. RESTRICTED RETUH~N IUReport No. FE-41a WITHIN ONE WEEK _ This report was prepared for use within the Bank and its affillated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMIC POSITION AND PROSPECTS OF MALAYSIA January 5, 1965 Far East CURRENCY EQUIVALENTS Currency Unit - Malayan dollar 1 Malayan dollar = U. S. $0. 327 1 U. S. $ = M$3. 06 M$l million = U.S. $327, 000 Terminology: Malaysia comprises the former Federation of Malaya, pLus Singapore, Sarawak and Sabah (formerly North Borneo). The latter three States are referred to as the "new States". The former Federation is now aneraly known as the "Statt- of Malava". Where there are difqImIion of the economic performance of "Malaysiat' prior to September 1963, the references are to the aggregate performance of the components of Malaysia. TABLE OF CONTENTS Page No. BASIC DATA SU&MARY AN. CONCLUSIONS ....................................... . -ii I. Political Developments ..................................... 1 II. Some Structural Problems of the New Federation ............ 2 III. Progress Towards Financial and Economic Integration ....... 4 A. Financial Integration ................................. 4 B. Economic integration ................................. v. Production and Exports ....... ................... ....... 7 A. Recent Overall Trends ................................ 7 B. Expected Trends in Total Output and Exports . ... 7 V. Development Planning ...................................... 9 VI. The Financial Situation ................................... 10 A. Public Sector Expenditures and Finance ............. 10 B. Revenue .............................................. 12 C. Financing the Deficit ................................ 13 D. The Balance of Payments .. .............. 1 E. The Overall Financial Position ................ 15 VII. Malaysia's Overall Economic Outlook and Creditworthiness .. 15 A. Financial Prospects of the Public Sector ............. 16 B. The Overall Financial Position and Creditworthiness .. 18 ANNEX Production and Exports; Developments in the lajor Sectors 1 A. Agriculture . ........ ............ .... ......... 1 Rubber ...................................... 1 Palm Oil ................................ 3 Rice ....................................... 4 Other Crops ................................ 4 B. Forestry and Fishin. ............................ 5 C. Minerals .................... ................... 7 Tin Minine ................................ 7 Iron Mining ........................... . 9 Other Mineral Resources .................... 9 D. Entrepot Trade . ......... . ....... .............. 10 E. Manufacturing-- - ........ ---.... --.---.---.--11 ,;TATT.qTTCAT, APPP\T( MAP OF MAIAYSIA BASIC DATA Area: Total 128,558 square miles Population: Total 10,769,000 Economically active 3,W1L,000 Population Growth: 2.8% p.a. Gross National Product: in 1903 at current market prices M9,66h million (US$3,150 million) per capita M$905 (US$300) Gross Fixed Investment: Ml1,827 million ( 19% of GNP) Foreign Trade (1963 M5 million): Domestic exports f,o.b. Rubber 1,392 Tin 48o T imb er 254 0 ther *62 Entrepot trade (net) 245 Total Exports 2.933 Imports c.i.f. 3,662 Balance '29 Gold and Foreign Exchange ) M$,050 million (US$1,324 million) gross, or Reserves of Official and Banking ) M$3,280 million (US$1,072) net of Institutions: (June 30, 196) ) commercial banks foreign liabilities and sinking funds. Public Finance: (1964 MP million - preliminary) Governmentst revenue and Public 1,926 Authorities current surolus Governmentst Current Expenditure 1 831 Total Current Resources Capital Expenditure by 980 Goverrnments and Public Authorities Overall Deficit External Public Debt: (June 30, 1964) US$309 million (includin, iindi.qbur.qPd) Mxternal Debt Servicn nn existing TTR.OP: millinn 5= -bi< of nrojctad Debt - average 1965-1970: export earnings.) Summary and Conclusions 1. The merger of Singapore, Sarawak and Sabah into the former Federation of Malaya took place in September 1963, creating the unique multi- racial nation of Malaysia, in which the Malays predominate in the political and administrative fields, but the Chinese, who form the largest single com- munity, dominate commercial and industrial life. Although the process of political, ecoz:omic and financial merger has not been smooth, good progress has alreacy been made on all fronts. 2. The Malaysia economy remains critically dependent on export performance - the ratio of exports to GNP has been about a third for several -7ears. but is expected to decline sliohtlv in the future. The relative im- portance of rubber in exports earnings and in total agricultural output will remain high - at around 509 and 60fg. rRsnectivelv. Nevertheless. as economic integration becomes a reality and as other sectors advance, the vulnerability of the economy to fluctuations in rnhhpr nrices will declinp- Thp outlook may well be one of stagnation until the late 1960's or early 1970ts because of nrbable vr movements in fh p+rms of traelp- Wnver, one rhhr prices begin to level off, after the decline that appears in prospect during the nrt fei vears the uprdorA trend of r"ber prouction should again contribute to a rising export level. By that time other crops, such as oil pa lm, suV ,ccoinlors-rdut,soudas have maesn nfcn advance. GNP should continue to grow slowly because of growth in the non- port~ Q U U/.., OIU Ui pJ O.L U' LJ 1.0L Y 10M.1C.±I L.L M LL"I UV J. the present level of about M$900 (US$300). Prospects in the longer run are .ttU.L a 1VOI.A11PU.Lull U.L~ UL,5.cLLL1V -. r Lv w L11 u l kCiLj_)~.LU.% ±I_ A m n. n.. r L. .22... U111. t sJ past~ fr. years'a been the -rowth in government expenditures; in all the components of Malaysia capital expenditure4 have increased two or three-fld slc 1ypy-u anu this has been the main factor behind the increase in the investment rate to almost 20c of NP. Particularly large increases were achieved in expenditures on education, roads and bridges, housing and agricultural development in the course of executing development plans which, on the whole, have been welI con- ceived and promise to be effective in the long run. In the past year, however, defense and security expenditures have risen sharply in the wake of merger and the Indonesian "confrontation." and this has aggravated the public sector's financial position. 4. Public savings have dropped to a low level, and are likely to remain low for several years if the present trends in current expenditures are main- tained, despite further efforts to raise taxes. Internal and external borrow- ing is unlikely to meet the public sectorTs needs during the rest of the decade, and some use will probably have to be made of the official exchange reserves. 5. For the country as a whole, the sharp increase in investment has not been matched by savings, and the balance on current foreign transactions has become negative following a large increase in imports over the past three years. This external deficit was more than matched by private and public capi+al inflow., nt+1 106-1 wnhen researves boe-n.+ofall Sligh'u-r f--, +ha4m high level of over M$,000 million. For most of the remainder of the decade ~~LL t~ . L-X .l UU) L; M .LOJrZ UA. OAU L At PL U YIJLUjJUO SajJ VL'V 141, C.) UL. t.Jt a substantial increase in Malaysia's public borrowing from abroad and an ex- panOsun uj 1vu.Lr-Lvcxuc LUv.om,nU , woI i ovL uvly u t4ulu a '-UiiO.LUC. C drawdown of reserves. During the early 19701s, the position should, however, improve cs exporsU and nr reume nte rate of growt tat wau Wd peneu uI the early 1960ts. This should make it possible to mobilize additional domestic resources aoid to reduce, or even eliminate, the running down of external reserves. Even allowing for a tripling in the rate of foreign public bcrrow- ing during the 1960Ts, debt service is unlikely to exceed 670 of 17 export earnings, and a substantial margin of creditworthiness should then remain. I. POLITICAL DEVELOPMENTS 1. Malaysia was formed in September 1963 by the merger of the dependent territories of Sin!o-nnr. Sarawak and Shh (fnrmp.rly North Bnrnpn) intx) the existing Federation of Malaya, which had been independent of Britain for six vears. The merger wn the lnat Qfe.n in a nrocess of cnnnolidation which heann in the nineteenth century with the formation by Britain of the Federated Malay S-taites and) t.he qtraits- SPE+tlementsc at. a tiyne of- rapnii eonno xliain The large-scale Indian and Chinese migration, which accompanied the development of rubbehr, fA r l +.),m frnAin- cont nue unti'4 1 k cz-on -W rl WJ~1 a r creating a unique multiracial society which is at the root of Malaysia's 2. The merge r of Sigaor into the,, Ua-1a Feeato4wsateptdi 1946, and again in 1957 at the time of 1ialayan independence, but on both Singapore into a nation with a tradition of Malay political and economic prv.LegestO. Then1, aO noVw, theZ w.l-lingness zof U aLay rLtyo gi .ve- ecnmcLuain- ages and greater political participation to the Chinese depended on Chinese' willingness to assist 11alays achieve ecUiUUc equaluy. Ater 17? oigapure continued to press for merger, and discussions were held from 1959 on the posibility of creailng a common market, but it was not until mlid-1961 hat the turning point was reached and 'alayan willingness to contemplate merger was announced - a change of approach which was stronZly influenced by the growing strength of the left wing in Singapore and by the possibility of incorporating the counter-balancing non-Chinese pcpulaTions o1 0arawaK and Saban. 3. The political agreement which is the basis of the new federation reflects this background. Singapore's per capita representation in the Federal Parliament is only about 60% of that of the existing eleven States of Malaya, while the Borneo States receive more than twice the Malayan representation. Singapore citizenship also remains distinct from Malaysian citizenship. On the other hand the State of Singapore retains a large measure of autonomy, particularly in education, health, social welfare, labour and finance, and did not inherit the Federation system of Malay privileges. Guaranteed access for Singapore to a Malaysian common market was also an essential part of the political agreement. The Borneo States' constitutional position guarantees certain privileges for the indigenous peoples and also gives them, particularly Sabah, considerably more autonomy than their Malayan counterparts. They retain, for example, control over i,nigration, both from other parts of Nalaysia and from other countries. Over the next decade, however, many of the distinctive features of the Borneo States' constitutional arrangements may be expected to lapse, leaving these states, particularly Sarawak, in a position similar to that of the States of Malaya. 4. In brief, Malaysia can be regarded as a successful merger based upon an intricate set of regional and communal interests. The accommodation of these interests has resulted in a patchwork of special concessions and corresponding restrictions, the need for which is widely acknowledged, although not accepted without some resentment. The new federation, however, receives much of its strength from the large number of Chinese and Indians who, although not indigenous, regard Malaysia as their home. The constitutional arrangements, although giving the new states disproportionate representations which are inversely related to their real political] and economic power, appear to be preerin the - t1il+- 1hic l~n.r ~efre ederation of~Maaa nevertheless have created a situation which might tend to encourage the lifet for tL on oiU 11 ;U.. Liao Ut:ull i .LUVYUU U'y .k1Z Indonesian "confrontation" which resulted in the curtailing of Indonesian occasional small and ineffective troop landings on the mainland. These have noU bee of1 UL very greaU BI_L_L.UdL'Y Ii k.L±Ut1VLO 1 Oul,lu _LU%-%dL DUU-~L Ij "aa given to the guerillas by subversive organizations in Sarawak) but economic -Losses -ave occurreaU' anu tle Goveriien-t- in auuuuu v o receiving ueIc support from Britain and other Commonwealth countries, has had to expand its armed forces. The financial consequences of tiui raplu expanion are disussed below. 6. Internally, the effect o confrontation has been to consolidate support for the Plalaysian merger, and at elections held since 'Malaysia was Lormed, both major ruling parties (The Alliance Party in Malaya; Peoples' Action Party in Singapore) were returned with substantially increased majorities. Tne PAP, in addition to forning the State Government of Singapore, also forms the core of the "loyal opposition" in the Federal Parliament. Conflicts and misunderstand- ings between the S:Lngap4re and Central Governments, which had emerged in the prolonged bargaining prior to merger, continue to exist and to hinder the progress of political and economic integration. The conflicts also probably contributed to the atmosphere of communal tension which led to racial riots in Singapore in July and August - the first for seven years. The result has been a period of conciliation, and various facilities for Malay advancement have been introduced into Singapore for the first time. Despite these troubles, however, progress iLn political and economic integration is being made, and throughout Malaysia the Central and State governmentst main emphasis continues to be on the promotion of further economic growth. II. SOME STRUCTUtAL PEOB-LES OF THE NEW FEDERATION 7. Merger has created a nation which in the short run has inherited the vulnerability of its camponents to fluctuations in exports of primary products; in the long run, however, this vulnerability will be significantly reduced in two ways. In the first place stimulus will be given to production for local consumption following the creation of a common market. Secondly, because production and exports are more diversified, and because of the possibility of income transfers and labour mobility, the severity of the impact of any decline in export earnings in one sector is diminished. However, the impact could still be severe. 8. Domestic exports of rubber and tin alone accounted for about 61% of Malaysia's export earnings- in 1963. and rubber itself for I6%. Of the remaining exports, entrepot services are next in importance - accounting for a steady 11-12% of external earnings - followed by forestry products and iron ore. Indonesian confrontation starting in September 1963, has mainly affected the entrenot trade rather than Malaysia's domesti. ernerts. 1/ Domestic exports Dlus value added by Malaysian external entrepot trade. 9. Total Malaysian export earnings have remained at a high level, still exceeding 30% of GNP, representing a very high dependence on external markets. In contrast to the steady average exports, retained imports have been rising sharply - increasing by 49% - twice as much as total imports, since 1959. Most of this increase is accounted for by machinery, transport equipment and other manufactured goods, which corresponds to the increase in expenditure on capital formation over that period. More recently, food imports have also been rising, and the overall result has been that expenditure on retained imports, as a percentage of Gross National Expenditure, has risen from 33% to 36% over the 1959-1963 period. The continued growth of the lalaysian economy is thus critically dependent not only on exports but also on imports. Curtailing imports for balance-of-payments reasons could have an adverse effect on the economy. 10. The structural problems faced by Malaysia are however not confined to over-dependence on a few uncertain export products, and on imports. The unemployment and under-employment problems remain severe - particularly in large towns and in the younger age groups - at a time when the population is probably growing at around 2.8/1 p.a. The sensitivity of the economy to unemployment is also growing, in that the size of the working force has dropved from 40% of the total population to 33% since 1947. In the States of Malaya as a whole in 1962 6% of the working force was unemployed, but in 2/ large towns about 25% of males aged 15-19 and 11% aged 20-2h were unemployed,2 with even higher percentages for females. Large numbers of unemployed of all age groups had been idle for more than a year, indicating that the problem is structural rather than seasonal. Employment opportunities for the unskilled in urban areas thus appear to have failed to keen un with the increase in the size of the labour force - a problem which has been aggravated by the popula- tion movenent to the towns since the war - mainly on the nqrt of nnn-Malays- The problem will be made more serious by the probable acceleration in the size of the labour force as the nost_war nonniltion hoom i. felt, The ;moint of unemployment in Singapore is not accurately known, but total unemployment has Ilong been high aY-ndH is p robabnly arnrnd 15,' cr-antincy a seroiou oi-n i MA (-l :nnd economic problem. In the rural areas of Malaya, declared employment and nder-empnloyment. is very low, although the scope for additional wrking hninr clearly is great. Under-employment is probably severe in the more primilive areas of the Bornon States. desnite the shorta of' wnoF labour. Throughout Malaysia the structure of employment and unemployment also has important communal asects. Overt unemninvment i. Iowpzt. in nrricnilturp and other rural occupations in which Malays predominate, and highest in urban occupations and a-reas whichl are= largeply Chinse 11. Despite these urban emplrmmnt probl ems,temi phs of Malayan government policy for many years has been on raising the ;..~~~ onos iA.t dleM olle gcj.Z.men capita-1±' 4± tJ. 1/ A recent sharp drop in the Singapore birth-rate implies a lower papulati.on growthr I-Eite Uriali iau oeUf(_1 abZjLitUU 1 Pl-t ~JV-UUZ) JDCUM J t_FVL 11. 2/ An unemployed or underemployed person is here defined as one a-ively seeking work - which is riot always sought throughout the year in rural areas. expenditures are being made in the rural sector, representing significant income transfers from the urban areas, and in the long run an increase in rural incomes should result over and above the increase in population. The tremend- ous disparity in incomes - average per capita incomes of Chinese in Malaya being between two and three times as great as that of Malays - and corres- ponding disparities in, for example, educational achievements seem likely to persist for a long time. Similarly, the disparities in the Borneo States between the indigenous and non-indigenous peoples, and between all Borneans and their Malayan counterparts, will require years of income transfer before equality of opportunity and income can be achieved. 12. In Singapore State Government policy has been aimed directly at increasinc investment so as to reduce urban unemoloVment: only recently has increased attention been given to the promotion of Malay interests. The extent to which Singapore's unemployment problems and over-dependence on the entrepot trade, can be solved, depends largely on the extent of Singapore's integration into the Malavan economy. This is dealt with in the next section. III. PROGRESS TOWARDS FINANCIAL AND ECONOMIC INTEGRATION 13. Ties between the comnonents of alava have lon:n been strnr.. A common currency has circulated for decades, and close economic links between the. vaqrioui- stantes have- grronM upT i n t,he wakeL- of Brits and qhe Pmrnpre-ial activities, To a considerable extent, therefore, integration is already ~pb ~ur1 ii+ i v.tnt iffrenes n trif polic, and ohreooi policies still remain as do certain tax differences. Z1i. V±Iid I _LdL d. V.L.J21I Jj VU L U.. uax U-LUIL UiI LJLUllitL dII1U ILLU_Lt-- U U11 UdA.UU, LUV11ULiL1 beverages and petroleum products are already very similar in the States of VLMaYCn UiLLUiUore, and may Ue regaueu as LIarmo[UniU. Lax rates ln t[e Borneo States will be harmonised with the Malayan rates over a period of' years. uons-ideiab].e JJLUVV,Lt-b LIaZi U.±±tdUy Uut__11 IIiciut:, JJa.L_U_UiUL1_U±.Y U.Y OCLCLWAA and large additional adjustments for all the New States were announced at ULie UiIIme oJ. Ulle±~~ LU 17, Budet Certin Utxe whIJ.1hL ar Fda elsewhtee i. Malaysia are State taxes in the Borneo States, giving them (particularly Sabah) some additAonal autonomy compared with the eleven nalayan Staues. ie l.arge range of export duties and revenue and protective import duties which exists in tne States of Palaya has almost no counterpart in the traditional free port of Singapore, however, and detailed prOcedures were evolved upon merger in order to ensure that harmonization does not interfere with Singapore's external entrepot trade. Some steps towards harmonisation of tariffs will be taken during 1965; but Singapore retains the right to delay the implementation of any protective duty by a year and the implementation of revenue duties on goods entering into the entrepot trade up to 1975, although compensation must be paid to the Federal 0overnment after 1968. Unlike the other Malaysian States, Singapore pays to the Federal Government only 40' of the Federal revenues collected in Singapore, so as to be able to meet the costs of services such as education, in which Singapore has autonomy but which elsewhere are a Federal responsibility. Singapore also neets the capital cost of Federal projects located in Singapore whose benefits are predominantly local. 15. These arrangements for the division of revenue between Singapore and the Federal Government are subject to biennial reviews for an indefinite period. The first of these reviews may take place during 1965. Each review will, in effect, produce a judement on the relative financial needs of the Federal and Singapore State governments, in the light of their respective constitutional and political responsibilities. and relative income levels. No criteria for these reviews have been established, and they introduce an element of uncertainty into the fiscal system. This apart, however. progress towards harmonisation has so far been substantial and smooth, and it does not seem that -the financial arrangements will in themselves be any barrier to internal harmony or to closer economic integration. BR Pconomin Tntisration 16 nornmic interntion nrinot IP qqici to h nrnPrPssing as swiftly as financial integration, and parochial attitudes have been widespread i-n the yea sice alasiawa formedi- T1he fir---. stepn tonwardsq the crea;tion of a common market has however been taken with the establishment, after many delays, o)rf.the Tanrif'f Advisnoy Poard,l whhsatdo holl publicJ( hearingsq in December 1964 on the first list of 101 commodities recommended for common of Singapore into Malaysia, since Singapore has long needed a larger guaranteed 11. . L i .. I L Ie 4n. A 11R ..L I - L C .L. p± L P U tLA%,C' LI I 0r. ~CeX Lt 0 I Ieell p 0 v G. hl e Lrs p c r S.- i tentl unemployment problem. The Tariff Board promises to secure effectively many of the benefits of a "Larger protce make fo producersnT5l and should help prevent the application of controls on inter-regiona Malaysian tra%de, asO occurred C; earlie n1964 in1. the case of' fhur and Phy sical facilities, including a free zone and an expanded customs force, are already the application of protective tariffs, so this does not appear to be a problem WLI-LCLI W.L" Slow UCIE, i~oi0Lc n~rai 1t, A common market in goods thus ths on the poitof emerging, and should come into effect in 1965 as the general protective duties announced in the 1965 budget, and others to be recommended by the Tariff Board shortly, are implemented. A complete common market in labour, however, does not yet exist, 1/ The degree of de facto autonomy which Singapore possesses is indicated by the unilateral ban which Singapore alone imposed on selected British imports, in retaliation for reduced textile quotas. - o - mainly because of the selectivity practiced by Sabah over internal migration, despite a serious labour shortage there. Sabah has, for example, shown a marked reluctance to recruit Indian labour, or to take any steps that might encourage the growth of trades unions. 18. The slow initial progress towards a common market is paraleled by developments in 6ther spheres. In the field of the promotion and coordination of industrial development, for example, little progress has yet been made in establishing a common program of industrialization in9luding the creation of the proposed Federal Industrial Development Authority:, which is designed to formulate and promote MTalaysian policies on pioneer status and industrial location. As a result decision-making has continued to be on a regional rather than national basis - which could produce severe errors in the pattern of industrial development, particularly where large investments are involved, as in the iron and steel industry. An ad-hoc start towards a Malaysian, rather than M1alayan, approach has however been made in one or two industries, such as automobile assembly. 19. Various Federal Government agencies and departments are gradually extending their activities onto a Malaysian basis, although operations in the new states are often inevitably curtailed by staff shortages - as appears to be the case with the Federal Land Development Authority. The Central Bank has extended its control over the commercial banks to the new states. Statistical services are however still working largely on a regional basis, and serious gaps exist both in regional data (especially in Sabah where data are almost non-existent) and in data on a Malaysian basis. These data shortages, the shortage of staff in Kuala Lumpur familiar with the economic problems of the new states, and the considerable degree of financial autonomy possessed by Singapore and to a lesser extent the Borneo States. have meant that nlanninw for the new States is mainly carried out locally, and is largely confined to the public sector program. Similarly. the Federal Economic PlanninL Unit is also handicapped particularly in its macrv-economic planning and in its work on policies towards the private sector. Full coonration between Sinarnore and the Federal Government on the exchange and preparation of statistics has aparently not yet been achieved. 20. Nevertheless, financial. economic and administrative merger are already advancing as well as had been expected, and no unforeseen problems have emerged to slow the pace of integration. Because of the special autonomy given by the constitutional and geographic positions of the new States, direct responsibilities of the Federal Government in many subinets in the new RtAte will in fact continue to be much less than in the Malayan States: progress towards the rention of common overall eonomic and financial nliciso sems however to be assured. A companion organization to the Tariff Advisory Board; both were recommendations of the Rueff Mission. ("A Report on the Economic Aspects of Malaysia", by an IBRD mission, July 1963.) - 7 - IV. PRODUCTION AIND EXPORTS A. Recent Overall Trends 21. Between 1958 and 1963 the volume of Malaysian production rose by about % a year, mainly as a result of the gradual increase in rubber outnut in the States of Malaya following heavy replanting during the 195O's. Tin, timber and manufacturing output also rose steadily. The volume of epornts rose even faster over that period, rising by about 7% per annum. These rates of growth between 1958 and 1963 were matched by the overall growth of GbP in current prices, which rose by about 6% a year over the period, implying a per capita growth of about 3% .. Howeverl almost all this incnme growth took place between 1958 and 1960, at a time when the terms of trade were moving sharply in Aalaysia's favour due to a rise in rubber and tin prices; export earnings rose by nearly 50% between 1958 and 1960. Since the 1960 peak the rubber price has declined and the terms of trade have moved adveely; Eaort earnings declined by about 11% by 1962. GNP increased by about 3.1% p.a. over the 1960-63 Deriod. and average per capita incomes rose slightly as a result. In 1964 per capita GNP is likely to rise by about 3% because of the booming tin price and only a slight decline in the price of rubber. The ecnom has thus proven remarkably resilient to the recent drop in export earnings; GNP has risen despite the drop in export earnings after 960, which also fell relatively from 345 of GNP in ;960 to 285 in 1963. The economy will probably also have to withstand a further period of s tagnaiu export earnings over the next few years, as is discussed below. 22. On a regional basis a slight drop in real per capita GNP in Malaya between 1960 and 1962 was offset by a rise in Singapore, which has since lost ground due to confrontation at a time when Malayan GNP has been increasing. The relative growth of the various regions depends very much on their economic structure - that of Singapore, very much dependent on the service trades, manufacturing and construction, has been less affected by the trends in exports of primary products than Malaya. Sarawak in particular, whose per capita GNP is less than half Singaporels, has been seriously affected by an inefficient agricultural sector. Recent trends and the outlook in the major sectors B. Expected Trends in Total Output and Exports 23. On the basis of the discussion of the major sectors, it is likely that GDP, in constant prices, will rise at about 41 a year for about three years, subsequently rising to around 6% p.a. by 1970, a rate of growth which wAl pruvauly continue until 1y>. These overall volume trends are of course dominated by the rubber and minerals prospects, and most of the increase can be ascribed to the gradual attainment of maturity by rubber trees planted during the peak planting period of the early 1960's. The acceleration in the vumune 01 output at the end of the decade is mainly in rubber although by that time other agricultural crops, such as palm oil, cocoa, etc., are expected to be reaching the markets in larger quantities. The minerals sector - mainly tin and iron - is unlikely to contribute any significant increase to the growth in the volume of output after 1966-1967. Export volume is likely to follow the same pattern as GDP, but will probably rise somewhat more slowly at around 31 p.a. until about 1968, and thereafter at about 570 p.a. into the early 1970's. 24. Although a reasonable basis exists for forecasting the volume of output and exports much less certainty exists about the future price prospects, particularly of rubber. If it is assumed (as in the remainder of the report) that rubber prices decline steadily to M/55 a pound by 1970, then, on the basis of the sectoral discussions in the Annex, it is likely that the value of domestic exports will decline slightly for two or three years before resuming an upward movement: it is unlikely that the 1964 level will be regained for four or five years, but by the end of the decade more rapid growth should take place if the price of rubber then stabilises and the volume of production continues to increase. The export of other crops such as oil palm, cocoa, etc. is also expected to be increasing more rapidly by that time. so by 1970 the value of domestic exports may be around M$3,000 million, and in the order of MMNI.800 milli on by 1975 assuming that the nrice of rubber stabilises at around M $$ a pound after 1970. 25. On the same basis, and assuming a continuing high and growing level of PovRrnmPnt ernenditure. it i. li.kelv thqt GNP. in current nrices. will continue to rise after 1964 by around 3% a year, despite stagnant export Parnins. because of the pcnnted buoancr in manuifacturing industry, _onstrun- tion, services, and other non-export sectors. Real per capita GNP is thus likely to be stable until 1(%7_6P Thereafter, the rate of increns in the volume of production is expected to rise slightly, and GNP will accordingly ris mozi nY, re rapidl and w A il maI inai -n t+he Mhhr ratei of inrasnftery 19Q, assuming that the rubber price does not fall further. By 1970, if the exp cta ion n th a -+rv ~~s.^, n.v' , 1 MKT1 a '~, ~ P clirmIrl +- .hvlQ h growing at a rate approaching that achieved in the 1958-1963 period. If it 0o al+ ann+ tr I 0 m P 4a11tn i+el as+m4 P I + +1-+ +V-a P o nP tyhbo l rl be M 65 by 1970, instead of M55, then the level of 1970 total export earnings M $55a pound; GNP likewise would be perhaps 3-4% higher in 1970. 26. On a regional basis, Singapore's GNP, which probably fell by about 1-~ 1 uL r 70t ng. partly das a resIu of Indonesia,i ± co,zonationL isepl.IC to resume an increase of 4-5% p.a. during the second half of the decade, assuming U L ctU J. IV t;Z W - UiI I U cU 1U U U pLU iL1 I111W LL UU jUL-.L IIr, ±1LtIUj U1Y, _ JI IUL :- ; U Uo CLI ±t,0 U _L 0 _. the gradual extension of the common market, and that State Government urban evelopmenU exPenULUres remnain buoyant. Te outooK for OaUah conuinues to be good, although the 5}f annual increase in output between 1958 and 1963 which resulted from the timber boom is unlikely to be as high in the foreseeable . future. Only in Sarawak is the position depressing, and per capita GDP there is likely to fall until the end of the decade, although the situation may be alleviated by heavy military expenditures. In 1970, the regional disparities in income will probably be almost as great as they are today. 27. On the basis of these trends and assumptions a gradual structural change can be observed. The ratio of exports of GNP is likely to fall from about 29% of GNP in 1958-59 to around 22% in 1970 - a level which will probably be maintained in the early 1970's. The direct importance of domestic rubber - 9 - exports alone is also expected to fall from the 1958-59 average of 19% of GNP and 66% of exports to 11% and h9% respectively by 1970. To some extent, therefore, the present structural vulnerability of the economy will have been reduced, although rubber remains the Achilles heel. V. DEVELORENT PLANNING 28. In all the components of Malaysia public sector expenditures are broadly following allocations set by the four regional development plans. Those of Malaya and Singapore date from 1960-61, while Sarawak and Sabah have recently prepared State plans; all have the common characteristic of emphasizing the role and targets of the public sector, although this includes substantial transfers from the public to the private sector; e.g., for rubber replanting in Malaya and for financing of private industrial investments in both Halaya and Singapore. A reconsideration of the scale and pattern of public investment and the policies towards private investment is currently taking place in connection with the preparation of the first Malaysian Plan (1966-70). 29. The al;ocations of investment have on the whole reflected the needs of the economv1/ Heavv exnenditures have been made in the rural areas of Malaya on land development, drainage and irrigation, crop subsidies, rural roads and hridges- hPalth sprvines nnd witRr munnlips. Although in certain areas - for example some rural roads and irrigation schemes - economic returns may h low for ;rmp time, the investments in the rural areas nrmi.p n thp whole to be an effective start towards improving smallholders future incomes. Duiringf t.he erlyriv i nsuiffic-ient anion -ras panidl ton policiesz wh ica'r wold help diversify the economy, and in the rural areas almost all the emphasis was nv,rih ~'*Mor ~~t1r~additional emphasi ha enplcdo-ivsmn in oil palm and many other crops, and on improving related extension services. Th Federal Land Deu-1-p-ent Authoriy, --ich has been responsible fo some of the more efficient schemes - short of investment in estate agriculture - £ - -nnl, S-V its'A in etm n Lin oneL are~a -± ;~ ± Oe l -1 ±JT .a a1 -. 1 expected to promote a more diversified agricultural base. 30. Outside agriculture, communications, utilities and education, the imnantr. r)f? tho Mnl !ran Covonm"en+ Aeve-lolmea hTl+ l bme- As is mentioned in the Annex, public assistance to the i'anufacturing sector has been sml,coIPrising mainly transfers of.P go0verrXent fundS for industrial credit and the establishment of industrial estates. Here also, however, there 0 D-j 1 UJL K.±II IUL.LLUo aid andU1 LIJ Ue_LjAIg Ut:Vt:±Ut:U Lul UL 1iUU0U1-.CdLL more funds have been provided for industrial credit and, if the Tariff Advisory aaru dUiU 'lnUe r'ueLd_ -LnUuLLLU eL UveFopmenu RUULIUr1U are auje Uo WUr, effectively, the result should be improved performance in this field, and progress towards the goal o1 fdiversific al -0-o- 31.. In Singapore, being an urban area, the pattern of investment is entirely different. Given the probability of a decline in the entrepot trade, neavy emphasis has been placed on the promoTIon of the manufacturing seclor.:- The allocation of Malaysian public sector capital expenditures can be seen in Table 26. 10 heavy expenditure on the Jurong Industrial Estate and New Town areas, and on industrial finance, has been the result. To date, the response to these investments by private manufacturers has been fairly disappointing, and in industrial finance disbursements have been low, although commitments now appear to be rising. Equal emphasis has been placed on social services and on utilities; one of the most remarkable performances has been the growth in expenditure on low cost public housing. Rents on the smaller (1- and 2-room) flats are subsidised to a amall extent, and a further additional subsidy is found in the long-term low-cost loans from the Government. Given the extremely poor and overcrowded housing which these flats replace, some subsidy to ease the adjustment appears fully justifiable, as are the plans to continue a high rate of housing investment. 32. In the Borneo States the new pattern of public investment expenditure which is emerging is a considerable improvement over the old. Excessive emphasis on road building, particularly in Sarawak, which in the past has not been closely related to economic development, has now been replaced by con- centration on various agricultural programs which promise to bring returns which, while still low, will be a considerable improvement over the recent past. Roads apparently are still being built to unnecessarily high standards, however. 33. The performance in implementing the various public sector programs has been imoressive. In Malava the adninistrative capacity to execute projects at a high rate was achieved in 1961-62, and in 1963 in Singapore in almost all sectors excent road and school building. In fact. in both Malava and Singapore the ability and urge to execute projects have outstripped the facilities for a thorough nroipnt evalution - a nrblem which has also led to a bottleneck in the preparation of projects for foreign financing. Despite this problem, however, the n,rfnrmanP of the government.s in nlanning and Ptynuting nublic sector projects has been good, and compares favourably with other countries in the region While there is some nblic an ital eYnPnditure on nrniPct.q r)f questionable economic priority, there appears to be less than in many other reasonably well conceived and the record of execution has been unusually good, VIT TH PTUAN.TaT. qTTTTTN A. Public Sector Expenditures 34. Rapid growth in government expenditure throughout Malaysia has been in public capital expenditure and capital expenditure of the public authorities; now reached. a level of M$980 million or 10.5o of GNP. Current expenditures education and agriculture, and because of growing debt service and security UUu11ia ,I LU .L e ft heu'j' V4LLLlw ingave btae: shrd by a.L 461 UUi(inU1IU1I, U_. Malaysia, can be seen from the following table: - 11 - 1/ Consolidated Public Sector Expenditures (* billions) - - 1959 1960 1961 1962 1963 1964 (est.) Governments' Current Expenditure 1.19 1.22 1.31 1.43 1.62 1.83 Governments' Capital Expenditure 0.23 0.25 0.2 0.63 0.73 0.82 Public Authorities Capital Expenditure 0.06 0.05 0.07 0.10 0.1h 0.16 TCTAL Expenditures 1.47 1.52 1.80 2.16 2.50 2.85 of which by: Malaya 1.01 1.05 1.24 1.8 1.63 2.08-, Singapore 0.27 0.29 0.33 0.40 0.48 0.492/ Borneo States 0.12 0.1 0.15 0.18 0.25 0.13. Public Authorities 0.06 005 0.07 0.10 01O 0.16 Fur coverage, see Statistical Anendix. Tables 22 et seq. 2/ Some expenditures, hitherto local, are now Federal. 35. Between 1960 and 1963 the social services sector ahsrbed 3L of governments' expenditure - mainly by education which alone accounted for 18% of total expenditure in 1963 and which also acoounted for over 20% of the increase since 1960. Average per pupil expenditures rose from M$150 to M3180 over the neriod, and nr cnita expenditure from M30 to M$50. Capital expenditure quadrupled over the 1960-64 period. The increase in expenditures ner head is due in part to the expansion of the more exensive sc-mary, technical and vocational education, in which enrolment has progressed twice asfast± as the tota. Or n h vrager onl one- pupil ~ in thewogrdae from primary school now enters the first year of secondary school, which serious, as the following table for 1963 shows:- Total States of Average expenditu-re pe ui W""W) 18 1'7, 20i '92 14) Per capita Expenditure on Education (IT6 N 13 hia6 9 2 School enrolment as % of Sol-e Pupulatoun 69.9 o8.4 90.u 53.4 5,3 Literacy rate - latest census -- 1 52% 25% 24% 36. In an attempt to improve post-primary education, a Comprehensive Schools Program for the States of Malaya is being introduced which will, if successful, provide education for all 13-15 year-olds by 1967. Although this ambitious scheme is unlikely to be fully realised by that date, the pressures for increased expenditures on post-primary and advanced education are strong; in particular, the need to improve educational standards in the Borneo States is urgent. it is thus probable that the 050-60 million a year increases of the past will be continued or exceeded. .- 12 - 37. In 1964 security expenditures overtook education for the first time since the end of the campaign against communist guerillas in 1958. The sharp increase in 1963 resulted partly from the assumption by Malaysia of former British obligations; more recently, the Indonesian threat has led to accelerateo police and military expansion including limited conscription. Total 1964 expenditures were about M$h0 million (1960, 14$220 million) and may rise to M$590 million or 20.4% of total public expenditures in 1965 during the military build-up - but some of this expenditure will be financed by military loans or grants from abroad. For the rest of the decade annual expenditures are expected to exceed MA500 million mainly because of the rapid increase in recurrent costs of the larEer military and police establishment. 38. Enenditure on the various rural develonment Drograms has also increased sharply. Effective rural development programs have at last emerged in the Borneo StatF;. and can be exnected to Lrow in the near future. Both there and in the States of Malaya road construction has proceeded very rapidly, qni 1v 1QOJi -arinuiiltural and transport rxnPnditures in the rural areas had approximately doubled since 1960 and had reached about 22% of public expenditures Very fast. goth has alsn nonrred in debt service nayments bcani. of the increase in debt. Expenditure on housing, television, and industrial sites and finance,h lorse ;a-uaIfinc n.snsuzi ii d llowq--costr housing developments alone now amount to more than a quarter of Singapore's capital expend4iu. ndA mayr bem expected ton innca asz iv"bn renewL C?r-t.. under way. 39. On the whole, as is discussed in Chapter V, capital expenditures and the rapid growth has been the result of an increasing capacity to execute pro JC'-'UD* J.I'iCres in th '-LC- of current~ exedtr doe -- appear to be excessive given the increase in the volume of government services such as expenditure will have to be less in the next five years than in the past if lar-e governmiient currentu deficits are to 'Li avoided, buseO of i'e JLLE: a ,4 of sluEgish revenue. D. nevenue 4u. CaUreni reVenue5 JJaVe Jaleu ou) kseep pace W.LUEJ UUULu tf.&Pu.U.L a Mialaysian Governments' overall surplus of M$261 million in 1960 became a deficit of .4725 million in 19o4, even after taking into account the net receipts of the social security systems. All Malaysian governments neverthe- less experienced a rise in revenue at a time when exports were falling. Total governments' receipts have risen from M$1,603 million in 1960 to M$1,831. million in 1L6o - receipts jwve remained roughly constant at about 107% of GNvr (.90 including social security contributions). The fall in export duty has, in part, been offset by rising import duty; company taxation has remained almost constant since 1961 while rubber profits fell. In 1964 tin duty exceeded rubber duty for the first time - a. situation which is expected to continue. Various miscellaneous items - Singapore property tax, currency board profits, royalties, etc., have shown some buoyancy, and taxes other than taxes on trade now account for 55' of revenue compared with 88% in 1960 - a trend which certainly strengthens the tax system. - 13 - 4l. Tax revenues. at 1h.4% of GNP. and total government receipts at 19%, are not excessively high given the structure of the Malaysian economy - with its laree and very Drofitable exoort sectors - but the onortunities for increases are limited. After a number of years during which tax structures and rates were unaltered. 1965 will see the introduction of several new taxes - a payroll tax, multi-stage turnover tax, capital gains tax, excess profits tax on tin. tax on crown corks. etc.. - which. together with imnortant stens towards harmonising tax rates throughout Malaysia, will raise revenues by a sten of 7-8- in 1965 to about 20% of GNP. This proliferation of taxes. each with low rates and initially hedged with exemptions, gives the government considerably qrepter scone in fiture attemnts to raise tax rPven]._ The low initial rates are not likely to depress business activity, although the multi- .qtnap turnmver tax might havre the off,o. nf cmnnieincina vPrt.ir_;1 intparn-i,n of companies if the burden is significant. Tax revenue is likely to be Jfairly buovant over the nxot few years* radual tav harmonisation throughout Malaysia - which in most cases will mean an increase in tax rates to the eXis.ng Malarren lov 1 hc - ril4 e an important+ f temnnry, factor. A growing number of firms, which hitherto have enjoyed tax relief under the oinone status mpanom. w.-41 also kn,-m,- +.ymrrs * Tm,nn,+ An,+r,r ch ul alo increase, since imports are also expected to rise over the next few years been accompanied by any change in the pattern of borrowing. In effect, the ony trends in the past six years have been in the reserves, as can be seen from the following table:- (MS million) 1959 1960 1961 1962 1963 196)(Est) Governments' Current Revenue 1,351 1,603 1,689 1,760 1,894 1,831 Governments' Current Expenditure 1,107 1,220 1,300 1,433 1,022 1,131 Current Surplus + 164 + 383 + 383 + 327 + 272 - plus, net social security contribution 110 125 139 148 157 167 plus, surplus of public authorities 53 62 69 81 80 95 Total current resources 327 57 70 >>o 6 > eoe less, total capital expenditure 288 301 491 729 009 9o Overall surplus or deficit + 39 +269 +100 -173 -360 -718 Financed by: Local borrowing 138 124 26 99 127 133 Foreign loans and grants 108 117 88 107 107 10 Use of assets (decrease +) -328 -527 -233 - 86 + 86 +410 Other 43 17 19 53 40 .15 Note: For full details see Tables 22 et seq. L3. The only additional source of finance was in the volume of foreian grants during 1964, which was augmented by military assistance. That apart, no new domestic resourcps have so far been mobilised to meet the growine deficit, and foreign public borrowing remains stagnant because of the shortage of suitabl nroiPct,; for for.4an finanina_ Tt has. in fact. nroven difficult to increase local borrowing, and the prospects for the coming years, as are dinn.d in C.hanter VTT hlow_ are not bright. Fortunately realisable official reserves are large, probably totalling about M,$2,500 million including i nnrtion of thp nrrenv baking, Thi should qiffin- if necesary. for drawdowms for six years at the current rate of utilisation. Of the several anvernmnt, the Federal nvernmenth i probabl vin thp ti chtat fi nnni Al position - the formation of Mlalaysia having increased its 196h aggregate expendi ture byr MI.44~ million mao than i+0 receipts from the New. States (Roo Table 27). However, both the Federal Government and the Singapore State Government seekingsJ add.lition,al. so,M-cc fo doesi borouin ..4flL. t-.e Ane ±L± L~ - -- e and will, in effect, be competing for loanable funds. D. The Balance of Payments h4. Recent trends in the balance of payments have reflected the growth in public sector investment and decline in public savings. Leween 1YU and 1964 the balance on current account has shifted from a surplus of M.'230 milion to a deficit of ag$Ou million, and net national foreign exchange assets, which had risen to It 3.414 billion or abaost a year's retained im;orts, began to decline slightly during 19o. The overall trends are indicated by the following data:- (M$ billion) 1960 1961 1962 1963 1964 (Est.) Domestic Exports f.ob. 2.89 2.57 2.55 2.69 2.88 Net Entrepot trade 0.23 0.23 0.25 0.25 0.19 less, retained imports c.i.f. 2.88 3.06 3.25 3.66 3.76 Balance of Trade +U.24 -0.20 -0.45 -0.73 -0.70 Invisibles (net) -0.01 +0.09 +0.21 +0.17 +0.19 j:alance on Current account +0.23 -0.17 -0.24 -0.6 -0.51 Private capital inflow +0.27 +0.29 +0.35 +o.ho +o.4o Use of reserves (increase -) -U.4Y -0.20 -0.21 -0.07 +0.06 Other (net) -0.01 +0.08 +0.10 +0.23 +0.05 Note: For details see Appendix Table :21 45. Trends in exports have already been discussed in Chapter IV above. Retained imports have been rising rapidly, as a result of increased invest- ment outlays and consumption expenditure. About 60% of all retained imports have been investment goods and most of the remainder manufactured goods and raw materials - although in the last l years imports of food have risen sharply. The adverse trend in the balance of trade and in the balance on current account has been offset in part by considerable private capital inflow (including retained profits of foreign-controlled companies). These inflows, which appear to have exceeded M300 million a year between 1960 and 1963, have been more important than any other factor in financing the current deficit and amount to thrice the public external borrowing during the period. E. The Overall Financial Position 46. The picture that thus emerges from the performance during the 1960-1964 period is dominated by the increase in the overall investnent rate from about 13.5% of GNP to almost 20% of GNP, at a time when real per capita incomes were rising by less than 1) annually, and total savings remained more or less stationary. The increase in investment has been largely by governments and public authorities; private investment appears to have grown relatively slowly, at about 5% a year during the 1960-1964 period, and has been exceeded by private savings. The growth in public investment has actually been accom- panied by a decline in public savings, which poses a serious financial problem for Malaysian Governments. The implications of these developments for public finance and the balance of payments over the coming decade are discussed in the next chapter. VII. MALAYSIA'S OVERALL ECONCMIC OUTLOOK AND CREDITWORTHINESS 47. Between 1960 and 1964 the changes that have taken place in the Malaysian economy have sprung mainly from the growinj activity of the public sector, and, more recently, from the economic and financial merger which is gradually taking place, rather than from any structural change in the economy. In essence the structural problems of the economy - excessive dependence on a few export cormnodities, low rural incomes, etc.. as discussed in Chapter II - are the same as in the mid-1950's. The technical and administrative capacity of Mlalavsian Governments to devote large resources towards removine or alle- viating these problems has however increased, and the strain on Government and national resources which thi has implied has hen qnravated during the past year by heavy 6efence expenditures in the wake of the merger and the Tndontsi n confrontrt.ion 48. The nrnblems which the economy has faced dring 190 are in effect those which Malaysia will have to face for most of the rest of thy decade. Cur rent gOVernment expea-nditre rose rapidAly ar ndl puli sav n. fel P-11 an average of M3580 million in 1960-61 to MS26o in 1964. Public capital Private investment probably rose slightly to around M!r$1,100 million, but of total savings over investment of the 1960-61 period has become a deficit .L J*'JUU U IIL JAfL-LVI, WVL1k.1I -ji~ _LIAktey LV LIUU I11U1UU J-1 _L7UI4 UY cL IM U pJ±. ue capital inflow of MS400 million, public borrowing from abroad of about inflow from abroad has thus played a key role in maintaining the level of prLvateI ivesUIt~imen ti d LII tIU4 dally aIr'll'IualluUup III lult;.Len asev so far. About a fifth of this investment has been in rubber, with an equal J-rx1 if - - - - __3---.-- atuunt in tin, vuy Une remaining 6u'o has veeI III I[maIIULUUL_LIg aiu Otlitr 'jUU which are expected to grow relatively in the future. Roughly a quarter of the private _LLUr±gxI .IVU3WfiUIj1 hLas E)et:!i III ULle 101-111 I U U ia1_IU(2 edrluligj. 1/ Including surplus of public authorities and increase in assets of provident funds. 49. The increase in the investment rate to almost 20% of GNP from about 14% in 1960 has thus been due almost entirely to the activities of the public sector. It has occurred at a time when exports and GNP are expected to be passing through a period of stagnation or slow growth, which aggravates the problem of generating adequate local savings to match the high level of investment. The rate of total investment during the rest of the decade will thus reflect the level of public sector investment, which will, in turn, be related in part to the level of public savings and the ability of the public sector to mobilise additional resources. 50. All these variables, in turn, will depend in part on the way in which exnort earnings develon- As indicated, there is a reasonable basis for fore- casting the trend of export volume. Price orospects, however, are a matter of much grevter inertainty. This is nArtiularly trii- cf rnihher nrics which are, of course, of major significance in any projection of Malaysian economic trnds- Perhans the most likely cne of ruhbor nricn iqn afurther ri-line by possibly 20% during the next four or five years, after which there will be reasonarble stbilit+.'r Ph,i 4q +.) q,_q11Mnf.in th+.i. hasc h-1n mrne KhVCe in assessing ialaysian economic prospects and financing requirements. If the than is assumed here, or if the price were to stabilise at a higher level, then the mediv,i-terin fin,-,cing difficultis would be leS _--t+ t-a is~ -L--e in the discussion below. .M L _L.a±~ .L 4 vc) '~D a. ~ ~ JX' ~.,~'J ± LJ ~IC P _ C L.J tJ JJJU UL> I-I. UL VJU.U_LJ_ ~ UJX O U V L L.U Aku any reasonable forecast of export trends. On the assumption of a decline in .1.U.UeJ. j).JU'~ U P1Y)) d j~JUiU y ± U I , U Vt1: d± U L LMj±e U_L.LLiLt tLt:CL1 borrowin7 seem likely to recur at least until the end of the decade, despite some im-L :- --- -- r U, Z--- m te'. iLcreasesi, unless tere i a radiucal uwnwauu uiange in expenditures. Total current government receipts have grown at the same pace as GNP, and in 196 were at the relatively high level of i42,oU million or 20.3% of GNP. With the 1965 tax increases, 1965 receipts will probably be about 2,2150 million or 21.2,k of 1965 GINP. If tax rates stayed unchanged, and after allowing for some additional revenue as a result of harmonisation of taxes throughout 1alaysia, current receipts would probably reach about MI3,000m. by 1970. It is probable, however, that additional efforts to raise taxes will be made after 196>, and hence total receipts could reach 3,ou20- 3,300 million, or about 24% of projected GNP in 1970. It is unlikely that any significantly larger increase would be possible. 52. Current expenditures will probably grow almost as fast as current receipts. Current defence and police expenditures have already doubled since 1961 and may be expected to grow by another 40% in the next two or three years before stabilising once the military buildup is complete. The current costs of education and health services will certainly continue to increase, while the administrative burden of the larger federation, together with the probable increase in government employeest salaries, will also constitute a further expense. Debt service will probably double by 1970, rising to around 15% of expected expenditures. On the assumption that continued stringency will be practiced, current expenditures may still reach M'2,600-2,700 million in 1970, implying a growth during the second half of the decade of around 35% compared - 17 - with 60. during the first half. Iet annual receipts of the social security systems are expected to rise fairly rapidly from about M$170 million at present to M300 million in 1970 as a result of extensions of coverage, and pub2ic authorities surplus' are also expected to rise from the present level of M$100 million to M$170 million by 1970. 53. On the basis of these assumptions, public savings would rise from a low point of about MS260 million in 1965 to around M.600 million in 1970 - a total in the 1965 through 1970 period of around M1$2,500-2,,600 million. Public investment, on the other hand, could well amount to around 1$7,700 million over that period if financial resources for this level of investment are available. "ublic investment was just short of M$1,000 million in 1964, equivalent to 9.55 of GNP and will probably reach M51,100 million in 1965 and about M$1,300 million by 1967, assuming continued heavy capital expenditure on defence in the 1965-67 period. Perhaps ;1200 million. or possibly more, of this expenditure may be financed by military grants or loans from abroad. After 1967. further growth in oublic canital expenditure may be much slower, and largely confined to the growth in public authorities' expenditure. In accordance with this nrnsnect thp 1970 Thvpl nf nublic investment may be put at about M$1,400 million, or slightly less in relation to GNP than in 1967. The exPnected rise in nrivate investment woild however man thnt total invst- ment remains more or less constant over the 1965-70 period at 21-22% of GNTP, comnared with l) i0in 1900-61 Sh n+.hi5 qassessmernant, t.he puhlcl -c seto uTahol wour ii l thu i ce 5in the problem of financing a gap of around M'q,200 million over the 1965-2970 pe,jrio. Theopotuite fr4domestI~ borringp fronm theq pnriirva scn trrqr limited, but some additional lending from private provident and trust funds, ments to invest locally are made. Of the T$1,200 million net new local borrowing, which is probable over this period,about hafis x-+A V from the banking system. After taking into account miscellaneous grants (4 +1,A -., -4 - --~ -44 -~4 -~ P~A~~~14, the gap which would have to be financed by drawing down public exchange assets the uncertainties over the future revenue position, it would seem neither LL - -t A4_4A 11Vf 1.4 a W Wwl JVL JUUJ.1 se Vor± cashL 'Dal.ances~ loy VI1.44. t-In. ~ ~ ~ million, leaving a residual of i$1,800 million to be borrowed mainly from of debt service to around M4400 million a year in 1970, or roughly 15" of . 1 i ILLLs cLear 61ab 11 Ulle Ign Leveu of puuLwc in1veauIti r1. UvU above is to be achieved, additional resources will have to be mobilised at a rate far exceeuing that achlieved in the recent past. 1nxile the aulity of the public sector to make effective use of this volume of investment funds is not seriously in doubt, the administrative ability of -alaysian governmenUs to prepare a sufficient volume of projects and loan proposals, which meet the 1/ Including the assets now held by the Currency Board as 100% backing for the currency. These assets are expected to be transferred to the Central Bank within two years. needs of the major institutional lenders, has yet to be derionstrated. This has been a bottleneck in the past, and no effective action has yet been taken to improve the situation. Over this period the use of assets cannot prudently be substituted for foreign borrowing, because of the need to preserve sDme modicum of flexibility to deal with the uncertainties of the 1970's. The achievement of the projected level of public investment thus depends, in contrast to the past, directly upon Malaysia's ability to borrow from abroad. Sound management of the reserves might dictate a cut in the investment rate if the projected volume of foreign borrowing cannot be achieved. B. The Overall Financial Position and Creditworthiness q6- The fina;nriql nronects for the economy as a whole are unlikely to be as serious as are those of the public sector. Private investment appears to have risen at nl1v abant < a year over the nast five years. and this rate of increase is assumed to continue until the end of the decade. Private -ziin c hnv hpon cyni -n mnly nTT 1041 ann hqve be0hnn to exceed orivate investment; given also a slow recovery of public savings after 1965, the ovrall&~ saig crat- col Y-Jzo ? f''rn n Inur nnvint of' nrniincl 1 - of' GNP in 1964-65 to 17-18% in 1969-70. Total investment expenditure will however tend to rise P-+ +Jinn total im~+Al1 04A-A7, dliring thei mnilitanrr buiildup,n and as a result the overall gap between investment and national savings may rwiAen fro-- ;,nAMCA 41m n i0AL . MtRor.o 00 iln ranny ivi 10AE 47 before declining to perhaps 14$600 million in 1970 - giving a total resource gap for +I-e -.1I4( +ho g '7n per:J-1 of -Vo,,+ AnrI1, ) I * ii. ~~~~~~ ±e:Vf;1_ 01 ±ive - IeL. -- I U %,CL Ajei.L .1 ~ II LA" CuL .1 then it is likely that retained imports will continue to grow. In the past .four1 years±, retc"ieU.LIj0 U~ Ll~ U ~ uei d ILUu Udji 1) cui cu 4,1/0 0.u-L itU of investment expenditure plus private consumption expenditure. Although some import sUbiuv.ua LU prjeceu tou occur, an average current balance-of- payments deficit of about 1,$800 million a year is likely to emerge over this periou whicu is equivalenu o about O of. average UNP. A drawduown Li pubic sector foreign balances of perhaps M$1,600 million as contemplated above, wou"u reduce net foreign assets uo a level of about Mlu,(U7 millon, or about $ months' retained. imports in 1970, a level which should be regarded as a ini±xwiunia1, given Wte UnUt1a.LU_eJ dUUU nalayalE long-run exporu perlurualce. Any exceptionally rapid drawdown of reserves, or a drawdown much in excess of the projected amount, might jeopardise the flow of private capital from abroad, which otherwise will probably total P11,600 million net,an average of M U250 million a year over the period. This assumes that Malaysia will maintain as favorable an investment climate as now exists. After allowing for grants and other capital receipts of around 14300 million over the period, the volume of borrowing from abroad necessary to hold the fall in reserves to the above level will probably be about M$1,600 million, or M$267 million a year - aliost four times thepresent average rate. Assuming that there is no slump in her major exports, Malaysia's ability to service an additional debt burden of that magnitude is not in doubt in view of the favourable long-term prospects for economic growth and export expansion. Service on existing debt is now less than 2% of export earnings, and would rise to about 6,, of projected export earnings in 1970 if an additional M$1,600 million of debt were to be incurred over the next six years. - 19 - 58. Malaysia is thus making an attempt to raise the investment rate, through accelerated public investment, to a level well in excess of the present level of savings - thus creating a serious potential financing problem both in the public sector and for the nation as a whole. It is probable that the financial situation will be aggravated by the expected steady decline in the rubber orice to MZ55 a pound by 1970 - the assumntion which is used here. Even if prices stayed at or near their present level of M/69, a financing problem would nevertheless exist. although it would be less severe. This can be traced, in part, to the pattern of investment in the recent past, in that heavy investments have been made in crons and other canital goods which have long gestation periods and long lives, and which therefore require a long interval before nroducing a strenm of income and savings. 59. Ass,.umi ng that, f inanc-i ng d1iffTicu-lte do,qi nnt. -,I nw th P rnt e of' investment, the prospects for the 1970's, on the assumptions used here, are more favorable PA thp Pnr nf thp decade the resumntion of orowth in nPr capita GNP should enable the private savings rate to increase after a period of st.anation This, nether with imnprved nnnoect for niblin :vinr should tend to reduce the resource gap to manageable proportions. If the Eor rowing requ() J-n ±.o -.1 on±iU -OI rrj- or, ton n* 1~1obu iul!, LL UL prices of natural rubber will fall from their present level of 69MI a pound Uo a leve1 0f 55Mp a pouna in 1970, the value of production of rubber wil remain at about its present level, or may rise slightly. 6. In Sarawak the position is less satisfactory. Average production has shown no trena out nas fluctuated since 1959 between 43,000 tons arid 50,000 tons; the value of production has declined. The industry in Sarawak consists entirely of smaliholders, whose care of trees and surrounding areas is poor and rubber processing rethods often primitive. As a result average yields are low - in the region of 350 pounds per acre, or about 60 of the average yield in Malaya. A subsidized rubber planting scheme was introduced in 1956, but only 25, of the planted area in 1963 was covered with high- yielding rubber. Only a small increase in physical production is likely between 1963 and 1970, and the value of production is therefore likely to drop from an estimated !T69 million in 1963 to M$4 million in 1970. As a result rural incomes are likely to fall during the rest of the decade, but accelerated planting now will enhance incomes in the early 1970's. 7. In Sabah where 38% of total rubber acreages is on estates, replanting has been widespread. Although the government subsidy is the lowest in Malaysia at Mlvi ,20 an acre - in 1962, 46% of the total rubber acreage was under high yielding clones. Much of the high-yielding material has not yet reached maturity and rubber production has been stagnant over the last five years (23,000 tons in 1959 and 21,000 tons in 1963). Since 1962, production has been held down by an acute labour shortage, and it is estimated that 10,000 more laborers are needed to exploit tapped acreage efficiently and 20,000 more will be needed as new rubber comes into production. If this labour problem is solved it should be possible to double physical output between 1963 and 1970. This would raise the total value of the rubber crop from MQ3L million in 1963 to around Mo53 million in 1970. It is quite possible, however, that the shortage of labour will persist and that the increase in production will be considerably less. Prospects for the Malaysian Rubber Industry 8. Competition from the synthetic rubber industry remains strong; ..U CIF C 3 UIl U 0,YAU1=- U-L%, 1 LAU'CL 4.11 ..7li.14 1±1o ti .L±At. .1 L '.1 ~ Vl .S.C.I and secured an increased share (about 59%) of total rubber consumption, out- S-Lutz Wiiu UU1111I1UILLOU UVLU .UZL )* h 111 10ur,proent- 0LI,u C:Y---. 0V~±u-PCL%'.LVY in the synthetic rubber industry continues to exert a depressing influence on Sy1tI L yers wich it p l U aIUccu tUs foruuILdi ruUUL 1IZ±U Up rVela e so 11 Ui pc.U two years, which probably accounts for the relatively slow price decline. In fact. the consumntion of natural rubber has remained steady and exceeded production since 1961, and stocks had to be significantly reduced in 1963. A further smnll rediintion in stocks is ereneterl this year. 9 * The inreanningr rnag o)f usstro which nthetic rubbe-Pr (..n hin tailored had led to a technical fragnentation of demand, and in the fields in iThi -h nq.va 1 riihho"v Ty-in- r Yn i +TrA l -, Int+Mir .Q.. q-r imrrT+.n. The importance of the introduction of high-yielding varieties lies in the woredcinn of un i + a tell as in +he increnn in +he volume of nnrdt- ion. All available data indicate that the alaysian industry can withstand afall in price to '50Mp a pound or even 'leSS, 0A is in fact better sitc!+atedw to meet the expected excess of productive capacity in natural rubber towards the~ ' end- of~ +-I,-- decade than.i are outer prduin natI.L1 ions JJI. T-FL +'k- __-; L_ --VJ to fall to 50-55M at the end of the decade, it is unlikely that many estates or snjaL_LIVI.LULLjVO LII rict-LCLya VLU_U j±U V L U± jJI_U%UI..LV4.II, jJCI U_LU±d.±I_,y ISLVtC:J UAII: poor alternatives for the use of smallholders land and labour in many an a± LId: tit _LC id ±UUI U d IV 'futl IU±y UVu-LI £i~~dU Uy e-UVUU -LC/) CO- result of the recent wage agreement, and may increase further when wages are renegoLauu o in 0; ne new payroll tax will also I ve tle UfUeC o0 increasing costs, so a cost squee2e is certainly in evidence and efforts will have to continue tu improve efficiency in producULon anu mnaxUe u±ng. It i0 Z bi±! likely, though, that tapping will continue except on low-yielding areas where returns at prospective prices woul.a not cover tapping and processing costs, or which could be converted to other crops without large capital losses, Production might fall in the Borneo ctates, nowever, where smallholders nave shown a much greater propensity to abandon tapping at times of low prices, and where new investment in hign-yielding varieties has been low. 10. Given these assumptions, and also assuming that Sabahts labour problems are solved, the volume of alaysian production is likely to rise from 80,000 tons in 1963 to around 1.2 - 1.3 million tons by the end or the decade. By 1975 production will probably have reached 1.6 - 1.7 million tons. The average export value of production over the next four or five years will probably be a little less than in 1963 (I$1,370 million) but should start to grow, attaining around M:1,500 million by the end of the decade assuming the price will fall steadily to 5511 a pound. Palm Oil 11. Malaysian palm oil production is at present almost entirely concentrated on estates in mainland 1alaya, where production has risen from 70,000 tons in 1958 to 124,000 tons in 1963. Production has, however, fallen in 1964 because of strikes. The value of exports is small compared with rubber, reaching MvS68.0 million in 1963, yet palm oil is now the fifth largest export. The increase in production and acreage is expected to continue, with production reaching 16,000 tons by 1966 and 239,000 tons by 1970. Yields per acre on the better estates have exceeded expectations, reaching 10 tons F.F.B. per acre. Given the improved yields and the swift attainment of maturity (now 21 years) the rate of return on investment in oil palm appears to be significantly higher than the rate of return on investment in rubber, even on soils which are ideal for rubber but only average for oil palms. These recent developments have confirmed oil palm's position as the best alternative crop to rubber, although it is unsuitable for smallholders except on large cooperative schemes, such as are now being unrIrhrtakLen hv tht FPdirql T.nri DvPlornmtnt Anuthorit.- or on the frinr_s of large estates. Further planting in the States of Malaya depends in part on th- nmiint of Inn nliann+ol 1- +. hr t .tq a nrn-rnmnnt.q Twhi ch hnlvp Inna been reluctant to alienate additional land for estates. 12. Extensive plantings of oil palm have recently taken place in acreage is irmature. Production in 1963 amounted to only 56 tons, but this f.;--, -I- to +,. 000 to- Jn -44 andA 'Ic)A. 000 to n '10W) In Sarawak fairly large areas have been found to be suitable for oil palms CLAS J'A L A _LO± L.--LLr UCII±LUU kJUU* F.L_ULGLI_LY, -L",VJWS 14. - Direction of Trade 1958-1963 15. - a) Import and Export Price Indices and Terms of Trade b) Consumers! Price index 16. Singapore- Entrepot Trade 17. Malaysia - Estimate of Gross National Product and Expenditure 1958-1963 18. i" - Composition of Consumption Expenditure 1958-1963 19. " - Expenditure on Gross Capital Formation by Type 1958-1963 20. Malaya - Gross Domestic Product by Industry of Origin in 1960 Prices 195-1963 21. Malaysia - Balance of Payments Estimates 1960-1963 (continued) D. Public Finance Statistical Note on Public Finance Tables 22. Mala9sia - Summary Overall Accounts of the Central and State Governments and Public Authorities 1959-1964 . - Regional Breakdown of Public Finance 1963 24. - Federal and State Current Revenues 1959-1964 . - Federal and State Current LX-penditures 1959-1964 20. - Consolidated Capital Expenditures of Federal and State Governments and Public Authorities L959-1you 27. - Federal Government - Summary Accounts and Sources of Finance 1959-19%o 28. Malq,sia - Holders of Federal Government Debt 1959-196L 29. Singapore- State Governmen. - Holders of Public Debt 1960-1964 E. Money and Banking 30. Halaysia - Gold and Foreign Exchange Reserves 1953 and 1959-1964 31. " - Estimated i-Ioney Supply 1960-196h 32. - Assets and Liabilities of the Commercial Banks, 1957-1964 33. - Commercial Banks - Classification of Loans and Advances, June 1964, by Region and by Purpose r jAU.L'W1U_L _UL)_L.LU; 1JUtL)k, UutiudA."I g _L1_U .1V U11U±L LULLU,jtU As Of June 30, 1964 Debt Repayable in Foreign Currencies "In thousands of u.S. aollar equivalents) Debt as of June 30, 1964 Gross Net of sinking fund Item Net of Including Net of Including undisbursed undisbursed undisbursed undisbursed TOTAL EXTERNAL PUBLIC DEBT 227,502 309,73 200,927 282,898 Publicly--issued bonds 69,059 69,059 48,210 h81210 IBRD loans 28,350 103,094 28,350 C,094 U.S. Government loans (DLF) 15,535 16,924 15,535 16 924 Loans from other governments 114,558 120,396 108,832 114,670 Brunei 60,550 60,550 55,179 $5,179 Hong :ong 6,122 6,122 5,767 5,767 TT-:+ v.v-,.,.w 1.7 QQ/. ).Q 1.'71. 1.7 P04 I.Q 1.71, U11_-C; i1LAG,Lum1 41,uuv 4w r ,u u,4 1 U%jL U 41 Statistics Division IBRD-Economic Department December 7, 196 Table II MALAYSIA - Estimated Contractual Service Payments on External Public Debt Outstanding including Undisbursed as of June 30, 1964 1/ Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) GRAND TOTAL Debt Outstanding at Beginning of Period Payments During Period (including Year undisbursed) Amortization Interest Total /3/ 196h 282,8981~ 7,271 9,312 16,583 196 2 p,5 7,373 96817,341l 1966 271,765 7,805 10,225 18,031 1967 262,955,- 8,497 11,661 20,158 1968 252,200 10,227 12,828 23,055 1969 240,796 15,850 12,354 28,20,1 1970 223,697 13,223 11,557 24,780 1971 209,391] 10,514 10,952 21,466, 1972 197,945 13,780 10,353 24,133 1973 183,212 27,270 9,211 36,481 1974 15,992 9,382 8,229 17,611 1975 144,651 9,548 7,879 17,427j 1976 134,075 27,539 6,903 34,43 1977 105,752, 7,05 5,908 13,723 1978 97,20 8,189 5,507 13,695 PUBLICLY-ISSUED BONDS Debt Outstanding at Beginning of Period Payments During Period Year Gross Net Amortization Interest Total 1964 69,059 48,210 572 2,866 3,437 1965 69,059 47,605 642 2,821 3,463 1966 69,059 46,295 642 2,821 3,463 1967 69,059 4h,942 654 2,821 3,h75 1968 69,059 h2,369 654 2,821 3,475 1969 69,059 hO,926 654 2,821 3,475 1970 69,059 39,435 h,Oho 2,531 6,571 1971 49,739 34,746 441 2,242 2,683 1972 49,739 33,858 hl 2,242 2,683 1973 49,739 32,938 13,723 1,787 15,510 1974 35,739 18,703 371 1,332 1,703 1975 35,739 17,809 371 1,332 1,703 1976 35,739 16,882 11,909 91 12,823 1977 7,893 4,626 79 496 575: 1978 7,893 4,425 79 496 575 (continued) JTable iI continuea) - 2- MALAYSIA - Estimated Contractual Service Payments on External Public Debt Outstanding Including Undisbursed as of June 30, 1964_/ Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) IBRD LOANE Debt Outstanding at Beginning of Period Payments During Period (including Year undisbursed) Amortization Interest Total 2/ 1964 103,094~ 812 1.575 2,387 1965 102,687 867 2,16 3,012 1966 101,820 1,223 2,5å5 3.769 1967 100,596 1,823 4,127 5,950 1968 98,773 3,70 5,46J 8,91L 1969 95,303 3,663 5,255 8,9:18 1970 91.60 3,872 5.O5 8.917 1971 87,769 4,079 h,826 8,906 1972 83,689 ,312 ,5996 8,908 1973 79,377 h,557 h,352 8,909 197) 7) 20 1,775 ,095 8,70 1975 70,045 4,883 3,828 8,7:11 1976 65,161 g,166 3,551 8,718 1977 59,995 5,455 3,259 8,714 1978 5f,5141 -759 2,951 8710 U.S. COUPMNMIV' T.nLäm Debt Outstanding at Beginning of Period Payments During Pro (including uea und -:iMUrs- 0ed)N Am- o r ti-z ation1- Inteest To tal 1961 69 ,4 551,869 1965 16,251 1,382 557 1,939 1,694 1, 508 1, 93 1967 13,1439 1,M81 458 1,939 196 11,Q n1, 53.3 .r 1 ,3 _L7JU A-L , 7n 14v;> -L, 7~) 1969 10,1425 1,587 351 1,938 1970 08 , 0 839 7 295 1 ,2I2 1971 7,891 278 274 552 4UU C-U4 1973 7,325 298 254 552 1974 7,027 309 23 552 1975 6,718 319 232 551 1976 6,399 331 221 552 1977 6,068 343 209 .552 1978 5,725 355 197 552 (continaed) (Table II continued) - 3- MALAYSIA - Estimated Contractual Service Payments on External Public Debt Outstanding Including Undisbursed as of June 30, 1964 1/ Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) LOANS FRXM OTHER GOVERNMENTS Debt Outstanding at Payments During Period Beg inIg of Period Year Grcs Net Aortization Interest Total 196h 120,396 11,670 ~ 4,553 4,336 8,889 1965 119,778 113,512 4,482 4,445 8,927 1966 116,159 108,780 1 .I 14,351 8,860 1967 112,512 103,977 4,539 4,255 8,7,94 1968 18A36 99,099 1,571 J,157 8728 1969 105,128 94,1142 9,946 3,927 13,873 1970 9,784 83,78 4,363 3,686 8,049 1971 91,218 78,985 5,715 3,610 9,325 1972 85,83 72,785 8,739 3 91 11,990 1973 76,566 63,573 8,691 2,819 11,510 1974 67,216 51,14142 3,926 2, 6,- 1975 63,942 50,079 3,974 2,487 6,462 1976 60,621 I 4,3 1c0,33 2,16 12,3I9 1977 16,160 35,062 1,938 1,913 3,881 1978 1 .. 712 3728 1 ,o 1 3 .11/ Inluues service na dubs included in Tale I Lpere December 7, 1964. 2/ Amount outstanding for 1964 is as of June 30, 1964. Payments are for the calYna year U1 3 .Grossbe leSS appL.Ua.le SiI116 fu.LU. L4/ Uross debu less appicLLtte fii fund. Luoans from Brnunei and Hong Kong are being redeemed in part by contributions to a sinking fund. Statistics Division IBRD-Economic Department December 7, 1964 Table 1 MALAYSIA -, Land Use and Area 1962-63 (Sq. miles) Total States of Malaya Singapore Sabah Sarawak Malaysia Rubber .................................... 6,250 10 '362 570 7,192 Rice ...................................... 1,540 -- 143 440 2,123 Ccnt............. 8 142 86 1,036 Oil Palm .................................. 275 -- 10 -- 285 Pepper .....................................-- -- -- 11 11 Sago ...................................... -- -- 6 140 143 Fruits .................................... 340 3 9 16 368 Shifting Agriculture ...................... - -- 1,000* 8,450+ 9,450 Other crops and fallow land ............... 600 39 68 169 876 Fcrost Reserves ........................... 13,350 -- 9,980* 11,550 34,880 All other land ............................. 27,545 160 18,568 26,818 72,194 Total ................................ 50,700 220 29,388 48,250 128,558 * Rough estimate + Excluding hill padi Source: Information from Agricultural Departments of the various regions. Table 2 MALAYSIA -Estimated Population by Age-group and by Race, end-1963 States of Malaya Singapore Sarawak Sabah Malaysia Total No. No. No. No. No. A. AGE-GiAUUP 0-4 ................... 1,326 17.3 327 18.1 151 18.7 95 18.9 1,899 17.6 5-9 ................... 1,173 15.3 274 15.2 133 16.4 79 15.9 1,659 15.4 10-14 ............. 988 12.9 226 12.6 84 C).4i 48 9.6 1,346 12.5 15-.19 ........... 741 9.7 143 7.9 72 8.8 41 8.3 997 9.3 20-.29 ...........1,127 14.7 267 14.9 115 14.2 84 16.8 1,593 14.8 30-39 .................. 813 10.6 210 11.7 96 11.8 65 13.0 1,184 11.0 40-.49 .................. 651 8.5 161 9.0 72 8.9 44 8.9 928 8.6 50-.59 .................. 467 6.1 117 6.5 46 5.7 24 4.8 654 6.1 60 and over ............ 374 4.9 74 4.1 41 5.1 19 3.8 508 4.7 TOTAL .............. 7,660 100.0 1,800 100.0 810 100.0 499 100.0 10,769 100.0 B. RACE 1/2/ Malays............... ,837 50.1 254 14.1 142 17.5 32 6.4 4,265 39.6 Chinese .............. 2,841 37.1 1,352 75.1 255 31.5 117 23.5 4,565 42.4 Indians and Pakistanis 843 11.0 143 8.2 -- -- -- -- 991 9.2 Sea Dayak ................-- -- -- -- 254 31.4 -- -- 254 2.3 Kadazan ................ -- -- -- -- -- -- 160 32.0 160 1.5 Other indigenous...... 4 -- -- -- 150 18.5 177 35.5 331 3.1 Other non-indigenous 135 1.8 46 2.6 9 1.1 13 2.6 203 1.9 TOTAL (all races)... 7,66o 100.0 1,800 100.0 810 100.0 499 100.0 10,769 100.0 Percentage Distribution .. 71.1 16.7 7.5 4.6 100.0 1/ Includes Indonesians 2/ Mainly Indonesians Source: Adaptation of official Projections based on latest census in each region. Net mgaini xldd T ab I e Economically Active Population of liallsia (thousands) States ofj2' / 31 Estimated M -ya Singapore ) Sarawak Sabah Total -- 1962 No. ~ No.o No. No. ; Agriculture, forestry, hunting and fishing .............. 1,290.3 54.3 40.2 8.4 239.6 81.4 142.1 80.5 1,735.3 50.8 Mining and Quarrying ............47,.7 2.0 1.6 0.3 -- -- 48.7 1.4 Manufacturing ..................162.9 6.9 66.8 13.9 11.5 3.9 6.7 3.8 262.2 7.7 Building and Construction 50.3 2.1 24.6 5.:1 4.6 1.6 4.5 2.5 90.0 2.6 Electricity, Gas, Water and Sanitary Services ........ 8.8 0.4 5.6 1.2 -- -- -- -- 15.8 0.5 Ccmmerce .......................318.7 13.4 121.5 25.3 13.8 4.7 7.7 4.4 506.5 14.8 Transport, Storage and Ccmmnications ............ 81. 1 3.4 50.3 10.5 .6 1.9 4.7 Services .......................412.7 17.4 161,.3 33.6 16.3 5.5 10.1 5.7 605.7 17.7 Others ........................ 1.9 0.1 8.3 1.7 2.9 1.0 0.8 0.5 7.8 0.2 TOTAL .................... 2,374.4 100.0 480.3 100.0 294.3 100.0 176.6 100.0 3,414.0 100.0 l/ Age 10 and cver in Singapore; age 15 and over elsewhere. I/ Results of 1962 Sample Survey of Emplcyment, Unemployment and Underemployment. 3/! At the time of the most recent official census (Singapore 1957, Sarawak and Sabah 1960). 4/ The total consists of the actual 1962 data for Palaya plus the census figures for th new States raised by the estimated percentage popu2ation increase between the census date and 1962. Table 4 MALAYSIA - Progress in Education 1953-1963 Regional Breakdown - 196' States of Singa- Sara-, 1953 1960 1961 1962 1963 Malaya pore wak Sabah 1964 est. Enrolment, (000 's) Primary Schools ............... ..922 1,526 1,631 1,655 1,690 1,178 343 106 63 1,741 Secondary Schools ............. 106 230 263 291 339 231 83 18 7 383 Others ......................... O 2 3 27 25 21 3 0 0 30 Total .................... 1,028 1,758 1,897 1,973 2,054 1,430 429 124 70 2,154 Enrolment as a % of total. population 13.2 18.0 18.8 19.0 19.2 .18.8 24.2 15.C 14.1 19.5 Enrolment as a % of schoolage population ................ 57.7 71.3 72.6 71.8 69.9 68.4 90.0 53.4 51.3 71.2 Secondary school enrolmett as a o of total enrolment ........ 10.3 13.1 13.9 14.7 16.5 16.2 19.3 14.5 10.0 17.8 Pupil/Teacher ratio ............... 32.1 28.4 28,3 27.8 28.1 27.4 30.0 30.5 28.2 28.3 Average enrolment per school ..... 177 239 257 257 267 260 701 118 135 278 Literacy rate - latest census .... 51 52o 25% 24% Estimated Expenditure on Education (M$ million) Current expenditure .......... 275 305 349 389 261 98 19 11 434 Capital expenditure ........... 25 46 67 76 50 14 7 5 99 Total ...................... 300 351 416 465 311 112 26 16 533 of which: 1/ Expenditure on Higher Education 34 61 68 84 58 20 3 3 94 Expenditure on ot.her schools 266 290 348 381 253 92 23 13 439 Total expenditure as a % of GNE 3.7 4.0 4.4 4.6 4.8 4.0 5.8 5.0 5.0 Financed by: (1$ million) School fees in Government and aided schools 26 27 15 19 10 3 3 3 23 Funds provided. by Central or Local Governments223 244 312 339 225 86 18 10 390 Other ......................... 17 19 21 23 18 3 2 0 26 Average expenditure per pupil in aided schools 147 153 178 182 171 216 192 185 204 Total per capita expenditure on education (M$) 31 35 40 43 41 -64 29 28 48 Table 5 Malaysia - Estimated Output of Selected Agricultural Products (1959-1963) Regional Breakdown 9- 93 192 1960 1961 1962 1963 States of Singapore Sabah Sarawak Mal aya _ Rubber (Th. tons) 764.0 780.0 807.6 817.3 ö50.5 782.9 1.8 21.2 44.6 Rice (Th. tons) 539.1 662.3 710.9 679.3 726.1 623.8 - 42.2 60.0 Palm Oil (Th. tons) 71.5 90.3 93.3 106.5 123.6 123.6 - - - Pepper (Th. tons) 8.4 4.1 10.9 11.5 11.7 - - - 11.7 Coconuts (Th. tons copra equiv.) 153.4 203.0 194.9 165.3 163.7 130.0 2.5 18.3 12.9 Pineapples (million lbs. received by canneries) 315.0 325.0 368.0 408.0 n.a. Fisheries (Th. tons landed) 147.0 167.0 178.0 196.0 210.0 184.0 9.0 17*1 Livestock (Th. Head) Buffalo and Cattle 663.0 673.0 680.0 677.0 n.a. 574 (1962) - 81.0 22.0 Pigs 1,424.0 1,454.0 1,552.0 1,610.0 n.a. 492.0 750.0 81.0 287.0 Goats 305.0 298.0 305.0 316.0 n.a. 287.0 18.0 11.0 */ Rough estimate Sources: Information from Agricultural Departments of the different regions. Table 6 States of Malaya - Rubber Statistics 1953-1964 Planted Acreage Production Yield per Small- Small- Tapped Year Estates holdings Total Estates hc,ldings Acre - Estates (00 acres) (ooo long tons)(pounds) 1953 2,041 1,614 574.4 341.8 232.6 470 1954 2,028 12,629 586.5 345.5 241.0 480 1955 2,025 1,650 638.7 352.5 286.2 490 1956 2,(17 1,686 626.0 351.6 274.4 496 1957 2,020 1,710 637,5 368.6 268.9 535 1958 1,989 1,766 662.9 390.1 272.8 586 1959 1,950 1,839 697.8 4o8.0 289.8 641 1960 1,942 1,892 708.4 414.1 294.3 676 1961 1,945 1,968 736.7 429.5 307.2 719 1962 1,933 2,064 751.6 439.2 312.4 745 1963 1,925 2,115 784.7 455.5 329.2 780 196h (Jan.-Aug.) -- 52h.9 299.5 225.4 -- Average Singapore Export Unit Year Fxnorts Imports Price R, S £ #1 Values (000 long tons) (Malayan cen prlb.) (Malayan per toný 1954 612.1 27.1 67.3 1,476 1q5 659.5 33q3 lb) 2 2,!02 1956 649.4 43-7 96,8 2,122 1957 655.1 379 88 ,991 1958 690.2 56.1 80-,2 1,735 1959 782.9 53.3 lo,6 2,1Q 1960 766.8 70.7 108.1 2,385 1961 790.6 6.9 83.5 1,82h 1962 791.0 67.3 78ý2 1)729 1963 841.5 53.2 7204 1,633 1964 554.5 26.8 67.C - Source: Department of-Statisticf Mla TWb1e 7 First half 8 1956 1922 L960 196 1, 1962. 12LI '2( . Production of Tin-in-Concentrates (Th. tons): 26. . by Drdging 28.6 30.7 28.1 19.9 18.9 28.0 29.6 28., 27 12.2 by Other Rethods 27.7 31.6 31.2 18.6 18.6 24.0 26.4 30,1 32.4 17.5 Total 56.3 62.3 59.3 38.5 37.5 52.0 56.0 58.6 59.9 29.7 Number of Tin Mines Operating: 78 76 34 43 69 72 63 65 64 Otrergs 764 710 3 ,9?26 Drdgh 553 706 662 383 438 522 624 639 644 710 Total 629 784 738 417 483 591 696 704 709 77+ Approximate, Export Value of Production (p mllOns) 343.4 405.1 371.7 238.6 250.2 343.8 420.6 440.9 458.6 270,5 Iron Ore Production (Th. tons) 1062.7 2444.6 2972.4 2795.3 3760.7 5640.3 6733.5 6507.3 7264.5 3207.1 Exports (Tb.. tons) 1018.3 2389.3 2919.7 2591.4 3772.3 5500.2 6435.1 611.1 65810 Value of Exports (M$ millions) 20.5 51.2 65.3 62,6 99.9 140.2 163.8 166.2 176.3 Average Unit Value (M$ per ton) 20 21 22 24 26 25 25 26 2? Bauxite Exports (Th. tons) States of Mlalaya 135.4 259.1 340.6 246.6 363.8 448.0 284.4 314.9 450.5 Sarawak 0 0 0 92.8 202.9 260.1 256.4 198.7 172.2 63.0 Total 135.4 259.1 340.6 3:39.4 566.7 708.1 540.8 513.6 622.7 Value (M$ millions) 2.8 4.8 6.4 5.8 10.4 13.0 10.6 9.7 11.0 (Table 7 continued) - First half ~ 1957 ~9j lQ164, 1964 Sarawak Petroleum Production (Th. U.S. bbls.) 351.5 508.8 474.5 410.4 396.6 433.3 435.5 418.2 372.5 178.7 Value (14 millions) 2.5 3.8 3.6 3.2 2.9 2.7 2.6 2.5 2.3 Other Mqinig Value of Production (excludes quarrying) 17.0 16.5 12.1 13,9 8.4 10.5 15.6 8.0 25.0 Total Value (approximate) 386.2 481.4 459.3 324.1 371.8 510.2 613.2 627.3 673.2 Jual . Af. rrddy - x q.I 4- 4±. nY tf -ie- A. Production and Trade (thousand long tons) Year Production Imports ExpCnrts Concentrates 2 Metal Total 1953 56.3 6.0 27.1 35.1 62.2 1954 60.7 8.2 31.5 37.3 68.8 1955 61.2 10.8 33.9 37.9 71.9 1956 62.3 10.9 20.0 52.4 73.0 1957 59.3 13.9 19.4 50.4 69.8 1958 38.5 7.9 6.3 38.5 44.8 1959 37.5 8.7 .7 44.1 44.8 1960 52.0 20.7 .3 76.3 76.6 1961 56.0 16.6 .4 74.2 74.6 1962 58.6 25.3 .5 81.3 81.3 1963 59.9 20.2 .5 84.6 35.1 1964 (Jan.-June) 29.6 5.0C.42 37-C2/ 37.32/ 1/ Tin content of concentrates. 2/ Estimates B. Tin Prices London-Upsh New York-prompt bingacre-ex--wvrks (L/lng ton) (US cents/lb. (M$ per picul) 1953 731.7 95.8 363.9 1954 719.4 91.8 353.6 1955 740.1 94.7 365.5 1956 787.7 101.2 387.0 1957 754.8 96.2 373.2 1958 734.9 95.1 369.3 1959 785.4 102.0 396.9 1960 796.6 101.4 393.8 1961 888.6 113.3 447.7 1962 896.5 114.6 447.8 1963 909.7 116.6 455.4 1964 January 1041.0 134.0 523.3 June 1183.0 149.0 588.8 end-October 1681.0 215.0 845.0 end-November 1448.0 185.0 739.0 Source: International Tin Study Groun and Denartment of Statistics States of Malaya. Table 9 Malaysia - Forestry Regional Breakdown --1963 199 1960 129 19_62 16 M y2 b Sarawak Volume of Pr oductioný 1/ Timber 81 154 209 22? 240 292 110 122 60 Poles, firewood and Charcoal n.a. 28 27 29 27 26 22 2 2 Total 182 236 256 267 318 132 124 62 Volume of Timber Exports Logs 13 60 74 96 110 134 neg. 103 31 Swin Timber 16 32 46 38 41 48 34 neg. 14 Total 29 92 120 134 151 182 34 103 45 Value of Timber Exports (M$ millions) Logs 16 69 99 119 144 179 neg. 149 31 Sam Timber 29 52 91 63 66 86 62 1 23 Total 45 121 190 182 210 265 62 150 54 of which Sabah 12 61 91 103 122 150 Average Unit Value $er cu. ft.) Logs 1.29 1.15 1.34 1.24 1.32 1.34 ri.a. 1.44 1.01 Sawm Timber 1.76 1.62 1.97 1.66 1.61 1.77 1.83 1.80 1.62 Approximate Total Value of Production (MS millions) 150 220 370 340 350 450 200 180 70 1/ All volume figures are estirmated true volume in millions of cubic feet. 2./ Includes Singapore. Source: Forest -Departments of the various regions. Table 10 Dutpt of Selected Industrial Products (States of ial2ya + Sin anore) 19 8 19,59 1960 1961 1962 12L Rubhbr Proce-sing Ribbed Smoked Sheet - Thousand Tons ................ 37.2 78.8 68.2 60.7 40.5 30.6 Remilled - Thousand Tons ........................... 130 141 168 185 207 193 All Rubber Processing - Value Added M$ millions ....... n.a. 50.2 85.,9 65.4 74.3 n.a. Rubber Products Footwear - million pairs ........................... 13.2 16.0 18.9 19.4 20.0 22.5 Compounds - million lbs. ........................... 3.3 3.5 4.1 4.0 3.7 4.5 All Products Value Added M$ millions ................ n.a. 14.9 17.6 18a5 18.2 n.a. Soft Drinks - million gallons ...................... 18.5 18.8 20.2 21.6 21.3 24.3 Beverage Industries - Value Added M$3 millions ......... n.a. 29.6 30.8 41.1 39.0 n.a. Biscuits - Thousand Tons ........................... 19.3 23.6 24.8 25.1 25-7 25.3 Soap - Thousand Tons ............................... 30.1 26.9 28.7 28.9 28.2 30.4 Cigarettes, Cigars, etc. million lbs. .................. 5.3 8.7 13.2 15.6 17.3 19.8 All Tobacco Products, Value Added M$ millions ......... n.a. 15.0 25.5 27.7 39.9 n.a. Sawn Timber '000 Tons of 50 cu. ft. ................... 661 688 907 899 943 1046 Wood Products, cL.. sawmills, Value Added M$ millions n.a. 38.7 49.4 47.5 52.1 n.a. Bricks - millions ..................................... 138 117 121 137 172 183 Cement - (states of Malaya only) Thousand Tons ........ 108 190 282 326 321 356 Electricity (Staties of Malya) Iillion E Conswriptio)n Tinr Tr Ind Dredges ..............................385 366 551 628 673 684 Other 11ines ........................................ 20 1 19 24 23 24 (Table 10 continued next page) (Table 10 continued) - 2- 1958 199 1960 1961 1962 1963 Electricity (States of Malaya) Industri al and Commercial ....................... Lighting and Domestic Power .......................... 181 211 233 255 279 308 Total Consumption ................................. 792 820 1066 1209 1323 1429 Electriditv (Singapore) Million KW,H Consumption Industrial and Commercial Power .................. 254 263 284 3c6 331 328 Doestic Power ...................................... 148 162 178 198 212 234 Private Lighting .................................. 81 89 104 120 133 148 Public Street Lighting ............................ 10 10 11 12 13 14 Total Sold ........................................... 492 525 578 637 690 724 Total Consumption (States of Malaya and Singapore) 1284 1345 1644 1846 2013 2153 1/ Excludes rubber processed on estates. Note: No comprehensive industrial data ex.ist, The follol,!ing partial sources were used. It should be noted that the Singapore Industrial Census only includes establishments employing more than 10 people. Scurces:a) Monthly Statistical Bulletin of the States of Malaya. b) Singapore Monthly Digest of Statistics. c) Survey of Manufacturing Industries - Federation of Malaya (1962). d) Censuses of Industrial Production ·· Singapore 1959, 1960, 1961, 1962. Table 11 Malaysian Balance of Trade_by S.I.T.C. Section_1 _5.963 -FMT millions) Machinery Misc. Food Beverages Crude Mineral Animal and and Manu- and Live and Materials fuels and Vegetable Transport factured Unclas- Animals Tobacco Inedible Lubricants Oils and Fats Chemicals Panuf actur douimnent Atias g sifi:ie Total Laports (c.i.f.) 1026 143 716 939 14 179 622 385 231 96 4352 Exports (f.o.b.) 323 35 2142 596, 108 37 450 63 :38 212 W003 Balance - 703 - 108 + 1426 - 343 + 94 -142 - 172 - 322 - 193 + 116 - 349 Imports 955 12E 967 886 19 192 573 366 221 77 4384 Exports 252 28 3071 555 96 30 414 54 25 200 4726 Balance . 703, 100 + 2104 - 331 + 77 -162 - 159 - 312 - 196 + 123 + 342 Imports 999 128 1064 852 20 219 652 476 276 105 4790 Exports 262 32 3180 527 103 31 620 59 28 190 5032 Balance -737 .96 + 2116 - 325 + 83 -188 - 32 - 417 - 248 + 85 + 241 Imports 1053 152 820 788 18 252 769 9?2 310 110 4864 Exports 275 37' 2639 461 106 36 723 68 37 218 4600 Balance 778 -115 + 1819 - 327 +88 216 - 46 - 524 - 273 + 108 - 263 iL ports 1047 151 862 834 18 246 821 733 335 86 5133 Exports 298 50 2558 504 94 36 762 110 43 232 4686 Balance - 749 - 101 + 1696 - 330 + 76 ..210 - 59 - 623 - 292 + 146 - 447 Imports 1267 171 672 807 17 268 889 836 392 82 5401 Exports 360 58 2511 475 98 36 779 83 52 -220 4672 Balance -907 -113 + 1839 - 332 +81 .. 232 - 110 - 753 - 340 + 138 - 730 Note: Because of rounding, individual items may not add to totals. Source: Mission estimates based on published trade statistics of the components of Malaysia. 1963 data are slightly under-estimated because of the exclusion of trade between Indonesia and Sineaor; which is no Tonger renorted- Table 12 MALAYSIA - Domestic Exports and Re-.exports 1958-1.6 (N$ million) 1958 1959 1960 DomestiC Totaloe Tolal Exports Re-exports Exports Exports Re-exports EXports Exports Re-exports Exports Rubber .... .......... 1,196.7 636.0 1,832.7 1,751.7 897.6 2,649.3 1,838.4 817.5 2,655.9 Tin .................... ....226.1 55.4 281.5 241.1 57.1 298.2 370.3 135.9 506.2 T imoer .................. .. . 8 1.0 14.3 86.1 112. 4 12.2 124.6 174.6 16.9 191. 5 Iron Ore ................ 62.5 -- 62.5 99.9 -- 99.9 140.2 -- 140.2 Coconuts and Products ... 70.4 68.6 139.0 64.1 60.2 124.3 76.4 65.0 141.4 Oil Palm and Products .. 50.6 8.4 59.0 53.3 13.1 66.4 61.2 11.9 73.1 Canned Pineapple ....... 33.1 -- 33.1 27.9 -- 27.9 26.4 -- 26.4 Pepper .................. . 15.1 30.2 45.3 15.7 44.0 59.7 17.0 70.6 87.6 Machinery ............... '12.3 50.8 63.1 11.9 41.8 53.7 13.1 45.8 58.9 Chemicals ............... 16.3 21.0 37.3 17.2 12.4 29.6 18.1 13.2 31.3 Textiles ................ 2.6 103.4 106.0 6.3 49.4 55.7 8.4 45.6 54.0 Other Manufac tures 32.0 665,1 697.1 33.2 606.7 639.9 39.9 574.2 614.1 Others .................. 97.9 462.5 560.4 120.8 376.0 496.8 106.4 344.6 451.0 Total ............... ..1,887. 4 2,115.,7 4,003.1 2,555.5 2,170.5 4,726.0 2,890.4 2,141.2 5,031.6 1961 - 1962 - -b Rubber .................. 1,453.1 681,7 2,133.8 1,364.3 679.5 2,043.8 1,391.8 546.1 1,937.9 Tin .................... 427.7 149.2 576.9 431.2 185.8 617.0 480.2 173.9 654.1 Timber .................. 169.6 13,6 183.2 202.6 7.8 210.4 253.8 6.4 260.2 Iron Ore ............... 163.8 - 163.8 166.1 -- 166.1 176.3 -- 176.3 Coconuts and Products 64.7 51,,0 115.7 46.5 20.3 66.8 45.2 25.9 71.1 Oil Paln and Products . 57.3 12.8 70.1 59.5 8.8 68.3 63.1 12.7 7.5.8 Canned Pineapple ....... 32.4 -- 32.4 35.6 - 35.6 39.6 - 39.6 Pepper ................. 26.8 52.,5 79.3 24.0 44.7 68.7 24.2 38.3 62.5 Machinery .............. 13.0 54.8 67.8 16.6 92.8 109.4 17.8 63.4 81.2 ChemicaLs .............. 15.5 20.4 35.9 15.4 21.1 36.5 22.4 13.6 36.0 Textiles ............... 5.4 77.,7 83.1 5.9 64.0 96.9 3.4 59.5 62.9 Other Manufactures . . . . . 32.9 524.6 557.7 44.9 578.9 623.8 60.8 532.0 592.8 Others .................. 108.1 392.6 500.7 136.8 432.3 569.1 109.3 511.6 621.2 Total ............... ..2,569.3 2,031.1 4,600.4 2,549.4 2,136.1 4,685.5 2,687.9 1,983.? 4,671.6 Source: Mission estimates based mainly on published trade statistics of the components of Malaysia. Table 13 ( millinn) Regional Analysis of Malaysian Exports, 1958 and 1963 Domestic orts to Rest of jord. TotalTotal Total States of Totala Re-exports Exports Malaya Singapore ialaya Sarawak Sabah Malaysia Malaysia Maasia 1958 -Rubber 1,100.2 3.3 1,103.5 60.4 32.8 1,196.7 636.0 1,832.7 Tin and concentrates 226.1 -- 226.1 -- -- 226.1 55.4 281.5 Timber 16.0 - 16.0 19.5 36.3 71.8 14.3 86.1 Iron ore 62.5 -- 62.5 -- -- 62.5 -- 62.5 Coconuts & Products 41.5 21.8 62.3 1.0 6.1 70.4 68.6 139.0 Oil Palm & Products 49.2 1.4 50.6 -- -- 50.6 8.4 59.0 Canned Pineapple 21.6 11.5 33.1 -- -- 33.1 -- 33.1 Pepper 0.6 --- 0.6 14.5 -- 15.1 30.2 45.3 Machinery 0.6 11.7 12.3 -- -- 12.3 50.8 63.1 Chemicals 5.8 8.2 14.0 0.8 1.5 16.3 21.0 37.3 Textiles 0.8 1.8 2.6 -- -- 2.6 103.4 106.0 Other Manufactures 14..2 14.8 29.0 3.0 -- 32.0 665.1 697-1 All other exports 53.1 8.5 61.6 28.2 8.1 97.9 Lå2.5 560.4 Total 1, 592.2 83.0 1,675.2 127.4 84.8 1,887.4 2,115.7 4,003.1 .1963 -Rubber 1,287.4 2.7 1,290.1 69.6 32.1 1,391.8 546.1 1,937,9 Tin and Concentrates 480.2 480.2 -- -- 480.2 173.9 654.1 Timber 55.4 - 55.4 53.7 150.6 253.8 6.4 260,2 Iron Ore 176.3 176.3 -- 1.76.3 -- 176.3 Coconuts and Products 27.0 9.6 36.6 0.8 7.8 45.2 25.9 71.1 Oil Palm and Products 58.4 4.7 63.1 -- -- 63.1 12.7 75.8 Canned Pineapple 29.0 10.6 39.6 -- -- 39.6 - 39.6 Pepper 2.2 2.2 21.8 0.2 24.2 38.3 62,5 Machinery 2.2 15.6 17.8 -- -- 17.8 63.4 81.2 Chemicals 14.2 8.2 22.4 -- -- 22.4 13.6 36.0 Textiles 2.1 1.3 3.4 -- 3.4 59.5 62.9 Other Ilanufactures 28.4 26.1 54.5 5.0 1.3 60.8 532.0 592.8 All other exports 67.6 18.5 86.1 15.2 8.0 109.3 511.6 621.2 Total 3,230.4 97.3 2,327.7 166.1 200.0 2,687.9 1,983.7 4,671.6 Source: as for Table 12. Table 14 MLM A - Directi nof r ie M 7i miillon) 1958 1959 1960 1961 1962 1963 1958 1959 1960 1961 1962 1963 United Kingdom ................ 735.3 628.5 740.4 814.6 817.5 856.5 559.5 584,.9 631.4 534.1 462.7 404.3 Australia ....................... 169.7 176.2 184.7 199.7 219.4 255.0 213.3 247.4 282.1 171.2 206.3 177.1 Brunei ......................... 304.4 299.2 246.7 195.3 198.9 178.6 32.2 30.8 27.3 28.1 26.6 33.7 Hong Kong ...................... 138.0 143.6 168.2 192.4 198.0 214.2 66.1 77.0 91.2 89.5 102.8 124.6 India ........................... 105.5 90.2 81.8 120.2 96.6 161.4 101.0 109.4 148.3 115.9 u6.3l 99.5 Other Sterling Area ............. 179.4 195.3 206.0 225.7 312.0 365.3 161.2 165.2 202.1 178.7 175.2 191.4 Subtotal .................. 1,632.3 1,533.1 1,627.8 1,747.9 1,842.4 2,031.0 1,133.3 1,214.7 1,382.4 1,117.5 1,089.9 1,030.6 Continental Europe W. Germany ......................8?.1 114.1 130.0 155.6 153.2 173.9 160.6 230.6 316.1 238.0 178.5 187.3 France .......... 33.5 36.0 48.1 54.4 58.2 53.2 108.5 151,0 198.2 178.9 166.5 137.1 Italy ................. 20.4 20.0 27.2 43.0 56.3 58.1 144.6 159.3 191.0 182.1 167.8 181.4 Netherlands .................... 76.0 91.0 98.6 134.9 123.2 127.3- 129.7 147.6 112.5 105.6 98.2 93.4 Belgium and Luxembourg ......... 20.6 26.1 24.9 31.4 30.3 30.0 23.3 29.6 64.0 57.2 68.9 64.8 Subtotal ................... 237.8 287.2 328.8 419.4 421.2 442.6 566.7 718.1 881.8 761.8 679.9 664.0 China - mainland .................. 204.0 166.7 188.6 190.0 222.9 314.4 119.4 123.2 88.7 13.6 3.8 18.3 Indonesia ....................... 1,109.8 1,277.6 1,251.3 1,021.6 1,045.3 790.8 380.8 162.5 161.6 246.6 339.0 277.3 Japan .............................. 316.1 304.7 405.1 451.0 505.7 576.7 463.0 641.4 710.7 724.5 685.4 731.8 Thailand ........................... 299.0 340.7 373.7 357.4 349.6 353.8 109.7 124.6 181.3 107.2 115.3 119.3 U. 3. A. .......................... 145.0 160.3 210.1 259.9 303.3 320.9 431.6 594.4 537.2 552.7 655.9 609.4 U. S. S. R. ...................... 1.0 2.3 6.7 8.8 10.3 16.0 137.2 354.4 165.1 275.1 338.5 341.4 Others ............................. 406.6 311.3 398.3 407.8 432.0 554.9 661.4 792.7 914.8 801.4 777.8 879.5 TOTAL ............................ 4,351.6 4,313.9 4,790.4 4,863.8 5,132.7 5,401.1 4,003.1 4,726.o 5,031.6 4,600.4 4,685.5 4,671.6 Source: Mission estimates based mainly on published trade statistics of the components of Malaysia. Table 15 (A) ImEort andExport Price Indices, and Terms of Trade of States of 11alaya, 1959=100 lst quarter 1957 1958 1959 1960 1961 1962 1963 1963 1964 Exports Price Index Rubber ......................... 90 80 100 106 83 79 76 79 68 Tin ......................... 96 93 100 101 113 116 112 107 134 TOTAL ......................... 91 83 100 105 87 85 82 84 79 Volume Index Rubber ....................... 92 90 100 103 108 108 115 116 116 Tin ............................ 112 87 100 169 170 179 191 194 163 TOTAL ......................... 97 92 100 113 122 125 134 131 131 Irmrts Price Index Food ........................1.....L08 101 100 101 103 103 106 105 110 TOTAL ......................... 107 102 100 103 101 98 103 101 104 Volume Index Food ........................ 96 102 100 108 107 107 121 127 120 TOTAL ......................... 98 94 100 120 126 143 142 148 134 TERMS OF TRADE ....................... 85 82 100 102 86 87 79 83 76 (B) Price Indices, States of I'Vialaya and Singapore, 1959=100 States of Ialaya - Retail Price Index 104 103 100 100 100 100 103 102 104 Singapore - Consumer Price Index 2/ n.a. n.a. 100 100 101 102 103 103 105 Sources: I'onthly Statistical Bulletin, States of Halaya. '1onthly Digest of Statistics, Singapore. / Includes all races except Europeans. Z/ %Weights apply only to households with expenditure levels of M$100-500 per month. Table 16 l/ Singapores Entrevot Trade (M$ millions) Imports for Imports for Imports for Reepots Value Added Rem-:exotRe-eEL3s Value Added Re-exports Re-ex-Prts Value Added_ ee=2_ME Rubber (crude) ...................... 921.9 102.1 1,042.0 1,379.9 133.4 1,527.9 1,360.2 125.4 1o420.5 Tin gj ............................. 44.4 5.6 50.0 6.8 0.5 7.3 7.6 0.2 7.8 Timbr 2/ 4-4-4 ................... 11.0 2.7 13.7 11.5 2.2 13.7 18.3 5.3 23.6 Animal & Vegetable oils, Oilseed, etc. 68.6 9.6 78.3 67.2 15.3 82.4 61.7 9.0 70.13 Spices and Tea ...................... 71.8 18.3 93,6 83.1 25.4 108.6 81.4 24.6 127.9 Machinery ........................... 115.0 19.2 146.9 121.6 21.4 161.2 151.3 37.1 211.9 Chemicals ........................... 33.6 6.9 39.9 34.2 6.9 41.8 41.5 7.7 48.9 Textiles and Clothin ............... 169.2 17.7 189.9 123.2 16.2 144.4 128.7 17.5 151.0 Other ManufacturesT ............... 97.2 16.0 122.0 89.4 16.6 124.3 108.3 20.6 141.4 All Others I/ I...................... 1,027.1 133.3 1,201.1 893.8 125.6 1,055.9 856.5 139.0 1,099.5 Total ................................ 2,559.8 331.4 2,977.1+ 2,810.7 363.5 3,267.5 2,815.5 386.4 3,303.4 of' which: Value added by processing 159.4 187.0 179.5 Other value added ...... 172.0 176. 5 206.9 1961 19216 Rubber ............................... 984. 0 133.1 1,130.2 969.8 129.0 1,088.7 820.3 94.6 974.9 Tin gj............................... 28.7 2.3 31.0 9.8 0.9 10.7 4.9 3.6 17.3 Timber v ................. 16.0 1.9 17.9 23.8 3.5 24.2 29.6 5.5 32.6 Animal & Vegetable oils, Oilseed, etc. 57.6 6.2 64.6 39.1 2.2 45.0 38.5 1 46.0 Spices and Tea ...................... 93.9 13.9 109.8 75.5 11.5 97.9 83.7 18.5 94-1 Machinery ............................ 189.8 40.2 245.3 244.2 65.6 315.8 217.3 98.1 319.8 Chemicals ............................ 51.4 7.7 58.4 55.7 9.3 70.2 62.4 L.6 78.5 Tetbim and Clothi .......... 146.0 20.3 166.9 154.0) 171.4 161.2) 4 190.2 Other Manufactures J............ 120.0 23.7 157.2 171.6)"6 215.9 183.9) 243.6 All Others ./ ......................... 958.6 142.5 1,134.8 920.1 121.3 1,125.3 945.4 144.5 1,200.4 Total ................................ 2,646.0 391.8 3,116.1 2,663.1 397.2 3,165.1 2,542.1 447.2 3,197.4 of which: Value added by processing 191.0 221.4 225.3 Other Value added ...... 200.0 175.8 221.9 Source: Based on data prepared by Chief Statistician, Singapore. L/ Including trade with other parts of Malaysia.. "Imports for re-exports" plus "value added" usually do not add up to "Re-exports" because of stock changes and other factors. 2/ Ipos o in n r for re-export are rough stiwate, because, prior to 1962, tin ore and logs were treated as retained imports rather than imports for re-export. 2/ Section 3, Mineral Fuels and Cils, included in "All Others." 4j SITC group 4 only. Table 17 MALAYSIA - Estimate of Gross National Product and Expenditure 19581.963 1958 1959 1960 1961 1962 1963 Gross National Product at Factor Cost ... 6572 7079 74 71 ?770 8206 8568 plus: indirect taxes less: subsidies ............... 744 936 1123 1023 1031 1096 Gross National Product at Harket Prices .................. 7316 8015 8594 8793 9237 9664 plus: net factor income to abroad ................. 130 204 270 188 170 200 Gross Domestic Product at Market Prices 9.,,...... 7546 8219 8964 9081 9507 96 less: exports of goods and non-f actor services 2..) 5811 5393 5531 5540 plus: imports of goods and non-factor services 2/..) -259 -839 5008 5095 5367 5656 discrepancy 2/ ....................... . ) +25 +105 +110 + 145 Gross National Expenditure ............................... 7287 7380 8186 8888 9453 10,135 cf which, on Consum tion ........................... 6351 6615 7044 7538 7843 8298 a) Private 7g ................................ 5301 5558 5959 6363 6504 6795 b) Public ..................................... 1050 1057 1085 1175 1339 1503 en Gross Domestic Fixed Capital Formation ......... 945 766 1142 1350 1610 1827 a) Private 41 .................................... 644 538 867 909 922 1c02 b) Public........ ..... .................. 291 228 275 441 688 825 Note:These estimates are orders of magnitude only, and reflect uncertainties about the underlying balance of payments data, and the production and expenditure data, of the New States. I Preliminary 2/ Complete Malaysian import and export data are not available prior to 1960. 1960 through 1963 data are taken from the balance of payments estimates in Table 21. The discrepancy arises mainly from the incorpsration of data on Singapore. Singapore's GDP estimate is derived from the Gross National Expenditure estimate, thus relying heavily upon trade and payments data of uncertain accuracy. The process of aggregating SLngaporeis balance of payments data into a Malaysian estimate led to the use of data which does not correspond with that upon which the GDP estimate is based, hence the discrepancy. A further error was introduced in deriving the Borneo States' GNE estimates from GDP using only the visible trade data, excluding non-factor services. ! Residual. Includes expenditures of Malaysians overseas. 5/ Includes public authorities. Table 18 MALAYSIA - Co-sition of' Consumption Expenditure (M$ millions) 1958 1959 1960 1961 l962 1963 F,Lvate Consumption Food .................................. 2,253 2 ,378 2 Lal 2, 6, 73 2,836 Beverages arid Tobacco ................. 508 519 560 591 589 616 Clothing and Footwear ................. 410 434 457 477 478 529 Furniture and Household Equipment ,... 323 352 390 437 472 506 Other Expenditures on Goods ........... 234 250 288 312 33 328 Housing Services ...................... 627 653 678 677 692 711 Transport and Communications .......... 282 319 374 393 411 432 Recreation and Entertainment2/ ......... 296 318 366 386 395 406 Other Services ........................ 330 356 376 393 396 408 Adjustments J............... +38 -21 -23 +33 +33 +23 Total Private Consumption Expenditure 5,301 5,558 5,959 6,363 6,504 6,795 Public Consumption ...................... 1,050 1,057 1,085 1,175 1,339 1,503 TOTAL CONSUMPTION EXPENDITURES ........... 6,351 6,615 7,044 7,538 7,843 8,298 1/ Preliminary Z/ Including value added by restaurants and some retail trade. I/ Includes expenditure abroad of residents, less expenditure in I1alaysia by non-residents and other adjustments. Source: The above figures are based on detailed official consumption estimates for the States of t'alaya and Singapore for 1958-1961. Detailed estinntes were also available for Singapore for 1962 and 1963, together with totals for the States of Ialaya for 1962 and 1963 - details were estimated by the mission. Virtually all the data for the Borneo States were also estimated by the mission. Table 19 MALAYSIA - Expediture on Gross Caital Formation by Type 1958-1963 (M$ millions) AJ 1958 1959 1969 1961 1962 1963 Land ................... 2 3 3 3 3 3 Dwellings ............................. 169 134 156 182 213 254 Ncn-residential buildings ............... 129 124 157 203 290 348 Other construction and works .......... 147 125 149 196 315 362 Machinery, transport equipment, etc. 312 271 368 4,64 546 609 Planting of perennial crops 152 169 189 217 243 251 Tctal fixed capital formation ......... 911 824 1,C22 1,270 1,610 1,827 plus increase in stocks........., 34 -60 12- 80 - -- Gross domestic capital formation ...... 945 766 1,142 1,350 1,610 1,827 Source: official estimates were available for the States if ]Aalaya and Singapore for 1958-1961, and fc7 Singapore fir 1962 and 1963. Partial estimates were available for the States of Malaya fsr 1962 and 1963 and these were supplemented by missicn estimates. Mission estimates were made for the Borneo States for all years except Sarawak 1961, where an official estimate was used. i/ Preliminary 27 Malaya ;rnly Table 20 States of Malya -- Gross Domestic Product by Industry of Origin in Constant 1960 $ (M$ millions) 1/ 1955 1956 1957 1958 1959 1960 1961 1962 1963 Agriculture, Forestry, Hunting and Fishing 1,723 1,723 1,767 1,831 1,879 1,986 2,070 2,113 2,207 Rubber ............................... 1,108 1,087 1,110 1,155 1,215 1,233 1,286 1,307 L,369 Other ............................... 615 636 657 676 664 753 784 806 830 M4ining and Quarrying...................... 270 292 288 203 218 306 338 351 410 Manufacturing ............................ 445 468 496 528 Construction ............................... 480 487 500 515 544 158 198 275 300 Electricity, Water and Sanitary Services 56 59 63 53 54 70 79 90 100 Transportation, Storage and Commun:ication 128 141 147 149 168 189 204 212 227 Wholesale and Retail Trade ............... 584 624 630 624 664 777 829 870 914 Banking Insurance and Real Estate ........ 59 56 51 54 62 71 79 87 96 Ownership of Dwellings ..................... 205 211 218 228 232 239 247 258 270 Public Admi.nistration and Defence ......... 308 317 330 331 338 355 377 389 449 Services .................................. 444 472 499 527 557 586 606 671 712 Gross domestic product at factor cost in constant 1960 dollars 4,257 4,382 4,493 4,515 4,716 5,182 5,495 5,812 6,213 1/ Preliminary Source: Department of Statistics States of 14alaya. Table 21 MALAYSIA - Balance of Payments Estimates 1960-1963 (M$ millions) 1960 1961 1962 1963 RecIpt.s Nayents Net Receipts Payments Net Receipt Pavients Net, Receipts Payents Net 1. Domestic Trade.............. 2,890 2,679 +211 2,569 2,847 -278 2,549 3,009 _46o 2,688 3,384 -696 2. Entrepot Trade .............. 2,141 1,780 +361 2,031 1,673 +393 2,136 1,744 +392 1,984 1,607 +377 3. Total Mercharxiise Trade ........ .032 4,459 +5?3 4,600 4,520 +80 4,686 4,753 -6e 4,672 4,991 -319 4. Services: L/ Freight and Insurance ...... 24 331 -37 19 344 -324 18 380 -326 16 410 -395 Other transportation & travelt/ 297 125 +172 310 134 +175 340 140 +199 :340 155 +185 Other Services j/ ............. 458 93 +365 46 97 +365 488 93 +395 512 100 +412 Subtotal of Services 779 549 +20 793 575 +21 846 614 +232 ..8 65 +204 5. Investment Income I ------ 111 41)2 -22 18 369 -1814 208 355 -14? 203 -16k 6. Private Transfers Payments 28 296 -28 11 276 -265 11 273 -262 14 288 -274 7. Net Govt. Transfer Payments ... n.a. n.a. -47 n.a. n.a. -4 n.a. n.a. -30 n.a. n.. -33 8. Official Grants 2............. 56 - +,i6 54 +54 38 +3E 30 +30 9. Non-monetary Gold............. 22 -22 29 -29 3 -3 7 -? 1O. 2Aaceo Current Account ... 6,oo61 5,775 +231 5,643 5,809 -166 5.788 6,043 _24o 5.787 6,350 -563, 11. Long-term Cap)ital Account Private Long-term CaptalV/(net) --- 20 - - +9 -- 30 - - +400 Central and State Government Issues Abroad ~Q........ -- * -- - - . 68 68 Official Loans y!.2........ ,80 2 +66 39 +39 59 2+51 412 +42 Other .........................n.a. n.a. -.9 n.a. n.a. -8 n.a. n.a. -11 n.a. n. a. -11. Subtotal2.................. 7 +327 +321 +391 +499 1L2. Balance, on Current -ad )gtr Caoital Account ±25 ---+j8- - ±i2 -- 13- tLonet r Ments Net Change in Foreign Assets of Official Institutions .*Z --- 520 --- -310 --- -301 - - -43 Net Change in Commercia2 Banks and other foreign assets 12 +27 +180 +8? _26 Other net monetary movements including errors and omissions --- -65 -- +47 --- +55 -- +133 Totaln net monetary movements .a n Source: Based on estimates prepared by the Depatment of Statistics, States of Malaya, and Bank Negara alaysia. Details may not add to totals because ofe rounding. Note: These data. should bie regarded as orcders of magnitude rather than precise estimates. Particularly the data on private long-tern capital, investment income, private transfer payments, and entrepot trade are subject to error. A further error is introduced by the use of customs data on the physical movment of. merchandise, rather than foreign payments data -which do not exist. I/ Retained inports and. donestic exports (f.o.bh. values). 2.1 Entrepot trade with the rest of the world, thus excluding Singapore's entrepot trade with the rest of Malaysia. -1/ Estimated from freight charges. 2/ Includes bunkers, provisions, a-ir passenger fares, port does, etc. d/ Foreign military and. embassy expenditures, film rentals, management fees, etc. H] ough estimate. 2/ Mainly to China, India and Europe. 8/ IncludiniT militarv aid. 2/Estirmate of direct and portfolio investment, based nainly on 1962 company survey for StatCS of M,alaya. Includes repatriation of assets of local insurance companies, required by the Insurance Ordinance. 10 Comprising L5 million issue in London a-nd 0S5" million lent by Chase "lahattan 1-ank, both in 1963. Il/ Drawings by Central Government and other official agencie 3en TIB and other loans. 121 All official and semi-offLcial agencies, as5 included in TanLe )0. lncludezs sin'king fun4.5 - minus si,n inlic ates lncrea:u ir. assets. 3 / Tae'Fblc 30 for coverage. Channees in nor-resiint h-nldIin-:3 oL e!aas-ncurnyat ne,gligible. in both items 12 and :13 a small error is introduced by the valuation of foreign assets at market value rather than cost. Statistical Note on Public Finance Tables 22 through 29 An attempt is made in the following tables to show the aggregate transactions of anencies in the rublic sectors of the component parts of Malaysia. The agencies included are the Federal Government, all fourteen State 7overnments. and the followinez authorities: Halava SinaaDcre (ntr.q1 Wlor-trinitv Pnqrd nHousing and Development Board M-alaysian Railways Harbour Board (now Port of Singapore Authority) Penang Port Commission Public Utilities Board (formerly nnrt nf City Council) Telephone Board The Economic Development BEward of Singapore is regarded, in m,st rconcts, as part. of +.ho qinannaro qt-t. mnrornmnt- 7,YnlndPd beause of lack of information are the transactions of the public authorities in the 'orn ++ - which, however, ae relat9ively unimnortant. Excluded also are agencies whose main contribution to the public sector is financial, such thea +kc , t Off;^,n q44' ra ri"c Tinri nil y,7rniindq ~ - Piii-hinr iT HineT - PX and some agencies whose functions are financed mainly from Government aprpaton+.se such as RTDA and FTDA -r - -r 4mrori ;r r~r + ,,o '5v "- c,l 4 otr .n t ho cn n nh although errors are introduced by the incorporation of the accounts of the 0= C= -- Tf , -- P 4,I ----dkUL, L)ILL' ct IIkA ± I I V VJ LI±VS'C;C .- I LI I .1S.tC"4 ,YC'J 0 -' Uo -cor es on W,.~~-±- ith theJ ctJ a Lln a year. Expenditures by public authorities and States exclude expenditures Government expenditures. Data on financing are less precise, in part because of the use of changes in gross assets and gross borrowings of public sector agenuIe. Debt of both the Central and Singapore State governments is held, to a limited extent, by other Malaysian governments and public sector agencies: over the 1.959-1964 period, however, changes in these holdings were relatively small and thus do not significantly affect Ute resulu. SWc changes in internal debt holdings as took place will of course be offset by corresponding changes in assets. Similarly, current receipts of governments are slightly overstated by the inclusion of tax and interest receipts from other government bodies, Such payments are offset, nowever, by reduced current surplus of public authorities. Unless otherwise noted, these tables are mission estimates based on data supplied by the agencies concerned. TABLE 22 LAYSIA -. Summary Overall Accounts of the Central and State Governments ard Public, Authorities (1959-1964) (M4 mili on) 1959 1960' 1961 1962 1963 196141 Revenue arid Exnenditure ~ Governments Current Revenue ........ 1351 1603 1689 1760 1894 1831 Goverriments' Gurrent Expenditure .. ... 1187 1220 1306 1433 1622 1831 Current surplus or deficit ................. +164 +383 +383 Public authorities1 current surplus . 53 62 69 81 80 95 Total current resources 9........... +217 +445 +452 +408 +352 +95 Capital expenditure of governments ... 229 247 422 631 726 820 Capital expenditure by public authorities 2/.......... 59 54 69 98 143 160 Total capital expenditure ......... ........ 288 301 4,91 729 869 980 Overall deficit or surplus .-71 +1144 -39 ..321 -517 -885 Sources of Finance Net Sale of long-term bonds .......................... 250 190 145 +269 252 +235 Net Sale of short-term bonds and treasury bills ...... -2 +59 +20 -22 +32 +65 Foreign Porrowing .................................... +50 +58 +41 +66 +87 50 Change in foreign assets 4/ (minus means increase) ... -272 -484 -250 -85 +59) Change in local assets (minus means increase)......... -56 -43 +17 -1 +27) +410 Capital grants received ............................. +58 +59 --47 +41 +20 +110 Other capital receipts / ............................ +43 +17 +19 +536/ +40 +25 Total Sources of Finance .................... +71 -144 +39 +321 +517 +895 uece: PBased on succeeding tables, but see note 1/ below. 1/ These totals represent estimated actual 19614 transactions, based upon the latest available data. They thus d» not agree with the supporting tables which are based upon budget estimates. 2/ From their own resources, excluding lrans or grants from governments. 3/ Ineludes borrowing by the Eorneo States, mainly from Brunei. Sinking funds are assuwed to be outside the governrments' accounts. 5/ Including appreciation of investments. local borrowing by pubicauthoritie, and errors a-d omissions. This item includes an unusually large appreciation of investments, and large statutory deposits by cormercial banks in Singapore. Table 23 al,aysin Public Finance 1963 - Reginal Breakdown (M$ millions) Malayan Singapore State Governments Federal Public Public in Govlt Authorities Authorities Malaya Singapore Sarawak Säbah Total Revenue and Expenditure Current Revenue 1,107 -- -- 150 2/ 454 88 95 1,894 Current Expenditure 935 2/ -- -- 179 354 79 75 1,622 Current surplus or deficit 2/ +172 +31 +49 -.29 +100 +9 +20 +352 Capital expenditure 455 77 66 60 126 49 37 869 Overall deficit or surplus -283 -46 -17 -89 -26 -40 -17 -517 Sources of Finance Net Sale of long-term bonds +177 -- -- - +6 -- 4-10 +252 Net Sale of short-term bonds & treasury bills +28 -- - - +4 - +32 Foreign Porroving +60 +25 +2 -- -- - -- +87 Change in foreign assets (minus means increase) +83 +4 +2 - -50 +27 -7 +59 Change in loc al assets (minus means increase) -5 +15 +4 +1 +9 +10 +27 Capital grants received -82 4/ -- +2 +88 4/ +4 +4 +4 +20 Gther capital receipts 22 +2 +7 - +10 - - +40 Total Sources of Finance +283 +146 +17 +89 +26 +40 +17 +517 j/Including Economic Development Board. 2/ Excludes the road, capitation, etc., grants paid by the Federal Government to the States' governments. Trading surplus in the case of the public authorities. _'. pt 88 million in grants from Federal Goverinnent to States - governments. Source: See Sta.tistical note preceding table 22. Table 24. Malasia - Federal and State Current Revenues 1959-1( (1M$ millions) 1959 zL6 ;L6 z16 .1963 1964 (est.) Direct Taxes Income tax 215 280 336 347 346 342 Estate duty 7 9 7 11 12 12 Subtotal 222 289 343 359 359 354 Export Duties Rubber 198 219 130 103 92 51 Tin and tin ore 36 58 65 67 71 76 Others 19 12 17 25 38 35 Subttal 253 287 212 195 199 162 Import Duties and Excise Tobacco and pr-ducts 157 1(5 167 169 174 181 Petr-1 and heavy oils 105 130 134 140 150 156, Malt Liqu-rs and spirits 76 83 86 88 93 94 Others 134 169 168 166 182 180 Subtotal 472 547 555 563 599 611 Other Receipts Licences and Fees, 1/ and Receipts for Gov't. Services 190 217 243 272 308 307 Receipts of trading departments 2 42 45 50 58 63 46 Interest 37 53 93 97 98 83 Currency Board Surplus Fund Distribution 27 28 35 50 61 60 Other revenues / 1n9 134 158 166 207 198 TOTAL 1.51 1 169 1,760 12891 of which: tax revenue 1,076 1,282 1,332 1,366 1,425 1,398 non- tx r eenue 275 321 357 394 469 421 includes royalties., 2/ net receipts of posts and teleCCfmniACations, gross receipts from civil aviation, broadcasting and T.V., and some rural water -upplies, / includes receipts of Singajore City Cuncil (maqinly property tax) and land sales. The City Cnuncil was merged with the State Go-ernr,ment in 1961, / Capital grants are excluded, Table 25 Malaysia - Federal and State Current Expenditures, .1959-1964 (M'$ illionis- )) 1959 1960 1961 1962 1963 1964 (rev.~ est.) Economic Services A gricultur-, rua develment, ise, forestry, et. 48 6r6 79 76 iK0 Industries and mining 9 6 4 3 4 7 Public Works and Transport 123 124 131 136 146 156 Social Services Education 223 235 267 320 356 382 Health 125 130 144 157 171 192 Labor and Social elfare, and other social services 2/ 51 47 47 52 66 71 Government Services Administration 160 178 191 197 250 240 Defence 92 86 92 95 109 184 Internal Security 148 123 115 126 148 185 Debt Service (including sinking fund contributions) 78 93 112 149 164 195 Pensions and Gratuities 96 99 97 77 84 96 Others 34 39 40 42 48 49 TOTAL 1,187 1,220 1L,3062 1,433 1,622 1,857 l/Excluded from these expenditures are the current expenses on posts and telecommunications (which are treated as offsets to revenue), and contributions to the development and other statutory funds. 2/ Mainly broadcasting and information. Table 26 Malaysia - Consolidated Caipital Expenditures of Federal and State Governments and Public A,uthorities n$ million 1959-1964 1959 1960 j6;L 162 1963 L964 (rev.est.) ur i culture 1) Land and Rural Development 11.5 8.4 18.4 51.5 44.5 65. 2) Rubber replanting 4,3.8 42.9 35.7 29.1 20.8 36.5 3) Drainage and Irrigation 5.8 6.9 19.1 26.7 24.8 32.9 4) Others 4.1 3.8 9.9 12.3 13.7 30.2 Subtotal 65.2 62.0 83.1 1l9.6 103.8 165.4 Transuort 5) Roads and Bridges 22.5 34.3 59.3 120.6 121.9 138.6 6) Railways 4.2 3.5 8.4 11.2 19.6 16.0 7.) Ports 7.6 11.6 23.1 26.1 22.5 12.4 8) Civil Aviation 2.5 3.1 4.4 11.0 21.0 32.1 9) PWD Plant and Equipment 1 1.9 "L4.5 37.3 31.9 17.0 11.9 Subtotal 38.7 67.0 132.5 200.8 202.0 211.0 ormunic atiLons 10) Telecommunications 18.9 13.2 18.8 22.8 23.7 42.2 11) Broadcasting and Television o.6 2.2 2.9 3.3 10.9 24.2 12) Posts o.4 0.7 0.9 2.2 2.0 2.9 Subtotal 19.9 16.1 22.7 28.3 36.6 69.3 Industry 13) S,ite Develop-ment (including related land purchases) 2/ o.1 0.2 7.1 8.4 16.1 29.0 4) In/dsri~a~l Finance~ 21 -- --- 0.8 5.3 30.0 3/ 18.0 15) Oth er 0.5 4.1 1.2 o.4 3 Subtotal 0.6 4,3 9.1 14.1 49.5 55.9 I -tinurd) (Table 26 continued) 2 99 ýL960 ¡961 ;962 196 1964 (rev.est.) Social Services 16) Housing 4/ 28.5 3O.5 65.9 73.6 97.1 122.1 17) Education 17.3 22.1 39.7 63.1 71.3 98.6 18) Health 8.0 7.6 11.9 34.9 23.8 50.0 19) Other 22.0 3/ 17.2 3.7 13.7 28.6 58.2 Subtotal 79.8 77.5 121.2 135.3 220.8 328.9 Utilities 20) rater and Sewerage 20.5 18.2 38.0 50.4 61.5 93.2 21) Electricity 55.1 44.6 59.4 99.4 123.5 166.2 Subtotal 75.6 62.8 97.4 149.8 185.0 259.4 22) Defence 7.5 9.2 21.2 25.1 .58.7 92.4 23) Police 1.0 1.8 3.4 5.7 12.4 34.2 Subtotal 8.5 11.0 24.6 30.8 71.1 126.6 GRAND TOTAL 288.3 300.7 490.6 728.7 868.8 1,216.5 l_/ PUD plant and equipment is used mainly for road construction. Plant and equipment expenditure is not separately identifiable in Singapore. / Includes actual disbursements by Singaporets Econoric Development Board, rather than transfer by the State Government to the EDB. 3/ Includes M$22.5 illion disbursement to M,.I.D.F.L., which subsequently reinvested most of this sum in Federal treasury bills. 4/ Includes low-cost housing, municipal housing, PWD housing and Government building. / Includes M$20 million contribution to the initial assets of the Bank Negara. Table 27 Federal Goveernment ury r urie and urces of /inning 1959-1Ž4 Total States of New 5/ 1959 1960 1961 1962 1963 1964 Malaya States 1965 Current Revenue 1/...................... ..829 996 1, 017 1,050 1,107 1,340 1,115 225 L, 420 Current Expenditure /................. .777 798 851 912 1, 023 1,330 1, 030 300 I, 455 Current Account Surplus ............. +52 +200 +166 +138 +84 +10 +85 -75 -35 Capital Expenditure .......... .......... ... 142 141 264 415 455 550 460 90 610 Overall Surplus/Deficit ............. -90 +59 -98 .-277 -371 -54) -375 -165 -645 SOurces cf Financing Domestic Borrowing Treasury Bills, Treasury Deposit Receipts and two-year loans (net) ............ ... -2 58 5 -32: +28 +66 +66 -- ) Long-term borrowing, including five-year lcans and advance deposits (gross)... 202 110 120 180 177 170 170 -- ) 210 Foreign Borrowing (gross) ............. 40 44 31 38 60 8 8 - ) Other Capital Receipts (mainly foreign grants)..................... 38 40 30 11 6 84 2 82 95 Change in Local Assets (-means increase) -24 -9 +39 -23 ·5 ) -- ) Change in Foreign Assets ( " ) -184 -298 -142 +75 +83 ) +212 +212 ) +340 Other Adjustments, including errors and omiss-ions ........................... +20 -4 +15 +28 +22 - -- - ) TOTAL ................................... +90 -59 +98 +277 +371 +540 +458 +82 +645 Scurce: M1inistry of Finance. Note:: For 1959 through 1963 these revenue and expenditure data relate to the Federal Government of the eleven States of Malaya, 1964 data includes Federal transactions with the new States as well. 1./ Excluding current expenses of Posts and Telecommunications, which are treated as offsets to revenue: these have been as follows: 1959 1960 1961 1962 1963 1964 1965 Revenue also excludes grants. 31 33 35 38 40 69 82 2/ EXcludes contributions to Statutory fund5: includes grants to State Oovernments. 3/ Estimated out-turn. 4/ Includes all receipts and expenditures directly attributable to the formation of Malaysia. 5/ Budget estimate, after allwing for underspending of 1M$60 million on current account and M$190 million on rable 28 MALAYSIA - Holders of Federal Government Debt 195-1964 (une) Short-term de> ediu3 and Løng-term debl, As at_epøof per-iod 1959 1 ?0 1961 1 62 1963 June 196L 1959 1960 1961 1962 --963 Jge96 (A) Fedieral and State Goenent Funds & Agencie B _2_ _ _120 116 _> _' _ _ Eployees Provident Fund ...... 35 -- - - - - 463 532 618 736 847 885 Post Office Savirgs Bank .................. 4 7 4 4 4 4 47 63 83 92 102 103 Federal Govt. Sinking Funds and Investments - - - - -- - n.a. 17 20 23 23 23 State Governments .. ....... ........ 9 18 5 6 14 17 24 33 34 34 34 34 Rubber Industry Replanting Board ............ 100 136 162 130 75 72 10 11 11 48 88 88 Municipalities ............... ....... - 3 7 12 12 11 17 17 17 18 20 20 Other Government Agencies ......... 6 48 38 18 11 11 33 2 4 4 4 4 (B) Finencial _Institutione ........................_. _1 _ _4 -82 JA2 60 88 _9 _11 .60 JL6 Bank Negara Malaysia ........................ 3 11 22 19 32 40 -- -- -- 16 19 Commercial Banks ............I....-..*....... 42 30 22 23 37 84 48 62 64 78 100 101 Insurance Companies ......................... - - - - - 1 n.a. 12 16 18 20 20 Cooperative Societies ..... ............... - - - - - 12 14 15 165 l. 16 M. I. D. F. L. ................................- - - 18 17 - - -- . . (C) Miscellaneous local Invet .............. _ __ _1 __ -i -92 _69 __69 _.Q _-9 _f.6L Private Provident and Trust Funds ........... -- - - - 1 - 11 16 12 16 26 31 Trustee Cmpanies ......... . - - -37 25 28 31 35 35 Others ................... ............ - - 1 3 5 49 28 29 33 38 36 (D) Foreign Holders of Damstic Debt Hong Kong Govenment .. ........... - - - 12 12 12 12 12 12 (E) TOTAL DOMESTIC DEBT ......................... 199 253 246 213 207 262 764 844 963 1158 1382 1427 () Exte ......... ..........-- 334 360 373 394 443 TOTAL FEDERAL GOVERNMWT DEBT (including short-term) ...................................... 1297 1457 1582 1765 2032 /Treaury Bills and Treasury Deposit Receipts. .g/2-.year, 5-year, and other long.-term loans, excluding advance depositø. 3/ Including a small loan from the Singapore Government. Source: Bank Neiara Malaysla. Details may not add to totals because of rounding Table 29 Singapore State Government - Holders of Public Debt (M$ millions) December 31st 2/ 1960 1961 1962 1963 June 30th 1964 A. Long-term Debt Singapore City Council and Public Utilities Board 10.7 10.8 12.8 10.6 (10.6) Gcvernment of Singapore ...... ............. .8.4 8.2 9.5 11.2 (11.2) Federal Governrment .................................. 14.2 14.2 14.2 14.3 (14.3) Central Provident Fund Board ..................... 34.3 80.8 122.7 169.7 (169.7) Other Public Sector Agencies 3/.............. 14.2 16.7 22.3 28.3 (28.3) Commercial Banks .................................... 33.0 33.1 38.0 40.7 (40.7) Insurance Companies .............................. 5.4 6.7 6.6 7.2 (7.2) Nominee and Trustee Companies ...................... . 10.7 11.4 15.1 24.7 (24.7) Individuals ... ...................................... 4.8 4.6 4.1 4.2 (4.2) Other Private Sector Agencies................... 14.1 13.6 14.2 14.7 (14.7) Total Long-term Debt ............................ 150.0 200.0 260.0 327.5 327.5 Bý. Treasury Bills Singapore City Council and Public Utilities Board -- -- 5.9 -- -- Economic Development Board ....................... -- 3.2 5.0 3.0 3.0 Post Office Savings Bank .. ............ .1.2 1.6 1.8 1.8 1.0 Port of Singapore Authority 3/ ...................-- -- 9.1 8.9 Other Public Sector Agencies ...................... -- 2.0 1.4 1.3 2.4 Ccmmercial Banks ....................... . -8.7 11.1 11.2 12.9 Other Private Sectors ........................... -- 0.2 -- 3.3 0.6 Total Treasury Bills ............................ 1.2 15.7 25.2 29.7 29.8 C. Total Debt ........................................ 151.2 215.7 285.2 357.2 357.3 _/ No new long-term issues took place in the first half of 1964 - holdings are assumed to be unchanged. 2/ Excludes advance deposits. 2/ Singapore Harbour Board/PSA Housing and Development Board, EPF Board, Post Office Savings Bank, City Council, Penang. Table 30 MALAYSIA -- Gold and Foreign Exchange Reserves 1953 and 1959 to mid-1964 (mid--rarket values in M$ millions as at December 31st) (A) GROSS REEVS 1. Central Government and States of Malava 1953 1959 1960 1,961 1962 1963 June 30. 1964 1(a) Central Goverrmient ............... .. 429 607 916 1,095 1,074 1,034 979 (excluding sinking funds)....... (344) (476) (767) (911) (845) (763) (694) 1(b) Bank Negara Aalaysia .............. 0 113 143 114 155 150 218 1(c) Currency Board 2/ ................ 768 1,156 1,189 1,212 1,334 1,373 1,376 l(d) IMjF Gold Tranche .................. 0 0 0 0 10 22 23 1(e) Government Agencies 1/............ included in 1(a) 90 91 83 90 88 87 1(f) Commercial Banks .................... 175 (est.) 150 .167 126 133 133 159 1(g) Other Private Agencies ....... n.a. 26 27 29 34 31 32 SUBTOTAL .......................1.,372 2,142 2,532 2,658 2,831 2,832 2,873 2. State of Singapore 2(a) State Government ............... 350 193 302 369 499 573 546 (excluding sinking funds) (294) (142) (260) (319) (433) (493) (460) 2(b) Goverrnment Agencies _/ ............. )included 137 137 204 217 202 203 (excluding sinking funds) ....) in 2(a) (92) (82) (130) (125) (125) (126) 2(c) Ccrnmmercial. Bariks ................. 345 (est) 447 435 382 295 351 299 SUBTOTAL ......................... 695 777 874 955 1,011 1,126 1,048 3. State of Sarawak 3(a) State Government 6/............... 66 60 90 89 82 5i 48 3(b) Commercial Banks .................n.a, 24 26 20 18 20 18 SUBTOTAL ...................... 66 84 116 109 100 71 66 4. State of Sabah 4(a) State Government .................. 11 12 21 32 38 48 53 4(b) Commercial Banks ............... .. .a. 17 31 30 14 8 9 SUBTOTAL ..................... 11 29 51 62 52 56 62 TOTAL .................................. 2,144 3,032 3,574 3,785 3,993 4,085 4,050 (excluding sinking funds)Z/.... (2,003) (2,806) (3,329) (3,479) (3,609) (3,661) (3,598) (Section (B) and footnotes, over) rn-. -I o - -aN. (Table j0 continued)/ June 30, 1953 1959 1960 1961 1962 1963 1964 1 l/ Official and semi-official reserves ... 1,624 2,368 2,888 3,198 3,499 3,542 3,533 Commercial Banks and other reserves 520(net) 664 686 587 494 543 517 TOTAL (gross) .. . 2,144 3,032 3,574 3,785 3,993 4,085 4,050 less: commercial Banks foreign liabilities ......................n.a. 146 195 204 198 221 318 TOTAL (net) .................... 2,144 2,886 3,379 3,581 3,795 3,864 3,732 (excluding sinking funds) /.. (2,003) (2,660) (3,134) (3,275) (3,411) (3,440) (3,280) l/ Preliminary / halaysia's share of the exchange assets of the Currency Board, which has varied between 92.3 and 93.3% in recent years. 3/ Comprising Post Office Savings Bank Malaysian Railways Employees Provident Fund Central Electricity Board Malayan Rubber Fund Board Penag Port Commission S. Indian Labour Fund Board k/ Comprising the four principal private provident funds only. Insurance companies, and other enterprises and individuals, are known to own substantial foreign assets: their maEnitude is unknown, but for Lalaysia as a whole is now likely to exceed $300 million. 3/ Comprising Public Utilities Board Singapore Harbour Board (now Port of Singapore Authority) Central Provident Fund Post Office Savings Bank Economic Development Board Municipal Provident Fund 6/ Including Post Office Savings Bank 2/ Including sinking funds of the Borneo States' governments. Source: based on Staff study prepared in Bank Negara Malaysia. Note: Dt.niltz Y rn t rn d d +o ols d to roundin. Table 31 MALAYSIA - Esti-,npated loney Supoly (end of period) Iarch June 19 0 1961 1962 1963 164 1964 I Ioneyupply Active Circulation oiC Currency in private sector 1/ 996 996 1035 1077 1077 1077 Current Account Deposits with banks 2/............ _.8s 854 92i3 1013 1010 991 Total Money Supply .............................. 1844 1850 1958 2090 2088 2069 Change from preceeding period ................. +20 +6 +108 +132 -2 -21 Details Changes 1967/ Dec. 1963 March/June II Factors Affecting Mon Supply 1962 1963 Mar.1964 1964 Gold and Foreign Exchange Holdings (net) .......................... 1353 +12 Currency Board ................................................ 1334 +39 +22 -20 Central Bank .................................................. 153 -3 -2 +71 Commercial Banks .............................................. 365 -71 -72 -39 Governments' Debt Holdings ........................................ 200 +72 -17 +66 Central Bank .................................................. ...2 -- Commercial Banks .............................................. 187 +50 -17+65 3/! Comercial Bank Credit to Private Sector ......................... 1672 +208 +119 +37 Loans and Advances ............................................ 1485 +176 +133 +3? Trade Bills ................................................... 154 +20 -15 -3 Private Securities .................. .......................... 32 +13 +1 +3 Ccvernments' Deposit Balances (decrease +) ......................... -263 +39 +5 -62 at Central Bank ................... ............................ 95 -- +2 -58 at Commercial Banks ........................................... 167 +39 +3 -4 liscellarieous items (net) ......................................... -349 +19 -18+ 3 Total Ioney Su pLv ...................................................... 3112 +303 +37 +55 Fixed and Savings Deposits of Vrivate Sector 3/ at commercial banks (decrease +)............. -1154 -171 -39 -72 Total Active Money Sum ly ............................................... 1958 +132 _ ~~ -2 -21 (Footnotes and source for Table 31) -- 2 - Source: data, supplied by Bank Negara Malaysia. (Details may not add to totals because of rounding.) 1/ Based on 14alaysia's share (92.5%) of the Currency Board profits. Private -3ector includes public authorities and local governments. */ Includes current accounts of the public authorities with Bank Negara and the comercial banks but excludes deposits of banks and governments. Also excludes deposits with the Post Office Savings Bank. / Including public and local authorities. Table 32 MALAYSIA - Assets and Liabilities of the Commercial Banks. 1957-1964 (M$ millions) December 31st June 30, L957 1958 1959 1960 1961 1962 1963 1964 Assets 1. CashJ/ ................................... 98 102 108 126 131 135 141 151 2. Loans and Advances 2/ .................. 925 901 1,100 1,353 1,593 1,782 2,005 2,130 3. Investments (a) in Malaysia ............. 140 144 163 179 190 219 281 335 (b) Abroad ................. 57 79 112 140 118 115 111 104 4. Balances due from other banks (a) in Malaysia........... 387 496 505 474 453 569 538 )8, (b) Abroad ................ 419 522 488 407 334 342 307 ) 837 5. Reserves with Bank Negara ............... -- -- 34 38 43 44 49 51 6. Other Assets ............................ 148 269 386 291 423 484 469 502 TOTAL ... ............... 2,174 2,513 2,896 3,008 3,285 3,690 3,901 4,110 Liabilities 7. a) Demand deposits ..................... 875 894 926 914 917 994. 1,047 1,036 b) Fixed deposits ...................... 300 414 521 701 822 912 986 1,080 c) Savings and other deposits ...... 214 225 296 304 340 381 439 470 d) Total deposits ......................1,389 1,533 1,743 1,919 2,079 2,287 2,472 2,586 8. a) Balances due to banks in Malaysia 338 451 459 486 491 567 605 )3. b) Balances due to banks abroad. 98 95 132 174 182 191 214 ) 938 9. Other liabilities ..................... 349 434 563 429 533 645 610 586 TOTAL .................................. 2,174 2,513 2,897 3,008 3,285 3,690 3,901 4,110 Regional Breakdown, December 1963 States of Malaya Singapore Sabah Sarawak TOTAL A. TOTAL Assets ............................ 1,758 45 1,890 48 145 4 108 3 3,901 B. Loans and Advances ....................... 826 41 1,045 52 82 4 52 3 2,005 C. Deposits ............................... 1,225 50 1,073 43 94 4 80 3 2,472 1/ Including cash with Bank Negara 2/ Including bills discounted or purchased, and bills receivable Sourne:*+,ai a ~ Table 33 Nalaysian Comnercial Banks - Classification of Loans and Advances as at June 30, 1964 (M$ million) Federation of liaya Singapore Sarawak Sabah Total Public author ities 10 698 _243 -- 234 11,175 Agriculture 14973_5 46,364 ._5654 .26.919 228,672 Rubber and rubber products 85,435 42,080 1,387 7,327 136, 229 Rice and rice milling 61>111 346 151 191 61,802 Other agriculture and forestry 3,189 3,938 4,116 19,398 30 ,641 PJiIjLn, 3,208 10 428 _ 206 481 44, 32 Tin and tin smelting 10,559 5,179 - -- 15,738 Iron ore 20,915 2,880 -- -- 23,795 Other minerals 1,734 2,369 206 481 4,790 Manuf acturing 51,364 86.709 .,6871267 144,027 Construction .6 441 55,871 2, 528 10,351 125,191 Trade - Imåort, ex)ort, wholesale & retail 271.881 404,114 21,875. 10,127 2797 Financial concerns (includin, banks) 30,298 46,376 -- 564 43,132 Individu s 8068 1893 L 484 3,209 346,71 For business purposes 85,572 75,716 797 3,802 165,887 For private purposes 102,496 63,237 13,686 1,407 180,826 (Table 33 continued) - 2 Federation of Malaya SinpaQore Sarawak Sabah Total Service trades 1/ 18,187 35 2,771. 157,683 Other 790 o 785 8.416 113.021 Subtotal - loans and advances 861 67o 839,6 25 35 j 8 Bills discounted or purchased 34,560 89,063 3,200 3,680 130,503 Bills receivable 20,204 103,797 -- -- 124,001 TOTAL 919,434 io66 600 55,49C 89 020 2 130 9j 1/ Transport, storagel communications, hotels and restaurants, institutions, etc. Source: data supplied by Bank Negara and State Governients. 鑒I、_/才b州兀、― 馴。夕一二斗叩。”- 引乎/一_一懦萍沫丰紅7妒一一」 &l、·“中_州中謬尋·、,...‘斤州l 〕叩戶莎襲糁’一:。斗_夕l 〕剷7戶參誹才州務州l 馴淺才〕洶斗了〕 「騖眾您f→、一:。〕 〕選夕。、訃―11 1‘黑郢;―。〕11 〕二“〕!19實〔〕 1畸‘“逛‘〔 〕”一l 〕_〕 l心「―不不劉_, }一ב偽l〕斗才斤二―茫〕 J,一:戶J‘結鰍悲彎瀾l喪! i、·升I。r:徐爍、’州義: l‘蔆八,、k傷汛,拯珍劇 l二!中訕‘斗]:籐他三蠶江}&l 〕·“.、…化;×〕巡惡擊’!!l 〕!:&!日k悶洱!·“〕 I:規·、支'×矯一-一一一州 l:蔆..…、::&&.k:〕 1:一,、'三1!神》聖。l 〕-一‘一■二‘.‘二、一方.&.…盒羋磁〕 〕】:今一為瀛!l i'、A'韋,;&―莽也..&.…‘l :隊。州豔紙’緬斤//l 綱州一軍瀾凡.&i ―了!一“×軍一― l三…l