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Entrepreneurship
Development in Malaysia
2
Synopsis
This chapter introduces students to the

historical and policy perspectives of
entrepreneurial development in Malaysia.
Introduction to Entrepreneurship All Rights Reserved

Oxford Fajar Sdn. Bhd. (008974-T), 2017 2 3
Objectives
The objectives of this chapter are:

To introduce students to the development of
entrepreneurship in Malaysia and the various
government support and incentives for
entrepreneurial activities.
To introduce students to Malaysias economy
and entrepreneurship development history.

Learning Outcomes
At the end of this chapter, students should be able

to:
Gain a better understanding of the historical
perspective of entrepreneurial development in
Malaysia.
Appreciate and analyze past and present
Malaysian Government Policy on entrepreneurial
development.

List of Topics
Malaysian Progress after Independence

The New Economic Policy (NEP)
The National Development Plan (NDP)
The National Vision Policy (NVP)
The New Economic Model (NEM)
Entrepreneurship in Higher Education

Introduction
An understanding of the historical perspectives

and the rationale of the various government
policies on the development of entrepreneurship
in Malaysia is a necessary requisite for
Malaysians to understand the countrys economic
history and challenges, so as to enable them to
contribute towards building the nation.

Malaysian Progress after
Independence
Malaysia achieved independence from the

British in 1957. After independence, Malaysia
made impressive progress in social and
economic development, but the benefits of this
progress were not evenly distributed among the
different ethnic groups in Malaysian society.

Independence (cont.)
The Bumiputeras (literally sons of the soil)

which refer to the indigenous people of
Malaysia and mainly include Malays, Kadazans,
Ibans and a few others, have been left far
behind in terms of their economic fortunes and
their participation in the modern sector of the
economy, particularly in commerce and
industry, compared to the Chinese and Indians.

The subservient nature of the Bumiputera

economic position, despite the countrys
independence, has created dissatisfaction
among the Bumiputera and sowed the seeds of
distrust and discontentment in their relationship
with the non-Bumiputera, in particular the
Chinese.

Not long after Malaysias general election in

1969, a racial clash erupted between the
Malays and the Chinese, killing at least 196
people with over 400 injured. The racial riot of
13 May 1969 served as an eye-opener for many
regarding the fragility of Malaysias pluralistic
society.

Recognizing the severity of the problems and

the urgent need to address them, the
government through the National Operations
Council (NOC) introduced the far reaching
reforms of the New Economic Policy (NEP).

The New Economic Policy
(NEP)
The New Economic Policy (NEP) started in

1971 as an ambitious national blueprint for
Malaysias socio-economic development.
The government realized that poverty and racial
economic imbalances were the root causes of
the unhappiness that had precipitated the 1969
racial riots.

(NEP) [cont.]
To redress this and engender unity, the national

ideology or Rukunegara was introduced in 1970
by the newly established Department of
National Unity, which called for a rejuvenated
Malaysian society with a common value system
that would transcend existing ethnic, cultural
and socio-economic differences.

(NEP) [cont.]
Guided by the Rukunegara principles, the NEP was
formulated with the objective of achieving national unity
through the two-pronged strategy of:
Eradicating poverty by raising income levels and
increasing employment opportunities for all
Malaysians, irrespective of race.
Accelerating the process of restructuring Malaysian
society to correct economic imbalances, so as to
reduce and eventually eliminate the identification of
race with economic function.
(NEP) [cont.]
In order to achieve the objectives of the second
prong, the three important aspects to accelerate the
process of restructuring the Malaysian society are:
Restructuring of racial composition in employment.
Restructuring of wealth ownership.
Creation of a Malay Commercial and Industrial
Community, later known as Bumiputera
Commercial and Industrial Community (BCIC).

(NEP) [cont.]
It must be said that the NEP has done much to

restore Malay confidence in the government
and also in reducing Malay-Chinese tensions.
The non-Malays, though, see the policy as
discriminatory against their economic welfare.
However, this cannot be true because by 1990,
the non-Malay equity ownership of the
corporate sector had increased to 46.2%
exceeding the 40% target set for them.

(NEP) [cont.]
The non-Malays, particularly the Chinese, had

also benefited from the poverty eradication
programme as evidenced by their mean
monthly household income, increasing from
RM394 in 1970 to RM1,582 in 1990 (OPP2,
1991).

The National Development
Plan (NDP) [cont.]
The National Development Plan (NDP) was

introduced in 1991, covering a ten-year period
from 1991 to 2000 (OPP2, 1991).
NDP also introduced several new strategic
dimensions, which included shifting the focus on
the poverty eradication strategy to addressing
hard-core poverty; emphasizing employment
opportunities and rapid development of an active
Bumiputera Commercial and Industrial
Community (BCIC).
Plan (NDP) [cont.]
Despite the increase in the number of Bumiputera
businesses in the mainstream economy of the
country, they remained small and proportionately
fewer than non-Bumiputera businesses.
At the end of the NDP period, the incidence of
poverty among Malaysians was further reduced
from 16.5% in 1990 to 7.5% in 1999, with the
incidence of hard-core poverty also reduced from
3.9% in 1990 to 1.4% in 1999.

Plan (NDP) [cont.]
Under the NDP, a significant progress has also

been achieved in terms of employment
restructuring of which the proportion of
Bumiputera in the professional and technical
employment categories has increased from
60.5% in 1990 to 63.8% in 2000.

The National Vision Policy
(NVP)
The National Vision Policy (NVP) was

introduced in 2001 with the aim of establishing
a progressive and prosperous Malaysian Race,
where different ethnic groups live in harmony
and engage in full and fair participation in the
economy, so as to ensure national unity (OPP3,
2001).

(NVP) [cont.]
The NVP (OPP3, 2001) had also introduced new

policy directions aimed at:
developing Malaysia into a knowledge-based
society
eliminating poverty in remote areas and among
aborigines and Bumiputera minorities in Sabah
and Sarawak, as well as increasing the income
and raising the quality of life of those in the
lowest 30% income category

(NVP) [cont.]
achieving effective Bumiputera participation as

well as equity ownership of at least 30% by
2010
increasing the participation of Bumiputeras in
the leading sectors of the economy.

The New Economic Model
(NEM)
The New Economic Model (NEM) is formulated

by the countrys National Economic Advisory
Council (NEAC). The core principles of NEM
are high income, inclusiveness and
sustainability.

(NEM) [cont.]
Its aims are for Malaysia to be a developed

nation by the year 2020, whose population
enjoys a high quality of life with a high level of
income resulting from economic growth that is
both inclusive and sustainable (NEAC, March,
2010).

(NEM) [cont.]
The NEM further envisions for the economy of

Malaysia to be market-led, well-governed,
regionally integrated, entrepreneurial and
innovative.
One of the key elements considered crucial to
attain these objectives is for the country to have
a conducive environment for
entrepreneurship development of its people.

(NEM) [cont.]
As such, the Malaysian government, through its

various ministries and agencies, has stepped up
efforts and initiatives to encourage and support the
growth of Malaysias business community and
innovative start-ups, including dedicated funding for
Small and Medium Enterprises (SMEs); provision of
support facilities such as incubators, advisory
services and training; as well as special programmes
and funding for young entrepreneurs.

Entrepreneurship in Higher
Education
Malaysian government is committed to foster and
facilitate an environment that is conducive in
stimulating the entrepreneurial mindset of the
countrys young generation.
Ministry of Higher Education (MOHE) recognizes the
need to encourage a more entrepreneurial culture, as
well as to develop graduates who are entrepreneurial
in their thinking, possessing a range of essential skills
and attributes to make a meaningful and productive
contribution to the real world, whether in employment
or being entrepreneurs.
Entrepreneurship in Higher
Education (cont.)
This is outlined in Shift 1 of the Malaysia Education

Blueprint 20152025 (Higher Education), which is to
produce holistic, entrepreneurial and balanced
graduates (MOE, 2015).
The Ministry has also introduced the
entrepreneurship Action Plan of Higher Education
Institutions 20162020 as an effort to enhance and
strengthen the implementation of entrepreneurship
education and to shift the mindset of Malaysias
younger generation from Job Seekers to Job
Creators (MOHE, 2016).
Summary
The journey of incorporating the entrepreneurship

element into Malaysian development policy is
unique and is using many avenueseducation,
technology, science, media, shaping societys
attitude towards business, competition and creativity,
besides the financing and creating business space
and channels. In facing economic uncertainties and
volatility, Malaysia must turn to entrepreneurship as
the key to move forward, speed up economic growth,
drive job creation and pursue new sources of
economic and social development.

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1

This chapter introduces students to the

Introduction to Entrepreneurship All Rights Reserved

The objectives of this chapter are:

Introduction to Entrepreneurship All Rights Reserved

At the end of this chapter, students should be able

Introduction to Entrepreneurship All Rights Reserved

Malaysian Progress after Independence

Introduction to Entrepreneurship All Rights Reserved

An understanding of the historical perspectives

Introduction to Entrepreneurship All Rights Reserved

Malaysia achieved independence from the

Introduction to Entrepreneurship All Rights Reserved

The Bumiputeras (literally sons of the soil)

Introduction to Entrepreneurship All Rights Reserved

The subservient nature of the Bumiputera

Introduction to Entrepreneurship All Rights Reserved

Not long after Malaysias general election in

Introduction to Entrepreneurship All Rights Reserved

Recognizing the severity of the problems and

Introduction to Entrepreneurship All Rights Reserved

The New Economic Policy (NEP) started in

Introduction to Entrepreneurship All Rights Reserved

To redress this and engender unity, the national

Introduction to Entrepreneurship All Rights Reserved

Introduction to Entrepreneurship All Rights Reserved

It must be said that the NEP has done much to

Introduction to Entrepreneurship All Rights Reserved

The non-Malays, particularly the Chinese, had

Introduction to Entrepreneurship All Rights Reserved

The National Development Plan (NDP) was

Introduction to Entrepreneurship All Rights Reserved

Under the NDP, a significant progress has also

Introduction to Entrepreneurship All Rights Reserved

The National Vision Policy (NVP) was

Introduction to Entrepreneurship All Rights Reserved

The NVP (OPP3, 2001) had also introduced new

achieving effective Bumiputera participation as

Introduction to Entrepreneurship All Rights Reserved

The New Economic Model (NEM) is formulated

Introduction to Entrepreneurship All Rights Reserved

Its aims are for Malaysia to be a developed

Introduction to Entrepreneurship All Rights Reserved

The NEM further envisions for the economy of

Introduction to Entrepreneurship All Rights Reserved

As such, the Malaysian government, through its

Introduction to Entrepreneurship All Rights Reserved

This is outlined in Shift 1 of the Malaysia Education

The journey of incorporating the entrepreneurship

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