Tag Archive for: economic development

JC History Tuition Online - Why was NEDCOL created

Why was NEDCOL created?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical context: Rise of NEDCOL
After the end of World War Two, Prime Minister Plaek Phibunsongkhram led his government to oversee economic recovery. As a result of economic isolation, Thailand‘s rice trade declined significantly, with the exception of its continued trade efforts with imperial Japan during the war.

As part of its efforts to carry out import-substitution industrialisation (ISI), the Phibun government oversaw the creation of state agencies, such as the National Economic Development Corporation Limited (NEDCOL).

NEDCOL was established in 1954 as a holding company with five manufacturing subsidiaries, namely two sugar mills, a jute mill, marble factory and paper mill. NEDCOL functioned as a guarantor of loans, supporting the growth of Thai and Chinese businesses.

During the period 1947-57 development strategy, while never clearly stated, had all the characteristics of ISI. However, these policies did not centre on tariff protection. Tariffs were treated primarily as sources of revenue. In addition, Akrasanee and Juanjai have suggested that the Phibun regime ‘deliberately avoided protecting industries for fear of promoting the Chinese community’. Rather industrialisation was promoted through the direct participation of the state in production.

State enterprises were set up with monopolies in such areas as brewing, paper manufacture, sugar refining and gunny sack production. […] Through NEDCOL the state acted as a guarantor of loans enabling comparatively large-scale foreign funding to be obtained for many of these enterprises.

An excerpt taken from “South East Asia in the World-Economy” by Chris Dixon.

Notably, the government’s share of domestic investment from 32% in 1952 to more than 38% in the period 1953-55, highlighting the key role that direct state investment played in the manufacturing sector.

Political clashes: Phibun vs Sarit
However, NEDCOL did not last as it became bankrupt in 1957. It coincided with the year in which Field Marshall Sarit Thanarat led a coup d’état against Phibun on 16 September 1957. It was revealed that corruption plagued NEDCOL, thus explaining the lack of productive investments.

NEDCOL was established in 1954 and was administratively subordinate to the Ministry of Defence. The Minister of Finance was closely affiliated with General Phao, the Director-General of the Police. When a coup d’état ousted Phao’s patron, in 1957, it was discovered that less than half the funds allocated to NEDCOL had actually been used for investment purposes. The remainder had disappeared. The belief is that these funds were used to keep Phao’s political clique together. This sort of activity has been repeated innumerable times since 1950.

An excerpt taken from “World Peace and the Developing Countries: Annals of Pugwash” by Joseph Rotblat and Ubiratan D’Ambrosio.

Picking up the pieces: post-NEDCOL
In the wake of the fallout, the Sarit government had to take over the company. With support from foreign economic advisor, John Alfred Loftus, the government managed to restructure and salvage the factories. As for the debt accumulated by NEDCOL, Loftus was able to renegotiate and extend the debt payment structure.

The NEDCOL experience stands out because of the foreign financial obligations it imposed on the Thai budget for five years and because it was the largest single industrial venture of the period. […]

Loftus was chagrined by the entire state enterprise policy and the economic wastage he observed that flowed from the disregard for ordinary good business practice. In a memorandum from 1961 addressed to M. L. Dej Snidwongse, the chairman of the Executive Committee of the National Economic Development Board (NEDB), Loftus observed that the government lacked even basic data on its own enterprises, was in no position to exercise financial or policy control over these enterprises, was allocating resources to them without applying any criteria or objectives, and was tolerating gross inefficiency in their operation.

An excerpt taken from “The Fifth Tiger: Study of Thai Development Policy” by Robert J. Muscat.

What can we learn from this article?
Consider the following question:
– How far do you agree that that expertise was most crucial in determining the economic development of Southeast Asian states after independence?

Join our JC History Tuition to learn more about the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How did the Guided Democracy affect the Indonesian Economy

How did the Guided Democracy affect the Indonesian Economy?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical context: Power Struggle
On 21 February 1957, President Sukarno delivered a speech, which claimed that Western parliamentary democracy was the root cause of political crises in Indonesia. As such, he proposed a change to the political system that will unify the Indonesian people. This was termed the ‘Guided Democracy‘.

Declaring that Western concepts of parliamentary democracy in Indonesia had led to recurring crises, because of the weakness of government authority and the vehemence of political opposition, Sukarno suggested a system “in harmony with the soul of the Indonesian people”, a system in which “all members of the family sit at the table – at the eating table and at the working table”.

An excerpt taken from “‘Guided Democracy’ in Indonesia” by Justus M. Van Der Kroef, published in the Far Eastern Survey Vol. 26, No. 8 (August 1957).

A month later, the cabinet of Ali Sastroamidjojo fell apart. Subsequently, it was replaced by an extra-parliamentary party of experts handpicked by Sukarno. The President made thorough attempts to quell the regional rebellions and consolidate power, with Major General Nasution leading the charge. Over the next two years, the Indonesian Army defeated the rebellions in Sumatra and Sulawesi. The 1945 Constitution made a comeback in July 1959. In March 1960, Sukarno dismissed the members of parliament and appointed a new body to back his economic policies.

Progress or Regress?
Between 1957 and 1965, Gross Domestic Product (GDP) growth was comparatively lower than the period of 1950 to 1957, suggesting that the Guided Democracy had created more problems for the Indonesian economy. According to the Central Bureau of Statistics, the average annual growth of net national product was about 1.7% per annum. Given that population growth rate averaged 2% per annum, it meant there was declining per capita income.

One such observation can be made in the agricultural sector. The government made efforts to promote the use of new technologies to raise rice production, but to no avail. In 1959, a three-year rice production programme was launched.

Under this programme, fertiliser imports increased from 250,000 to 450,000 tons, but because of the succession of very poor rainfalls, especially in Java, in 1961, 1963, 1965 and 1967, rice output growth was disappointing. […]

Some authorities blamed the disappointing rice production performance, in spite of increased fertiliser use, on the declining effectiveness of the irrigation system, which made crops such as corn more attractive to farmers, especially in the dry season, but it is probable that most of the shift in hectarage from rice to corn in these years was due to poor rainfall, although lack of funds for irrigation maintenance certainly aggravated the situation.

An excerpt taken from “The Indonesian Economy in the Nineteenth and Twentieth Centuries: A History of Missed Opportunities” by Anne Booth.

Enter the New Order
By the end of Sukarno’s Guided Democracy, Indonesia experienced hyperinflation and severe poverty. Following the ’30 September’ incident in 1965, General Suharto led the KOSTRAD against the Communist Party of Indonesia (PKI). Sukarno was then discredited, such that he transferred power to Suharto in March 1966. This enabled Suharto to implement policies to achieve economic stabilisation in the late 1960s, ushering the start of the New Order.

In fact, per capita GDP, while certainly lower than in the late 1950s, had not sunk back to the level of 1945. But even so the economic situation was grim enough. The most pressing problem concerned the balance of payments. Debt service payments were expected to be at least $530 million in 1966; as total export earnings (including oil) were estimated to be only $430 million, it was clear that substantial rescheduling of foreign debt was inevitable. […] In short, massive injections of aid, or loans on very soft terms, would be essential to achieve the twin objectives of lower inflation and faster economic growth.

An excerpt taken from “The Indonesian Economy in the Nineteenth and Twentieth Centuries: A History of Missed Opportunities” by Anne Booth.

What can we learn from this article?
Consider the following question:
– How far do you agree that the development of the Indonesian economy was largely shaped by politics than economics under the Guided Democracy?

Join our JC History Tuition to learn more about the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What does FELDA stand for - Economic Development Notes

What does FELDA stand for?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical context
FELDA stands for ‘Federal Land Development Authority’. Under the Land Development Ordinance, FELDA was established on 1 July 1956. Its main function was oriented towards the development and relocation of land, striving to achieve poverty eradication. Land development projects were focused on the cultivation of oil palm and rubber.

In its initial stage of development from 1956 to 1970 its main function was to act as a lending body, providing funds to the state governments for land development. However, with the growing political importance of the overall rural programme (and thus land development which was a major component of this policy), FELDA was given in 1960 direct authority to open up and develop land throughout Malaysia.

An excerpt from “Group Farming in Asia: Experiences and Potentials” by John Wong.

Application of FELDA
FELDA was first put into practice in March 1957, relocating about 400 settlers over 1,680 hectares of land in Air Lanas, Kelantan. These settlers were picked from rural areas and assigned about 4 to 6 hectares of land to cultivate either rubber or oil palm. They were paid wages until their crops matured. In 1960, FELDA expanded its function to include the management of all land schemes and land development at the national level.

From that date its activities of land development and settlement rapidly increased until the present day when it has some 200 schemes throughout Peninsular Malaysia, with 40,000 settlers and their families, and sales in 1976 of M$357 million (US$145 million). In the twenty-year period from 1956 to 1976 FELDA has also opened up 967,000 acres of land and built up and an extensive processing and marketing apparatus for its products including 25 palm oil and rubber factories and bulk storage installations at Malaysia’s main ports.

An excerpt from “Group Farming in Asia: Experiences and Potentials” by John Wong.

In the 1990s, FELDA became a statutory board that generates its own income through diverse businesses. In particular, FELDA has formed private corporate entities to support its value chain of activities, such as FELDA Holding Berhad and FELDA Global Ventures.

What can we learn from this article?
Consider the following question:
– How far do you agree that agricultural policies were most significant in promoting economic development?

Join our JC History Tuition to learn more about the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What is the Look East policy - Economic Development Notes

What is the Look East Policy of Malaysia?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical context: Learning from the best
Six months after Dr. Mahathir assumed the role as the Prime Minister of Malaysia, his administration launched the ‘Look East Policy‘ in February 1982, which called upon Malaysians to emulate the Japanese work ethic and business management techniques. By doing so, the government aims to acquire Japanese expertise and capital through bilateral trade and investment.

To Mahathir, the definition of ‘East’ consisted of Japan and South Korea. Interesting, Taiwan and Singapore were not being raised as case study references.

Mahathir also mentioned two features which Malaysia proposed to adopt from the Japanese model. One was the concept of Malaysia Incorporated, intended to encourage business owners and workers in the public and private sectors to work together. Another was to create large companies based on the Japanese sogo shoshas (the large trading companies), although in Malaysia these were not developed as rapidly as the Prime Minister would have wished.

An excerpt from “Malaysian Politics Under Mahathir” by Diane K. Mauzy and R. S. Milne.

Two-pronged approach
The ‘Look East Policy’ had two parts. First, Malaysians studied at the Japanese universities. Second, trainees worked at Japanese industries. The program was mainly financed by the Malaysian government, while the Japanese counterpart deployed Japanese trainers and covered part of the expenditure.

No one can dispute that Japan achieved a miracle when it rebuilt itself after the war. How did it do it? It did it by not being advised by other people. It did it in its own way. The only advice it accepted was to produce high quality goods, goods of world standards, so as to be accepted by the world markets. The rest was entirely Japanese.

[…] Japan has been censured for the close cooperation between the government and the corporations. Japan incorporated was regarded as some kind of cronyism involving the government and the private sector. Malaysia sees nothing wrong in the close collaboration between government and the private sector. The government should help the private sector to succeed because a large chunk of the profits made by the private sector belongs to the government. In helping the private sector the government is actually helping itself.

An excerpt from a speech by Dato’ Seri Dr. Mahathir bin Mohamad, Prime Minister of Malaysia, on “Look East Policy – The Challenges for Japan in a Globalized World“, in 2002, marking the 20th anniversary of the ‘Look East Policy’.

Dr. Mahathir held a firm belief that the ‘Look East Policy’ was vital in realising his Vision 2020, an aim to transform Malaysia into fully developed nation by doubling the Gross Domestic Product (GDP) every decade between 1990 and 2020. Japan was identified as a integral role to fulfil this national aim.

A pipedream in the making?
However, government efforts to emulate the successful Japanese model were obstructed by several factors. One such problem was the cultural differences. For instance, the Japanese employees have adapted to long working hours, but there was resistance from the Malaysians.

Another issue was related to the differences in economic development. While Japan was a pro-Capitalist developed nation, Malaysia was still in the process of transforming from a developing nation to a newly-industrialised economy.

The application of the ‘Look East Policy’ can be traced to the establishment of the Heavy Industry Corporation of Malaysia (HICOM) in 1980, which was also key feature in Mahathir’s policymaking in the 1980s. With the help of a team of United Nations development experts, HICOM formed companies, such as the Proton Saga national car project (Perusahaan Otomobil Nasional) and the Perwaja Terengganu steel mill.

While still Minister of Trade and Industry, Mahathir contacted Mitsubishi, apparently without sounding out any other possible Japanese partners, and reached agreement with Mitsubishi.

[…] There seems to have been reluctance to make use of knowledgeable Chinese in the Proton project. However, on marketing and selling, the government relied on existing Chinese firms. There was some truth in comments that the Proton was not really a Malaysian car, but a Japanese car with a Malaysian “chop” (name). In 1994 Mahathir accepted this, admitting that Malaysia would not have the know-how to produce a fully fledged car for ten to fifteen years.

An excerpt from “Malaysian Politics Under Mahathir” by Diane K. Mauzy and R. S. Milne.

What can we learn from this article?
Consider the following question:
– How far do you agree that external actors were more important than domestic actors in promoting economic development of Southeast Asian states?

Join our JC History Tuition to learn more about the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How did the 1970s oil crises affect Southeast Asia

How did the 1970s oil crises affect Southeast Asia?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical context: The 1970s oil shocks
In the early 1970s, petrostates in the Arab world agreed to boycott Western nations, such as the USA and UK, for their provision of support to Israel during the Yom Kippur War against Egypt. As a result, crude oil prices quadrupled from $3 per barrel to $12 per barrel by 1974.

The second oil shock took place between 1978-1979, in which the Iranian Revolution concluded with the fall of the Shah’s regime. At that time, Iran was the world’s second-largest oil exporter. With the temporary halt in oil production in Iran, the political turmoil had further devastated the world oil markets, causing oil prices to surge to nearly $30 per barrel by early 1980.

A windfall in Indonesia: Surge of petrodollars
In Southeast Asia, oil exporting nations like Indonesia benefited from this unprecedented development, given their membership in the Organisation of Petroleum Exporting Countries (OPEC). The oil price in Indonesia increased from $1.67 per barrel in 1970 to $35 in 1981.

With large inflows of revenues from oil exports, the Indonesian government used these surpluses to correct its balance of payment deficits. Furthermore, the New Order government used the oil revenues to expand the manufacturing sector, particularly through import purchases of raw materials and capital goods. More importantly, President Suharto embarked on ambitious large-scale development programs in different parts of Indonesia, including Java.

Due to the higher oil revenues, the Indonesian government was able to undertake substantial public investments and expand and improve the efficiency of the public administration sector (for instance by raising the salaries of public servants) which, in turn, contributed to economic growth.

[…] After the early 1970s first foreign aid and then oil revenues were spent on rehabilitating and expanding the long-neglected physical infrastructure (particularly in rural areas) and transport infrastructure. This rapid expansion and improvement of the physical and transport infrastructure involved roads, railways, bridges, harbours, airports and communications.

An excerpt from “Emergence of a National Economy: An Economic History of Indonesia, 1800-2000” by Howard Dick, Vincent J. H. Houben, J. Thomas Lindblad and Kian Wie Thee.

A temporary setback: For oil-importing nations in Southeast Asia
In contrast to Indonesia and Malaysia, oil-importing nations like Thailand, Malaysia, Singapore and the Philippines were adversely affected by the rise in oil prices. Higher oil prices meant a decline of the terms of trade as well as their balance of payment positions.

Thailand was hit harder by the second oil crisis and the subsequent world-wide recession because the country had become more dependent on external trade, and the external terms of trade were no longer favourable. […] The rate of inflation as measured by the consumer price index, which was 7 to 10 percent during the period 1977-1979, accelerated to 19.7 percent in 1980. Economic growth slowed somewhat to an annual growth rate of 7 percent in the 1970s, with the manufacturing sector growing at a higher-than-average rate of around 10 percent per annum.

An excerpt from “Economic Development in East and Southeast Asia: Essays in Honor of Professor Shinichi Ichimura” by Seiji Naya and Akira Takayama.

What can we learn from this article?
Consider the following question:
– How far do you agree that governments were responsible for the economic instability in independent Southeast Asia?

Join our JC History Tuition to learn more about the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What affected the economic development of Indonesia under Suharto

What affected the economic development of Indonesia under Suharto?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Challenges that surfaced during the ‘New Order
After Suharto took over Sukarno as the Indonesian President in the late 1960s, the new leader had begun efforts to recover the Indonesian economy. Agendas were set in the new Five-Year Plan, also known as Repelita I (Rencana Pembagunan Lima Tahun I).

A crisis in the agricultural sector: Rice
In the early 1970s, a serious drought had hit Indonesia. It adversely affected rice producers, leading to a fall in production. As a result, the price of rice surged, impacting the poor. If left unchecked, this economic problem may spill over to the political sphere.

In 1973, Suharto formed the Badan Urusan Logistik (BULOG), a national rice agency. It was established to build and maintain a buffer stock of rice, managing distribution of rice across Indonesia. Also, it helped to maintain rice price stability to protect the welfare of rice farmers.

In addition, the Indonesian government aimed to create a national buffer stock of rice to pre-empt shortages, should there be unforeseen circumstances like a serious drought. By 1979, an integrated network of modern warehouses was built. This network had the capacity to store one million tons of rice across the nation.

From 1975 to 1983 BULOG implemented the government’s floor and ceiling price policy and delivered monthly rations to the Budget Groups without a hitch. […] Supporting the floor price received top priority as a way of stimulating domestic rice production, a crucial task because of the perceived unreliability of the world rice market. From 1974 to 1978, persistent problems with disease and pests associated with the new rice varieties kept upward pressure on rural prices, so maintaining the floor price was relatively easy at the prices actually set, which merely kept pace with inflation.

An excerpt from “Indonesia’s Sustainable Development in a Decentralization Era” by Budy P. Resosudarmo, Armida S. Alisjahbana and Bambang P.S. Brodjonegoro.

Public demonstrations: Malari
In the same decade as the ‘rice crisis’, Indonesia grappled with protests in Jakarta and other parts of Indonesia, known as the Malari riots in short (Malapetaka Lima belas Januari). The origins of the riots can be traced to a visit by the Japanese Prime Minister Kakuei Tanaka. There were fears of growing Japanese influence in the commercial sectors of Indonesia.

In response to the demonstrations led by students, the New Order government mobilised the military to quell the unrest and restore order. Furthermore, public discussion of the Malari and its impacts was prohibited.

From the economic standpoint, Suharto revised the policies on attracting foreign investment, especially from Japan, to minimise the resurgence of socio-political instability.

The first was the so-called “Malari Affair” of January 1974, during which public anger about the rising tide of Japanese investment boiled over and called into question the continued dominance of energy extraction in Japanese-Indonesian relations. […] Malari forced a toning down of Japan’s conspicuous presence in Indonesia, as many analysts at the time identified it with Japan’s poor public image abroad.

An excerpt from “Engineering Asia: Technology, Colonial Development, and the Cold War Order” by Hiromi Mizuno, Aaron S. Moore and John DiMoia.

What can we learn from this article?
Consider the following question:
– How successful were governments in managing economic challenges in independent Southeast Asia?

Join our JC History Tuition to learn more about the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How did the Dutch influence the Indonesian economy

How did the Dutch influence the Indonesian economy?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical Context
In the 19th century, the Dutch established the cultivation system known as the cultuurstelsel. The origin of the system can be traced to the early 1800s, in which the Dutch colonial government had struggled to engage private cultivators to raise crop production for export. Under the leadership of the Dutch Governor-General, van den Bosch, he switched to a different method to cultivate export crops.

In particular, the Dutch identified individual villages and instructed the people in each village to grow specific crops, such as rice, coffee and sugar. In the 1830s, export production from Java increased significantly due to the efforts put in by the Chinese merchants and indigenous Javanese ruling class and the Dutch officials.

The emergence of economic nationalism: Limitations of the Ethical Policy
Yet, the Dutch cultivation system was not deemed by all local natives as beneficial. Within the indigenous Indonesian community, some viewed economic participation by the Chinese merchants as a threats to their interests.

Influential merchant groups in urban Java, such as the Sarekat Dagang Islam, resented competition from the Chinese. The better-off farmers in Java, who controlled irrigated rice land, resented the enforced renting of land to the sugar companies. Most of those involved in the growing nationalist movement, including growing numbers of indigenous business people, would probably have agreed with the judgement of a later economist that ‘the developmental effort under the ethical system was too little and too late to be effective in raising levels of living of the Indonesian people’.

An excerpt from “Economic Change in Modern Indonesia: Colonial and Post-colonial Comparisons” by Anne Booth.

The Sarekat Dagang Islam (Islamic Trade Union) was initially formed as a Javanese traders’ cooperative to support textile traders against Chinese competitors. In 1912, it was renamed as Sarekat Islam as the organisation evolved into a mass political party.

The Dutch Ethnical Policy (Ethische Politiek) was identified as the root cause of the unequal economic opportunities that generated resentment towards the Chinese immigrants and the colonial power. The policy was guided by its slogan: ‘irrigation, education and emigration’.

The Dutch colonial administration aimed to enhance the irrigation facilities to increase agricultural productivity. However, the intended growth target was not realised. As a result, the poor living standards had fueled the growth of Indonesian nationalism instead.

The Ethical Policy sought to protect the ‘poor’ and ‘unenlightened’ Javanese peasant against the oppression by feudal Javanese overlords and ruthless Chinese. Its formulated lofty goal was to raise the prosperity of the indigenous population through direct state intervention in economic life.

[…] The economic downturn of the early 1920s and 1930s started a period of consolidation and eventually deterioration of the Ethical Policy. The political will to initiate ethical programs waned as the administration embarked on a policy of expenditure cuts to balance the budget.

An excerpt from “Dutch Commerce and Chinese Merchants in Java: Colonial Relationships in Trade and Finance, 1800-1942” by Alexander Claver.

What can we learn from this article?
Consider the following question:
– Assess the significance of economic challenges in influencing government intervention in post-independence Southeast Asian economies.

Join our JC History Tuition to learn more about colonial-era policies and their impacts on the Paths to Economic Development. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How was the Asian Financial Crisis resolved

How was the Asian Financial Crisis resolved?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis

An overview of the Crisis
In the early 1990s, many member nations of ASEAN pegged their exchange rates to the US dollar (USD). Given the dominant position of the Americans in the global economy, the peg instilled strong market confidence. Over time, the economic expansion in the region led to increased foreign capital inflows. By June 1997, cross-border flows in Southeast Asia totaled US$173 billion.

Greater access to capital had encouraged the provision of private loans. In turn, firms and household investors had ploughed funds into the real estate market. As a result, an asset bubble was formed. When the bubble burst, the Bank of Thailand declared its inability to prop up the largest finance company, Finance One, triggering fears of an impending market crash.

The anticipation of loan defaults resulted in the withdrawal of funds by short-term loan creditors. On the other hand, the gradual recovery of the Japanese economy resulted in the appreciation of the Yen and an interest rate hike. This led to shift of capital from Southeast Asia to Japan markets. The Bank of Thailand struggled to maintain the peg, such that nearly of its reserves were lost, forcing them to float the baht on 2 July 1997.

The unpegging of the Thai baht from the U.S. dollar in July 1997 and the baht’s subsequent collapse are commonly regarded as the triggers of the Asian crisis. The floating of the baht was made necessary by the exhaustion of Thai foreign exchange reserves, after months of futile efforts to stave off necessary policy adjustments and financial sector reforms. The crisis was preceded by an investment bubble, especially in real estate and stock markets, by widespread structural and prudential problems in the financial sector, and by a very rapid buildup of short-term foreign debt liabilities.

An excerpt from “The Asian Financial Crisis: Lessons for a Resilient Asia” by Wing Thye Woo, Jeffrey Sachs and Klaus Schwab.

Concerted efforts for crisis management
In view of the Asian Financial Crisis, governments in Southeast Asia sought solutions to dampen the adverse impacts. On 28 February 1998, finance ministers in ASEAN had gathered in Jakarta to set up a “mutual monitoring system. They agreed to seek technical support from the Asian Development Bank (ADB) to enhance the development of the system. Later, this system was known as the ASEAN Surveillance Process (ASP).

Ideally, the monitoring system will function as an early warning system, so that the affected member nations can intervene before the economic setback escalates into another crisis.

Before the Asian financial crisis, there were no surveillance mechanisms that functioned to detect irregularities in regional finance markets, either in ASEAN or in East Asia. In that respect, these two mechanisms were formed to address the same problem. However, while the ASEAN Surveillance Process oversees the ASEAN member states, the ASEAN+3 Surveillance Process addresses all East Asian countries.

An excerpt from “ASEAN as a Method: Re-centering Processes and Institutions in Contemporary Southeast Asian Regionalism” by Ceren Ergenç

ASEAN Plus Three: The Chiang Mai initiative
In 1999, the ASEAN Plus Three (APT) [or ASEAN+3] Summit was held, involving ASEAN members and three external powers – China, Japan and South Korea. In 6 May 2000, the APT met in Chiang Mai, Thailand, to derive a regional solution to avert another Asian Financial Crisis.

The Chiang Mai Initiative (CMI) became the first regional swap arrangement to address short-term liquidity difficulties in the Asia.

The CMI functioned on two branches:

  1. ASEAN Swap Arrangement (ASA) among the ASEAN member nations
  2. Bilateral Swap Arrangement (BSA) among ASEAN+3 countries

An important feature of the CMI was that crisis-affected members requesting short-term liquidity support could immediately obtain financial assistance up to an amount equivalent to 10 percent (later raised to 20 percent) of the maximum amount that could be borrowed, and that the remainder was to be provided to the requesting member under an IMF program. […] Essentially, the CMI was intended to be used for crisis lending and hence required conditionality.

An excerpt from “Monetary and Financial Cooperation in East Asia: The State of Affairs After the Global and European Crises” by Masahiro Kawai, Yung Chul Park and Charles Wyplosz.

In 2004, an expanded framework was proposed, known as the Chiang Mai Initiative Multilateralisation (CMIM). The CMIM would involve all ten members of ASEAN, China, Japan and South Korea, with a combined size of US$240 billion worth of foreign exchange reserves. Five years later, the CMIM was founded.

Structure of the Chiang Mai Initiative (CMI) [Source: Ministry of Finance, Japan]

What can we learn from this article?
Consider the following question:
– How far do you agree that the responses to manage the Asian Financial Crisis were adequate and effective?

Join our JC History Tuition to recap on the Asian Financial Crisis topic. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - What is the Singapore Economic Development Board

What is the Singapore Economic Development Board?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical Context
In 1961, the Dutch economist Albert Winsemius made a trip to Singapore to assess the economic situation as a representative of the United Nations Development Programme (UNDP) team. Then, he proposed that the Singapore Government should embark on industrialisation to address the high levels of unemployment.

On 26 April 1961, the Minister of Finance Dr. Goh Keng Swee oversaw the tabling of the Economic Development Board (EDB) bill at the Legislative Assembly. The proposed EDB was meant to replace its predecessor – the Singapore Industrial Promotion Board (SIPB). The SIPB was formed in 1957 for industrial development, but it lacked the capacity to scale up domestic production.

Singapore’s rapid GDP growth to the mid-1960s was chiefly due to expansion in the manufacturing and construction sectors. The former depended principally on import-substituting industries encouraged by the formation of Malaysia; increased construction reflected economic planning which concentrated on investment in infrastructure. The Economic Development Board (EDB), as the government’s agent, was set up as ‘the spearhead for industrialisation by direct participation in industry’ and building necessary infrastructure.

An excerpt from “The Economic Growth of Singapore: Trade and Development in the Twentieth Century” by W. G. Huff.

Then, the Permanent Secretary Hon Sui Sen assumed the role of Chairman in the newly-established EDB. Notably, there were four divisions:

  • Finance Division
  • Projects Division
  • Industrial Facilities Division
  • Investment Promotion Division

1960s: Jurong Industrial Estate, JTC and DBS
The Industrial Facilities Division took the lead in shaping Jurong into an industrial estate. Factories were built to support the production of low-value-added goods such as wigs, toys and garments. The EDB had envisioned a production base to prepare Singapore for export-oriented industrialisation (EOI) in the future.

After the Separation from Malaysia in August 1965, plans for export promotion were accelerated. In 1968, the Jurong Town Corporation (JTC) was set up to oversee industrial estate development. In the same year, the Development Bank of Singapore (DBS) was formed to take over the EDB’s role of industrial financing.

Industrialization was government-driven and approximately 85 percent of the industrial land was developed by government bodies. As a key engine driving the industrialization program, the Economic Development Board (EDB) was set up in 1961 and was instrumental in the birth of the Jurong Industrial Estate. In 1968, the Jurong Town Corporation was created as a full-fledged statutory board of the EDB to undertake planning, development, leasing and management of all industrial estates.

An excerpt from “Spatial Planning for a Sustainable Singapore” by Tai-Chee Wong, Belinda Yuen and Charles Goldblum.

1970s: Gearing up for export-driven industrialisation
The EDB then intensified its efforts to raise the skills proficiency of the labour in Singapore. The Board facilitated the formation of joint government-industry training centres and provided access to training grants.

For instance, the Skill Development Fund was set up in October 1979 to finance manpower training, upgrade business operations and retrain displaced workers. Also, it promoted the expansion and diversification of local industries, so as to position Singapore as a business hub.

With strong government support, Singapore’s reliance on entrepôt trade had declined from 43 percent in 1960 to 16 percent by the early 1970s. In contrast, it was precipitated by the increase in manufacturing activities from 11 percent of total Gross Domestic Product (GDP) in 1960 to 20 percent in 1970. By then, unemployment rate hovered around 3 percent by the early 1970s.

The EDB’s export strategy was backed by wage control measures. In 1972, the National Wages Council (NWC) was formed to set national wage policies and create annual wage guidelines to regulate wage increment.

The modest wage increase in Singapore from the mid-1970s onwards was a boon to labor-intensive manufactured exports; it also held back the natural adjustment process of economic upgrading in terms of moving towards more capital-intensive activities. Furthermore a low-wage economy creates its own vicious cycle: low wages tend to encourage firms to use labor inefficiently which in turns results in low productivity and, hence, low wages. This actually happened in Singapore in the late 1970s, as labor productivity in 1979 dipped to an all-time low of 2.6 percent amidst full employment and a very tight market.

An excerpt from “Economic Development in East and Southeast Asia: Essays in Honor of Professor Shinichi Ichimura” by Seiji Naya and Akira Takayama.

In view of this economic setback, the Government embarked on its ‘Second Industrial Revolution‘ in 1979 to undergo economic restructuring. It can be understood by its three-pronged approach:

  • Wage increments to incentivise more efficient firms to raise productivity through automation
  • Fiscal incentives in the form of taxation and subsidies to promote expansion, automation and R&D spending
  • Manpower training to cultivate a pool of highly-skilled and literate labour force

Now, [the government] decided that a series of substantial wage increases was the best way to force less productive industries and companies to upgrade, close down, or relocate to countries with cheaper labour costs. These industrial restructuring efforts, driven by a clear government commitment to raise the wage of Singaporean workers , came to be known as Singapore’s ‘Second Industrial Revolution’ in contrast with the earlier industrialisation efforts that had been focussed on solving the unemployment problem.

An excerpt from “Singapore’s Productivity Challenge: A Historical Perspective” by Lee Kuan Yew School of Public Policy.

What can we learn from this article?
Consider the following question:
– To what extent was government intervention most crucial in explaining the economic development of Singapore?

Join our JC History Tuition to comprehend the topic on Paths of Economic Development in independent Southeast Asia. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.

JC History Tuition Online - How was Thailand affected by the Asian Financial Crisis

How was Thailand affected by the Asian Financial Crisis?

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Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 2: Asian Financial Crisis

Overview
The Asian Financial Crisis of 1997 was a devastating problem that impacted fast-growing economies in Southeast Asia. Before the crisis, the region was fuelled by unprecedented growth, as seen by the rise of the ‘Tiger economies’ like Singapore.

The epicentre: Thailand
With the Bank of Thailand (BOT) at the helm of the nation’s push for financial liberalisation from the 1980s to the early 1990s, few had expected the central bank to assume partial responsibility for the underlying problems.

Since the 1960s, the Thai baht was tied to the American dollar. This arrangement proved beneficial in accelerating the Thai government’s switch from import-substitution industrialisation (ISI) to export promotion. The establishment of export processing zones (EPZs) was carried out in tandem with the large capital inflows from newly industrialised economies, such as Taiwan.

Like a moth to a flame: Enter the BIBF
Furthermore, the BOT had accepted Article 8 of the International Monetary Fund (IMF) Agreement on 20 May 1990. It meant that BOT agreed to open the Thai economy to a larger degree of financial liberalisation. Notably, the Bangkok International Banking Facilities (BIBF) was formed in March 1993 as an offshore banking centre, turning the nation in to an investment hub that could compete with Singapore.

As a result of Thailand’s market-friendly measures, the economy gained from a tremendous amount of capital inflow.

In fact, between 1988 and 1996 Thailand was the recipient of the largest capital inflows relative to GDP in the world. According to the Bank of Thailand, between 1988 and 1996 Thailand received a staggering cumulative amount of US$100.3 billion, about 55 per cent of 1996 GDP, or 9.4 per cent of GDP on average per annum.

An excerpt from “The Asian Financial Crisis: Crisis, reform and recovery” by Shalendra Sharma.

An impending disaster
However, excessive capital inflow proved to be more detrimental than beneficial for Thailand. In particular, the influx of short-term capital, also known as ‘hot money‘, have debilitating effects on the economy, such as a widening current account deficit and an appreciation of the real exchange rate.

Although capital control measures were introduced on 8 August 1995, such responses proved futile. By mid-1997, Thailand’s external debt stood at US$94 billion. Its current account deficit was nearly 8.5% of the Gross Domestic Product (GDP).

In anticipation of the Thai government’s inability to finance their ever-growing foreign debt, foreign investors brought their money out of the nation. On 10 May 1996, the Bangkok Bank of Commerce (BBC) collapsed, causing widespread panic in the financial market. In December 1996, more than 50 percent of the companies listed on the Stock Exchange of Thailand (SET) declared falling earnings. On 5 February 1997, Somprasong Land Company defaulted.

On 5 February came the first Thai default, by the company Somprasong, on a foreign loan repayment. Later that month, it was announced that the largest of the finance companies, Finance One, was seeking a merger with a bank to stave off collapse. In the face of widespread fears of an impending financial implosion, Financial Minister Amnuay and central bank governor Rerngchai Marakanond suspended trading of financial sector shares on the stock exchange and went on national television to announce a series of emergency measures designed to reassure nervous markets.

An excerpt from “The Asian Financial Crisis and the Architecture of Global Finance” by Gregory W. Noble and John Ravenhill.

Although the Thai Prime Minister Chavalit Yongchaiyudh had claimed that the baht would never be allowed to devalue, a massive depreciation occurred on 2 July 1997. Subsequently, the Chavalit administration turned to the IMF for help.

What can we learn from this article?
Consider the following question:
– How far do you agree that the Asian Financial Crisis was inevitable?

Join our JC History Tuition and learn to answer essay questions on the Asian Financial Crisis. The H2 and H1 History Tuition feature online discussion and writing practices to enhance your knowledge application skills. Get useful study notes and clarify your doubts on the subject with the tutor. You can also follow our Telegram Channel to get useful updates.

We have other JC tuition classes, such as JC Math Tuition and JC Chemistry Tuition. For Secondary Tuition, we provide Secondary English Tuition, Secondary Math tuition, Secondary Chemistry Tuition, Social Studies Tuition, Geography, History Tuition and Secondary Economics Tuition. For Primary Tuition, we have Primary English, Math and Science Tuition. Call 9658 5789 to find out more.