Rethinking the Strategy for the Manufacturing Sector
Industrial policy has played out an important function in changing Malaysia's economy from one dependent on the primary sector to one motivated by the manufacturing sector. The transformation inside the economic framework and structure was attained in just more than two decades after independence in 1957.
In the early years after self-reliance, Malaysia's overall economy was typically focused on the production of primary commodities. Main commodities always been the main earnings generators before the late-1970s, and after that the primary sector's relative importance began to reduce. By the mid-1980s, manufacturing started to be the engine of Malaysia's economic development.
Malaysia's maneuver from an economy dependent upon primary products to an industralising one was accelerated while using inflow of foreign direct investment (FDI) in the late-1960s and early-1970s. The government found the important position of FDI in expanding and framing the country's industrial bottom via the technology (embodied in machinery and production processes) and specialized expertise which it brought in. Solutions from commercial countries had been relatively dominant when Malaysia adopted import-substitution policies in the 1960s. During that period, foreign capital and information provided an important avenue pertaining to Malaysia to search for new products and processes.
In the 1970s, when the professional base was enlarged and export-promotion prompted, a more picky approach was adopted for importing technologies (based on the promoted industrial sectors). The growth industries in that era had been electrical and electronics, linen and apparel, and processed agricultural products. Although much of the production activity was relevant to product and process variation at that time, a few amount of indigenous technology was urged, especially for the established sub-sectors.
In the 1980s, when hefty industries had been promoted to encourage increased interindustry...