ABSTRACT
Malaysia is often classified as liberal, with its export-oriented industries considered to be governed by free markets, being a fast growing economy. The modern manufacturing sector which emerged during colonialism began to expand after independence in 1957, with foreign firms setting up assembly, packaging and other finishing manufacturing operations to benefit from the high tariffs introduced following the Pioneer Industries Ordinance of 1958. This demand–pull effect on foreign capital began to fall gradually as the local market became saturated. Except for beverages and tobacco, the domestically-oriented industries have become increasingly locally owned. It also appears that the EO industries generally have higher levels of investment, employment and output growth than the inward-oriented industries, reflected in the EO industries’ rising contribution to overall manufacturing. The industry was mainly characterised by simple fabrication and foundry work, and operated primarily as backyard workshops.
