CHAPTER 3

 

THE EMERGENCE AND EVOLUTION OF
MULTINATIONAL CORPORATIONS (MNCs) FROM MALAYSIA

 

 

 

3.0 
Introduction

 

This chapter
is devoted to the history of Malaysian multinational corporations.

 

3.1 
The Emergence of Malaysia-based Multinational Corporations: Economic and
Political Development 

 

(i)                 
Transformation from the British Colonial Period to the 1970s

 

To understand
the origins of Malaysia-based MNCs is to understand the economic and political
history of Malaysia (formerly known as Malaya on that particular of time) as a
British colonial heritage. The cession of Penang by Sultan of Kedah to the
British East India Company in 1786, the formation of the Straits Settlements
uniting Malacca, Penang and Singapore in 1826, the designation of this
settlement as Crown colony in 1867, and the independence of Malaya from the
British in 1957, had important implications on the emergence of the first
Malaysian-based multinational corporations.

 

Historically,
in general, the development of the Malaya economy was largely a function of the
British Colonial Administrative State interest and attention (Edmund and Jomo,
1997). Prior to 1957, the Malaysian economy was heavily dependent on primary
products specifically tin and rubber to generate growth, and employment.
The prosperity of many British trading companies namely Sime Darby Corporation,
London Tin Corporation, Anglo Malayan Tin Limited, Kinta Kellas Tin Mining
Limited and Malayan Tin Dredging Limited derived from these two main products.
A diversification into palm oil began in the late 1960s, and
about the same time, forest resources in the form of saw logs and swan timber
proved to be the leading primary commodities. During British control, a
well-developed system of public administration was established, public services
were extended and large-scale rubber and tin production was developed (Edmund
and Jomo, 1997). Immigrants from China and India were brought to Malaysia for
construction of public works and also as labourers in production sectors (Snograss,
1980; Anand, 1983; Saw, 1988; Faaland et. al., 1990). They were not only needed
as additional manpower but also for their skills and technology. In comparison
with the indigenous population, they were found to be more advanced in nature
and highly developed. (Lim, 1967).

 

 

 

 

 

                                                           

 

(ii)               
From Export-Oriented Raw Materials (EORM) to Import-Substitution
Industrialisation (ISI):

 

(iii)              
From Import-Substitution Industrialisation (ISI) to Export-Oriented
Industrialisation (EOI):

 

(iv)             
The Development of New Economic Policy

 

 

3.2 
Development and Characteristics of Indigenous Malaysian Multinationals

 

Early
Contribution by the Chinese Community

 

Dominance by
the Government Controlled

 

Dominance by
Politically Influential Businessman

 

 

3.3 
The Evolution of Malaysia-based Multinational Corporations: International
Expansion and Outward Investment

 

(i)                 
Malaysia Economic Development towards Malaysian Multinationals

 

(ii)               
Distribution of Malaysia Outward investment (1970 – presents)

 

3.4 
Present and Future Challenges

 

 

3.5 
Summary and Conclusion