’,
that had been outlined in all four aforesaid documents.94 The phrase ‘for
ever all the rights’, which referred to the term ‘lease’, could clearly be in-
terpreted as ‘surrender’. Maxwell and Gibson in their book, Treaties and
Engagement Affecting the Malay States and Borneo (1924), elucidated a
similar interpretation.95 ‘Lease’ as defined within the context stated in the
documents was ‘forever and ever’.96 Professor K. G. Tregonning asserted in
his article (1962)97 that the handovers effected on 29 December 1877 and 22
January 1878 were indeed ‘cession’ and not ‘lease’.98

For the British government, Britain had sovereign rights over North Bor-
neo and no legal claim whatsoever could be made by any party whether
by the Sulu Sultanate heirs (who only had the rights to continue receiving
the cession royalty) or according to the former sovereign rights of Spain
or America over the Sulu islands in the Philippines. The people of British
North Borneo had unquestionable legal rights with the British government
opposing any claim on the island state whether from the Philippines govern-
ment, or individuals in the Philippines.99

This British resolve was due to their awareness of some planned strategies
by the heirs of the Sulu Sultanate, namely Muhammad Esmail Kiram, who
was acting for himself and on behalf of the descendants of Sultan Moham-
mad Jamalul Alam. This group had engaged the legal services of Vicente
D. Gabriel, the Attorney-in-fact to terminate the surrender of regions made
by Seri Paduka Maulana as-Sultan Muhammad Jamaluladzam ibn Seri
al-Marhum as-Sultan Muhammad Fadzalun Sultan on 22 January 1878.100
Britain was no longer interested for any further discussion on the claim
since the concession obtained by the British was valid.101 To strengthen their
case, the British submitted a report by Dr E. Saslawaki, an expert on British
comparative and international law102 and the judgment by the High Court
of North Borneo on the civil suit between Dayang Dayang Hadji Piandao

Philippines’ claim over Sabah  217

together with eight family members versus the government of North Borneo
and others in Sandakan on 18 December 1939.103

In this connection, any claim made on the sovereignty of North Bor-
neo including those by the heirs of the Sulu Sultanate was not valid and
the only rights the Sultanate descendants had were on the agreed mone-
tary share.104

This claim in fact was not merely an issue of sovereignty, but also a form
of extracting more money to fund the lifestyles of certain groups and heirs
of the sultanate as communicated by J. A. Pilcher to J. E. Cable:

There may, nonetheless, be some basis for the Malayan view that what
the Filipinos are really after is money, and Pelaez may, as I have often
suggested in the past, wish to get some lump sum out of us to terminate
the cession monies before North Borneo is incorporated into Malaysia;
he indeed goes after this even if a plebiscite obliged him to forego ter-
ritorial ambitions. Filipinos are unfailingly money grabbing[,] and the
Malays, being closer to them in many ways [as] they are, may well be
able to assess their motives better that I can.105

Pilcher’s statement here was based on evidence obtained by Britain of
Nicasio Osmena, the son of Sergio Osmeña (the fourth President of the
Philippines) being promised the amount of US$80 million by the family of
the Sultan of Sulu for the successful return of Sabah from Malaysia.106 It
was this monetary promise, and his own vested interests, that prompted
Nicasio Osmena to search for documents pertaining to the Sabah claim.107
His actions, although more for personal gains, were somewhat justified, in
that the Philippines-Sulu Sultanate relations ceased to exist on 22 March
1915, when the former terminated the latter’s political power and no longer
acknowledged the Sultanate.108

The issue of cession payment did not satisfy several family members of
the Sulu Sultanate even until today. This dissatisfaction was manifested
through the military incursion into Kg. Tandua, Lahad Datu on 9 Febru-
ary 2013 by 150 soldiers led by Rajah Mudah Agbimuddin Kiram, on the
instructions of Sultan Jamalul Kiram III. The ‘army’, comprising mostly
heirs and issues of the Sulu Sultanate, then infiltrated Semporna, from
where eight Malaysian police officers were later murdered during a con-
frontation between the two conflicting sides.109 Kuala Lumpur-Manila re-
lations were transparent, with Manila supporting the two calls by President
Benigno Aquino III urging the invading army to exit Sabah and return to
their homeland. This action was questioned by Sultan Jamalul Kiram III,
the Sultan of Sulu, who conveyed his amazement at the Philippines gov-
ernment backing of Malaysia to the Philippine Daily Inquirer.110 The Kuala
Lumpur-Manila relations were akin to the Philippines endorsing Malay-
sia as a sovereign state, and nullifying the validity of the Sulu Sultanate
heirs’ claim due to the government’s refusal to recognize the existence of

218  Mat Zin Mat Kib

the Sultanate since 22 March 1915.111 The claim, perceived as being per-
sonal to the Sulu Sultanate lineage, is still pursued to the present day by the
Amilbangsa, Kiram III, Akjan and Maharaja Adinda, descendants with
their demands yet to be resolved even within their own families. The Sulu
Sultanate heirs especially from the Kiram III lineage are pursuing both the
issues of cession money and their claim over Sabah.112

Post-Cold War Kuala Lumpur–Manila relations

Although the Cold War ended in 1991, the Philippines’ claim on Sabah
has persisted even to the current era. Besides the Kuala Lumpur-Manila
relations in the cession money claim issue as earlier stated, the Philippines
government had on 13 March 2001 filed to the Registry of the Interna-
tional Court of Justice (ICJ) an application for permission to intervene
in the judgment case concerning the sovereignty over Pulau Ligitan and
Pulau Sipadan whereby both islands are linked to an additional agree-
ment effected on 29 April 1903 in Sandakan between Sultan Mohammad
Jamalul-Kiram II and the North Borneo Chartered Company whereby the
Sultan agreed to cede all islands from Banggi to Sibuko Bay – inclusive of
Ligitan and Sipadan – to the British. The North Borneo Chartered Com-
pany agreed to the terms set by the Sultan, which among other things stip-
ulated an annual cession payment of Malayan dollar M$300 to be made to
Kiram II and his demand for arrears backdated to 1878, which amounted
to M$3,200.00 in total.113 The International Court of Justice dismissed the
application by the Philippines government.114 The Indonesia-Malaysia ter-
ritorial conflict also ended when the International Court of Justice in its
ruling on 7 December 2002 reaffirmed Malaysia’s ownership over Ligitan
and Sipadan.

The Philippines and Malaysia are both involved in the dispute over the
Spratly Islands. These islands have been of interest to the governments of
China, the Philippines, Malaysia, Taiwan and Vietnam since the 1940s with
their locations linked to the People’s Republic of China and Taiwan, Britain
and France. These five governments set up base on a total of 48 islands/reefs
within Spratly Islands, with China (11), the Philippines (eight), Malaysia
(three), Taiwan (one) and Vietnam (25).115 All the islands/reefs command
critical economic and security values. The Philippines’ Claim over the
Spratly Islands began in May 1956116 although it was only in April 1972 that
the government declared their rights to the eight islands/reefs they had oc-
cupied. The new map of Malaysia, issued on 21 December 1979, claimed
ownership of the southern part of the Spratly Islands in accordance with
the 1958 Geneva Convention. The nations involved in the dispute effected
the approach of international détente, the so-called end of the Cold War
movement among the countries in conflict over the South China Sea. This
in itself referred to the Philippines and Malaysia, which were viewed as the
new post-war claimants in the Spratly dispute.117

Philippines’ claim over Sabah  219

Malaysia and the Philippines share the South China Sea (including Cele-
bes Sea and Sulu Sea) and face the common problem of piracy. Throughout
2010 until 2016, both countries experienced a series of pirate attack inci-
dents as stated in the following:

Malaysian waters still appear to be a major spot in the South China Sea
as 18 attacks occurred there in 2010, 16 in 2011, 12 in 2012, 9 in 2013, 24
in 2014, 13 in 2015 and 7 in 2016. Philippines waters also experienced a
steady increased of piracy as 3 attacks in 2012, 3 attacks 2013, 6 attacks
in 2014, 11 attacks in 2015 and 10 attacks in 2016 were reported there.118

The two countries had their own specific ways of dealing with the pirate
menace such as periodic sea patrol by the Malaysian Maritime Enforcement
Agency in the Celebes Sea and Sulu Sea. To deal with piracy in Sabah’s
East Coast, the government implemented a periodic curfew system from 6
o’clock in the evening until 6 o’clock the following morning for certain areas
referred to as the Eastern Sabah Security Zone (ESSZONE) encompassing
the seven districts of Tawau, Semporna, Kunak, Lahad Datu, Kinabatan-
gan, Sandakan and Beluran. The curfew came into effect in the wake of the
Lahad Datu incursion in February 2013.

Despite the ongoing Philippines’ claim on Sabah, Kuala Lumpur-Manila
relations have remained cordial. For the Malaysian government, the claim is
a non-issue as clearly indicated by the country’s role and commitment as me-
diator in the peace negotiations between the Moro Islamic Liberation Front
(MILF) and the Philippines government. Malaysia is resolved on respecting
the sovereignty of the Philippines and practising non-interference in the Re-
public’s internal matters, in line with the aspiration of ASEAN. Malaysia, in
fact, holds true to the spirit of regional collegiality and solidarity, and is will-
ing to extend help and cooperation when necessary. The negotiations began
with the ceremony to officiate the Implementation Phase of the Mindanao
Peace Talk held on 13–14 August 2016 in Kuala Lumpur. Present at the cere-
mony were Jesus Dureza, Advisor to the President of the Philippines on Peace
Process, Murad Ebrahim, Chairman of MILF, and Datuk Tengku Ab Ghafar
Tengku Mohamed as Facilitator in the Philippines Government-MILF Peace
Process. The Malaysian government takes pride in being the mediator in the
peace negotiations and contributing towards the increased level of security
and stability in Mindanao and the region, more so when this decades-old
conflict has led to the deaths of tens of thousands.119

Kuala Lumpur-Manila relations clearly demonstrated that although the
Philippines’ Claim on Sabah is ongoing, the two parties concerned put pri-
ority over universal issues facing the two countries such as the sovereignty
of Malaysia-the Philippines and regional peace. This is also related to both
countries adopting similar democratic-capitalist outlooks inherited from
Britain and America and rejecting the communist-socialist idealism of the
Soviet Union.

220  Mat Zin Mat Kib

Conclusion

The Philippines’ claim on Sabah started in 1963 during the Cold War era
and remains unresolved to contemporary times. The main actors in this
claim are the governments of Malaysia and the Philippines. While Malaysia
is more historically linked to Britain and the Philippines to the US, both
are still relatively fortunate since these major power nations in the post-war
bipolar world subscribe to the same democratic-capitalist ideology. As such,
Malaysia and the Philippines are able to reject the communist-socialist ide-
ology of the Soviet Union, another major Cold War power.

The formation of Malaysia on 16 September 1963 was the Grand Design
conceptualized and initiated by Tunku Abdul Rahman, who envisaged the
coming together of Malaya, Sabah, Sarawak and Singapore,120 based on a
proper balance of ethnic communities and his wish to prevent the infiltra-
tion and spread of communist ideology in the country. His efforts towards
this end were opposed by Indonesia, which itself had increasingly turned
to communist ideology at that material time. The Philippines also rejected
Tunku’s efforts based on geopolitical factors that viewed the establishment
of Malaysia as an action that endorsed Sabah as Malaysia’s rights. Although
the ceding of North Borneo could be traced historically back to 1878, the
Philippines does not acknowledge or recognize this, which has led to the
claim issue becoming more and more protracted even up to the current
post-Cold War era. This claim, without doubt, impacts on Kuala Lumpur-
Manila relations although it has not escalated into conventional war with
both governments choosing the path of regional interest and peace. The
Kuala Lumpur-Manila dispute on the Sabah claim is more of an ongoing
‘storm in a teacup’ scenario, that in itself, is a blessing, in that Malaysia and
the Philippines were once colonies of Britain and the US, two major power
nations in the post-war bipolar world effecting similar democratic-capitalist
ideologies and rejecting the other major power nation of the Soviet Union.

Notes

Philippines’ claim over Sabah  221
Commission, and became the Cobbold Commission’s Permanent Advisor. He
was tasked to review the opinion of the people of Sabah and Sarawak to join
Malaysia. His role in the formation of Malaysia with the participation of Sabah
and Sarawak was so significant to the extent that he was called the architect of
Malaysia.
8 In the context of international relations, the relationship structure and compe-
tition of these two powers is known as the bipolarity structure. See Paul R. Viotti
and Mark V. Kauppi, International Relations Theory: Realism, Pluralism, Glo-
balism (New York: Macmillan Publishing Co., 1993), p. 575; Mohd. Noor Mat
Yazid, ‘The Cold War, Bipolarity Structure and the Power Vacuum in the East
and South East Asia after 1945’, Journal of Global Peace and Conflict, 2, 1 (June
2014): p. 121.
9 For example, see Telegram from Foreign Office to Manila, 16 Nov 1962, FO
371/166601 XC21701 (NAUK). There was a paragraph (no. 1.iv) on this issues:
‘There would be no agreed agenda for these discussions, but when they where
opened we would see that they were limited to the legitimate interests of Philip-
pines, i. e. security, communications of cession monies, trade, piracy, etc.’
10 Ghazali Shafie, Ghazali Shafie’s Memoir, p. 361.
11 Rodolfo C. Severino, Where in the World is the Philippines? Debating its Na-
tional Territory (Singapore: Institute of Southeast Asian Studies, 2011), p. 31.
12 Robert Jackson and Georg Sorensen, Introduction to International Relations
(Oxford University Press, 2001), p. 85.


15 See E. H. Peck, ‘Philippine Claim: U. S. Reactions’, 22 October 1962, FO
371/166601 XC21701 (NAUK); and F. A. Warner to Foreign Office, 14 Novem-
ber 1962, FO 371/166601 XC21701 (NAUK); Outward Telegram from Com-
monwealth Relation Office to Ottawa, Canberra and Wellington (Rptd: Kuala
Lumpur, Delhi, Karachi, Colombo, Manila, Djakarta, Jesselton, Washington,
New York, Commissioner-General Singapore), ‘Philippine Claim to North
Borneo’, 20 October 1962, FO 371/166601 XC21701 (NAUK). The telegram con-
tained a summary of a memorandum given to the American Embassy.
16 Severino, Where in the World is the Philippines? pp. 31–32.
17 See below.
18 F. A. Warner to Foreign Office, 14 November 1962, FO 371/166601 XC21701
(NAUK).
19 Ibid.
20 James P. Ongkili, Nation-building in Malaysia, 1946–1974 (Singapore: Oxford
University Press, 1985), p. 152.
21 Grand Design, PREMII/3418 XC22452. CO1030/608 XC22452 (NAUK) (em-
phasis added).
22 British Commissioner’s letter from Kuala Lumpur to the British Commissioner
in Singapore, 31 December 1958. CO 1030/608 (NAUK).
23 Mohamad Rodzi Bin Abd Razak, ‘Konfrontasi Indonesia-Malaysia 1963–1966:
Konflik dan Penyelesaian [Konfrontasi Indonesia-Malaysia 1963–1966: Con-
flict and Resolution]’, MA thesis, Universiti Kebangsaan Malaysia, 2009, p. 45
(emphasis added).
24 Ibid. Regarding Brunei’s position, Lord Perth explained that it is the right of
the people of the state to decide on the merger issue. Note of my talk (Lord
Selkirk) with Tunku Abdul Rahman, 10 June, 1960, PREMII/3418 XC22452.
CO1030/608 XC22452 (NAUK).
25 Mohamed Noordin Sopiee, From Malayan Union to Singapore Separation:
Political Unification in the Malaysia region 1945–1963, 2nd ed. (Kuala Lumpur:
Penerbit Universiti Malaya, 2005), p. 136.

222  Mat Zin Mat Kib
26 For racial compositions of Malaya and Singapore, and Malaya, Singapore

and the Borneo Territories (Sarawak, Brunei and Sabah), see Ongkili, Nation-
building, pp. 153–154.
27 See ‘Singapore, The Malayan Federation and the Borneo Territories@ (C.P.C
(61) 9), PREMII/3418 XC22452. CO1030/608 XC22452 (NAUK).
28 Mohamad Rodzi Bin Abd Razak, ‘Konfrontasi Indonesia-Malaysia
1963–1966’, p. 45.
29 Note of my talk (Lord Selkirk) with Tunku Abdul Rahman, 10 June, 1960,
PREMII/3418 XC22452.
30 Grand Design, PREMII/3418 XC22452. CO1030/608 XC22452 (NAUK).
31 Ibid.
32 Ibid.
33 Mohamad Rodzi Bin Abd Razak, ‘Konfrontasi Indonesia-Malaysia 1963–1966’,
p. 4.
34 H. Nield to Mr. Melville, 2 January 1959, CO1030/608 XC22452. (NAUK).
35 Duncan Sandy to Tunku Abdul Rahman, 5 June 1961, PREMII/3418 XC22452.
CO1030/608 XC22452 (NAUK).
36 Tunku Abdul Rahman’s memorandum to Harold Macmillan, Integration of
British North Borneo and Singapore with the Federation of Malaya, 26 June
1961, PREMII/3418 XC22452. CO1030/608 XC22452 (NAUK).
37 Ibid.
38 Johan Saravanamuttu, Malaysia’a Foreign Policy the First Fifty Years: Alignment,
Neutralism, Islamism (Singapore: Institute of Southeast Asian Studies, 2010), p. 52.
39 Harold Macmillan to Tunku Abdul Rahman, 3 August 1961, PREMII/3418
XC22452. CO1030/608 XC22452 (NAUK).
40 Ibid.
41 Tunku Abdul Rahman to Harold Macmillan, 11 August 1961, PREMII/3418/
XC22452. CO1030/608 XC22452 (NAUK).
42 Ibid.
43 Kunaseelan Muniandy, Hubungan Malaysia-Indonesia 1957–1970 [Malaysia-
Indonesia Relations 1957–1970] (Kuala Lumpur: Dewan Bahasa dan Pustaka,
1966), p. 40.
44 Ibid.
45 Ibid.
46 Ibid.
47 For instance, see Rohani binti Abdul Ghani, ‘Dasar British terhadap Indonesia,
1945–1967 [British Policy towards Indonesia, 1945–1967]’, PhD thesis, Faculty
Social Sciences and Humanities (Bangi: Universiti Kebangsaan Malaysia,
2012), pp. 101–179; Richard Mason, ‘Nationalism, Communism and the Cold
War: The United States and Indonesia during the Truman and Eisenhower
Administrations’, in Reflections Southeast Asian History since 1945, edited
by Richard Mason and Abu Talib Ahmad (Pulau Pinang: Penerbit Universiti
Sains Malaysia, 2006), pp. 122–127.
48 Mohamad Rodzi Bin Abd Razak, Konfrontasi Indonesia-Malaysia 1963–1966,
p. 113.
49 ‘Study of the Possible Grounds Upon Which the Philippines Government Might
Base its Claim’, Part 3, FO 371/169980/XC 6996 (NAUK); ‘Serrano Warns Ma-
laysia will Defeat Borneo Claim’. FO 371/169980/XC 6773 (NAUK).
50 The Manila Chronicle, 26 September 1963, FO 371/169980/XC 6874 (NAUK);
The Saturday Chronicle, 28 Sept 1963, FO 371/169980/XC 6874 (NAUK).
51 President Diosdado Macapagal’s address to the Philippine Congress, 28
January 1963, Philippine Claim to North Borneo (Sabah) (manila: Bureau of
Printing, 1964), vol. 1, p. 6.

Philippines’ claim over Sabah  223
52 J. A. Pilcher to the Foreign Department dated 11 April 1962, FO 371/166591/XC

21600 (NAUK). Also see Nik Anuar Nik Mahmud, Tuntutan Filipina ke Atas
Borneo Utara, (Bangi: Penerbit Universiti Kebangsaan, 2001), p. 65.
53 J. A. Pilcher, British Embassy in Manila to F. A. Warner’s Department of South-
east Asia, Office of Foreign Affairs, London, 10 October, 1962. FO 371/166601/
XC21701 (NAUK).
54 Ibid.
55 The areas stated in three grants dated 29 December 1877.
56 Outward Telegram from Commanwealth Relation Office, 1 May 1962. FO
371/166591/XC 21600 (NAUK); T. Peters, British Embassy in Malaya to J. E.
Cable, 2 May 1962. FO 371/166591/XC 21600 (NAUK).
57 E. H. Peck to J. A. Pilcher, 3 August 1962. FO 371/166597/XC21600 (NAUK).
58 Draft minutes ‘Prime Minister: PM/62/156’, 17 December 1962. FO 371/166603
XC 2168 (NAUK).
59 E. H. Roach, Colonial Attache, British Embassy, Washington to J. D. Higham,
Eastern Department, Colonial Office, London, 15 June 1949. CO 537/4749/137458
(NUK). Also, see Washington Evening Standard, 9 June 1949.
60 J. D. Higham, The Colonial Office, The Church House, Great Smith Street,
London to E. E. Sabben-Clare, Colonial Attache, British Embassy, Washing-
ton, 29 June 1949. CO 537/4749/137458.
61 Overbeck was the consul of the Austro-Hungarian Empire based in Hong
Kong. Alfred Dent, who headed the firm of Dent Brothers and Company,
No. 11, Old Broad Street, merchants and commission agents in the City of
London, was a prominent colonial merchant and entrepreneur. In 1878, in
partnership with Overbeck, Dent secured a territory in northern Borneo
from the rulers of Sulu that subsequently became British North Borneo. See
Graham Irwin, Borneo Abad Kesembilan Belas: Kajian Mengenai Persain-
gan Diplomatik [Nineteenth Century Borneo: A Study of Diplomatic Rivalry],
trans. Mohd. Nor Ghani and Noraini Ismail (Kuala Lumpur: Dewan Bahasa
dan Pustaka, 1986), p. 249.
62 ‘A History of Borneo’, Part 2. FO 371/169980/XC 6996 (NAUK); International
Court of Justice: Case Concerning Sovereignty Over Pulau Ligitan & Pulau
Sipadan (Indonesia/Malaysia), Memorial of Malaysia, Submitted by the Gov-
ernment of Malaysia, vol. 2, 2 November 1999. The letters of the agreement
were: (1) Grant by Sultan of Brunei of Territory Comprising Gaya Bay and
Sepanggar, 29 December 1877, (2) grant by Sultan of Brunei of Territories from
Paitan to Sibuku River, 29 December 1877, and (3) grant by Sultan of Brunei of
Territories from Sulaman River to River Paitan, 29 December 1877.
63 Grant by Sultan of Brunei of Territories from Paitan to Sibuku River. Grant
by Sultan of Brunei of Territories from Paitan to Sibuku River, 29 December
1877. ‘A History of Borneo’, Part 2. FO 371/169980/XC 6996 (NAUK) (emphasis
added). Also, see FO 371/166591 XC21600 (NAUK).
64 Grant by Sultan of Brunei of Territory Comprising Gaya Bay and Sepang-
gar, 29 December 1877. ‘A History of Borneo’, Part 2. FO 371/169980/XC 6996
(NAUK); Memorial of Malaysia: Case Concerning Sovereignty Over Pulau
Ligitan & Pulau Sipadan (Indonesia/Malaysia), vol. 5 (Atlas). Submitted by the
Government of Malaysia. The Hague, Netherlands: International Court of Jus-
tice, 2 January 1999, p. 4. Also see FO 371/166591 XC21600 (NAUK).
65 Letter [of] Sultan Muhammad Jẻmal al-Aadzam, A. H. 1279, CO 874/942
(NAUK); Letter to A. F. Richard, 6 Oct 1931, CO 874/942 (NAUK); Letter no.
740 entitled “Claim of Sultan of Sulu”, 29th October 1931, CO 874/942 (NAUK).
Also, see K. G. Tregonning, A History of Modern Sabah, 1881–1963 (Singapore:
University of Malaya Press, 1965), p. 14.

224  Mat Zin Mat Kib
66 Letter of Secretary of North Borneo, 7 November 1931; CO 874/942 (NAUK);

Letter of Secretary of North Borneo to A. F. Richards, Governor of North
Borneo entitled ‘The Sultan of Sulu’, 19 November 1931. CO 874/942 (NAUK);
Despatch no. 459, 31 July 1927. CO 874/942 (NAUK); Despatch no. S. 178/30, 30
June 1930. CO 874/942 (NAUK).
67 Letter of Secretary of North Borneo to A. F. Richards, Governor of North
Borneo entitled ‘The Sultan of Sulu’, 19 November 1931. CO 874/942 (NAUK).
68 D. R. Maxwell, Secretary of Sabah to Seri Paduka Sultan Mohammed Jamel-
luel Kiram, Sultan Sulu in Sandakan, 23 July 1927. CO 874/942 (NAUK); Letter
no. 1024/27 (no. 459) issued by Government House, North Borneo, Sandakan, 4
Oct 1931. CO 874/942 (NAUK).
69 Grant by Sultan of Brunei of Territory Comprising Gaya Bay and Sepanggar.
70 Grant by Sultan of Brunei of Territories from Paitan to Sibuku River. ‘A His-
tory of Borneo’, Part 2. FO 371/169980/XC 6996 (NAUK).
71 Grant by Sultan of Brunei of Territories from Sulaman River to River Paitan.
Grant by Sultan of Brunei of Territories from Sulaman River to River Paitan,
29 December 1877. ‘A History of Borneo’, Part 2. FO 371/169980/XC 6996
(NAUK). Also see FO 371/166591 XC21600 (NAUK).
72 Emmanuel Pelaezs Statement, Vice President cum Secretary of Philippine
Foreign Affairs, Manila, 3 April 1963, The Philippine Claim to North Borneo
(Sabah) (Manila: Bureau of Printing, 1964), vol. 1, p. 1.
73 ‘Calendar of events in the Philippines During 1962’. FO 371/1669964/ XC7577
(NAUK).
74 Telegram no. 2185 from New York to Department of Foreign Affairs, 28 No-
vember 1962. CO 1030/951/7074 (NAUK).
75 Severino, Where in the World is the Philippines? p. 54.
76 ‘The 1987 Constitution of the Republic of the Philippines’, Article I; http://
www.chanrobles.com/ article1.htm#.XZcTifZuI2w (accessed 4 October 2019).
77 Served as Under Secretary of the Ministry of Foreign Affairs during President
Ramon (30 December 1953–17 March 1957). He was appointed as a Senator
twice and held the post of Under Secretary of the Ministry of Foreign Affairs in
1987–1992 during President Corazon Aquino (25 February 1986–30 June 1992).
See Severino, Where in the World is the Philippines? p. 43.
78 Ibid.
79 ‘Following is Text of Aide-Memoire Handed to Philippines Ambassador on
May 24, 1962’. FO 371/166595/XC 21701 (NAUK); letter of P. F. De Zulueta,
4 June 1962. FO 371/166595/XC 21701 (NAUK). Also see Emmanuel Pelaez’s
Speech, Vice President of the Philippines cum Secretary of Philippine Foreign
Affairs at the Opening Ceremony of the British-Philippines (British-Philippines
Talks also known as Anglo-Philippines Talks) London, 28 January 1963. FO
371/169979 6957 (NAUK); Philippine Claim to North Borneo (Sabah) (Manila:
Bureau of Printing, 1964), vol. 1, p. 9; and Ghazali Shafie, Ghazali Shafie’s
Memoir, p. 327.
80 ‘Following is Text of Handed to her Majesty’s Ambassador, Manila by Under-
Secretary for Foreign Affairs on June, 1962, and released to the Press an Hour
Earlier’. FO 371/166595/XC 21701 (NAUK). Also see Diosdado Macapagal, The
Philippines Turns East (Quezon City: Mac Publication House, 1966), p. 18.
81 Speech by Diosdado Macapagal during the Declaration no. 28, ‘Declaring June
12 as Philippines Independence Day”, Macapagal, The Philippines, p. 2.
82 Grant by Sultan of Sulu of Territories and Lands on the Mainlands of the Island
of Borneo, January 1878. CO 1030/356 (NAUK); International Court of Justice:
Case Concerning Sovereignty Over Pulau Ligitan & Pulau Sipadan (Indonesia/
Malaysia), Memorial of Malaysia, Submitted by the Government of Malaysia,
vol. 2, 2 November 1999.

Philippines’ claim over Sabah  225
83 Commission from the Sultan of Sulu appointing Baron Gustavus von Over-

beck, Dato’ Bendahara and Rajah of Sandakan, 22 January 1878, International
Court of Justice: Case Concerning Sovereignty Over Pulau Ligitan & Pulau
Sipadan (Indonesia/Malaysia), Memorial of Malaysia, Submitted by the Gov-
ernment of Malaysia, vol. 2, 2 Nov 1999. FO 371/169980 XC6996 (NAUK).
84 ‘Following is Text of Aide-Memoire Handed to Philippines Ambassador on
May 24, 1962’. FO 371/166595/XC 21701 (NAUK).
85 Speech by President Diosdado Macapagal to the Philippine Congress, 28
Jauaryn 1963, Philippine Claim to North Borneo (Sabah), vol. 1, p. 6.
86 Telegram no. 249 from Lopez, Lopez, Acting Foreign Affairs Secretary of the
Philippines, 4 October1963. FO 371/166601/XC 21701 (NAUK); ‘Philippine
Press Summary Philippine Claim to North Borneo’, 3–10 October, 1962. FO
371/166601/XC 21701 (NAUK).
87 Telegram no. 2185 from New York to Department of Foreign Affairs, 28 Nov
1962. CO 1030/951/7074 (NAUK).
88 Telegram no. 249 from Lopez, Acting Foreign Affairs Secretary of the Philip-
pines, 4 October 1963. FO 371/166601/XC 21701 (NAUK); ‘Philippine Press Sum-
mary Philippine Claim to North Borneo’, 3– 10 October 1962. FO 371/166601/
XC 21701 (NAUK).
89 Ibid.
90 See grant by Sultan of Brunei of Territory Comprising Gaya Bay and Sepanggar;
grant by Sultan of Brunei of Territories from Paitan to Sibuku River; grant by
Sultan of Brunei of Territories from Sulaman River to River Paitan; and grant by
Sultan of Sulu of Territories and Lands on the Mainlands of the Island of Borneo.
91 See Commission from the Sultan of Sulu appointing Baron Gustavus von Over-
beck, Dato’ Bendahara and Rajah of Sandakan, 22 January 1878.
92 ‘Part 4: Basic of United Kingdom Sovereignty’. FO 371/169980/XC6996
(NAUK).
93 Civil Suit no. 169/30 Dayang Dayang Hadji Piandao (f) of Jolo, Phillippines &
8 others vs. The Government of North Borneo & Others, Chief Justice C. F.
C Macaskie, Sandakan, 18 Dec 1939. CO 1030/536: XC 21086 (NAUK); Let-
ter of The Foreign Servive of the Republic of the Philippines, 15 January 1963
(see Godofredo Ramos, a member of the Philippine Congress of Claims on
Sabah – see section Judgment Decision of Chief Justice C. F. C. Macaskie).
CO 1030/536: XC 6773 (NAUK). Also see Bob Reece, ed., End of an Era: The
Borneo Reminiscences of C. F. C. Macaskie, C. M. G. (Kota Kinabalu: Opus
Publication, 2011), p. 17.
94 Namely, Grant of Gaya Bay and Sepanggar territories by the Sultan of Brunei
on 29 December 1877, grant by the Sultan on 29 December 1877 encompassing
territories from Paitan to Sibuku River, grant for the regions from Sulaman
River to Paitan River and grant by the Sultan of Sulu of Territories and Lands
on the Mainlands of the Island of Borneo on 22 January 1878
95 W. G. Maxwell and W. S. Gibson, Treaties and Engagement Affecting the Malay
States and Borneo (London: Truscott, 1924), p. 158.
96 ‘Part 3: A study of the possible ground upon which The Philippine Government
might base its claim’. FO 371/169980/XC 6996 (NAUK).
97 K. G. Tregonning, ‘The Claim for North Borneo by the Philippines’, Australian
Outlook, XVI (1962): 283–291.
98 Letter of R. F. McKeever, British Consulate, Tamsui to the Far East Depart-
ment, the Office of Foreign Affairs, London, 21 October 1962. FO 371/166601/
XC 21701 (NAUK). Also see Tregonning, ‘The Claim for North Borneo by the
Philippines’, p. 289.
99 ‘Following is Text of Aide-Memoire Handed to Philippines Ambassador on
May 24th 1962’. FO 371/166595/XC 21701 (NAUK).

226  Mat Zin Mat Kib
1 00 Letter of G. L. Clutton, British Embassy, Manila to Selwyn Lloyd, 17 December

1957. CO 1030/536/XC21086 (NAUK); Letter of Vicente D. Gabriel, Attorney-
in-fact to Minister of Foreign Affairs, London, England, 9 December 1957. C.O
1030/536/XC21086 (NAUK).
1 01 Letter of W. L. F. Nuttall, St Helen’s Court, Great St Helen’s, London to J. K.
Kisch, Colonial Office, Sanctuary Buildings, Great Smith Street, London, 6
September 1957. CO 1030/536/XC 21086 (NAUK).
1 02 ‘Sultan Sulu to North Borneo: Philippine Press Summary, 11–18 April 1962’. FO
371/166591/XC 21600 (NAUK).
1 03 Letter of W. L. F. Nuttall, St Helen’s Court, Great St Helen’s, London to J. K.
Kisch, 6 September 1957.
1 04 Despatch no. 76 dated 22 January 1920. CO 874/942 (NAUK); Despatch no.
147 dated 6 March 1920. CO 874/942 (NAUK); Letter no. 147 (2568/19) issued
by Government House, North Borneo, Jesselton 6 March 1920. CO 874/942
(NAUK); Letter no. 268 (2568/19) issued by Government House, North Borneo,
Jesselton, 20 May 1920. CO 874/942 (NAUK); Letter no. 46 (37/21) issued by
Government House, North Borneo, Sandakan, 15 January 1921. CO 874/942
(NAUK). For judgment’s decision, see Reece, End of an Era, p. 109.
1 05 Letter of J. A. Pilcher to J. E. Cable, 8 August 1962. FO 371/166597: XC 21600
(NAUK).
1 06 Telegram from Kuala Lumpur to Manila, 24 December 1962. FO 371/166603:
XC 21687 (NAUK).
1 07 Annual report for the Philippines in 1962. FO 371/166591/XC 21600; Letter
of J. A. Pilcher to Department Office of Foreign Affairs, 11 April 1962. FO
371/169964: XC 7577 (NAUK).
1 08 ‘Payment to the heirs of the Sultan of Sulu’. FO 371/166591/XC 21600 (NAUK).
1 09 Clampdown in Lahad Datu; http://www.theborneopost.com/2013/03/02/
clampdown-in-lahad-datu/, posted on 2 March 2013.
110 ‘Kesultanan Sulu sedia berunding, mahu tuntutan ke atas Sabah diiktiraf
[Sultanate of Sulu is willing to negotiate, demand that the claims on Sabah
is recognized]’, MStar, 4 March 2013; https://www.mstar.com.my/ lokal/
semasa/2013/03/04/kesultanan-sulu-sedia-berunding-mahu-tuntutan-ke-atas-
sabah-diiktiraf/ (accessed 4 October 2019).
1 11 ‘Payment to the heirs of the Sultan of Sulu’. FO 371/166591/XC 21600
(NAUK).
112 Severino, Where in the World is the Phillippines? p. 122.
113 See Confirmation by Sultan of Sulu of Cession of Certain Islands, 22 April
1903, International Court of Justice: Case Concerning Sovereignty Over Pulau
Ligitan & Pulau Sipadan (Indonesia/Malaysia), Memorial of Malaysia, Sub-
mitted by the Government of Malaysia, vol. 2, 2 November 1999, Annex MM
22. FO 371/169979 6957 (NAUK).
114 For futher information, see Application for Permission to Intervene by the
Government of the Phillipines (13 March 2001, Case Concerning Sovereignty
over Pulau Ligitan and Pulau Sipadan Indonesia/Malaysia).
115 Sutarji bin Haji Kasmin, ‘Tuntutan Malaysia ke atas Kepulauan Spratlys
[Malaysia’s Claim to the Spratlys Islands]’, MA thesis, Universiti Kebangsaan
Malaysia, 2009, p. 26.
116 Ibid., p. 39.
117 Hara, Cold War Frontiers in the Asia-Pacific, pp. 155–156.
118 Muhamad Hassan Ahmad, et al., Suppression of Piracy Armed Robbery Against
Ships and Maritime Terrorism: Global and Regional Perspectives (Kuala Lum-
pur: International Islamic University Malaysia Press, 2017), pp. 28–29.

Philippines’ claim over Sabah  227
1 19 Hilal Azmi, ‘Malaysia terus komited kepada perjanjian perdamaian Bang-

samoro [Malaysia remains committed to the Bangsamoro peace treaty]’,
Astro­awani,13August2016;http://www.astroawani.com/berita-malaysia/malaysia-
terus-komited-kepada-perjanjian-perdamaian-bangsamoro-113891 (accessed
4 October 2019); Muhtar Suhaili, ‘Perjanjian damai Bangsamoro: Malaysia
komited jadi perantara [Bangsamoro peace treaty: Malaysia is committed to me-
diation]’, Sarawak Voice, 14 August 2016; https://sarawakvoice.com/2016/08/14/
perjanjian-damai-bangsamoro-malaysia-komited-jadi-perantara/
(accessed 4 October 2019).
1 20 Although Singapore subsequently seceded in 1965, consequent of insurmount-
able issues.

8 The regression of Malaysian
socioeconomic policy

Rise of state discrimination in
the Cold War era, 1970s–1980s

Sivachandralingam Sundara Raja

During the Cold War, one of America’s strategies as the torchbearer of
liberal capitalism was the promotion of cultural inclusivity to exhibit the
ability of a single capitalist state to articulate several ethnic identifications.1
The wider purpose of this was to disprove what might have otherwise been
the case for the communist bloc’s contention of the incompatibility of cul-
tural heterogeneity and a global capitalist system. Communist revolutions
that took place around the world, such as the Chinese Communist Revolu-
tion (1946–1949),2 the Fidel Castro-led Cuban Revolution (1953–1959) and
the events leading to the rise of Ho Chi Minh’s Communist Party of Viet-
nam (CPV) in northern Vietnam, all suggested the propensity of an ethni-
cally homogenous state for a social communist system.3 The failure of the
Malayan communist insurgency, which took place in the form of guerrilla
warfare led by the Malayan Communist Party (MCP) and its armed wings
from 1948 to 1989, could in fact be attributed to the multicultural demog-
raphy of the country where the idea of common ownership failed to tran-
scend individual ethnic lines. Any racialist agenda on the capitalist side of
the so-called ‘Iron Curtain’, especially in America, was then increasingly
criticized for a possible dysfunctional multicultural society and ascribed as
an undesirable opportunity for communist-socialist behaviourism. There-
fore, American policymakers of the Cold War era, by and large, urged for
the separation of politics from ethnicity to expand the scope of its liberal-
capitalist economy. Likewise, Washington needed this to be the case inter-
nationally to safeguard its extensive economic interests.

The broader aim of this present chapter deals not with the American re-
alization of the political and economic importance of forming a domestic
multicultural foundation in the bipolar world, but rather, focuses on the
failure, inability of Malaya/Malaysia4 for not realizing the aforesaid.

The government of Malaya, led by the Malay-dominated coalition of the
Alliance Party (from 1973, Barisan Nasional, BN or National Front),5 sur-
prisingly showed little consideration for racial inclusivity in its socioeco-
nomic restructuring policy particularly from the late 1960s and early 1970s.
Part of the reasons why its domestic policy in the Cold War era was not rem-
iniscent of America’s gradual acceptance of multiculturalism for economic

Rise of state discrimination in the Cold War era  229

progress is the way in which the country was politico-economically devel-
oped during British colonial rule. In the post-independence era, Malaya
did not find itself to be able to practise the idea of separating politics from
ethnic group formation consequent from the policy of racial identification
with economic occupations that developed during the colonial period.
There was a widespread practice of racial division by the British colonial
administration, wherein the new immigrants, namely the Chinese capital-
ists and labourers, the Indian Tamil labourers of plantations and govern-
ment departments, were segregated geographically and economically from
the native Malays from the late nineteenth and throughout the twentieth
century.6 Consequently, Hirschman points to the ‘cultural barriers and hos-
tility between [the] Asian populations’ in the decades of post-independence
Malaya.7

As a newly independent post-colonial country, Malaya evidently adopted
a pro-West and an anti-communist orientation as its foreign policy, tak-
ing into consideration domestic political and security interests.8 The
adoption of the former was largely due to economic interests because it
had little economic flexibility but to build its economy on the colonial era
commodity-export trade of primary products especially rubber and tin.
These respectively accounted around 85 percent and 40 percent in 1957
and remained not drastically altered at 80 percent and 30 percent in 1970.9
Multiculturalism, however, was disregarded as an economic growth strat-
egy, preferring a continuation of the colonial era pro-Malay policy. Previ-
ously implemented to safeguard the economic interests of the native Malays
and as a political strategy for the British to justify its continued colonial
administration, the pro-Malay policy was inevitably held on to by the post-
independence Malayan government.10 The policy, which instilled a sense
of political legitimacy among the Malays, especially from the mid-1940s,
had ushered the rise of nationalistic aspirations among the Malay elites.
This manifested when the United Malays National Organization (UMNO)
spearheaded an opposition front against the racially inclusive British-
designed Malayan Union state and succeeded in putting in place a more
Malay-biased Federation of Malaya in 1948 and, from 1963, Malaysia.11

From a political viewpoint, the implementation of the pro-Malay policy
was a needful strategy for the state to bring about its professed anti-
communist stand. The administration was particularly sensitive to the Malay
population’s sentiment for neighbouring Indonesia, especially in the 1960s,
a period considered to be the peak of the Cold War. As Malaya was itself
already embroiled in its own communist insurgencies, the administration
wanted to detach the Malays, many among whom still felt close attachment
to Indonesia, from forming any emotional affinity to the power struggle be-
tween Indonesian communists, the military and certain Islamist groups in
the country.12 The pro-Malay policy was thus protracted and succeeded, to a
large extent, in diverting the attention of the indigenous Malays towards in-
ternal problems. Together with these, and Malay grouses over their relative

230  Sivachandralingam Sundara Raja

economic backwardness vis-à-vis the Chinese and Indians, there was subse-
quently a rise in the preoccupation of legitimate rights among the Malays.
The effect was to retard multiculturalism in Malaya as evidenced in the case
of deteriorating ethnic relations between Malays and Chinese, due to the
former’s suspicion of the latter’s loyalty to the country and support for the
People’s Republic of China (PRC).13 Evidently, Malayan Prime Minister,
Tunku Abdul Rahman had explicitly expressed in 1967 during an UMNO
annual assembly his misgiving of Malaysian Chinese for their support for
China’s communist expansionism, suggesting them as one of the enemies
of the state.14 The fact that the Chinese predominantly constituted the
communist movement in the country strengthened this perception. None-
theless, there is still much economic interest to Malaya’s adoption of an anti-
communist stance, as it was required to sustain economic relations with its
essentially liberal-capitalist Western allies.

Malaya deviated markedly from the Western Cold War strategy of
promoting multiculturalism in domestic economic policy. The Malayan
government, instead, formulated its socioeconomic policies on racial
grounds, emphasizing state protection for the Malays and, consequently,
marginalizing the non-Malays. This was in fact already evident when the
post-independence Malayan government, as Gomez notes, had selectively
intervened in private enterprises to alleviate the Malays from their state of
poverty created during colonial rule.15 Besides, the government had also
implemented specific measures to solely promote Malay capitalistic de-
velopment through the Rural Industrial Development Authority (RIDA,
1950; reconstituted as Majlis Amanah Rakyat or People’s Trust Council in
1966), and the Federal Land Development Authority (FELDA), established
in 1950 and 1956 respectively.16 Other state apparatuses were also estab-
lished to help overcome the economic backwardness of rural Malays, viz.
the Federal Agricultural Marketing Authority (FAMA, 1956), the Federal
Land Consolidation and Rehabilitation Authority (FELCRA, 1966) and
the Rubber Industry Smallholders Development Authority (RISDA, 1973).
Malay capitalism was, however, not successfully promoted through these
institutions. At the same time, there was also growing awareness among the
non-Malays of the failure of the Alliance government (1957–1970) to redis-
tribute wealth equitably between ethnic groups. These factors quickly took
precedence as matters of great contention in the 13 May racial riot following
the 1969 Malaysian general elections. The riot itself did not begin as an out-
burst of ethnic frustration but merely due to provocation felt by the losing
Alliance supporters when the opposition conducted victory celebrations on
the streets of Kuala Lumpur.17 The event, nevertheless, paved the way for an
upsurge of Malay nationalist and economic-protectionist agenda among the
Malay political elites of the coalition.

Taking this as the point of departure, the chapter then proceeds to discuss
the rise of the perception of legitimate rights, or one which was narrowly in-
terpreted as bumiputera18 sentimentalism, among the Malay political elites

Rise of state discrimination in the Cold War era  231

in the 1970s and 1980s, and to what extent the socioeconomic position of
non-Malay communities, specifically of the Chinese and Indians, were af-
fected as a consequence.

The rise of bumiputeraism during the Cold War
in the 1970s and 1980s

The 1969 riot resulted not only in a major economic policymaking shift in
the country, as it is often suggested, but also brought Malaysia along the
path of socioeconomic regression and a multicultural retrogression not un-
like that of the colonial era. That the ensuing domestic economic policy was
incongruous with the contemporary Cold War era seen as in the complete
termination of the laissez-faire economic system and the introduction of
what could be termed ‘racial economy’ or, more specifically, ‘Malay econ-
omy’. Following the sectarian riots, the radical Malay elites of the Alliance
coalition made it a point that it was the Malays’ vexation of their inferior
economic position compared to the Chinese and, to some extent, the Indi-
ans, that was the root cause of the tragedy.19 In retrospect, the problem of
widespread Malay poverty had not been sufficiently addressed, instead, the
hitherto Malaya/Malaysia Plans focuses on the introduction of capital and
technology.20

What was also lacking in the series of economic plans was a racially
all-embracing affirmative action. Although the government’s development
policy was to usher economic development, its socioeconomic implementa-
tions almost always only addressed to the economic position of the back-
ward Malays, a political responsibility of all parties of the Alliance.21 At
that point, not many funds were allocated for national economic develop-
ment. Nearly half of government expenditure was channelled towards de-
fence and domestic security, namely to address the communist insurgency.22
Government at that stage was directly involved in improving the economic
position of the Malays, given the pressure exerted by the middle-class urban
Malays on the government for greater Malay participation in business.23
Government allocated a total of RM124 million to develop the economic
position of Malays in the First Malaya Plan (1956–1960).24 In the period be-
tween 1965 and 1968, two Malay economic congresses were held to propose
policies and ways to improve the economy of Malays. The Ministry of Unity
and Rural Development sponsored both congresses under the leadership of
its minister, Tun Abdul Razak. The First Congress (1965) submitted 69 pro-
posals to the government seeking assistance to uplift the Malay economy.25
The Second Congress (1968) also urged for greater government involvement
in improving Malay well-being.

Towards the late 1960s, especially in conjunction with the 1969 general
elections, it became increasingly clear that the Malay elites would not ac-
cept Chinese demands for equal participation in economics and politics,
as succinctly expressed by Mahathir Mohamad in his book, The Malay

232  Sivachandralingam Sundara Raja

Dilemma.26 This caused a flare-up of racial conflict following the 1969 elec-
tions. Malay nationalists such as Mahathir and Musa Hitam, who were
critical of Tunku’s pro-Chinese policies, ‘nationalist elements attacked
the Tunku for his allegedly pro-Chinese policies, rose to prominence and
contended that racial-economic imbalance was ultimately responsible for
the racial riots.’27Tun Abdul Razak, one of the Malay elite and succes-
sor to Tunku as prime minister, aspired to produce a new class of Malay
businessmen on par with the Chinese and foreigners. Prime Minister Tun
Abdul Razak (1970–1976) implemented the New Economic Policy (NEP,
1970–1990), a socioeconomic restructuring programme to correct economic
imbalances among ethnic groups within two decades.

The NEP not only to restructure employment in society, but also its
structural ownership. In 1971, the Federal Constitution was amended,
thereafter raising sensitive ethnic issues and special privileges of Malays,
in or outside Parliament, became an offence. The Federal Constitution
also made provisions to legitimize government favouritism for Malays
in education, business and recruitment in public administration. More-
over, any discussions and debates pertaining to the NEP were limited
to its implementation, not the policy itself. Razak also realized that for
national development, the government needed to avoid racial conflicts.
For this purpose, the Alliance Party was expanded in 1974, including a
name change to Barisan Nasional (BN, National Front). It enabled the
participation of a larger number of political parties thereby reducing
politicking, a political strategy called ‘ethnic corporatism’ whereby its
main objective was to strengthen Chinese support. The Pan-Malaysian
Islamic Party (PAS), an Islamist political party, was in the fold of the BN
coalition between 1973 and 1976. Then, in 1971, the trade and industry
portfolio was transferred from the MCA to UMNO. As premier, Razak
also assumed the finance portfolio in 1974. The MCA’s hitherto strong
influence over national economic management ended.28 From 1974, na-
tional management agencies including the all-important and influential
Economic Planning Unit (EPU) were taken over by Malays. Throughout
the 1970s and early 1980s, government was in a strong financial position
thereby enabling substantial public expenditure allocated to increase
Malay capital (see Table 8.1).

It can be suggested, from a Marxist reductionist point of reference, that
the NEP policy was the result of the need of the dominant Malay political
class to preserve a domestic socioeconomic order that secured their privi-
leged position.29 This was the order already put in place under the British
colonial administration where the Malay ethnic group was promised privi-
leges and preferences. The NEP, thus, although aimed to eliminate the iden-
tification of race with economic functions, patently lacked racial inclusivity
as the vital component of national development.

The basic features of the NEP were heavily Malay biased and aimed only
to ensure the Malays were employed in the largest number in all economic

Rise of state discrimination in the Cold War era  233
Table 8.1 Allocation of public expenditure for selected government agencies,

1971–1985 (in Malaysian ringgit, RM million)

Agency Year of Second Malaysia Third Fourth
operation Plan, 1971–1975 Malaysia Plan, Malaysia
1976 –198 0 Plan,
1981–1985

Perbadanan 1970 150.0 382.0 233.9
Nasional 200.0
Berhad —
(PERNAS, 252.2
National
Corporation) 169.0
State Economic 1970s — 493.2 525.3
Development 500.0 2,922.9
Corporation
(SEDC)
Permodalan 1978
Nasional
Berhad (PNB,
National
Equity
Corporation)
Majlis Amanah 1966 231.9 303.9
Rakyat
(MARA,
Council of
Trust for
Indigenous
People)
Urban 1971 300.0 691.4
Development — 330.6
Authority
(UDA)
Heavy Industries 1981
Corporation
(HICOM)

Source: James V. Jesudason, Ethnicity and the Economy: The State, Chinese Business, and
Multinationals in Malaysia (Singapore: Oxford University Press, 1989), p. 85.

sectors (Table 8.2). While the government, not surprisingly perhaps, in-
creased Malay employment in the public service, it even went to the extent
of intervening in the private economy by forcing enterprises to recruit 30
percent Malay employees as their staff.30 The government also attempted to
encourage Malays to venture into the business economy by providing loans,
accessible business premises, preferences in the allocation of licenses and
the awarding of business contracts. In other words, the NEP marked the
beginning of extensive state intervention through which the socioeconomic
development of the Malays were planned out while the non-Malays were left
to their own devices.31

234  Sivachandralingam Sundara Raja
Table 8.2 Employment based on occupation and ethnicity, 1970 (%)

Sector Malay Chinese Indian

Professional and technical 47.2 37.7 12.7
Administration and management 22.4 65.7 7.5
Clerks 33.4 51.0
Sales workers 23.9 64.7 14.3
Production workers 31.3 59.9 11.0
Service workers 42.9 42.5 8.6
Agricultural workers 68.7 20.8 13.4
Total 51.4 37.0 9.6
10.7

Source: Third Malaysia Plan, 1976–1980 (Kuala Lumpur: Government Printer, 1976), p. 82.

Consequently, only the business and political class, especially among the
Chinese, with extensive capital networks, who were able to circumvent the
tight regulatory and ethnic framework of the NEP. Following independ-
ence, the economic position of the Chinese was seen to be strong due to their
trading skills, and the role played by Chinese associations in raising capital.
The business concept of kongsi helped the community not only to raise cap-
ital, but also to retain that capital for itself.32 Their position was reinforced
with sound education obtained especially among urban Chinese; this did
not happen in the case of the Malays. From the early 1950s until 1969, the
leaders from the Malayan/Malaysian Chinese Association (representing the
Chinese community in the Alliance government) were more influential in
matters relating to the economy and businesses compared to UMNO lead-
ers due to the fact that the first generation of UMNO leaders did not pos-
sess business experiences and practical know-how regarding the functions
of local and international markets.33 On winning in the federal elections
in 1955, MCA began influencing UMNO to not introduce interventionist
economic policies that were pro-Malay.34 MCA’s ability to hinder Malay
economic nationalism arose from their contribution in ensuring the success
of the Alliance in winning the 1955 elections. The MCA even contributed a
major part of the election costs and succeeded in leading UMNO to believe
that Malay backwardness was due to control over the nation’s capital that
remained in British hands.

At the same time Malays were given preference, the Chinese leaders
ensured that their situation and position were not violated. Article 153 (a)
of the Federal Constitution states: ‘Nothing in this Article shall empower
Parliament to restrict business or trade solely for the purpose of reservation
for Malays.’35 In his capacity as MCA President, Tan Siew Sin urged Tunku
to adopt a restrictive policy of Malay supremacy. This is evident when the
first Agriculture Minister, Abdul Aziz, was expelled by the Tunku because
he implemented policies that caused problems to Chinese entrepreneurs.
According to Tunku: ‘[Aziz] has confiscated all the licenses of Chinese rice
millers in northern Perak and Province Wellesley with which to win Malays.

Rise of state discrimination in the Cold War era  235

But this way of doing things was wrong: it was like the adage “robbing Peter
to pay Paul”.’36 In 1970, Chinese assets in the construction sector were 52.8
percent, transport (43.3 percent) and commercial (30.4 percent).37 The NEP
however failed to pay attention to the poor Chinese in the New Villages.38
It was reported that 1.8 million Chinese in these New Villages lived in pov-
erty, receiving no benefits from the NEP.39 There was clearly dissatisfaction
between the Chinese and Malays.

The introduction of the NEP raised Chinese awareness on the impera-
tive need to change their attitudes and cooperate with Malays for economic
benefits. The Chinese started to change their business strategy, from being
individual based to becoming group based. They were forced to compete in
fields formerly wholly monopolized by them. Their traditional strongholds
were construction, transport and distribution. By this stage, Malay-owned
firms had increased tenfold, conversely Chinese firms had been reduced
threefold.40 The Chinese were also dealt a severe blow in the public sector,
specifically in the provision of goods and services to government agencies;
the bulk was taken over by bumiputera firms. As such, for the Chinese to
survive, the private sector had to expand and they were also forced to com-
bine with Malay firms. The government in turn controlled the private sector
by ensuring that all licences for printing, fuel stations, air and sea transport,
logging, sawmilling, mining, rubber sales, rubber export, vehicle import,
finance and banking, telecommunications and other services were state con-
trolled, and reserved for Malays.41

There was wide perception that government officials responsible for
approval of business permits were unsympathetic towards Chinese busi-
nessmen. The Chinese also experienced negative repercussions with the
introduction of the Industrial Coordination Act in 1975. The Act made
it compulsory for non-Malay firms with capital exceeding RM100,000 or
employing more than 25 workers, to allocate at least 30 percent of equity
to Malay shareholders. Employment in their firms should reflect the racial
composition of the country, namely about 50 percent Malays.42 This re-
quirement was amended in 1977 whereby firms with investment exceeding
RM500,000 were required to allocate 30 percent of equity to bumiputeras.43

The Chinese businessmen had no choice but take on their Malay coun-
terparts as business partners for their companies to succeed. Thus, began
the ‘Ali-Baba’ business practice. According to Shamsul A. B., this mode
of joint venture was ‘most of the Malay new rich (orang kaya baru) were
UMNO politicians who got the tenders and contracts for rural development
projects, but who subcontracted the work to Chinese entrepreneurs for a
percentage of profits earned.’44 Only in this manner, could Chinese busi-
nessmen and entrepreneurs secure licences, permits, contracts and other job
opportunities.45 Although suppressed, the Chinese managed to succeed in
the early 1970s. Per capita income increased to RM1,582 (from RM394),
while corporate equity rose by 32.3 percent in 1979, and then to 46.2 percent
in 1990.46

236  Sivachandralingam Sundara Raja

Chinese businessmen worked in cooperation with four sources of Malay
capital created under NEP. First, were the state agencies – PERNAS, PNB,
UDA and SEDC; second, companies controlled by UMNO – Lembaga Uru-
san dan Tabung Haji (Pilgrimage Board and Hajj Fund), Lembaga Tabung
Angkatan Tentera (Armed Forces Fund Board); third, private-sector capi-
tal owned by new millionaires such as Daim Zainuddin, Wan Azmi Wan
Hamzah, Azman Hashim, Rashid Hussain; and fourth, the royalty involved
in business such as Tunku Imran and Tunku Jaafar from Negeri Sembilan.47
Many of the Chinese who forged business partnerships with Malays at this
stage succeeded.

The 1980s witnessed an increasingly larger number of Chinese-Malay
joint ventures. Examples include partnerships between Vincent Tan and
Daim Zainuddin; Daim and Lim Thian Kiat; Quek Leng Chan, Halim
Saad, Wan Azmi Wan Hamzah and Rashid Hussain.48 These relationships,
however, were not of the Ali-Baba mode, but genuine and/or sincere types.
It was a ‘win-win’ situation whereby both parties mutually benefitted (or
suffered losses) in the partnership. Based on such ventures, Chinese busi-
nessmen succeeded in building business empires. The 1985–1987 economic
downturn had adverse impacts on the Chinese. All government-owned
companies were beginning to report losses. Government also started to
re-examine the role of the Chinese in the private sector. Consequently, the
Chinese were becoming disillusioned with the NEP and Chinese funds
started to flow out of the country, seeking profits from foreign and/or off-
shore investments.

The position of Indians in the 1970s and 1980s

The Indians in Malaysia were particularly severely marginalized in the pe-
riod of the NEP implementation. Historically, the British had neglected the
Indians compared to the Malays and the Chinese. Malay-Indian economic
relations were cordial and satisfactory in the early part of the twentieth cen-
tury as evident from the relationships between the Malays and the Chet-
tiars, a moneylending Indian clan. There was no feeling of enmity between
them; in fact, Malays viewed the Chettiars as good hearted. It was believed
that those who forged good relations with the Chettiars obtained large loans
without collateral.49 The relationship, however, became strained in the
1930s when the Indians started to make political demands requesting more
privileges. A memorandum was sent to the British High Commissioner Sir
Lawrence Guillemard, requesting the appointment of an Indian represent-
ative in the Federation Meeting Council based on the following rationale:
there was a sizeable number of Indian labourers in the Malay States; growth
of Indian trade and capital was also rapid; Indian labour was important for
economic development; and, they were citizens of the British empire. The
situation further deteriorated with the onslaught of the economic slump/
depression on Malaya.

Rise of state discrimination in the Cold War era  237

The sufferings of the Indians heightened during the Great Depression
(1929–1931) when the prices of primary commodities such as tin and rub-
ber plummeted. The rubber sector suffered the most when labourers’ wages
were reduced from 50 to 20 cents and many were retrenched.50 Since most
of these labourers were unable to acquire other skills, they found it difficult
to be hired and hence became jobless. To stop the increase in unemploy-
ment among plantation workers, the Immigration Restriction Ordinance
was introduced in August 1930 that facilitated the repatriation of plantation
labour to leave Malaya.51 The British feared that wage reduction below the
standard fixed rate would create labour unrest in Malaya. Thousands re-
turned to India and those who remained were paid meagre wages relative
to pre-Depression times. On the part of the British colonial administration,
they were not pleased with repatriation, but had to comply with Indian rules
relating to workers’ welfare. The European planters were not keen in creat-
ing a permanent Indian labour force in Malaya, moreover, they were dis-
pleased with Indian public opinion over higher wages and provision of other
amenities. The British colonial administration threatened to replace Indian
labourers with Javanese. Indeed, from 1931, attempts were made to negoti-
ate with the Dutch colonial government in Java to supply Javanese labour.
Besides, the British colonial administration even granted vacant lands for
the unemployed Chinese to cultivate vegetables and commercial crops. In
the early 1930s, the number of Chinese squatters increased, but the colonial
authorities were unconcerned. Chinese squatters, who cultivated the land,
albeit illegally, provided sources of fresh vegetables, pigs, poultry and eggs,
and, in fact, were regarded by the colonial administration as a useful res-
ervoir of casual labour. Indeed encouraging whereby some 50–60,000 Chi-
nese were granted Temporary Occupation Licenses, in anticipation that, at
the end of the slump, they would be absorbed into the rubber and mining
industries.52

Meanwhile, Malays were uncomfortable with Indian demands for higher
wages and amenities, a situation worsened by the effects of the slump. In
the 1930s, Malay newspapers began to allocate more space to discuss the
political threats shown by the Indians. The situation deteriorated in 1937
when the British High Commissioner Sir Shenton Thomas announced that
more non-Malays were to be recruited in the administration of the Fed-
erated Malay States (FMS). English-educated Indians prospectively filled
administrative positions in the colonial bureaucracy, a development that
further strained Indian-Malay relations. In the 1930s, Indian associations
increasingly proliferated; one notable example was the Central Indian Asso-
ciation of Malaya (CIAM) that was represented by 12 Indian organizations
throughout India. Further to demanding better and fairer wages and work-
ing conditions in the estates, CIAM criticized the British colonial policy
of maintaining Indian labourers as immigrants without privileges. CIAM
pressed for citizenship status for Indian labourers in order to afford them
basic rights.53 The British colonial authorities began to take action against

238  Sivachandralingam Sundara Raja

the associations and many were dissolved and their leaders and agitators
repatriated to India. Indians in Malaya then, indeed, faced an uncertain
future.

This was evident in the issues pertaining to the non-utilization of the South
Indian Labour Fund for the welfare uplift of destitute and economically
underprivileged Indians, lack of land settlement schemes and the hardship
they went through during and after the Japanese Occupation. In retrospect,
the neglect of the Indians was evident as early as 1907 when the British in-
troduced the Tamil Immigration Fund, which was subsequently renamed
Indian Immigration Fund (1912) and South Indian Labour Fund (1958).54
Following Malaya’s independence in 1957, the Indian community was
politically meek and economically weak. Although the post-independence
era witnessed various economic initiatives carried out by the Alliance gov-
ernment, nothing positive impacted on Indian plantation workers.

Worse still, the newly independent Malayan government’s policy to
takeover foreign-owned plantations adversely impacted the livelihood of
Indian estate labourers. The Malaysian Indian Congress (MIC), the Indian
representative within the Alliance coalition, did raise the matter with the
government but it did not respond positively. A non-positive response was
no surprise, simply because Indians were a minority community, constitut-
ing only a negligible percentage of the electorate. Moreover, MIC leaders
preferred negotiations behind closed doors and appeared to be ineffective
as spokesmen for Indian interests on major and pertinent issues. The prob-
lems faced by the community escalated after the government took control
of the flagship European plantation companies, viz. Dunlop Estates, and
Harrisons and Crosfield (later known as Golden Hope Plantations). West-
ern companies were disengaging and, as a consequence, were selling their
plantations. The government takeover came to be known as the ‘London
Dawn Raid’ and was seen to have devastating effects on the condition of
Indian plantation workers. Although the ‘Raid’ was supposed to have paved
the way for new management to be more sympathetic to the needs and as-
pirations of estate workers, in reality, the situation was anything but. The
‘Raid’ paved the way for massive rural-urban drift and maladaptation of
estate workers to new surroundings. The lack of skills and culture of pov-
erty as well as escalating crime among the community conspired to conjure
a negative image of the community in the public eye. It is no exaggeration
to claim that after independence, the government had neglected the Indian
community, apparently seeing it as but a minor contributing factor for the
electoral triumph of the Alliance Party. In fact, on the political front, no
MIC candidate could realistically win a seat without the support of Malays,
and/or Chinese.

By 1972, 85 percent of all plantations in Peninsular Malaysia were divided
or fragmented into smaller units of five acres or under.55 These smaller units
were not termed estates but, rather, smallholdings. According to Stenson,
between 1950 and 1967, approximately 324,931 acres of estates involving

Rise of state discrimination in the Cold War era  239

28,363 workers were thus fragmented.56 Chinese entrepreneurs, who bought
up and subsequently further divided the land into smaller units to obtain
larger profits, capitalized on this opportunity. The new plantation owners
were also keener on recruiting Malay labourers on contract basis to curb
worker unions among Indian labourers. It also fulfilled post-independence
government policy that required the presence of Malay workers in all
sectors.57

The fragmentation led to thousands of Indian labourers losing their
jobs. Those who chose to stay in the estates had to settle for lower wages,
and were denied health and other facilities.58 Government’s work permit
policy adopted in 1969 further jeopardized the economic position of Indian
labourers.59 The policy required non-Malaysian citizens to apply for a
work permit, which, in turn, was only to be given to citizens with no job.
The effects of the policy were felt deeply by the Indian labourers as most
of them had not applied for citizenship due to sheer ignorance, although
many had been both born and raised in Malaya. Many of the estate work-
ers became victims, as they were now, in effect, non-citizens. This policy
was announced by government to tackle the problem of unemployment,
as well as to fulfil Malay sentiments. It resulted in nearly 60,000 Indian
labourers leaving Malaysia, while more than 50,000 decided to remain in
the estates live with much anxiety and uncertainty, fearing being sent back
in the event on non-renewal of their contracts.60 MIC attempted to protect
the welfare of Indian labour by buying over small estates through the es-
tablishment of National Land Finance Co-operative Society (NLFCS) in
1960.61 Between 1961 and 1969, NLFCS bought 18 such estates.62 MIC and
NLFCS urged the government to draft laws controlling the sale of estates
exceeding 100 acres.63

Indian labourers in particular, who comprised only a meagre percent-
age of the Malaysian population after the 13 May tragedy, appeared to be
the weakest community economically. The economic well-being of these
labourers changed little during the 1970s. The nationalization of mining
companies and foreign-owned plantations such as Sime Darby and others
by Perbadanan Nasional Berhad (PERNAS, National Corporation), had
adverse effects on the Indian community. These companies then started
selling their shares to Permodalan Nasional Berhad (PNB, National Equity
Corporation), a move that subsequently became mandatory.64

With PNB’s takeover of foreign-owned plantations, the Indians hoped for
security in terms of better wages and working conditions, but this was not
to be in actuality. The new management was only interested in multiplying
profits, and ensuring wages remained low. They also started recruiting la-
bour from Indonesia and other countries. The plantation management com-
plained of labour shortages, resulting in government becoming flexible in
allowing the entry of Indonesian labour in large numbers.65

Although Indian labourers had worked in their plantations for several
years, their wages had not increased significantly. Many were forced to hold

240  Sivachandralingam Sundara Raja

more than two jobs to survive; could not own houses; and experienced diffi-
cult and depressing basic living conditions.66 In 1970, 46.5 percent of Indian
labourers worked in estates and 24.8 percent in non-skilled jobs. Unemploy-
ment among Indians was relatively high in comparison with others (Indians
11 percent; Malays 8 percent; and Chinese 7.4 percent). Indians involved in
commerce comprised 10.7 percent; Malays 23.5 percent; and Chinese 65.3
percent. Indian businesses were concentrated in restaurant management,
retail and petty trades.67 They did not have sufficient capital or a sound
industrial base.

The socioeconomic deterioration of the Indians was duly noticed by the
MIC and subsequently addressed in its economic seminars as due to the
regressive aspects of the NEP. MIC organized its first economic seminar
on 11–12 May 1974 to put forward proposals to the government for improv-
ing Indian labourers’ welfare. Among the proposals were to request gov-
ernment to allocate quotas in the mining, quarrying, logging, construction
and transport as well as in FELDA sectors. The seminar proposals can be
detailed in term of the following aspects:

1 Asset ownership. Target set for Indians to own at least 18 percent of na-
tional assets within 20 years.68

2 Small industries and business. Request made that Indian investment be
encouraged through Government agencies such as Federal Industrial
Development Authority (FIDA), Malaysian Industrial Development
Finance Berhad (MIDF), Credit Guarantee Corporation, and others
offering consultancy and advisory services. Such institutions were
called on to provide positive response to the needs of Indian investors.
More stable financial institutions were requested to assist Indians to
promote their small businesses.69

3 Poverty eradication programme. Government was called on to focus
on poverty eradication in the rural sector and cities, through land
development programmes, credit, drainage and irrigation facilities,
roads, housing and health facilities. Special attention to be given to the
plantation sector as most of the Malaysian poor were then found here.
Government was requested to publish data on development programmes
and lists of recipients enjoying the benefits of development, by race.70

4 MIC’s role and community organizations. MIC and community bodies
were called on to create both formal and informal coordination
machinery in requesting government to organise well-structured/
coordinated programme to uplift the socioeconomic position of the
Indian community under NEP.71

5 Imbalance in employment. MIC identified the main problems of the
Indian community as high unemployment, low employment in the eco-
nomic/trading sectors; higher concentrations of employment in manual
and low skilled/unskilled jobs; as well as an insignificant number em-
ployed in civil service.

Rise of state discrimination in the Cold War era  241

The seminar recommendations were:

a Worker recruiment records to reflect status by race, i.e Malay,
Chinese and Indian, not under the categories of bumiputera and
non-bumiputera. This made analysis of progress of Indian employ-
ment difficult, more so when they were not represented adequately
in modern sectors.72

6 Education and training programmes. Given the high employment of In-
dians in unskilled sectors, government was requested to increase the
intake of Indians in training institutions such as vocational schools,
agricultural institutions, National Productivity Centre and other
institutions.

7 Land development. About 47 percent of Indians were involved in the
agricultural sector, of which 3/4 was under plantations. Economic de-
velopment as well as several other changes could force a large number
to become unemployed in 10–15 years. They could also face problems
of developing more productive land in other sectors. Proposals of the
Congress were asfollows:

a The Indian community be allocated about 10 percent in FELDA’s
land development programmes. This programme were estimated
to represent about 1,400 settler families per year or 28,000 settler
families in a period of 20 years. FELDA at that time pioneered the
opening up of about 100,000 acres of land annually.73

b At that point of time, the intake of Indians by FELDA did not ex-
ceed 2 percent. In the year 1973, it was reported that of the total
24,000 applications made to open FELDA land, 3,300 or 14 percent
of the total applications were from Indian applications.74

8 Civil service. A larger Indian intake in civil service will reflect more
balanced/fairer racial representation.75

9 Citizenship and work permit. Many eligible Indians who qualified to
become Malaysian citizens faced problems in seeking employment,
given the weakness on the part of government, as well as other rea-
sons. Many Indians born in Malaysia failed to produce the necessary
documents as proof, in line with government requirements. Many were
refused/rejected citizenship because of the links with their motherland;
commiting petty crimes; unable to converse in Malay; as well as being
slow in applying for citizenship. MIC called on the Ministry of Home
Affairs to review these cases and issue temporary work permits in the
meantime, while their applications were being processed.76

10 Training programme. Given the concentration of Indian labour in the un-
skilled and semi-skilled employment categories, government was urged
to increase the intake of Indian candidates in training institutions such
as National Youth Training Centre (NYTC), Vocational School, Na-
tional Productivity Centre, Foresty Training School, Rural Agricultural

242  Sivachandralingam Sundara Raja

Training Centre, Logging Industry Training Centre, Fisheries Training
School and others.77
11 Education. Government was called on to revamp/improve Tamil schools;
efforts were taken to upgrade academic and profesional qualifications
of Tamil school teachers; a 10 percent quota allocated to Indian students
to enter university; provide more interest-free loans and scholarships to
Indian students.78

However, these proposals were not given serious consideration by the
government.79 Except for acknowledgment, none of MIC’s proposals was
actually incorporated in the ensuing Third Malaysia Plan (1976–1980).80
Due to this, in the 1970s, MIC acted on its own initiative. Under President
V. Manikavasagam Pillai (1973–1978), the MIC established several coopera-
tives and unit trusts with the objective of pooling the savings of Indians and
to increase the community`s corporate equity in business and investments.
The relevant unit trusts and corporatives were MIC Unit Trust (1976), NESA
Cooperative (1974), Maju Jaya Cooperative (1978), Pekerja Jaya Cooperative
(1978) and Sempoorna (1978).81 Nonetheless, these initiatives appeared to be
not particularly succesful.

There are scholars who claimed that the MIC had hardly any significant
role to play in the actual negotiations for Malayan independence. MIC
played the role of an obedient, submissive junior partner. It was in the Al-
liance on sufferance, hence was dispensable.82 Although history records
that Tun V. T. Sambanthan83 had played a major role in the struggle for
independence, the fact remains that the government was not forthcoming in
helping the Indian community deal with the issue of estate fragmentation in
the 1950s. The position of the MIC was further weakened when the Alliance
coalition was broadened and rebranded as BN in 1974 with the objective
of reducing needless politicking and ensuring political stability.84 This saw
more political parties being accepted into the BN’s fold, thereby creating
a situation whereby the MIC lost its bargaining power. From 1974, MIC
remained subdued where its demands were never fulfilled by the dominant
UMNO.85 This was echoed by the then MIC President Manikavasagam at
the 23rd MIC Annual General Assembly in 1975:

In most cases, the problems that we in the MIC are raising are problems
of implementation. We have a saying in Tamil that ‘even if God is pre-
pared to concede the priest remains an obstacle’. While at the top levels
of Government we share a clear perception of the goals and direction
of national effort, [but] down the line of bureaucracy – in Departments,
Districts or Agencies of Government and Universities - the vision gets
blurred or distorted, leading us to the problem we are now facing.86

In the 1980s, the fall in prices of primary commodities such as rubber and
palm oil led to plantation owners selling their properties for purposes of

Rise of state discrimination in the Cold War era  243

conversion into housing projects. This reduced the acreage of land planted
with agricultural produce, from 906,106 hectares to 204,127 hectares in
1992.87 Labourers employed in rubber plantations also declined from
104,898 to 59,127. This development led to several families leaving the plan-
tations in the early 1980s, a trend that continues to this day.88 Furthermore,
the new firms managing oil palm plantations were keener on recruiting In-
donesian labourers under two- to four-year contracts at rather low wages.
This dealt a heavy blow to Indian labourers who frequently claimed being
paid unfair wages and resulted in their being increasingly sidelined. Those
who moved to urban areas faced untold problems in seeking employment,
given their lack of skills.

Once again, MIC through its second economic seminar on 13 July 1980,
attempted to analyse the community’s problems, and ways government
could help and support it.89 The 1974 Seminar, however, did not discuss
the outcome of the proposals put forward at the earlier one. Many of the
proposals were deemed important and if accepted, would help elevate the
economic status of the Indians, inter alia the proposal that estates be placed
under the Ministry of Rural Development, allocate quotas commensurate
with the composition of Indian population in employment, land develop-
ment, company share equity and entry into institutes of higher learning. The
Seminar concluded that the NEP did not succeed in changing the economic
status of the Indian community.

It was only towards the end of the Cold War in 1990, that the Malaysian
government for the first time raised concerns about Indian socioeconomic
deterioration through a government apparatus, namely the National Eco-
nomic Consultative Council (NECC) and forwarded proposals to formulate
economic policy for the period 1991–2000. The Council called on the gov-
ernment to undertake appropriate action to develop the economic situation
of Indians under the National Development Policy (NDP), which would
replace the NEP.90 Among the recommendations submitted were: offering
fixed monthly wages for estate workers; opening kindergartens in plan-
tations; changing status of all Tamil schools from partially aided to fully
aided; providing technical training for estate youths to improve their wages;
opening a bank for Indians; establishing a trust fund to offer credit facilities
for Indians for investing in the share market.91 It was also suggested that
government provide scholarships especially for Indian students pursuing
overseas higher education. The additional Cold War context for these at-
tempts could be that the government was beginning to take into considera-
tion racially inclusive economic development in its policy as the imminent
end of communist insurgency in the country also reduced the emphasis of
Malay supremacy as a counter-ideology against Communism.92

There are alternative views, however, that alleged that post-1990 attempts
to restructure Indian economic backwardness were merely politically
motivated statements and the government was not wholly prepared to ana-
lyse the Indian dilemma in a sincere, fair and objective manner.93 In any case,

244  Sivachandralingam Sundara Raja

the political effect of bumiputeraism was by this time deeply entrenched in
Malaysian politics and often shaped national socioeconomic policymaking
of the country ever since. In the 1980s, with the emergence of Dr Mahathir
Mohamad as Malaysia’s Prime Minister (1981–2003), efforts were taken to
accelerate economic growth with the privatization programme, ‘Look East
Policy’ and various other economic programmes. The ‘Malay First’ policies,
in fact, became pronounced during the Mahathir era. The ultimate aim was
to produce a bumiputera business class.94

Privatization was a strategy to restructure ethnically based employment
that was dominated by the Chinese in the higher categories. Executive,
financial and technical posts were in the hands of non-bumiputeras. Eight of
the 14 projects privatized between 1986 and 1989 were given to bumiputeras.
Most of these companies recorded losses following privatization. Govern-
ment undertook to write off most of such losses. In addition, government
controlled many of the privatized companies through its participation as
the principal shareholder in these entities. For example, 75 percent of Tele-
kom Malaysia was government owned.95 Such developments caused dissat-
isfaction among non-Malays, and strained interracial relations.

To encourage participation of Malays in heavy industries, the govern-
ment established the Heavy Industries Corporation of Malaysia (HICOM).
Among the projects implemented were the production of cement by Kedah
Cement Sdn Bhd and iron rods and steel billets by Perwaja Steel Sdn Bhd
in Terengganu. PNB was a prime example in encouraging company share
ownership directly by bumiputeras. The privatization and Malaysia incor-
porated policies were introduced to encourage greater private sector partic-
ipation in national development.

Government’s involvement to assist the Malays came through grant of
subsidies, protection, ensuring lack of local competition, tendering and di-
rect control. Firms such as Kedah Cement, Perak Hanjoong, Perwaja and
Proton were set up under this strategic approach. These firms/industries
also absorbed as well as trained Malay managers, engineers, professionals
and technicians.

Conclusion

The Cold War in Malaya/Malaysia especially in the late 1960s and 1980s
possessed a peculiar dimension in terms of socioeconomic regression, which
differentiated it markedly from the importance of multiculturalism as upheld
in the Western capitalist bloc. The lopsided socioeconomic development of
the country is but a reflection of a larger tendency towards centralism that
sought power and authority for the dominant racial group of power wielders
over the rest of society that included minority groups, regardless fringe
political opponents or ethnic minorities. Post-colonial centralism reared its
head after 13 May 1969, whereby the National Front (coalition government)

Rise of state discrimination in the Cold War era  245

strengthened its powers and exercised complete control over the executive
and other branches of governance as well.96 From the 1970s, the central
government seriously attempted to transform the colonial economy into a
national economy. However, very little consideration was made to restruc-
ture the socioeconomic landscape of the country under a racially com-
prehensive domestic economic policy. Since the Malays were the de facto
hegemonic power in the policymaking sphere, racism was an institutional
action and state-sanctioned positive and negative discrimination – for the
Malays and non-Malays respectively – received official interpretation. The
poorer sector of the Chinese and especially the Indian populations barely
experienced any noticeable socioeconomic growth. This is especially ob-
vious in the case of the latter. Although Indians represented sizeable per-
centages in the medical (25 percent) and legal (33 percent) fields, they were,
however, relatively miniscule in administration, technical and clerical cat-
egories. The bulk was in the general labour group that reflected the lack of
progress experienced by Indians by class, as opposed to that seen among
Malays and Chinese.

Generally, the various Malaya/Malaysia economic plans failed to include
people of all races in need of assistance. Studies done by Rusaslina Idrus,
Zawawi Ibrahim and Andrew Aeria prove that the bumiputeras of Sabah
and Sarawak, Indians and other ethnic minorities in Sabah and Sarawak
and the Orang Asli (aborigines) of Peninsular Malaysia were excluded
from poverty-eradication programmes.97 Although the affirmative action
policy of the government aimed to reduce poverty, it sadly ended up being
exploited by the rich.

Spatial disparities had worsened after the NEP was implemented because
members of the targeted group in urban and prosperous rural areas dis-
proportionately utilized the preferences designed to encourage bumiputera
entreprenurship. The policy was patently not needs based but a radical
agenda of bumiputera wealth creation. A clear spatial divide also emerged,
with poverty most severe in the bumiputera heartland states in the penin-
sula, particularly in Kelantan, Terengganu, Kedah and Perlis and among
the non-Malay-bumiputeras in Sabah and Sarawak.

Based on the economic development experienced by all three races in the
twentieth century, locational concentration was clearly evident. The Chi-
nese were concentrated in towns, with 62.2 percent of urban population be-
ing Chinese before independence.98 The Chinese also represented half of
the urban population in all the Peninsular States, except Kelantan, Tereng-
ganu and Perlis. The Malays, by way of contrast, were mainly in the rural
areas, tied to agriculture. In 1947, only 14 percent of Malays were in towns,
unlike Chinese forming 54 percent; and Indians, 39 percent).99 A majority
of Indians lived in the rural areas, while those in the urban areas were con-
centrated in the states of Perak, Selangor and Negeri Sembilan. All these
factors, as a whole, contributed to poor national integration.

246  Sivachandralingam Sundara Raja
Notes
1 On the history of multicultural development in the US, see Ronald Takaki,

A Different Mirror: A History of Multicultural America (Boston, MA: Little,
Brown, 1993); and, David A. Hollinger, Postethnic America: Beyond Multicultur-
alism (New York: Basic Books, 1995).
2 The Chinese Communist Revolution commenced in the aftermath of the Sec-
ond Sino-Japanese War (1937–1945), and overlapped and became a part of the
Chinese Civil War (1945–1949). This Communist Revolution culminated with
the triumph of the Chinese Communist Party (CCP) with the declaration of the
People’s Republic of China (PRC) on 1 October 1949.
3 For example, see Pavel Kolar, ‘Communism in Eastern Europe’, The Oxford
Handbook of the History of Communism, edited by in S. A. Smith (Oxford:
Oxford University Press, 2014), pp. 205–206.
4 Prior to the formation of the Federation of Malaysia (hereinafter Malaysia) in
September 1963, the component states were independent (since August 1957)
Federation of Malaya (hereinafter Malaya), the British Crown Colonies of
Singapore, Sarawak and North Borneo. Malaya (present-day West or Peninsular
Malaysia) is the Malay Peninsula that comprised nine sovereign Malay states –
Perlis, Kedah, Kelantan, Terengganu, Perak, Pahang, Selangor, Negeri Sembi-
lan and Johore – that were British protectorates, and the British Crown Colonies
of Penang and Malacca (Melaka). The Federation of Malaya was formed in 1948
and gained political independence from Britain in August 1957. See Ooi Keat
Gin, Historical Dictionary of Malaysia, 2nd ed. (Lanham, MD: Rowman& Lit-
tlefield, 2018), pp. 161–162, 277.
5 The Alliance Party came into being in 1952, initially comprising the United
Malays National Organization (UMNO) and the Malayan Chinese Association
(MCA), and then in 1954, the Malayan Indian Congress (MIC) became the third
component of this political coalition representing the three main ethnic com-
munities of Malaya, viz. Malay, Chinese and Indian respectively. Then 1973, an
expansion was made widening the membership including also political parties
from Sabah and Sarawak, hence the Barisan Nasional (BN, National Front). The
BN coalition was the ruling party of Malaysia with UMNO as the senior and
dominant component to the extent of its president and deputy present were also
the prime minister and deputy prime minister of the nation (1973–2014). Ooi,
Historical Dictionary of Malaysia, pp. 66, 85–86.
6 Sivachandralingam Sundara Raja, and Shivalinggam Raymond, ‘The Lost Race
in British Malaya: Revisiting the Problems of South Indian Labourers’, Diaspora
Studies, 11, 2 (2018): 1–20.
7 Charles Hirschman, ‘The Making of Race in Colonial Malaya: Political Econ-
omy and Racial Ideology’, Sociological Forum, 1, 2 (1986), p. 356.
8 Cheah Boon Keng, Malaysia: The Making of a Nation (Singapore: Institute of
Southeast Asian Studies, 2002), pp. 150–151.
9 Greg Felker, ‘Malaysia’s Development Strategies: Governing Distribution-
through-Growth’, Routledge Handbook of Contemporary Malaysia, edited by
Meredith L. Weiss (London: Routledge, 2014), p. 135.

Rise of state discrimination in the Cold War era  247

248  Sivachandralingam Sundara Raja
economy. On a broader perspective, this was to lead the country into a transition
from subsistence to commercial economy. The flaw was evidenced in the Sec-
ond Malaysia Plan when it identified poverty among the farmers to uneconomic
use of land and continued use of traditional techniques/methods to cultivate
the crops. The real reason for the poverty was due to the exploitation by mid-
dlemen; and land ownership by capitalists who exploited farmers working for
them. There was a tendency to divide modern from traditional sectors when
in reality both sectors had strong structural links with one another. See Sham-
sul Amri Baharuddin, ‘Perancangan Pembangunan Negara Selepas Merdeka
1957–1975: Tinjauan Sejarah Perkembangan Sosio-Ekonomi Malaysia [National
Development Plan after Independence: An Overview of Malaysian Socioeco-
nomic Development]’, Sejarah Proses dan Pembangunan [Historical Process and
Development] (Kuala Lumpur: Persatuan Sejarah Malaysia, 1979), p. 345.

21 ‘The constitutional contract obliged the government to improve the Malay share
in the economy. They were committed to it, but decided that gains obtained by
one group would not be at the expense of others.’ See Cheah, Malaysia: The
Making of a Nation, p. 83.

2 2 Ibid.
23 Jesudason, Ethnicity and the Economy, p. 51. One ministry set up specifically

to safeguard problems of rural areas was the Ministry of National and Rural
Development in 1959. Efforts to further improve Malay status were intensified
under the Second Malaya Plan, 1961–1965 (SMP). The objective of the SMP was
quite similar to that of the first. FAMA (Federal Agricultural Marketing Au-
thority) (1965) and the Village Development Committee (1961) were respectively
set up to enable greater and more direct Malay participation in development
programme planning and implementation. Besides, the Bank Bumiputera was
incorporated in 1965 with a capital of RM20 million to function as an institu-
tion providing credit and advisory services to bumiputera traders. The MARA
Trust launched in 1967 was to spearhead Malay savings. The Federated Malay
Business Chamber was also set up in 1967 as secretariat for the Malay capitalist
group. See H. Osman Rani, ‘Ekonomi Sebagai Satu Faktor Untuk Perpaduan
Ethnik: Pengalaman Malaysia Selepas Merdeka [Economy as a Factor for Eth-
nic Unity: Malaysian Experience after Independence]’, Kajian Malaysia, 2, 2
(1987), p. 22.
24 Jesudason, Ethnicity and the Economy, p. 51.
25 Ibid., p. 65; and, Chin Yee Wah, ‘Ethnicity and the Transformation of the
Ali-Baba Partnership in the Chinese Business Culture in Malaysia’, The
Challenge of Ethnicity, Building a Nation in Malaysia, edited by Cheah Boon
Keng (Singapore: Marshall Cavendish International Private Ltd., 2004), p. 73.
26 In the twentieth century, an era that witnessed the participation of non-Malays,
particularly the Chinese and the Indian Tamils, in the British-owned economy,
the Malays were isolated to the rural areas, while the educated became salaried
employees in the government administrative sector. The marked difference in
the economic status of the three races gave rise to dissatisfaction among the
Malays, as expressed by their novel and short story writers in that century (Cher-
ita Awang Putat by Abdul Rahim Kajai; Putera Gunung Tahan and Anak Mat
Lela Gila by Ishak Haji Muhammad. For a complete picture, see Shaharuddin
Maaruf, Malay Ideas on Development (Singapore: Times Books International,
1988), pp. 91–112. In short, ethnic relations at that point of time were prejudi-
cial in nature, with economic activity still being identified by race. The Malays
expressed their dissatisfaction as their economic well-being was relatively worse
off compared to that of the Chinese in the new settlements during the Emer-
gency (1948–1960). Furthermore, land converted into new settlements was
Malay reserve land, acquired from Malay rulers on the understanding that there
was a need to set up new settlements for security purposes. See James P. Ongkili,

Rise of state discrimination in the Cold War era  249
Nation-Building in Malaysia 1946–1974 (Singapore: Oxford University Press,
1985), p. 86. Between the years 1951–1953, the Malay leaders and Malay papers
criticized the British for neglecting the economic well-being of the Malays in the
kampongs, while protecting the Chinese who were not to be trusted as there were
those who supported the Communists.
27 Jesudason, Ethnicity and the Economy. p. 71.
2 8 Ibid., p. 78
29 Richard Saull, Rethinking Theory and History in the Cold War: The State,
Military Power and Social Revolution (London: Frank Cass, 2001), p. 69.
3 0 Stephen Chee, and Khoo Siew Mun, Malaysian Economic Development and
Policies (Kuala Lumpur: Malaysian Economic Association, 1975), p. 2.
31 The Petroleum Development Act (1974) and the Industrial Coordination Act
(1975) were clear examples of how the government managed to exploit its politi-
cal power to shape economic development.
32 Chin, ‘Ethnicity and the Transformation’, p. 56.
33 Heng Pek Koon and Sieh Lee Mei Leng, ‘The Chinese Business Community in
Peninsular Malaysia, 1957–1999’, The Chinese in Malaysia, edited by Lee Kam
Hing and Tan Chee-Beng (Shah Alam, Oxford University Press, 2000), p. 129.
34 Ibid., p. 130.
35 Ibid.
36 See Tunku Abdul Rahman, Looking-Back (Kuala Lumpur: Pustaka Antara,
1977), p. 243.
37 Heng and Sieh, ‘The Chinese Business Community’, p. 131.
38 ‘New Villages’ were created to house mainly Chinese peasant settlers who had
been surviving on the fringes of the jungle in Peninsular Malaysia. Fleeing the
Japanese during the wartime occupation, in the post-war period, these settlers
were utilized by communist terrorists (CTs) for foodstuffs, medicines, intelli-
gence and even recruits. Hence, the Malayan government during the Emergency
(1948–1960) undertook resettlement of the Chinese settlers in order to sever the
supply line of the CTs. See Ooi, Historical Dictionary, pp. 319–320.
39 Heng and Sieh, ‘The Chinese Business Community’, pp. 136–137.
4 0 Ibid., p. 137.
41 Jesudason, Ethnicity and the Economy, p. 132; Heng and Sieh, ‘The Chinese Busi-
ness Community’, p. 137.
42 Jesudason, Ethnicity and the Economy, pp. 135–137; Heng and Sieh, ‘The Chinese
Business Community’, p. 138. For further information on the weakness of this
Act, see David Lim, ‘The Political Economy of the New Economic Policy in
Malaysia’, Review of Indonesian and Malaysian Affairs, 16 (1982): 64–65; Ariffin
Omar, ‘Origins and Development of the Affirmative Policy in Malaya and Ma-
laysia: A Historical Overview’, Kajian Malaysia, 21, No. 1 & 2 (2004): 23–24.
43 Heng and Sieh, ‘The Chinese Business Community’, p. 138.
4 4 A. B. Shamsul, ‘The Malay New Rich: A Comment on the Origin and the For-
mation of a Social Class’, Paper presented at the Malaysian Study Group Semi-
nar, Institute of Developing Economies, Tokyo, 14 March 1996, p. 9. Quoted in
Heng and Sieh, ‘The Chinese Business Community’, p. 132. Also see Thock Ker
Pong, Ketuanan Politik Melayu Pandangan Orang Cina [Malay Political Suprem-
acy from the Chinese Viewpoint] (Kuala Lumpur: University of Malaya Press,
2005), p. 99.
45 Heng and Sieh, ‘The Chinese Business Community’, p. 142.
46 Ibid., p. 137.
47 Ibid., p. 148.
48 Ibid., p. 144.
49 Khoo Kay Kim, ‘Malay Attitudes Towards Indians’, Indian Communities in
Southeast Asia, edited by in K. S. Sandhu and A. Mani (Singapore: Institute of
Southeast Asian Studies and Times Academic Press, 1993), p. 271.

250  Sivachandralingam Sundara Raja
50 P. T. Bauer, ‘Some Aspects of the Malayan Rubber Slump, 1929–1933’, Readings

in Malayan Economics, edited by T. H. Silcock (Singapore: Eastern University
Press, 1961), p. 192.
51 George Netto, Indians in Malaya: Historical Facts and Figures (Singapore:
George Netto, 1961), p. 11.
52 See Sivachandralingam and Shivalinggam, ‘The Lost Race in British Malaya’,
pp. 7–9.
53 K. Anbalakan, ‘Pembentukan Identiti Di Kalangan Masyarakat India Di
Malaysia [Identity Formation among the Indian Community of Malaysia]’, PhD
thesis, Universiti Kebangsaan Malaysia, 2001, p. 83. Also, see Sucked Oranges:
The Indian Poor in Malaysia (Kuala Lumpur: INSAN (Institute of Social Anal-
ysis), 1989), p. 51.
54 Pushpavalli A. Rengasamey and Sivachandralingam Sundara Raja, ‘Peranan-
dan Perkembangan Tabung Imigrasi Tamil Di Tanah Melayu, 1907–1938 [Role
and Development of the Indian Immigration Fund in Malaya, 1907–1938]’,
SARJANA, 27, 2 (2012) pp. 38–49.
55 S. Nagarajan, ‘A Community in Transition: Tamil Displacements in Malaysia’,
PhD thesis, Universiti Malaya, 2004, p. 36.
56 Michael Stenson, Class, Race and Colonialism in West Malaysia: The Indian
Case (St Lucia: University of Queensland Press, 1980), p. 203.
57 Stenson, Class, Race and Colonialism, p. 36.
58 Chandra Muzaffar, ‘Political Marginalization in Malaysia’, Indian Communities
in Southeast Asia edited by K. S. Sandhu and A. Mani (Singapore: Institute of
Southeast Asian Studies and Times Academic Press, 1993), p. 222.
59 Ibid.
60 Kernial Singh Sandhu, ‘The Coming of the Indians to Malaysia’, Indian Com-
munities in Southeast Asia, edited by K. S. Sandhu and A. Mani (Singapore:
Institute of Southeast Asian Studies and Times Academic Press, 1993), p. 186.
61 Nagarajan, ‘A Community in Transition: Tamil Displacements in Malaysia’,
p. 37. Also see Anbalakan, ‘Pembentukan Identiti Di Kalangan Masyarakat In-
dia Di Malaysia’, p. 267.
62 Anbalakan, ‘Pembentukan Identiti Di Kalangan Masyarakat India Di Malay-
sia’, p. 267.
63 Ibid., p. 266.
64 Nagarajan, ‘A Community in Transition: Tamil Displacements in Malaysia’, p. 40.
65 Ibid., p. 41.
66 Ibid., p. 37.
67 Ibid., p. 63.
68 Malaysian Indian Congress National Seminar on the New Economic Policy, The
Second Malaysia Plan, The Mid Term Review and the Role of MIC (Kuala Lum-
pur: Dewan Bahasa and Pustaka, 11–12 May 1974), p. 15.
69 Ibid., p. 19.
70 Ibid., p. 20.
71 Ibid.
72 Ibid., p. 31.
73 Ibid., p. 40.
74 Ibid., p. 41.
75 Ibid., p. 32.
76 Ibid., p. 33.
77 Ibid., p. 32.
78 Ibid., p. 59.
79 Anbalakan, ‘Pembentukan Identiti Di Kalangan Masyarakat India Di Malaysia’,
pp. 283–284.

Rise of state discrimination in the Cold War era  251
8 0 Muzafar Desmond Tate, The Malaysian Indians History, Problems and Future

(Kuala Lumpur: Strategic Information and Research Development Centre,
2008), p. 135.
81 Ibid., p. 137.
82 Chandra Muzaffar, ‘Political Marginalization in Malaysia, p. 220.
83 Thirunyanasambanthan Veerasamy, but better known as V. T. Sambanthan,
helmed the MIC as president between 1955 and 1963, the formative years of
merdeka (independence) for Malaya (31 August 1957), and Malaysia (16 Septem-
ber 1963).
8 4 Ongkili, Nation-Building in Malaysia 1946–1974, p. 232.
85 UMNO, was once jokingly, claimed to stand for, ‘You May Not Oppose’.
86 MIC Annual Report, 1976, p. 14.
87 Nagarajan, ‘A Community in Transition: Tamil Displacements in Malaysia’, p. 41.
8 8 Ibid.
89 Anbalakan, ‘Pembentukan Identiti Di Kalangan Masyarakat India Di Malaysia’,
p. 287.
90 Nagarajan, ‘A Community in Transition: Tamil Displacements in Malaysia’, p. 67
91 Anbalakan, ‘Pembentukan Identiti Di Kalangan Masyarakat India Di Malaysia’,
p. 297.
92 See Karl Hack and Kevin Black Burn, War Memory and the Making of Mod-
ern Malaysia and Singapore (Singapore: National University of Singapore Press,
2012), p. 278; and Jan Stark, Malaysia and the Developing World: The Asian Tiger
and the Cinnamon Road (London: Routledge, 2013), p. 11.
93 P. Ramasamy, ‘Nation-Building in Malaysia: Victimization of Indians?’, Ethnic
Relations and Nation Building in Southeast Asia, edited by in Leo Suryadinata
(Singapore: Institute of Southeast Asian Studies, 2004), p. 157.
9 4 Rajah Rasiah, ‘Class, Ethnicity and Economic Development in Malaysia ‘, The
Political Economy of Southeast Asia, edited by R. Robinson, Garry Rodan and
Kevin Hewison (Melbourne: Oxford University Press, 1997), p. 132.
95 Ibid., p. 134.
96 Ooi Kee Beng, ‘The New Economic Policy and the Centralisation of Power’, The
New Economic Policy in Malaysia, edited by Edmund Terence Gomez and Johan
Saravanamuttu (Singapore: National University of Singapore, 2013), p. 321.
97 Edmund Terence Gomez, Johan Saravanamuttu and Maznah Mohamad,
‘Malaysia’s New Economic Policy: Resolving Horizontal Inequalities, Cre-
ating Inequities?’, The New Economic Policy in Malaysia, edited by Edmund
Terence Gomez and Johan Saravanamuttu (Singapore, National University of
Singapore, 2013,) p. 17.
98 Norton Ginnburg, and Chester F. Roberts, Malaya (Seattle: University of
Washington Press, 1958), p. 56.
99 Ibid., p. 60.

9 Malaysia and the Cold War

The longue durée approach

Ooi Keat Gin

Adopting a longue durée approach of the Cold War offers a wider and deeper
comprehension of external influences and impacts on local, internal devel-
opments. Stimuli from within could also be better scrutinized through long-
term lenses. In the context of Malaya/Malaysia, the Cold War (1947–1990)
phenomenon was not only a post-war manifestation, but could be traced
back to the 1920s and 1930s and also beyond the 1990s allowing a refreshing
look on this global spectacle. Malaya/Malaysia, as a case study of stretch-
ing the conventional Cold War period on either end of the timeline, might
set the agenda for other nation-states and/or regions to follow suit thereby
further enriching our understanding of the influence and impact of this
twentieth-century global phenomenon.

When the British colonial administration of Malaya declared a state of
emergency in June 1948 that launched what came to be referred to as the
Malayan Emergency (1948–1960), a protracted armed conflict in the sup-
pression and annihilation of the Malayan Communist Party (MCP) and its
jungle guerrillas, it recalled a history of anti-Communism within British
colonial circles that dated three decades ago to the 1920s. In both Malaya
and Sarawak, two territories in which Communism had a long established
history of taking root and manifesting its influences, countering and elim-
inating this ideology had long been the guiding policy of the authorities,
namely the British colonial administrators in Malaya and officers of the
Brooke Raj in Sarawak.1

The fact that the ideology had positively impacted on the Chinese commu-
nity, its adherents were recruited from within Chinese vernacular classrooms
and schoolyards, attention therefore was on the large Chinese population on
the west coast Peninsular Malay states (Perak, Selangor, Negeri Sembilan,
Johor) and the Straits Settlements (Penang, Malacca, Singapore). Similarly,
focus was on Sarawak, which possessed the largest Chinese population on
the island of Borneo.

Communism, however, had scant appeal to Muslims, whether Peninsular
Malay and Sarawak Malay communities or other indigenous ethnic groups
such as the Iban, Bidayuh, Melanau of Sarawak. The belief in a supreme be-
ing remained the contentious issue between atheist Communism and Islam,

Malaysia, Cold War and the longue durée approach  253

the latter an Arabic verbal noun meaning, ‘voluntary submission to God’.
Adat, which encompassed traditions and customs, customary law and an-
imistic beliefs, is the main belief system of non-Muslim ethnic groups in
the Peninsula, mainly the Orang Asli (lit. ‘original peoples’) and the 20 and
30 ethnic minorities in Sarawak and Sabah, respectively. Low literacy rate
among ethnic minorities meant the non-comprehension hence non-appeal
of communist ideology. Besides, communist propaganda materials and its
literature were in the Chinese language (Mandarin), largely imported from
the mainland, likewise its activists and recruiters were mainly Chinese,
where many possessed little knowledge of the indigenous minorities, of their
language and sociocultural traits. As far as Communism was concerned, it
was confined almost exclusively within the Chinese populace, as agitators,
activists, spies, hard-core communist revolutionary guerrilla fighters, sym-
pathizers and/or supporters.

Therefore, in reflecting on a longer shadow of the Cold War, the Western
colonial era shall be examined, followed by the post-independence period
in order to identify and locate the attitude towards communist and non-
communist ideology in Malaya and Sarawak, both territories having signifi-
cant numbers of Chinese residents. Furthermore, the political orientation of
post-independence Malaya/Malaysia shall reveal the guiding principle and/
or strategy abided by the leaders, whether ideologically driven or based, or
other motivations.

Colonial Malaya (c. 1870s–1957) and Sarawak (1841–1941):
ensconced in the Western capitalist system

Colonial Malaya came into being as a result of the pursuit of raw mate-
rials (initially tin ore, later rubber) for the Western capitalist market in
commodities that fuelled the industrial economies of Britain, Europe and
North America. Besides the economic motivation, it necessitated territorial
acquisition, for without political control over territories, economic exploita-
tion of resources (mineral, vegetative, etc.) might prove too problematic, if
not nigh impossible. Unlike trade transactions where agreements for pur-
chase and delivery of goods could function rather satisfactorily, mining of
minerals and/or growing and harvesting commercial agriculture demanded
long-term settlement and close, continuous vigilance and presence to exert
effective and profitable management of the enterprise. Therefore, a perma-
nent presence required territorial acquisition accompanied by a system of
governance, notably establishing an administrative structure (governor,
bureaucracy), provision of infrastructure (transport, communication) and
military enforcement.

Although one could date British colonial beginnings on the Malay Penin-
sula that subsequently brought forth British Malaya (present-day Peninsula/
West Malaysia) to the English East India Company’s (EEIC) establishment
of Prince of Wales Island or Penang in 1786, thereafter Singapore (1819) and

254  Ooi Keat Gin

through treaty arrangement of Malacca (1824), the aforesaid were primarily
port-cities designed to facilitate trade and commerce, particularly the trade
in luxuries with China, the famed ‘China trade’ of silk, tea and porcelain
(chinaware). Even then, the EEIC thought it expedient to establish a per-
manent form of governance, hence the administrative setup of the Straits
Settlements comprising the three port-cities and their surrounding hin-
terland. Penang, for instance, deemed prudent and practical to acquire a
territory opposite the island, viz. Province Wellesley (1800) to ensure safe
food supply (rice) and security. Nonetheless, direct political intrusion into
the Peninsular Malay states in the mid-1870s marked the onset of a unique
form of British colonial rule.

The Pangkor Engagement (1874) introduced an ingenious system of in-
direct rule that was subsequently replicated throughout all nine peninsula
Malay states. A British administrative officer (titled ‘resident’ or ‘adviser’)2
was appointed to the court of the Malay ruler whose ‘advice’ it was manda-
tory to request and, when given, was binding, on all state matters including
legislation and finance but excluding Malay customs and religion (Islam).
Although all executive and legislative orders were issued in the name of the
sultan with his royal mohor (seal), conspicuously stamped on the related
documents, the real power was in the hands of the resident/adviser. In
this manner of indirect rule, the position of the sultan was fully exploited
knowingly that Malay tradition forbids disloyalty (Anak Melayu pantang
durhaka), hence any opposition was construed as unfaithfulness to the mon-
arch. The consequent penalty was death.

Moreover, this system of indirect rule proved both cost effective and had
little adverse impact in the event of failure. For the former, the officer’s
emolument and accommodation was provided by the ruler. And if the of-
ficer failed in his tasks, whether due to incompetence and/or misjudgement,
he alone bore the responsibility and/or blame, adversely affecting neither
the reputation of the British Colonial Office (CO) nor Anglo-Malay rela-
tions. The failed officer was replaced by another (it was to be hoped), more
suitable and capable individual. The case of J. W. W. Birch, the first Resi-
dent to Perak, was an exemplary lesson that was quickly addressed.3 Besides
lacking background knowledge and interactions with Malays and their lan-
guage and culture, Birch’s previous colonial appointment was in Ceylon (Sri
Lanka); his successor, Hugh Low experienced at least two decades of close
proximity, interactions and interrelationships with Malays in Brunei prior
to Perak. Fluent in Malay and regarded almost an ‘expert’ on Malay socio-
cultural traditions, Low made an unqualified success of the British system
of indirect rule of the Malay states.

In order to further facilitate the more efficient exploitation of the re-
sources of the Peninsula, the Federated Malay States (FMS) was consti-
tuted in 1895 that effectively streamlined and coordinated infrastructure
development, in particular transport and communication with the con-
struction of rail and road systems and the laying of telegraph and telephone

Malaysia, Cold War and the longue durée approach  255

lines. Thus, the constituents of the FMS – Perak, Selangor, Negeri Sembilan
and Pahang  – especially the first three-mentioned possessed one of the
most efficient rail and road networks in connecting the production sources
(mines, plantations) to the export centres (ports). Kuala Lumpur, the ad-
ministrative centre of the FMS, for instance, was in direct telegraph and
telephone communication with London where the commodities’ market was
based, thereby facilitating the trading of the Peninsula’s tin and rubber to
the global market.

The Malay sultans of the nine Malay states reigned but did not rule over
their respective domain; the CO through the resident/adviser, resident-
general,4 governor/high commissioner5 were the real executive power behind
the throne. Sovereignty (daulat) remained with each Malay ruler, but more
importantly, in the eyes of the rakyat (peoples, masses), their reigning sul-
tan was their respected and exalted monarch. In reality and practice, all
internal administration was in the hands of the CO (through its officers on
the ground), the Foreign Office (FO) handled all external relations, while
the War Office (WO) was responsible for defence. Theoretically, the nine
Malay states were British protectorates with internal self-government: the
fact that the mohor was conspicuously stamped on every executive and leg-
islative document meant that the sultan, albeit on paper, was the ruler. This
façade appeared to please all quarters, viz. all the nine sultans,6 rakyat, CO,
FO, WO.

The most important priority for the British was the economic exploitation
of raw materials, viz. tin and rubber, to be undertaken with limited inter-
ruption thereby ensuring that stockholders were paid handsome dividends
annually. The crux of the capitalist system was profitability, all else were
rendered secondary. Any means to maximize profitability were employed,
for example, cheap and easily managed labour from South India were re-
cruited from South India to address the labour issue in the rubber industry.

Leftist propaganda that breeds subversion with its anti-imperialist and
anti-colonialist literature and activism was anathema to the British colonial
government in Malaya. The colonial authorities kept in check on all per-
ceived subversive activities, viz. Chinese ‘secret societies’. But Chinese
labour was crucially necessary, as was Indian labour, hence as long as there
were no serious overt troubles such as unrest, rioting or sabotaging the
economy, the immigrant communities were generally left to their own de-
vices with scant interference from the colonial government.

Sarawak under the Brooke Raj likewise subscribed to the Western capi-
talist system. Economic commodities included pepper and rubber, gold and
petroleum. Even before the advent of Brooke rule, jungle products such as
dammar, camphor and birds’ nests had trickled into the regional and inter-
national market, the last hastened with the opening of Singapore as an EEIC
port-of-call from 1819. During the Brooke period, Singapore continued to
serve as the gateway for Sarawak’s commodities to enter the world’s mar-
ketplace. Immigrant Chinese served as entrepreneurs as well as the labour

256  Ooi Keat Gin

force in mining (gold) and commercial agriculture (pepper and rubber). The
highly specialized and capital-intensive oil industry was entrusted to West-
ern enterprise.

Coincidentally, the fact that the Chinese were the purveyors of com-
munism acting as propagandists, activists, agitators as well as the faithful
practitioners (hard-core communists), supporters and sympathizers, the
community was regarded with deep suspicion and mainly eschewed. Since
the so-called Chinese Rebellion (1857), when Hakka goldminers raided
Kuching, the seat of the White Rajah, and nearly killed Rajah James Brooke
if not for Malay assistance, the Brooke Raj had been distrustful of the Chi-
nese as a community. Moreover, from then all Chinese so-called ‘secret
societies’ were proscribed.

Although being pragmatic, both the first and second rajahs strived to in-
vite Chinese to develop the economy, the Brooke Raj remained suspicious,
hence vigilant of whatever Chinese activities, organizations and/or ex-
pressed intentions lest they posed a subversive threat. At the same time, the
Brooke Rajahs were aware and held the belief and had confidence that only
the Chinese could make a success of Sarawak’s economy. The Chinese, for
their part too, did not disappoint the Brookes’ faith in them: as wholesale
importers and exporters, mainly Hokkien, also Teochew merchants who
catered to the trade with Singapore (regional and world markets); Hokkien
and Teochew traders that cornered the domestic distribution trade; Hakka
pepper growers; Foochow rubber smallholders; Hokkien and Teochew rice
and sago millers.

Therefore, ever since communists and Communism made their appear-
ance in the 1920s, both the British colonial administration in Malaya and
the Brooke Raj in Sarawak had taken measures to suppress this ideology
from the Chinese mainland. The MCP and the Sarawak Communist Organ-
ization (SCO), exclusively a clandestine and overt organization, relentlessly
pursued the establishment of a communist republic. Through ‘united front’
strategy – influencing and controlling Chinese vernacular middle school
student bodies, labour unions, peasant and political parties – the MCP
and SCO sought the armed seizure of political power. In the urban setting,
the MCP had to a certain extent succeeded in garnering support from the
working class and labour organizations and unions that had largely Chi-
nese membership. Since the industrial sector was small in Sarawak, little
headway was made by the SCO in harnessing support from the proletariat.
Neither the MCP nor the SCO was particularly successful in getting support
from the native inhabitants, since both Muslim and non-Muslim alike sub-
scribed to both Chinese-dominated organizations.

The Chinese vernacular schools throughout Malaya and Sarawak, par-
ticularly the middle schools, were a hotbed for MCP and SCO activities, viz.
spreading influence, recruiting adherents, supporters and sympathizers.
The fact that both the British colonial administration and the Brooke Raj
did not undertake a serious view for the provision of education and schools

Malaysia, Cold War and the longue durée approach  257

for the offspring of local inhabitants and left such undertakings to private
agencies (Christian missionary groups, philanthropists, etc.), Chinese ver-
nacular schools emerged and operated as independent entities financially
supported and managed by the local Chinese communities. Not only were
textbooks and curriculum wholly imported from mainland China, but also
schoolteachers who were born and trained on the mainland. Undoubtedly,
some, if not a significant number of schoolteachers, held strong leftist views,
or were even card-carrying members of the Chinese Communist Party (1921)
themselves. Leftist propaganda materials were in the Chinese language tar-
geting a Chinese audience.

The British colonial administration and the Brooke regime legislated
against the spread of communist ideology in the Chinese vernacular schools
requiring registration of schools and teachers, scrutiny of textbooks and
other curricula materials and vigilant watch over the schools and their ac-
tivities. But during the pre-war period, the SCO was unable to exert any
significant impact on the schools and the student population.

Independent Malaya (1957–1963), and Malaysia (1963–1970):
continuity in the Western capitalist system

During the Pacific War (1941–1945), Malaya and Sarawak came under the
military occupation of Imperial Japan. For three years and eight months,
both territories endured wartime sufferings, deprivations, want of foodstuff
and other material necessities, besides existing in a climate of fear and sus-
picions. The wartime economy prioritized the military while the civilian
population bore hardships; all foodstuff and materials were confiscated for
the Imperial Japanese forces. Moreover, Malaya grieved over the sook ching
(purification) campaign, a pre-emptive measure on the part of the Impe-
rial Japanese Army (IJA) in eliminating anti-Japanese elements among the
Chinese community. Tens of thousands were executed (mostly shot, some
decapitated) based largely on accusations, mere perception and/or suspi-
cion.7 In addition, Chinese communities throughout the Peninsula had to
‘contribute’ monies for their pre-war ‘sins’ against Imperial Japan, namely
supporting the nationalist regime on mainland China.8 Likewise, the Chi-
nese inhabitants in Sarawak faced the financial demands of shu-jin (‘life-
redeeming money’) totalling Straits $1.9 million.9

The Malayan People’s Anti-Japanese Army (MPAJA), the wartime mil-
itary arm of the MCP, undertook a jungle guerrilla war against the occu-
pying forces without inflicting any major impact. Even collaboration and
assistance with the British Force 136, a guerrilla force behind enemy lines,
did not unduly troubled the IJA. The SCO, as far as can be ascertained, had
no links with the abortive Chinese-led anti-Japanese revolt in North Borneo
that broke out in Jesselton (present-day Kota Kinabalu) in October 1943.

The post-war period witnessed much relieved on the part of the Chi-
nese community with the reinstatement of British colonial administration

258  Ooi Keat Gin

in Malaya and the Brooke Raj in Sarawak. The latter, however, ceded the
territory of Sarawak to the British government, hence the Crown Colony
of Sarawak, a part of the British Empire. On the Peninsula, initially, the
Malayan Union (1946–1948) was established that comprised the nine pro-
tectorate Malay states, and the Crown Colony of Penang and Malacca. Sin-
gapore remained a British Crown Colony. But intense opposition towards
the Malayan Union forced the British to replace with another administra-
tive setup, the Federation of Malaya (1948–1957). But opposition to cession
(1946–1949) by some quarters within the Sarawak Malay community was
abortive and only resulted in schism and loss of Malay political influence in
the subsequent decades.

Against the background of administrative changes, the post-war economy
of both Malaya and Sarawak were rehabilitated and resuscitated from war-
time neglect. Repairs were made to war-damaged infrastructure facilities
(transport and communication). The onset of the Korean War (1950–1953)
boosted commodity prices benefitting Malaya (tin and rubber) and Sarawak
(rubber and oil). Foreign exchange earnings were ploughed back in recon-
struction and rehabilitation works. By the late 1940s and early 1950s, the
economy of Malaya and Sarawak were fully integrated in the world capital-
ist economy as during the pre-war era.

Therefore, when the MCP attempted to forcefully seize political power
in order to establish a communist republic, the British colonial government
defended Malaya. Even this all-out war was expediently termed ‘Malayan
Emergency’, to ensure insurance coverage remained tenable for damages
to mines, plantations and other properties, machinery, equipment. MCP
guerrilla fighters, referred to as CTs (communist terrorists) by the colonial
authorities, sought to disrupt and destroy the economy, and amidst the eco-
nomic dislocation and social chaos, to seize political power.

This protracted 12-year Malayan Emergency (1948–1960) witnessed the
concentration of all means and resources – military, police, civil, economic,
political, psychological – aimed at overcoming the communist armed in-
surgency. In ‘winning hearts and minds’ proved the successful formula in
countering MCP propaganda of anti-imperialism and anti-colonialism.
Meanwhile, political progress through constitutional means in laying the
groundwork towards merdeka (independence), attained on 31 August 1957,
pre-empted the MCP’s claims of struggling to unshackle the colonial chains
of Malaya. Talks held in 1955 to end the insurgency failed, neither the self-
rule government of Malaya nor the MCP was willing to compromise and/
or give up its respective commitment. And, within two years of merdeka,
the government of independent Malaya declared the end of the Malayan
Emergency.

Meanwhile across in Sarawak, the 1950s witnessed student strikes by Chi-
nese middle school students. The hidden hand of the SCO in such norm
defying behaviour was obvious, evidenced in the anti-imperialist and anti-
colonial slogans that the youngsters chanted and displayed on placards and

Malaysia, Cold War and the longue durée approach  259

banners. Although the strike actions were subsequently resolved, the SCO
accomplished its objectives: garnering support of the student masses. Un-
deniably and conspicuously evident that the leaders of SCO military organ-
izations, viz. Pasukan Gerilya Rakyat Sarawak (PGRS, Sarawak People’s
Guerrilla Force, SPGF), Pasukan Rakyat Kalimantan Utara (PARAKU,
North Kalimantan People’s Army, NKPA), had their taste of ‘defiance’ in
the schoolyard of Chinese middle schools. Personalities such as Teo Yong
Jim, Wen Ming Chyuan (b. 1932), Bong Kee Chok (b. 1937) and others (Guo
Weizhong, Lim Ho Kui, Lui How Ming, also Yap Choon Ho and Yang Chu
Chung) were the spawn of Chinese middle schools.

Besides gaining support of the student masses, the SCO achieved an un-
qualified success in the infiltration of a bona fide political party, namely the
Sarawak United People’s Party (SUPP), the first political party in Sarawak
formed in 1959. Apart from the president and secretary-general, the entire
body polity of SUPP was riddled with SCO adherents, including its Central
Executive Committee. Meanwhile, many labour unions were similarly infil-
trated with SCO members holding influential posts such as secretary.

Consequent of the anti-subversive sweep of the colonial government of
Sarawak in the wake of the outbreak of the Brunei Rebellion (1962), members
of the SCO were forced to flee across the border to West Kalimantan. It was
then that the SCO had little choice but to change strategy to one of armed
revolution. With the moral support from other anti-Malaysia groups, viz.
Partai Rakyat Brunei (PRB, Brunei People’s Party), Partai Komunis Indone-
sia (PKI, Indonesian Communist Party), Indonesian President Sukarno, the
SCO having received some military training from Tentera Nasional Indone-
sia (TNI, National Armed Forces of Indonesia), crossed back into Sarawak
to launch its armed revolutionary struggle. The last event came to be known
as the Sarawak Communist Insurgency (1962–1990), a three-decade-long
guerrilla war, initially against the colonial administration of Sarawak and
from 1963, the state government of independent Sarawak, then a part of the
Federation of Malaysia.

Despite armed opposition (Indonesia’s Konfrontasi) and legal issues
(Philippines’ ‘Sabah claim’), the concept of ‘Malaysia’, a wider federation
encompassing then independent Malaya, self-governed Singapore, Crown
Colonies of Sarawak and North Borneo (Sabah, from 1963), was realized
on 16 September 1963. The Federation of Malaysia was borne of the Cold
War geopolitical situation. Communist activities were rife and threatening
in both Singapore and Sarawak. In Indonesia, the PKI was increasingly
exerting influence over Sukarno to move further to the left, insisting in
creating a people’s militia that irked the TNI, the Army, in particular. Ma-
laysia was going to be the ‘domino’ that would not fall, vis-à-vis the ongoing
conflict on the Indochinese Peninsula, the threat of the Barisan Sosialis
(Socialist Front) in Singapore, the SCO in Sarawak and Sukarno-PKI al-
liance in Indonesia. In a single stroke of the creation of the Federation of
Malaysia led by the anti-communist Malay prince, Tunku Abdul Rahman,

260  Ooi Keat Gin

the communist threat was greatly alleviated. The fulfilment of Malaysia was
that the former British colonial territories – Malaya, Singapore, Sarawak,
North Borneo – remained within the Western capitalist market, practicing
Westminster-style parliamentary democracy.

Like Malaya, Malaysia continued to be the world’s largest producer and
exporter of tin and rubber. Mining and commercial agriculture remained
the mainstay of its economy. Tied closely with the Western capitalist system
that then dominated the global economy. Secured in the Western camp, the
so-called ‘free world’ under the leadership of the US, Malaysia was an un-
qualified accomplishment acting as bulwark to the spread of communism in
the Southeast Asian region.

Malaysia (from 1970s): shift to neutrality

Following the ’13 May 1969’ episode, Tun Abdul Razak assumed the
premiership of Malaysia. Not unlike the Tunku, Razak too was a British-
trained barrister but he was less an Anglophile than his predecessor. In-
stead, the pragmatist Razak intended for Malaysia to adopt a neutral stance
rather than be identified solely with the Western camp. When the Bandung
Conference was held in 1955, Malaya was still a British colonial possession
thus was unable to participate. The Non-Aligned Movement (NAM) was
appealing to Razak and Malaysia became a member in 1970. At the same
time, Razak and his deputy, Dr Ismail Abdul Rahman, was committed to
the concept of creating in Southeast Asia a Zone of Peace, Freedom and
Neutrality (ZOPFAN). During the next decades (1970s through to 1990s),
ZOPFAN seemed to be a pipedream despite being formally adopted by
the Association of Southeast Asian Nations (ASEAN) (1967) in its Kuala
Lumpur Declaration (27 November 1971). Conflicts on the Indochinese
Peninsula were the most conspicuous obstacles, besides protracted
internecine separatists’ struggles in Thailand’s and Philippines’ Muslim
provinces. Acheh, in the northern part of Sumatra, too was estranged with
Jakarta over religious issues.

‘Friends to all, enemies to none’ was the cornerstone of Malaysia’s for-
eign relations. The fact that Malaysia was then facing the Second Malayan
Emergency (1968–1989) on the Peninsula notwithstanding, and the Sarawak
Communist Insurgency (1962–1990), Razak journeyed to Beijing in 1974 to
normalize relations with the People’s Republic of China (PRC). Nonetheless,
government-to-government relations had no impact on party-to-party ties,
hence the CCP continued to provide support, in both moral and material
terms, to the MCP, and the North Kalimantan Communist Party (NKCP)
(1971), as the SCO formally became known. Both insurgencies proceeded
without hinder, neither quarter compromising.

In countering the communist insurgencies, the Razak administration
embarked on an ingenious formula in ‘marrying’ security and development
(economic and infrastructure). Program Keselamatan dan Pembangunan

Malaysia, Cold War and the longue durée approach  261

(KESBAN, Security and Development Programme) witnessed the hasten-
ing of rural development: improving agricultural produce (rice, rubber,
oil palm, pineapple, etc.) to enable lucrative returns and undertaking in-
frastructure development (transport, communication, electricity supply,
piped water, irrigation systems). Both undertakings were aimed in lifting
the economic livelihood of the rural farming community. KESBAN, to a
large extent, contributed in the alleviation of rural poverty, consequently
removing a viable appeal to the communist cause, namely disenfranchise-
ment that could lead to subscribing to subversive propaganda. Reducing the
rural poverty rate also helped to fulfil one of the twin objectives of the New
Economic Policy (NEP, 1970–1990), notably the eradication of poverty.

As in the Malayan Emergency, the Malaysian government undertook co-
ordinated efforts between the military, police and civilian administration
in addressing the communist insurgency. In applying the classic counter-
insurgency principle of ‘winning hearts and minds’, all avenues to win over
the rakyat to the government side were made, from utilizing psychological
warfare, alternating military operations deep in the jungle to seek out CTs
to dropping amnesty offers, to provision of development and progress for
the rakyat (such as KESBAN) that negated communist propaganda of cap-
italist exploitation and oppression of the masses. In Sarawak, a concerted
effort (combining military and civil authorities) was undertaken in the cre-
ation of RASCOM (Rajang Area Security Command) whereby the Third
Division, which comprised a large part of the Rajang Valley, was designated
a ‘special security area’. From army generals to police constables to ketua
kampung (village headmen) to government kerani (clerk), literally all quar-
ters were involved in suppressing the communist threat.

Although no major ‘surrender’ occurred on the Peninsula, Operation Sri
Aman succeeded in a penning of a memorandum of understanding (MoU)
between Sarawak Chief Minister Abdul Rahman Yaakub and Director and
Political Commissar of PARAKU Bong Kee Chok on 21 October 1973.
Bong and his comrades (altogether 302 individuals) laid down their arms
and were welcomed back to society following debriefing by Special Branch
(intelligence). In commemorating this historic accomplishment, Simanggang
where the MoU was signed, was renamed Bandar Sri Aman (Town of
Peace). Nonetheless, the insurgency continued; Bong’s other brothers-
in-arms remained in the jungle, committed to the revolutionary cause.

The Mahathir era (1981–2003): looking east and south

When Dr Mahathir Mohamad assumed the premiership in 1981, he em-
barked on several radical breaks with his predecessors. Despite the pref-
erence of neutrality and NAM, the Razak administration did not sever the
traditional ties with the Western democracies, Britain in particular. But in
an unprecedented move, Mahathir launched the ‘Buy Britain Last’ cam-
paign (1981–1983) and, concurrently, the ‘Look East’ policy (1982–2000s).

262  Ooi Keat Gin

Owing to several intractable issues – Guthrie, Carcosa, hike in university
tuition fees for foreign students – Mahathir retaliated in discriminating
British products, preferring alternatives. Malaysia had long looked to the
West, UK in particular, but also to the US, for technical training and higher
education. But when Britain decided on a threefold increase in university
tuition fees for non-British students, the financial impact was unduly adverse
for Kuala Lumpur to support government-aided postgraduate students in
British universities. Mahathir, who had admired Japan’s miraculous post-
war phoenix style emergence to be the second richest and powerful economy
in the world next only to the US, sought to adopt its best and effective prac-
tices. Its economic models, management format, and organizational struc-
ture and work ethics were needed to be adopted and adapted by Malaysian
companies and the civil service. East Asian countries such as Japan and
also South Korea and Taiwan would be good models to emulate. Therefore,
from the mid-1980s, students were sent to Japan for technical and industrial
training besides tertiary education and/or for postgraduate studies.

Mahathir, a medical doctor by profession, was the first non-British-
trained Malaysian prime minister; he graduated in 1954/1955 from the King
Edward VII College of Medicine in Singapore.10 Consequently, he possessed
few emotional ties with Britain or the West, unlike his predecessors. His
outspoken personality and astute judgement saw him criticizing the West-
ern powers as well as the UN. In turn, he championed the cause of the Third
World against the First World, the South against the North. Throughout the
Third World and the South and the Islamic world, Mahathir was a spokes-
man, a beacon and Malaysia, a model of success. Through the Organization
of Islamic Cooperation (OIC), Mahathir spoke on behalf of the Muslim na-
tions against Islamophobia and other injustices and prejudices.

Not only adept at denouncing wrongs, discriminations and injustices,
Mahathir proffered recommendations, alternatives and panaceas. For in-
stance, he called for the abrogation of the veto power privilege of the perma-
nent members of the UN Security Council and suggested that more Third
World countries and Japan be made permanent members for more judicious
representation.

Although Malaysia remained anathema towards communism, the Ma-
hathir administration pushed ASEAN to welcome the membership of all
nations in the region, communist and non-communist, hence Vietnam
(1995), Laos (1997), Myanmar (1997) and Cambodia (1999) thereby expand-
ing ASEAN to a 10-member association. As a result, ASEAN boosted its
collective bargaining strength vis-à-vis other blocs and/or major powers
(US, Russia). ASEAN Plus Three – PRC, Japan and South Korea – further
galvanized cooperation between East Asia and Southeast Asia.

Mahathir broke with tradition, not only almost severing ties with Brit-
ain and the Commonwealth, but also criticized the Western democracies
for their double standards, hypocrisies and negligence of the poor, dispos-
sessed, downtrodden nations in Asia, Africa and even in Europe. With nei-
ther fear nor favour, Malaysia stood up for righteousness.

Malaysia, Cold War and the longue durée approach  263

Mahathir’s successors – Abdullah Ahmad Badawi (2003–2009) and Na-
jib Abdul Razak (2009–2018) – continued with his foreign policy without
any dramatic reversals. Abdullah strengthened Malaysia’s ties with the
OIC. Najib reaffirmed Sino-Malaysia relations and built on the goodwill his
father (Razak) had laid the groundwork from the mid-1970s.

The longue durée approach

As can be seen in the foregoing sections, eschewing Communism and em-
bracing capitalism had a long antecedent in Malaysia dating back to the
Western colonial times of the 1920s and 1930s. Taking an anti-communist
stance conspicuously in the post-war period was not an ‘overnight’ position
of policy but possessed a long history and a case of continuity. Rightly,
when the MCP in the Peninsula and the SCO in Sarawak turned from
united front strategy to armed revolution (in 1948 and 1962 respectively),
the government of the day responded with counter-insurgency measures.
But in both instances, the ruling authorities realized that the suppression
and defeat of the MCP and SCO was not solely dependent on firepower,
‘search and destroy’, ‘carpet bombings’ and other military manoeuvres but
a strategy of ‘winning hearts and minds’. Therefore, constitutional politi-
cal developments towards merdeka, resettlement operations, security of the
rakyat vis-à-vis CTs, development programmes, collectively overcame the
communist ultimate aim of establishing PRC-style republics on the Penin-
sula and Sarawak.

The post-independent Tunku administration (1957–1970) of Malaya/
Malaysia understandably took on a pro-Western position in relations to for-
eign policy in the Cold War environment then. Malaya/Malaysia securely
emplaced and identified itself with the Western democracies of the UK,
Western Europe and the US. Moreover, the country’s economy, still largely
dependent on commodities (tin and rubber), was securely and tightly en-
trenched with the world capitalist system gravitating to London where the
tin and rubber markets were based. Meanwhile, the Tunku administration
that faced communist insurgency (1948–1960, 1968–1989) relied on British
and Commonwealth military assistance (ground troops, military supplies).
Personally, the Anglophile Cambridge-trained Tunku, was especially par-
tial to the UK, a significant ally of the US.

Razak, by way of contrast, was a pragmatist, and his administration
(1970–1976) was increasingly moving away from the Western camp to
a neutral stance, ‘friends to all, enemy to none’ seemed to be the mantra
for self-preservation. Malaysia begun to make ‘new friends’ in NAM and
formally became a member. At the same time within the region, Malaysia
pushed for the adoption of ZOPFAN that gained currency with ASEAN’s
Kuala Lumpur Declaration (1971).

The bipolar world then had three, instead of the initial two, centres – Moscow,
Washington and Beijing. What appeared more influential with an historical
relationship stretching back to the nineteenth century, Malaysia-PRC ties

264  Ooi Keat Gin
­

Malaysia, Cold War and the longue durée approach  265

countries faced against the rich (economic), advanced (technological), pow-
erful (political and military) nations. It could be seen that Malaysia stood
up and lent a voice for the inequalities confronting a post-Cold War world.

Malaysia navigated itself prudently and well through the Cold War era
confronting and overcoming obstacles and challenges thanks to its political
leadership. When continuity was necessitated, Malaysia abided and when
changes appeared sensible and practical, Malaysia made the required ad-
justments. In hindsight, Malaysia remained the ‘domino’ that did not fall;
on the contrary, it emerged much stronger and more confident in marching
through the post-Cold War era.

Notes

1 Sabah, formerly known as North Borneo (before 1963), was a colonial terri-
tory under the British North Borneo Company administration and Brunei
under British colonial administration, exhibited insignificant communist activ-
ities. During the colonial period, Sabah, Brunei and Sarawak collectively were
known as British Borneo, differentiating from the southern and eastern parts of
the island of Borneo that were then under Dutch administration, hence Dutch
Borneo.

2 Perak, where the Pangkor Engagement was first signed, styled the British of-
ficer ‘resident’. Under similar treaty terms, Selangor, Negeri Sembilan and Pa-
hang also had their respective resident. The four states were referred to as the
Western Malay States and they comprised components of the Federated Malay
States (FMS) (1895). Others, referred to as Un-federated Malay States (UMS),
viz. Perlis, Kedah, Kelantan, Terengganu and Johor had ‘adviser’ accredited
to their respective royal courts. Comparatively, Malay rulers of UMS enjoyed
more latitude and were less shackled by bureaucratic dictates, than their brother
rulers in FMS.

3 Consequent of his misjudgement and haste in carrying out reforms (abolishing
slavery) and implementing changes (revenue collection), Malay chiefs with the
blessing of the sultan of Perak, murdered Birch at Pasir Salak in 1875. Those
responsible for this deed were apprehended and following a trial were hanged
and others, chiefs and the sultan himself, were banished to the Seychelles.

4 The post of resident-general was created to oversee coordination and overall
supervision of the FMS. In 1911, the resident-general was replaced by chief
secretary,

5 When the FMS came into being, the governor of the Straits Settlements acted as
its high commissioner.

6 In the 1920s and 1930s, owing to dissatisfactions expressed by sultans in the FMS
of a devolution of powers of the states vis-à-vis the centralization of administra-
tion in Kuala Lumpur, a protracted debate of decentralization was undertaken
with some powers restored to the states. The latter was also aimed at enticing
UMS rulers to acquiesce in joining the FMS. Both, neither decentralization nor
UMS rulers joining FMS, did not materialize as expected. But before any other
measures were taken, the Pacific War (1941–1945) broke out.

7 According to one source, the ‘total number of victims for the whole of Malaya is
considered by Malayans to have been around 100,000’. Hara Fujio, ‘Sook ching:
A “Cleansing’ Exercise”’, Southeast Asia: A Historical Encyclopedia, from Ang-
kor Wat to East Timor, edited by Ooi Keat Gin (Santa Barbara, CA: ABC-Clio,
2004), III: 1230.