History of Malaysia

Malaysia is a country in South East Asia whose strategic sea-lane position brought trade and foreign influences that fundamentally influenced its history. Hindu and Buddhist cultures imported from India dominated early Malaysian history. They reached their peak in the Sumatran-based Srivijaya civilisation, whose influence extended through Sumatra, Java, the Malay Peninsula and much of Borneo from the 7th to the 14th centuries.

Although Muslims had passed through Malaysia as early as the 10th century, it was not until the 14th and 15th centuries that Islam first established itself on the Malay Peninsula. The adoption of Islam by the 15th century saw the rise of number sultanates, the most prominent of which was the Melaka (Malacca). Islamic culture has had a profound influence on the Malay people, but has also been influenced by them. The Portuguese were the first European colonial powers to establish themselves in Malaysia, capturing Malacca in 1511, followed by the Dutch. However, it was the British, who after initially establishing bases at Jesselton, Kuching, Penang, and Singapore, ultimately secured their hegemony across the territory that is now Malaysia. The Anglo-Dutch Treaty of 1824 defined the boundaries between British Malaya and the Netherlands East Indies (which became Indonesia). A fourth phase of foreign influence was immigration of Chinese and Indian workers to meet the needs of the colonial economy created by the British in the Malay Peninsula and Borneo.

Japanese invasion during World War II ended British domination in Malaysia. The subsequent occupation of Malaya, North Borneo and Sarawak from 1942 to 1945 unleashed nationalism. In the Peninsula, the Malayan Communist Party took up arms against the British. A tough military response was needed to end the insurgency and bring about the establishment of an independent, multi-racial Federation of Malaya in 1957. On 31 August 1963, the British territories in North Borneo and Singapore were granted independence and formed Malaysia with the Peninsular states on 16 September 1963. Approximately two years later, the Malaysian parliament passed a bill to separate Singapore from the Federation. A confrontation with Indonesia occurred in the early-1960s. Race riots in 1969 led to the imposition of emergency rule, and a curtailment of political life and civil liberties which has never been fully reversed. Since 1970 the "National Front coalition" headed by United Malays National Organisation (UMNO) has governed Malaysia. Economic growth dramatically increased living standards by the 1990s. This growing prosperity helped minimise political discontent.

Prehistory

Stone hand-axes from early hominoids, probably Homo erectus, have been unearthed in Lenggong. They date back 1.83 million years, the oldest evidence of hominid habitation in Southeast Asia. The earliest evidence of modern human habitation in Malaysia is the 40,000 year old skull excavated from the Niah Caves in Borneo in 1958. A study of Asian genetics points to the idea that the original humans in East Asia came from Southeast Asia. The oldest complete skeleton found in Malaysia is 11,000-year old Perak Man unearthed in 1991. The indigenous groups on the peninsula can be divided into three ethnicities, the Negritos, the Senois, and the proto-Malays. The first inhabitants of the Malay Peninsula were most probably Negritos. These Mesolithic hunters were probably the ancestors of the Semang, an ethnic Negrito group who have a long history in the Malay Peninsula.

The Senoi appear to be a composite group, with approximately half of the maternal mitochondrial DNA lineages tracing back to the ancestors of the Semang and about half to later ancestral migrations from Indochina. Scholars suggest they are descendants of early Austroasiatic-speaking agriculturalists, who brought both their language and their technology to the southern part of the peninsula approximately 4,000 years ago. They united and coalesced with the indigenous population.

The Proto Malays have a more diverse origin and had settled in Malaysia by 1000 BC. Although they show some connections with other inhabitants in Maritime Southeast Asia, some also have an ancestry in Indochina around the time of the Last Glacial Maximum about 20,000 years ago. Anthropologists support the notion that the Proto-Malays originated from what is today Yunnan, China. This was followed by an early-Holocene dispersal through the Malay Peninsula into the Malay Archipelago. Around 300 BC, they were pushed inland by the Deutero-Malays, an Iron Age or Bronze Age people descended partly from the Chams of Cambodia and Vietnam. The first group in the peninsula to use metal tools, the Deutero-Malays were the direct ancestors of today's Malaysian Malays, and brought with them advanced farming techniques. The Malays remained politically fragmented throughout the Malay archipelago, although a common culture and social structure was shared.

Early kingdoms

In the first millennium CE, Malays became the dominant race on the peninsula. The small early states that were established were greatly influenced by Indian culture. Indian influence in the region dates back to at least the 3rd century BCE. South Indian culture was spread to Southeast Asia by the south Indian Pallava dynasty in the 4th and 5th century.

The Malay Peninsula was known to ancient Tamils as Suvarnadvipa or the "Golden Peninsula". It was shown on Ptolemy's map as the "Golden Khersonese". He referred to the Straits of Melaka as Sinus Sabaricus. Trade relations with China and India were established in the 1st century BC. Shards of Chinese pottery have been found in Borneo dating from the 1st century following the southward expansion of the Han Dynasty. In the early centuries of the first millennium, the people of the Malay Peninsula adopted the Indian religions of Hinduism and Buddhism, religions which had a major effect on the language and culture of those living in Malaysia. The Sanskrit writing system was used as early as the 4th century.

There were numerous Malay kingdoms in the 2nd and 3rd century, as many as 30, mainly based on the Eastern side of the Malay peninsula. Among the earliest kingdoms known to have been based in what is now Malaysia is the ancient empire of Langkasuka, located in the northern Malay Peninsula and based somewhere in Kedah. It was closely tied to Funan in Cambodia, which also ruled part of northern Malaysia until the 6th century. According to the Sejarah Melayu ("Malay Annals"), the Khmer prince Raja Ganji Sarjuna founded the kingdom of Gangga Negara (modern-day Beruas, Perak) in the 700s. Chinese chronicles of the 5th century CE speak of a great port in the south called Guantoli, which is thought to have been in the Straits of Malacca. In the 7th century, a new port called Shilifoshi is mentioned, and this is believed to be a Chinese rendering of Srivijaya.

Between the 7th and the 13th century, much of the Malay peninsula was under the Buddhist Srivijaya empire. The site of Srivijaya's centre is thought be at a river mouth in eastern Sumatra, based near what is now Palembang. For over six centuries the Maharajahs of Srivijaya ruled a maritime empire that became the main power in the archipelago. The empire was based around trade, with local kings (dhatus or community leaders) swearing allegiance to the central lord for mutual profit.

The relation between Srivijaya and the Chola Empire of south India was friendly during the reign of Raja Raja Chola I but during the reign of Rajendra Chola I the Chola Empire attacked Srivijaya cities. In 1025 and 1026 Gangga Negara was attacked by Rajendra Chola I of the Chola Empire, the Tamil emperor who is now thought to have laid Kota Gelanggi to waste. Kedahâ€"known as Kedaram, Cheh-Cha (according to I-Ching) or Kataha, in ancient Pallava or Sanskritâ€"was in the direct route of the invasions and was ruled by the Cholas from 1025. A second invasion was led by Virarajendra Chola of the Chola dynasty who conquered Kedah in the late 11th century. The senior Chola's successor, Vira Rajendra Chola, had to put down a Kedah rebellion to overthrow other invaders. The coming of the Chola reduced the majesty of Srivijaya, which had exerted influence over Kedah, Pattani and as far as Ligor. During the reign of Kulothunga Chola I Chola overlordship was established over the Sri Vijaya province kedah in the late 11th century.The expedition of the Chola Emperors had such a great impression to the Malay people of the medieval period that their name was mentioned in the corrupted form as Raja Chulan in the medieval Malay chronicle Sejarah Melaya.Even today the Chola rule is remembered in Malaysia as many Malaysian princes have names ending with Cholan or Chulan, one such was the Raja of Perak called Raja Chulan.

Pattinapalai, a Tamil poem of the 2nd century CE, describes goods from Kedaram heaped in the broad streets of the Chola capital. A 7th-century Indian drama, Kaumudhimahotsva, refers to Kedah as Kataha-nagari. The Agnipurana also mentions a territory known as Anda-Kataha with one of its boundaries delineated by a peak, which scholars believe is Gunung Jerai. Stories from the Katasaritasagaram describe the elegance of life in Kataha. The Buddhist kingdom of Ligor took control of Kedah shortly after. Its king Chandrabhanu used it as a base to attack Sri Lanka in the 11th century, an event noted in a stone inscription in Nagapattinum in Tamil Nadu and in the Sri Lankan chronicles, Mahavamsa.

At times, the Khmer kingdom, the Siamese kingdom, and even Cholas kingdom tried to exert control over the smaller Malay states. The power of Srivijaya declined from the 12th century as the relationship between the capital and its vassals broke down. Wars with the Javanese caused it to request assistance from China, and wars with Indian states are also suspected. In the 11th century CE the centre of power shifted to Melayu, a port possibly located further up the Sumatran coast at near the Jambi River. The power of the Buddhist Maharajas was further undermined by the spread of Islam. Areas which were converted to Islam early, such as Aceh, broke away from Srivijaya’s control. By the late 13th century, the Siamese kings of Sukhothai had brought most of Malaya under their rule. In the 14th century, the Hindu Java-based Majapahit empire came into possession of the peninsula.

Arrival of Islam

Islam came to the Malay Archipelago via Arab and Indian traders in the 13th century, ending the age of Hinduism and Buddhism. It arrived in the region gradually, and became the religion of the elite before it spread to the commoners. The Islam in Malaysia was influenced by previous religions and was originally not orthodox.

The port of Malacca on the west coast of the Malay Peninsula was founded in 1402 by Parameswara, a Srivijaya prince fleeing Temasek (now Singapore), who was claimed in the Sejarah Melayu to be a descendant of Alexander the Great. Parameswara in particular sailed to Temasek to escape persecution. There he came under the protection of Temagi, a Malay chief from Patani who was appointed by the king of Siam as regent of Temasek. Within a few days, Parameswara killed Temagi and appointed himself regent. Some five years later he had to leave Temasek, due to threats from Siam. During this period, a Javanese fleet from Majapahit attacked Temasek.

Parameswara headed north to found a new settlement. At Muar, Parameswara considered siting his new kingdom at either Biawak Busuk or at Kota Buruk. Finding that the Muar location was not suitable, he continued his journey northwards. Along the way, he reportedly visited Sening Ujong (former name of present-day Sungai Ujong) before reaching a fishing village at the mouth of the Bertam River (former name of the Melaka River), and founded what would become the Malacca Sultanate. Over time this developed into modern-day Malacca Town. According to the Malay Annals, here Parameswara saw a mouse deer outwitting a dog resting under a Malacca tree. Taking this as a good omen, he decided to establish a kingdom called Malacca. He built and improved facilities for trade. The Malacca Sultanate is commonly considered the first independent state in the peninsula.

At the time of Melaka's founding, the emperor of Ming Dynasty China was sending out fleets of ships to expand trade. Admiral Zheng He called at Malacca and brought Parameswara with him on his return to China, a recognition of his position as legitimate ruler of Malacca. In exchange for regular tribute, the Chinese emperor offered Melaka protection from the constant threat of a Siamese attack. The Chinese and Indians who settled in the Malay Peninsula before and during this period are the ancestors of today's Baba-Nyonya and Chetti community. According to one theory, Parameswara became a Muslim when he married a Princess of Pasai and he took the fashionable Persian title "Shah", calling himself Iskandar Shah. Chinese chronicles mention that in 1414, the son of the first ruler of Malacca visited the Ming emperor to inform them that his father had died. Parameswara's son was then officially recognised as the second ruler of Melaka by the Chinese Emperor and styled Raja Sri Rama Vikrama, Raja of Parameswara of Temasek and Malacca and he was known to his Muslim subjects as Sultan Sri Iskandar Zulkarnain Shah or Sultan Megat Iskandar Shah. He ruled Malacca from 1414 to 1424. Through the influence of Indian Muslims and, to a lesser extent, Hui people from China, Islam became increasingly common during the 15th century.

After an initial period paying tribute to the Ayutthaya, the kingdom rapidly assumed the place previously held by Srivijaya, establishing independent relations with China, and exploiting its position dominating the Straits to control the China-India maritime trade, which became increasingly important when the Mongol conquests closed the overland route between China and the west.

Within a few years of its establishment, Malacca officially adopted Islam. Parameswara became a Muslim, and due to the fact Malacca was under a Muslim Prince the conversion of Malays to Islam accelerated in the 15th century. The political power of the Malaccan Sultanate helped Islam’s rapid spread through the archipelago. Malacca was an important commercial centre during this time, attracting trade from around the region. By the start of the 16th century, with Malaccan Sultanate in the Malay peninsula and parts of Sumatra, the Sultanate of Demak in Java, and other kingdoms around the Malay archipelago increasingly converting to Islam, it had become the dominant religion among Malays, and reached as far as the modern-day Philippines, leaving Bali as an isolated outpost of Hinduism today.

Malacca's reign lasted little more than a century, but during this time became the established centre of Malay culture. Most future Malay states originated from this period. Malacca became a cultural centre, creating the matrix of the modern Malay culture: a blend of indigenous Malay and imported Indian, Chinese and Islamic elements. Malacca's fashions in literature, art, music, dance and dress, and the ornate titles of its royal court, came to be seen as the standard for all ethnic Malays. The court of Malacca also gave great prestige to the Malay language, which had originally evolved in Sumatra and been brought to Malacca at the time of its foundation. In time Malay came to be the official language of all the Malaysian states, although local languages survived in many places. After the fall of Malacca, the Sultanate of Brunei became the major centre of Islam.

Struggles for hegemony

The closing of the overland route from Asia to Europe by the Ottoman Empire and the claim towards trade monopoly with India and southeast Asia by Arab traders, led European powers to look for a maritime route. In 1511 Afonso de Albuquerque led an expedition to Malaya which seized Malacca with the intent of using it as a base for activities in southeast Asia. This was the first colonial claim on what is now Malaysia. The son of the last Sultan of Malacca, Sultan Alauddin Riayat Shah II fled to the southern tip of the peninsula, where he founded a state that which became the Sultanate of Johor. Another son created the Perak Sultanate to the north. By the late 16th century the tin mines of northern Malaya had been discovered by European traders, and Perak grew wealthy on the proceeds of tin exports. Portuguese influence was strong, as they aggressively tried to convert the population of Malacca to Catholicism. In 1571 the Spanish captured Manila and established a colony in the Philippines, reducing the Sultanate of Brunei's power.

After the fall of Malacca to Portugal, the Johor Sultanate and the Sultanate of Aceh on northern Sumatra moved to fill in the power vacuum left behind. The three powers struggled to dominate the Malay peninsula and the surrounding islands. Johor founded in the wake of Malacca's conquest grew powerful enough to rival the Portuguese, although it was never able to recapture the city. Instead it expanded in other directions, building in 130 years one of the largest Malay states. In this time the numerous attempts to recapture Malacca led to a strong backlash from the Portuguese, whose raids even reached Johor's capital of Johor Lama in 1587.

In 1607, the Sultanate of Aceh rose as the powerful and wealthiest state in Malay archipelago. Under Iskandar Muda reign, he extended the sultanate's control over a number of Malay states. A notable conquest was Perak, a tin-producing state on the Peninsula. The strength of his formidable fleet was brought to an end with a disastrous campaign against Malacca in 1629, when the combined Portuguese and Johor forces managed to destroy all his ships and 19,000 troops according to Portuguese account. Aceh forces was not destroyed, however, as Aceh was able to conquer Kedah within the same year and taking many of its citizens to Aceh. The Sultan's son in law, Iskandar Thani, former prince of Pahang later became his successor. The conflict over control of the straits went on until 1641, when the Dutch (allied to Johor) gained control of Malacca.

In the early 17th century the Dutch East India Company (Vereenigde Oost-Indische Compagnie, or VOC) was established. During this time the Dutch were at war with Spain, who obtained the Portuguese Empire due to the Iberian Union. From there they expanded across the archipelago, forming an alliance with Johor and using this to push the Portuguese out of Malacca in 1641. Backed by the Dutch, Johore established a loose hegemony over the Malay states, except Perak, which was able to play off Johore against the Siamese to the north and retain its independence. The Dutch did not interfere in local matters in Malacca, but at the same time diverted most trade to its colonies on Java.

The weakness of the small coastal Malay states led to the immigration of the Bugis, escaping from Dutch colonisation of Sulawesi, who established numerous settlements on the peninsula which they used to interfere with Dutch trade. They seized control of Johor following the assassination of the last Sultan of the old Melaka royal line in 1699. Bugis expanded their power in the states of Johor, Kedah, Perak, and Selangor. The Minangkabau from center Sumatra migrated into Malaya, and eventually established their own state in Negeri Sembilan. The fall of Johore left a power vacuum on the Malay Peninsula which was partly filled by the Siamese kings of Ayutthaya kingdom, who made the five northern Malay statesâ€"Kedah, Kelantan, Patani, Perlis, and Terengganu â€" their vassals. Johore’s eclipse also left Perak as the unrivalled leader of the Malay states.

The economic importance of Malaya to Europe grew rapidly during the 18th century. The fast-growing tea trade between China and United Kingdom increased the demand for high-quality Malayan tin, which was used to line tea-chests. Malayan pepper also had a high reputation in Europe, while Kelantan and Pahang had gold mines. The growth of tin and gold mining and associated service industries led to the first influx of foreign settlers into the Malay worldâ€"initially Arabs and Indians, later Chineseâ€"who colonised the towns and soon dominated economic activities. This established a pattern which characterised Malayan society for the next 200 yearsâ€"a rural Malay population increasingly under the domination of wealthy urban immigrant communities, whose power the Sultans were unable to resist.

British influence

English traders had been present in Malay waters since the 17th century. Until the arrival of the British European power became fully apparent in Malaysia. Before the mid-19th-century British interests in the region were predominantly economic, with little interest in territorial control. Already the most powerful coloniser in India, they were looking towards southeast Asia for new resources. The growth of the China trade in British ships increased the Company’s desire for bases in the region. Various islands were used for this purpose, but the first permanent acquisition was Penang, leased from the Sultan of Kedah in 1786. This was followed soon after by the leasing of a block of territory on the mainland opposite Penang (known as Province Wellesley). In 1795, during the Napoleonic Wars, the British with the consent of the Netherlands occupied Dutch Melaka to forestall possible French interest in the area.

When Malacca was handed back to the Dutch in 1815, the British governor, Stamford Raffles, looked for an alternative base, and in 1819 he acquired Singapore from the Sultan of Johor. The exchange of the British colony of Bencoolen for Malacca with the Dutch left the British as the sole colonial power on the peninsula. The territories of the British were set up as free ports, attempting to break the monopoly held by other colonial powers as the time, and making them large bases of trade. They allowed Britain to control all trade through the straits of Malacca. British influence was increased by Malayan fears of Siamese expansionism, to which Britain made a useful counterweight. During the 19th century the Malay Sultans aligned themselves the British Empire, due to the benefits of associations with the British and the belief in superior British civilisation.

In 1824 British hegemony in Malaya (before the name Malaysia) was formalised by the Anglo-Dutch Treaty, which divided the Malay archipelago between Britain and the Netherlands. The Dutch evacuated Melaka and renounced all interest in Malaya, while the British recognised Dutch rule over the rest of the East Indies. By 1826 the British controlled Penang, Malacca, Singapore, and the island of Labuan, which they established as the crown colony of the Straits Settlements, administered first under the East India Company until 1867, when they were transferred to the Colonial Office in London.

Federated and Unfederated Malay States

Initially, the British followed a policy of non-intervention in relation between the Malay states. The commercial importance of tin mining in the Malay states to merchants in the Straits Settlements led to infighting between the aristocracy on the peninsula. The destabilisation of these states damaged the commerce in the area, causing British intervention. The wealth of Perak’s tin mines made political stability there a priority for British investors, and Perak was thus the first Malay state to agree to the supervision of a British resident. British gunboat diplomacy was employed to bring about a peaceful resolution to civil disturbances caused by Chinese and Malay gangsters employed in a political tussle between Ngah Ibrahim and Raja Muda Abdullah. The Pangkor Treaty of 1874 paved the way for the expansion of British influence in Malaya. The British concluded treaties with some Malay states, installing “residents” who advised the Sultans and soon became the effective rulers of their states. These advisors held power in everything except to do with Malay religion and customs.

Johore alone resisted, by modernising and giving British and Chinese investors legal protection. By the turn of the 20th century, the states of Pahang, Selangor, Perak, and Negeri Sembilan, known together as the Federated Malay States, had British advisors. In 1909 the Siamese kingdom was compelled to cede Kedah, Kelantan, Perlis and Terengganu, which already had British advisors, over to the British. Sultan Abu Bakar of Johor and Queen Victoria were personal acquaintances who recognised each other as equals. It was not until 1914 that Sultan Abu Bakar's successor, Sultan Ibrahim accepted a British adviser. The four previously Thai states and Johor were known as the Unfederated Malay States. The states under the most direct British control developed rapidly, becoming the largest suppliers in the world of first tin, then rubber.

19th-century Borneo

During the late 19th century the British also gained control of the north coast of Borneo, where Dutch rule had never been established. Development on the Peninsula and Borneo were generally separate until the 19th century. The eastern part of this region (now Sabah) was under the nominal control of the Sultan of Sulu, a vassal of the Spanish Philippines. The rest was the territory of the Sultanate of Brunei. In 1841, British adventurer James Brooke helped the Sultan of Brunei suppress a revolt, and in return received the title of raja and the right to govern the Sarawak River District. In 1846, his title was recognised as hereditary, and the "White Rajahs" began ruling Sarawak as a recognised independent state. The Brookes expanded Sarawak at the expense of Brunei.

In 1881, the British North Borneo Company was granted control of the territory of British North Borneo, appointing a governor and legislature. It was ruled from the office in London. Its status was similar to that of a British Protectorate, and like Sarawak it expanded at the expense of Brunei. The Philippines never recognised the loss of the Sultan of Sulu’s territory, laying the basis of the subsequent Filipino claim to eastern Sabah. In 1888, what was left of Brunei was made a British protectorate, and in 1891 another Anglo-Dutch treaty formalised the border between British and Dutch Borneo.

By 1910, the pattern of British rule in the Malay lands was established. The Straits Settlements were a Crown Colony, ruled by a governor under the supervision of the Colonial Office in London. Their population was about half Chinese, but all residents, regardless of race, were British subjects. The first four states to accept British residents, Perak, Selangor, Negeri Sembilan, and Pahang, were termed the Federated Malay States: while technically independent, they were placed under a Resident-General in 1895, making them British colonies in all but name. The Unfederated Malay States (Johore, Kedah, Kelantan, Perlis, and Terengganu) had a slightly larger degree of independence, although they were unable to resist the wishes of their British Residents for long. Johore, as Britain’s closest ally in Malay affairs, had the privilege of a written constitution, which gave the Sultan the right to appoint his own Cabinet, but he was generally careful to consult the British first.

Race relations

Unlike some colonial powers, the British always saw their empire as primarily an economic concern, and its colonies were expected to turn a profit for British shareholders. Malaya’s obvious attractions were its tin and gold mines, but British planters soon began to experiment with tropical plantation cropsâ€"tapioca, gambier, pepper, and coffee. But in 1877 the rubber plant was introduced from Brazil, and rubber soon became Malaya’s staple export, stimulated by booming demand from European industry. Rubber was later joined by palm oil as an export earner. All these industries required a large and disciplined labour force, and the British did not regard the Malays as reliable workers. The solution was the importation of plantation workers from India, mainly Tamil-speakers from South India. The mines, mills and docks also attracted a flood of immigrant workers from southern China. Soon towns like Singapore, Penang, and Ipoh were majority Chinese, as was Kuala Lumpur, founded as a tin-mining centre in 1857. By 1891, when Malaya’s first census was taken, Perak and Selangor, the main tin-mining states, had Chinese majorities.

The Chinese mostly arrived poor; yet, their belief in industriousness and frugality, their emphasis in their children's education and their maintenance of Confucian family hierarchy, as well as their voluntary connection with tightly knit networks of mutual aid societies (run by "Hui-Guan" 會館, or non-profit organisations with nominal geographic affiliations from different parts of China) all contributed to their prosperity. In the 1890s Yap Ah Loy, who held the title of Kapitan China of Kuala Lumpur, was the richest man in Malaya, owning a chain of mines, plantations and shops. Malaya’s banking and insurance industries were run by the Chinese from the start, and Chinese businesses, usually in partnership with London firms, soon had a stranglehold on the economy. Since the Malay Sultans tended to spend well beyond their means, they were soon indebted to Chinese bankers, and this gave the Chinese political as well as economic leverage. At first the Chinese immigrants were mostly men, and many intended to return home when they had made their fortunes. Many did go home, but many more stayed. At first they married Malay women, producing a community of Sino-Malayans or baba people, but soon they began importing Chinese brides, establishing permanent communities and building schools and temples.

The Indians were initially less successful, since unlike the Chinese they came mainly as indentured labourers to work in the rubber plantations, and had few of the economic opportunities that the Chinese had. They were also a less united community, since they were divided between Hindus and Muslims and along lines of language and caste. An Indian commercial and professional class emerged during the early 20th century, but the majority of Indians remained poor and uneducated in rural ghettos in the rubber-growing areas.

Traditional Malay society had great difficulty coping with both the loss of political sovereignty to the British and of economic power to the Chinese. By the early 20th century it seemed possible that the Malays would become a minority in their own country. The Sultans, who were seen as collaborators with both the British and the Chinese, lost some of their traditional prestige, particularly among the increasing number of Malays with a western education, but the mass of rural Malays continued to revere the Sultans and their prestige was thus an important prop for colonial rule. A small class of Malay nationalist intellectuals began to emerge during the early 20th century, and there was also a revival of Islam in response to the perceived threat of other imported religions, particularly Christianity. In fact few Malays converted to Christianity, although many Chinese did. The northern regions, which were less influenced by western ideas, became strongholds of Islamic conservatism, as they have remained.

The one consolation to Malay pride was that the British allowed them a virtual monopoly of positions in the police and local military units, as well as a majority of those administrative positions open to non-Europeans. While the Chinese mostly built and paid for their own schools and colleges, importing teachers from China, the colonial government fostered education for Malays, opening Malay College in 1905 and creating the Malay Administrative Service in 1910. (The college was dubbed “Bab ud-Darajat” â€" the Gateway to High Rank.) A Malay Teachers College followed in 1922, and a Malay Women’s Training College in 1935. All this reflected the official British policy that Malaya belonged to the Malays, and that the other races were but temporary residents. This view was increasingly out of line with reality, and contained the seeds of much future trouble.

The Malay teacher's college had lectures and writings that nurtured Malay nationalism and anti-colonialist sentiments. Due to this it is known as the birthplace of Malay nationalism. In 1938, Ibrahim Yaacob, an alumnus of Sultan Idris College, established the Kesatuan Melayu Muda (Young Malays Union or KMM) in Kuala Lumpur. It was the first nationalist political organisation in British Malaya, advocating for the union of all Malays regardless of origin, and fighting for Malay rights and against British Imperialism. A specific ideal the KMM held was Panji Melayu Raya, which called for the unification of British Malaya and Dutch East Indies.

In the years before World War II, the British were concerned with finding the balance between a centralised state and maintaining the power of the Sultans in Malaya. There were no moves to give Malaya a unitary government, and in fact in 1935 the position of Resident-General of the Federated States was abolished, and its powers decentralised to the individual states. With their usual tendency to racial stereotyping, the British regarded the Malays as amiable but unsophisticated and rather lazy, incapable of self-government, although making good soldiers under British officers. They regarded the Chinese as clever but dangerousâ€"and indeed during the 1920s and 1930s, reflecting events in China, the Chinese Nationalist Party (the Kuomintang) and the Communist Party of China built rival clandestine organisations in Malaya, leading to regular disturbances in the Chinese towns. The British saw no way that Malaya’s disparate collection of states and races could become a nation, let alone an independent one.

War and emergency

Malaya saw little action during World War I, except for the sinking of the Russian cruiser Zhemchug by the German cruiser Emden on 28 October 1914 during the Battle of Penang.

The outbreak of war in the Pacific in December 1941 found the British in Malaya completely unprepared. During the 1930s, anticipating the rising threat of Japanese naval power, they had built a great naval base at Singapore, but never anticipated an invasion of Malaya from the north. Because of the demands of the war in Europe, there was virtually no British air capacity in the Far East. The Japanese were thus able to attack from their bases in French Indo-China with impunity, and despite stubborn resistance from British, Australian, and Indian forces, they overran Malaya in two months. Singapore, with no landward defences, no air cover, and no water supply, was forced to surrender in February 1942, doing irreparable damage to British prestige. British North Borneo and Brunei were also occupied.

The Japanese had a racial policy just as the British did. They regarded the Malays as a colonial people liberated from British imperialist rule, and fostered a limited form of Malay nationalism, which gained them some degree of collaboration from the Malay civil service and intellectuals. (Most of the Sultans also collaborated with the Japanese, although they maintained later that they had done so unwillingly.) The Malay nationalist Kesatuan Melayu Muda, advocates of Melayu Raya, collaborated with the Japanese, based on the understanding that Japan would unite the Dutch East Indies, Malaya and Borneo and grant them independence. The occupiers regarded the Chinese, however, as enemy aliens, and treated them with great harshness: during the so-called sook ching (purification through suffering), up to 80,000 Chinese in Malaya and Singapore were killed. Chinese businesses were expropriated and Chinese schools either closed or burned down. Not surprisingly the Chinese, led by the Malayan Communist Party (MCP), became the backbone of the Malayan Peoples' Anti-Japanese Army (MPAJA), which with British assistance became the most effective resistance force in the occupied Asian countries.

Although the Japanese argued that they supported Malay nationalism, they offended Malay nationalism by allowing their ally Thailand to re-annex the four northern states, Kedah, Perlis, Kelantan, and Terengganu that had been surrendered to the British in 1909. The loss of Malaya’s export markets soon produced mass unemployment which affected all races and made the Japanese increasingly unpopular.

During occupation, ethnic tensions were raised and nationalism grew. The Malayans were thus on the whole glad to see the British back in 1945, but things could not remain as they were before the war, and a stronger desire for independence grew. Britain was bankrupt and the new Labour government was keen to withdraw its forces from the East as soon as possible. Colonial self-rule and eventual independence were now British policy. The tide of colonial nationalism sweeping through Asia soon reached Malaya. But most Malays were more concerned with defending themselves against the Malayan Communist Party (MCP) which was mostly made up of Chinese, than with demanding independence from the British; indeed, their immediate concern was that the British not leave and abandon the Malays to the armed Communists of the MPAJA, which was the largest armed force in the country.

In 1944 the British drew up plans for a Malayan Union, which would turn the Federated and Unfederated Malay States, plus Penang and Malacca (but not Singapore), into a single Crown colony, with a view towards independence. The Bornean territories and Singapore were left out as it was thought this would make union more difficult to achieve. There was however strong opposition from the Malays, who opposed the weakening of the Malay rulers and the granting of citizenship to the ethnic Chinese and other minorities. The British had decided on equality between races as they perceived the Chinese and Indians as more loyal to the British during the war than the Malays. The Sultans, who had initially supported it, backed down and placed themselves at the head of the resistance.

In 1946 the United Malays National Organisation (UMNO) was founded by Malay nationalists led by Dato Onn bin Jaafar, the Chief Minister of Johore. UMNO favoured independence for Malaya, but only if the new state was run exclusively by the Malays. Faced with implacable Malay opposition, the British dropped the plan for equal citizenship. The Malayan Union was thus established in 1946, and was dissolved in 1948 and replaced by the Federation of Malaya, which restored the autonomy of the rulers of the Malay states under British protection.

Meanwhile the Communists were moving towards open insurrection. The MPAJA had been disbanded in December 1945, and the MCP organised as a legal political party, but the MPAJA’s arms were carefully stored for future use. The MCP policy was for immediate independence with full equality for all races. This meant it recruited very few Malays. The Party’s strength was in the Chinese-dominated trade unions, particularly in Singapore, and in the Chinese schools, where the teachers, mostly born in China, saw the Communist Party of China as the leader of China’s national revival. In March 1947, reflecting the international Communist movement’s “turn to left” as the Cold War set in, the MCP leader Lai Tek was purged and replaced by the veteran MPAJA guerrilla leader Chin Peng, who turned the party increasingly to direct action. These rebels, under the leadership of the Malayan Communist Party, launched guerrilla operations designed to force the British out of Malaya. In July, following a string of assassinations of plantation managers, the colonial government struck back, declaring a State of Emergency, banning the MCP and arresting hundreds of its militants. The Party retreated to the jungle and formed the Malayan Peoples’ Liberation Army, with about 13,000 men under arms, all Chinese.

The Malayan Emergency as it was known, lasted from 1948 to 1960, and involved a long anti-insurgency campaign by Commonwealth troops in Malaya. The British strategy, which proved ultimately successful, was to isolate the MCP from its support base by a combination of economic and political concessions to the Chinese and the resettlement of Chinese squatters into “New Villages” in “white areas” free of MCP influence. The effective mobilisation of the Malays against the MCP was also an important part of the British strategy. From 1949 the MCP campaign lost momentum and the number of recruits fell sharply. Although the MCP succeeded in assassinating the British High Commissioner, Sir Henry Gurney, in October 1951, this turn to terrorist tactics alienated many moderate Chinese from the Party. The arrival of Lt.-Gen Sir Gerald Templer as British commander in 1952 was the beginning of the end of the Emergency. Templer invented the techniques of counter-insurgency warfare in Malaya and applied them ruthlessly. Although the insurgency was defeated Commonwealth troops remained with the backdrop of the Cold War. Against this backdrop, independence for the Federation within the Commonwealth was granted on 31 August 1957, with Tunku Abdul Rahman as the first prime minister.

Towards Malaysia

Chinese reaction against the MCP was shown by the formation of the Malayan Chinese Association (MCA) in 1949 as a vehicle for moderate Chinese political opinion. Its leader Tan Cheng Lock favoured a policy of collaboration with UMNO to win Malayan independence on a policy of equal citizenship, but with sufficient concessions to Malay sensitivities to ease nationalist fears. Tan formed a close collaboration with Tunku (Prince) Abdul Rahman, the Chief Minister of Kedah and from 1951 successor to Datuk Onn as leader of UMNO. Since the British had announced in 1949 that Malaya would soon become independent whether the Malayans liked it or not, both leaders were determined to forge an agreement their communities could live with as a basis for a stable independent state. The UMNO-MCA Alliance, which was later joined by the Malayan Indian Congress (MIC), won convincing victories in local and state elections in both Malay and Chinese areas between 1952 and 1955.

The introduction of elected local government was another important step in defeating the Communists. After Joseph Stalin’s death in 1953, there was a split in the MCP leadership over the wisdom of continuing the armed struggle. Many MCP militants lost heart and went home, and by the time Templer left Malaya in 1954 the Emergency was over, although Chin Peng led a diehard group that lurked in the inaccessible country along the Thai border for many years. The Emergency left a lasting legacy of bitterness between Malays and Chinese.

During 1955 and 1956 UMNO, the MCA and the British hammered out a constitutional settlement for a principle of equal citizenship for all races. In exchange, the MCA agreed that Malaya’s head of state would be drawn from the ranks of the Malay Sultans, that Malay would be the official language, and that Malay education and economic development would be promoted and subsidised. In effect this meant that Malaya would be run by the Malays, particularly since they continued to dominate the civil service, the army and the police, but that the Chinese and Indians would have proportionate representation in the Cabinet and the parliament, would run those states where they were the majority, and would have their economic position protected. The difficult issue of who would control the education system was deferred until after independence. This came on 31 August 1957, when Tunku Abdul Rahman became the first Prime Minister of independent Malaya.

This left the unfinished business of the other British-ruled territories in the region. After the Japanese surrender the Brooke family and the British North Borneo Company gave up their control of Sarawak and North Borneo respectively, and these became British Crown Colonies. They were much less economically developed than Malaya, and their local political leaderships were too weak to demand independence. Singapore, with its large Chinese majority, achieved autonomy in 1955, and in 1959 the young socialist leader Lee Kuan Yew became Prime Minister. The Sultan of Brunei remained as a British client in his oil-rich enclave. Between 1959 and 1962 the British government orchestrated complex negotiations between these local leaders and the Malayan government.

In 1961 Abdul Rahman mooted the idea of forming "Malaysia", which would consist of Brunei, Malaya, North Borneo, Sarawak, and Singapore, all of which had been British colonies. The reasoning behind this was that this would allow the central government to control and combat communist activities, especially in Singapore. It was also feared that if Singapore achieved independence, it would become a base for Chinese chauvinists to threaten Malayan sovereignty. To balance out the ethnic composition of the new nation, the other states, whose Malay and indigenous populations would cancel out the Singaporean Chinese majority, were also included.

Although Lee Kuan Yew supported the proposal, his opponents from the Singaporean Socialist Front resisted, arguing that this was a ploy for the British to continue controlling the region. Most political parties in Sarawak were also against the merger, and in North Borneo, where there were no political parties, community representatives also stated their opposition. Although the Sultan of Brunei supported the merger, the Parti Rakyat Brunei opposed it as well. At the Commonwealth Prime Ministers Conference in 1961, Abdul Rahman explained his proposal further to its opponents. In October, he obtained agreement from the British government to the plan, provided that feedback be obtained from the communities involved in the merger.

The Cobbold Commission, named after its head, Lord Cobbold, conducted a study in the Borneo territories and approved a merger with North Borneo and Sarawak; however, it was found that a substantial number of Bruneians opposed merger. North Borneo drew up a list of points, referred to as the 20-point agreement, proposing terms for its inclusion in the new federation. Sarawak prepared a similar memorandum, known as the 18-point agreement. Some of the points in these agreements were incorporated into the eventual constitution, some were instead accepted orally. These memoranda are often cited by those who believe that Sarawak's and North Borneo's rights have been eroded over time. A referendum was conducted in Singapore to gauge opinion, and 70% supported merger with substantial autonomy given to the state government. The Sultanate of Brunei withdrew from the planned merger due to opposition from certain segments of its population as well as arguments over the payment of oil royalties and the status of the Sultan in the planned merger. Additionally, the Bruneian Parti Rakyat Brunei staged an armed revolt, which, though it was put down, was viewed as potentially destabilising to the new nation.

After reviewing the Cobbold Commission's findings, the British government appointed the Landsdowne Commission to draft a constitution for Malaysia. The eventual constitution was essentially the same as the 1957 constitution, albeit with some rewording. For instance, giving recognition to the special position of the natives of the Borneo States. North Borneo, Sarawak and Singapore were also granted some autonomy unavailable to the states of Malaya. After negotiations in July 1963, it was agreed that Malaysia would come into being on 31 August 1963, consisting of Malaya, North Borneo, Sarawak and Singapore. The date was to coincide with the independence day of Malaya and the British giving self-rule to Sarawak and North Borneo. However, the Philippines and Indonesia strenuously objected to this development, with Indonesia claiming Malaysia represented a form of "neocolonialism" and the Philippines claiming North Borneo as its territory. The opposition from the Indonesian government led by Sukarno and attempts by the Sarawak United People's Party delayed the formation of Malaysia. Due to these factors, an eight-member UN team had to be formed to re-ascertain whether North Borneo and Sarawak truly wanted to join Malaysia. Malaysia formally came into being on 16 September 1963, consisting of Malaya, North Borneo, Sarawak, and Singapore. In 1963 the total population of Malaysia was about 10 million.

Challenges of independence

At the time of independence Malaya had great economic advantages. It was among the world’s leading producers of three valuable commodities, rubber, tin, and palm oil, and also a significant iron ore producer. These export industries gave the Malayan government a healthy surplus to invest in industrial development and infrastructure projects. Like other developing nations in the 1950s and 1960s, Malaya (and later Malaysia) placed great stress on state planning, although UMNO was never a socialist party. The First and Second Malayan Plans (1956â€"60 and 1961â€"65 respectively) stimulated economic growth through state investment in industry and repairing infrastructure such as roads and ports, which had been damaged and neglected during the war and the Emergency. The government was keen to reduce Malaya’s dependence on commodity exports, which put the country at the mercy of fluctuating prices. The government was also aware that demand for natural rubber was bound to fall as the production and use of synthetic rubber expanded. Since a third of the Malay workforce worked in the rubber industry it was important to develop alternative sources of employment. Competition for Malaya’s rubber markets meant that the profitability of the rubber industry increasingly depended on keeping wages low, which perpetuated rural Malay poverty.

Foreign objection

Indonesian President Sukarno, backed by the powerful Communist Party of Indonesia (PKI), chose to regard Malaysia as a "neocolonialist" plot against his country, and backed a Communist insurgency in Sarawak, mainly involving elements of the local Chinese community. Indonesian irregular forces were infiltrated into Sarawak, where they were contained by Malaysian and Commonwealth of Nations forces. This period of Konfrontasi, an economic, political, and military confrontation lasted until the downfall of Sukarno in 1966. The Philippines objected to the formation of the federation, claiming North Borneo was part of Sulu, and thus the Philippines. In 1966 the new president, Ferdinand Marcos, dropped the claim, although it has since been revived and is still a point of contention marring Philippine-Malaysian relations.

Racial strife

The Depression of the 1930s, followed by the outbreak of the Sino-Japanese War, had the effect of ending Chinese emigration to Malaya. This stabilised the demographic situation and ended the prospect of the Malays becoming a minority in their own country. At the time of independence in 1957, the Malays were 55% of the population, the Chinese 35% and the Indians 10%. This balance was altered by the inclusion of the majority Chinese Singapore, upsetting many Malays. The federation increased the Chinese proportion to close to 40%. Both UMNO and the MCA were nervous about the possible appeal of Lee's People's Action Party (then seen as a radical socialist party) to voters in Malaya, and tried to organise a party in Singapore to challenge Lee's position there. Lee in turn threatened to run PAP candidates in Malaya at the 1964 federal elections, despite an earlier agreement that he would not do so (see PAP-UMNO Relations). Racial tensions intensified as PAP created an opposition alliance aiming for equality between races. This provoked Tunku Abdul Rahman to demand that Singapore withdraw from Malaysia, which it did in August 1965.

The most vexed issues of independent Malaysia were education and the disparity of economic power among the ethnic communities. The Malays felt unhappy with the wealth of the Chinese community, even after the expulsion of Singapore. Malay political movements emerged based around this. However, since there was no effective opposition party, these issues were contested mainly within the coalition government, which won all but one seat in the first post-independence Malayan Parliament. The two issues were related, since the Chinese advantage in education played a large part in maintaining their control of the economy, which the UMNO leaders were determined to end. The MCA leaders were torn between the need to defend their own community’s interests and the need to maintain good relations with UMNO. This produced a crisis in the MCA in 1959, in which a more assertive leadership under Lim Chong Eu defied UMNO over the education issue, only to be forced to back down when Tunku Abdul Rahman threatened to break up the coalition.

The Education Act of 1961 put UMNO’s victory on the education issue into legislative form. Henceforward Malay and English would be the only teaching languages in secondary schools, and state primary schools would teach in Malay only. Although the Chinese and Indian communities could maintain their own Chinese and Tamil-language primary schools, all their students were required to learn Malay, and to study an agreed “Malayan curriculum”. Most importantly, the entry exam to the University of Malaya (which moved from Singapore to Kuala Lumpur in 1963) would be conducted in Malay, even though most teaching at the university was in English until the 1970s. This had the effect of excluding many Chinese students. At the same time Malay schools were heavily subsidised, and Malays were given preferential treatment. This obvious defeat for the MCA greatly weakened its support in the Chinese community.

As in education, the UMNO government’s unspoken agenda in the field of economic development was to shift economic power away from the Chinese and towards the Malays. The two Malayan Plans, and the First Malaysian Plan (1966â€"70), directed resources heavily into developments which would benefit the rural Malay community, such as village schools, rural roads, clinics, and irrigation projects. Several agencies were set up to enable Malay smallholders to upgrade their production and increase their incomes. The Federal Land Development Authority (FELDA) helped many Malays buy farms or upgrade ones they already owned. The state also provided a range of incentives and low-interest loans to help Malays start businesses, and government tendering systematically favoured Malay companies, leading many Chinese-owned businesses to “Malayanise” their management. All this certainly tended to reduce to gap between Chinese and Malay standards of living, although some argued that this would have happened anyway as Malaysia’s trade and general prosperity increased.

The crisis of 1969

The collaboration of the MCA and the MIC in these policies weakened their hold on the Chinese and Indian electorates. At the same time, the effects of the government’s affirmative action policies of the 1950s and 1960s had been to create a discontented class of educated but underemployed Malays. This was a dangerous combination, and led to the formation of a new party, the Malaysian People’s Movement (Gerakan Rakyat Malaysia) in 1968. Gerakan was a deliberately non-communal party, bringing in Malay trade unionists and intellectuals as well as Chinese and Indian leaders. At the same time, an Islamist party, the Islamic Party of Malaysia (PAS) and a Chinese socialist party, the Democratic Action Party (DAP), gained increasing support, at the expense of UMNO and the MCA respectively.

At the May 1969 federal elections, the UMNO-MCA-MIC Alliance polled only 48% of the vote, although it retained a majority in the legislature. The MCA lost most of the Chinese-majority seats to Gerakan or DAP candidates. The victorious opposition celebrated by holding a motorcade on the main streets of Kuala Lumpur with supporters holding up brooms as a signal of its intention to make sweeping changes. Fear of what the changes might mean for them (as much of the country's businesses were Chinese-owned), a Malay backlash resulted, leading rapidly to riots and inter-communal violence in which about 6,000 Chinese homes and businesses were burned and at least 184 people were killed. The government declared a state of emergency, and a National Operations Council, headed by Deputy Prime Minister Tun Abdul Razak, took power from the government of Tunku Abdul Rahman, who, in September 1970, was forced to retire in favour of Abdul Razak. It consisted of nine members, mostly Malay, and wielded full political and military power.

Using the Emergency-era Internal Security Act (ISA), the new government suspended Parliament and political parties, imposed press censorship and placed severe restrictions on political activity. The ISA gave the government power to intern any person indefinitely without trial. These powers were widely used to silence the government’s critics, and have never been repealed. The Constitution was changed to make illegal any criticism, even in Parliament, of the Malaysian monarchy, the special position of Malays in the country, or the status of Malay as the national language.

In 1971 Parliament reconvened, and a new government coalition, the National Front (Barisan Nasional), took office. This included UMNO, the MCA, the MIC, the much weakened Gerakan, and regional parties in Sabah and Sarawak. The DAP was left outside as the only significant opposition party. The PAS also joined the Front but was expelled in 1977. Abdul Razak held office until his death in 1976. He was succeeded by Datuk Hussein Onn, the son of UMNO’s founder Onn Jaafar, and then by Tun Mahathir bin Mohamad, who had been Education Minister since 1981, and who held power for 22 years. During these years policies were put in place which led to the rapid transformation of Malaysia’s economy and society, such as the controversial New Economic Policy, which was intended to increase proportionally the share of the economic "pie" of the bumiputras ("indigenous people", which includes the majority Malays, but not always the indigenous population) as compared to other ethnic groupsâ€"was launched by Prime Minister Tun Abdul Razak. Malaysia has since maintained a delicate ethno-political balance, with a system of government that has attempted to combine overall economic development with political and economic policies that promote equitable participation of all races.

Modern Malaysia

In 1970 three quarters of Malaysians living below the poverty line were Malays, the majority of Malays were still rural workers, and Malays were still largely excluded from the modern economy. The government’s response was the New Economic Policy of 1971, which was to be implemented through a series of four five-year plans from 1971 to 1990. The plan had two objectives: the elimination of poverty, particularly rural poverty, and the elimination of the identification between race and prosperity. This latter policy was understood to mean a decisive shift in economic power from the Chinese to the Malays, who until then made up only 5% of the professional class.

Poverty was tackled through an agricultural policy which resettled 250,000 Malays on newly cleared farmland, more investment in rural infrastructure, and the creation of free trade zones in rural areas to create new manufacturing jobs. Little was done to improve the living standards of the low-paid workers in plantation agriculture, although this group steadily declined as a proportion of the workforce. By 1990 the poorest parts of Malaysia were rural Sabah and Sarawak, which lagged significantly behind the rest of the country. During the 1970s and ‘80s rural poverty did decline, particularly in the Malayan Peninsula, but critics of the government’s policy contend that this was mainly due to the growth of overall national prosperity (due in large part to the discovery of important oil and gas reserves) and migration of rural people to the cities rather than to state intervention. These years saw rapid growth in Malaysian cities, particularly Kuala Lumpur, which became a magnet for immigration both from rural Malaya and from poorer neighbours such as Indonesia, Bangladesh, Thailand and the Philippines. Urban poverty became a problem for the first time, with shanty towns growing up around the cities.

The second arm of government policy, driven mainly by Mahathir first as Education Minister and then as Prime Minister, was the transfer of economic power to the Malays. Mahathir greatly expanded the number of secondary schools and universities throughout the country, and enforced the policy of teaching in Malay rather than English. This had the effect of creating a large new Malay professional class. It also created an unofficial barrier against Chinese access to higher education, since few Chinese are sufficiently fluent in Malay to study at Malay-language universities. Chinese families therefore sent their children to universities in Singapore, Australia, Britain or the United States â€" by 2000, for example, 60,000 Malaysians held degrees from Australian universities. This had the unintended consequence of exposing large numbers of Malaysians to life in Western countries, creating a new source of discontent. Mahathir also greatly expanded educational opportunities for Malay women â€" by 2000 half of all university students were women.

To find jobs for all these new Malay graduates, the government created several agencies for intervention in the economy. The most important of these were PERNAS (National Corporation Ltd.), PETRONAS (National Petroleum Ltd.), and HICOM (Heavy Industry Corporation of Malaysia), which not only directly employed many Malays but also invested in growing areas of the economy to create new technical and administrative jobs which were preferentially allocated to Malays. As a result, the share of Malay equity in the economy rose from 1.5% in 1969 to 20.3% in 1990, and the percentage of businesses of all kinds owned by Malays rose from 39 percent to 68 percent. This latter figure was deceptive because many businesses that appeared to be Malay-owned were still indirectly controlled by Chinese, but there is no doubt that the Malay share of the economy considerably increased. The Chinese remained disproportionately powerful in Malaysian economic life, but by 2000 the distinction between Chinese and Malay business was fading as many new corporations, particularly in growth sectors such as information technology, were owned and managed by people from both ethnic groups.

Malaysia’s rapid economic progress since 1970, which was only temporarily disrupted by the Asian financial crisis of 1997, has not been matched by change in Malaysian politics. The repressive measures passed in 1970 remain in place. Malaysia has had regular elections since 1974, and although campaigning is reasonably free at election time, it is in effect a one-party state, with the UMNO-controlled National Front usually winning nearly all the seats, while the DAP wins some Chinese urban seats and the PAS some rural Malay ones. Since the DAP and the PAS have diametrically opposed policies, they have been unable to form an effective opposition coalition. There is almost no criticism of the government in the media and public protest remains severely restricted. The ISA continues to be used to silence dissidents, and the members of the UMNO youth movement are deployed to physically intimidate opponents.

Mahathir administration

The restoration of democracy after the 1969 crisis caused disputes in the UMNO, a struggle of power which increased after the death of Tun Abdul Razak. The ailing Datuk Hussein Bin Onn replaced him, but the fight for control shifted to appointing the deputy prime minister. Mahathir bin Mahamad was chosen, an advocate of Bumiputra who also tried to benefit the other ethnic communities.

Under the premiership of Mahathir bin Mohamad, Malaysia experienced economic growth from the 1980s, a 1985â€"86 property market depression, and returned to growth through to the mid-1990s. Mahathir increased privatisation and introduced the New Development Policy (NDP), designed to increase economic wealth for all Malaysians, rather than just Malays. The period saw a shift from an agriculture-based economy to one based on manufacturing and industry in areas such as computers and consumer electronics. It was during this period, too, that the physical landscape of Malaysia changed with the emergence of numerous mega-projects. Notable amongst these projects were the construction of the Petronas Twin Towers (at the time the tallest building in the world, and, as of 2010, still the tallest twin building), KL International Airport (KLIA), the North-South Expressway, the Sepang International Circuit, the Multimedia Super Corridor (MSC), the Bakun hydroelectric dam, and Putrajaya, the new federal administrative capital.

Under Mahathir bin Mohamad’s long Prime Ministership (1981â€"2003), Malaysia’s political culture became increasingly centralised and authoritarian, due to Mahathir's belief that the multiethnic Malaysia could only remain stable through controlled democracy. In 1986â€"87, he faced leadership challenges among his own party. The Internal Security Act was invoked in October 1987 arresting 106 people, including opposition leaders. The head of the judiciary and five members of the supreme court who had questioned his use of the ISA were also arrested, and a clampdown on Malaysia's press occurred.

This culminated in the dismissal and imprisonment on unsubstantiated charges of the Deputy Prime Minister, Anwar Ibrahim, in 1997 after an internal dispute within the government. The complicity of the judiciary in this piece of persecution was seen as a particularly clear sign of the decline of Malaysian democracy. The Anwar affair led to the formation of a new party, the People's Justice Party, or Keadilan, led by Anwar’s wife, Wan Azizah Wan Ismail. At the 1999 elections Keadilan formed a coalition with the DAP and the PAS known as the Alternative Front (Barisan Alternatif). The result of this was that the PAS won a number of Malay seats from UMNO, but many Chinese voters disapproved of this unnatural alliance with the Islamist PAS, causing the DAP to lose many of its seats to the MCA, including that of its veteran leader, Lim Kit Siang. Wan Azizah won her husband’s former constituency in Penang but otherwise Keadilan made little impact.

In the late 1990s, Malaysia was shaken by the Asian financial crisis, which damaged Malaysia's assembly line-based economy. Mahathir combated it initially with IMF approved policies. However, the devaluation of the Ringgit and the deepening recession caused him to create his own programme, based on protecting Malaysia from foreign investors and reinvigorating the economy through construction projects and the lowering of interest rates. The policies caused Malaysia's economy to rebound by 2002, but brought disagreement between Mahathir and his deputy, Anwar Ibrahim, who backed the IMF policies. This led to the sacking of the Anwar, causing political unrest. Anwar was arrested and banned from politics on what are considered trumped up charges. In 2003 Mahathir, Malaysia's longest serving prime minister, voluntarily retired in favour of his new deputy, Abdullah Ahmad Badawi. In November 2007 two anti-government rallies occurred, precipitated by allegations of corruption and discrepancies in the election system that heavily favoured the ruling political party, National Front, which has been in power since Malaya achieved independence.

Badawi administration

Dato Seri Abdullah Ahmad Badawi freed Anwar, which was seen as a portent of a mild liberalisation. At the 2004 election, the National Front led by Abdullah had a massive victory, virtually wiping out the PAS and Keadilan, although the DAP recovered the seats it had lost in 1999. This victory was seen as the result mainly of Abdullah's personal popularity and the strong recovery of Malaysia’s economy, which has lifted the living standards of most Malaysians to almost first world standards, coupled with an ineffective opposition. The government's objective is for Malaysia to become a fully developed country by 2020 as expressed in Wawasan 2020. It leaves unanswered, however, the question of when and how Malaysia will acquire a first world political system (a multi-party democracy, a free press, an independent judiciary and the restoration of civil and political liberties) to go with its new economic maturity.

In November 2007, Malaysia was rocked by two anti-government rallies. The 2007 Bersih Rally which was attended by 40,000 people was held in Kuala Lumpur on 10 November 2007, to campaign for electoral reform. It was precipitated by allegations of corruption and discrepancies in the Malaysian election system that heavily favour the ruling political party, Barisan Nasional, which has been in power since Malaysia achieved its independence in 1957. Another rally was held on 25 November 2007, in Kuala Lumpur led by HINDRAF. The rally organiser, the Hindu Rights Action Force, had called the protest over alleged discriminatory policies favouring ethnic Malays. The crowd was estimated to be between 5,000 and 30,000. In both cases the government and police tried to prevent the gatherings from taking place.

On 16 October 2008, HINDRAF was banned when the government labelled the organisation as "a threat to national security".