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Royal professor Ungku Abdul Aziz: A key pillar in Malaysia’s development

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Abstract

Few economists in Malaysia have pursued their academic career with anchors solidly planted into the plight of the people. Royal Professor Ungku Aziz was a rare mind who achieved intellectual distinction for his tiring efforts to theorize and study poverty in Malaysia, which led to the government’s strategies strongly mirroring his recommendations. This article analyses five of the major contributions he made that emerging scholars can look up to as examples of exemplary intellectual leadership, as well as, academic scholarship. © 2015, Faculty of Economics and Administration. All rights Reserved.
Institutions and Economies
Vol. 7, Issue 3, October 2015, pp. 1-19
Royal Professor Ungku Abdul Aziz: A
Key Pillar in Malaysia’s Development
Rajah Rasiaha,1, Norma Mansorb and Chandran VGRc
Abstract: Few economists in Malaysia have pursued their academic career
with anchors solidly planted into the plight of the people. Royal Professor
Ungku Aziz was a rare mind who achieved intellectual distinction for his
tiring efforts to theorize and study poverty in Malaysia, which led to the
government’s strategies strongly mirroring his recommendations. This article
analyses ve of the major contributions he made that emerging scholars
can look up to as examples of exemplary intellectual leadership, as well as,
academic scholarship.
Keywords: Economic Development, Poverty, Malaysia, Ungku Abdul Aziz
JEL Classication: I31, I38, P13, P25, Q13
a Corresponding Author. Faculty of Economics and Administration, University of Malaya.
Email: rajah@um.edu.my
b Social Security Research Centre (SSRC), Faculty of Economics and Administration, University of
Malaya. Email:norma@um.edu.my
c Faculty of Economics and Administration, University of Malaya. Email:vgrchandran@um.edu.my
1. Introduction
At a time when nascent Malaysia, which carried the name Malaya from British
rule until September 16 1963, sought ways to transform colonial structures
that had served largely to meet British interests (Shamsul, 1986), Malaysia
was fortunate to have Royal Professor Ungku Abdul Aziz whose contribution
to the theories of economic development in the 1950s until the 1990s was
unrivalled. Ungku Aziz’s intellectual innings is now reaching a century but
his colossal contributions to the country’s development still remains fresh in
the minds of people. Of the many contributions he has made, we ag ve to
celebrate his contribution to nation building.
The rst deals directly with alleviating poverty as Ungku Aziz (1956,
1964) discussed strategies to end middlemen exploitation that removed the
poor peasants from competing directly in the end market. These strategies
were linked to the two prongs of the New Economic Policy (NEP) namely,
poverty alleviation and the removal of ethnic identication with occupations.
The second is Ungku Aziz’s (1972) efforts to convince the then Prime Minister
Tun Abdul Razak to explore export diversication and promote agricultural
industries on a commercial basis in the country. The third major contribution
relates to Ungku Aziz’s (1959) idea in launching the Tabung Haji (TH)
Rajah Rasiah, Norma Mansor and Chandran VGR
2
concept to assist Mecca-bound Muslim pilgrims avoid usury when seeking
to perform the Haj. The fourth relates to his role in promoting cooperatives
in Malaysia. The fth and nal contribution that will be analysed is his role
as an educator and Vice Chancellor. Several experts obviously were involved
in the rst four contributions but this article puts on record that Ungku Aziz
was one of the pioneering contributors to the launching of these initiatives.
The rest of this article is organised as follows: Sections 2, 3, 4, 5 and 6 discuss
Ungku Aziz’s ve arguably foremost contributions while section 7 presents
the outline of the papers in this special issue.
2. New Economic Policy
The question of ethnicity cannot be avoided on any discussion related the
Malaysian economy, a legacy that began thousands of years ago but was
accelerated during British colonialism as Chinese and Indians came in large
numbers to work in tin mines and rubber plantations respectively; they were
also brought in to develop port facilities and infrastructure (Lim, 1988; Kaur,
2003). Like most countries, international migration was based on an open-
door policy before the 20th century, though technological limitations restricted
peoples’ capacity to move as we go deep into history. There are many studies
on how the conguration of ethnic groups inuenced the formulation of the
New Economic Policy (NEP) and its consequences on occupational and class
structures (Shamsulbahriah, 1996; Khong and Jomo, 2009).
Critics of the NEP claim that it is the prime reason why Malaysia did not
record the extraordinary growth rates enjoyed by Singapore, the Republic of
Korea and Taiwan (Jesudason, 1989, 1997; Yoshihara, 1988). Supporters claim
that the framework that the NEP provided offered a trade-off to ensure that
growth based on an equity framework prevented political chaos (World Bank,
1980), though, others who shared this thought criticised its implementation
for the slower growth rates achieved arguing that the focus on creating a
state-dened bourgeoisie among Bumiputeras undermined the creation of
competitive entrepreneurs and corporations (Rasiah, 1997; Rasiah and Ishak,
2001). In discussing Ungku Aziz’s (1964, 1972a) contributions to the NEP, it
is important to distinguish his contributions related to policy implementation.
The focus of NEP, which was outlined and implemented via the Second
Malaysia Plan in 1971 to alleviate poverty and eliminate ethnic identication
by occupations, presented Malaysia with an opportunity to target poverty
reduction and to integrate the then truncated living of the ethnic communities
that had evolved during British colonialism into a plural society (Malaysia,
1971).While this was the actual aim of the NEP, its implementation left much
to be desired (Ishak, 2000a, 2000b; Jomo, 1986; Jomo and Ishak, 1986). With
the ruling coalition, Alliance until 1970 and the National Front since 1970,
constituted by political parties that represented particular ethnic groups, the
overzealous pursuit of garnering votes led to the predominance of Malays in
3
Royal Professor Ungku Abdul Aziz: A Key Pillar in Malaysia’s Development
the civil service. Hence, while there were successful forays into restructuring
ethnic-based concentration in plantations and in professional occupations such
as doctors, engineers, accountants and lawyers, the civil service (including the
military and police) and government linked companies became dominated by
the Malays. It must be said that the expansion of Malays into the civil service
including public universities, hospitals and schools was a departure from the
original aims of the NEP.
While the NEP distanced itself from the socialist versions in the Soviet
Union and China (Park, 1986), by targeting restructuring based on new growth
and on efciency grounds (Malaysia, 1971) the implementation took on ethnic
coloration. Alas, while policy advisors such as Ungku Aziz had conceived
a robust way of achieving the NEP’s twin goals, the implementation was
shrouded by political interests. Aspects of nationalism that took account of
the peoples of Malaysia but with a strong focus on the indigenous peoples
is to be found in Silcock and Ungku Aziz (1953; see also Said, 1996) Ungku
Aziz (1965) had argued that poverty in Malaysia knew no racial barriers. The
divide and rule policy of the British and its adverse impact on nationalism has
been well documented (see Abraham, 1970; Amin and Caldwell, 1977; Husin
Ali, 1984; Gabriel, 2012).
Drawing data from the 1960 agricultural census, Ungku Aziz (1964: 81)
noted that 70% of farmers owned less than 5 acres of land, which he argued
were uneconomic not only because they were small but also because they
were fragmented and non-contiguous and planted with different crops. His
work on the deciencies of fragmentation in relation to poverty extended
beyond the Malays could be seen from his research on the sub-division of
estates (1962: 168). Ungku Aziz had argued that the increased fragmentation
of estates aggravated the plight of Indian workers who lost condence in
the National Union of Plantation Workers (NUPW) due to retrenchment.
Ungku Aziz (1962) argued that the disgruntled workers discontinued their
membership with NUPW because of its inability to help them to address their
grievances.
The government aggressively developed the infrastructure, including
roads, canals and drains to integrate the peasants into the capitalist market
system. A major scheme under this development pursuit was the Muda
Agricultural Development Authority (MADA) that sought not only to
develop physical infrastructure, but also modernisation of paddy farming by
using high-yielding paddy seeds and modern machinery. Also, rather than
allowing the Malay peasants to be oppressively exploited by market forces,
the government introduced interventionist mechanisms and organisations to
protect the poor. Poverty alleviation was foremost in Ungku Aziz’s mind when
advising government on development issues. Ungku Aziz (1964) introduced
alternative measures to reduce poverty levels that reected to some extent the
plight of the poor, which also went beyond traditional and current measures
of poverty (see Ragayah, 2007). Ungku Aziz devised the sarong index, which
Rajah Rasiah, Norma Mansor and Chandran VGR
4
was derived by dividing the number of sarongs in a household with the
number of persons above one year of age. Although the Sarong Index was
not an exhaustive measure of rural poverty it offered an easy approach to
distinguish the hardcore poor.
Hence, the present article argues that if only the government had broad-
ened the NEP to eradicate poverty regardless of race as proposed by Ungku
Aziz (1965), the country could have enjoyed greater progress and stability as
the circumstances experienced by the Malays were no different from the poor
irrespective of their ethnic backgrounds. For example, Indians faced the same
environment in the rubber estates where large families shared common toilet
and bathing facilities that catered to all the tapper families. They accessed rain
water and common tap located on the street, as well as, oil lamps as a source
of light. Their parents were so poor that most of their income often went to
settling debt from money lenders. Attending school on time was itself a daunt-
ing task for children of poor families. Indeed, some of them never had any
text books or the money to pay their school fees. Many dropped out of school
with those from family criminal histories often trapped in what Lewis (1969)
referred to as the vicious circle of poverty (see also Salih, 1982). The poor
who live in rural locations were alienated from mainstream society and often
ended up unable to live normal lives.
Subsumed in the NEP debate is Ungku Aziz’s (1964) incisive arguments
on the causes of poverty who believed that the peasants were poor because
they were so far away from modern infrastructure and the end market,
which led to massive exploitation by the middle men. While rural locations
disadvantaged the Malay peasants, they also earned little money for their farm
and sh produce because of the asymmetric powers enjoyed by the middle
men. Hence, the government under the premiership of Tun Abdul Razak and
Tun Musa Hitam who took charge of the Primary Industries Ministry, launched
the Farmers Marketing Authority (FAMA), Lembaga Padi dan Beras Negara
(LPN), Malaysian Rubber Development Corporation (MARDEC), and the
land tenure schemes of Federal Land Development Authority (FELDA),
Federal Land, Federal Land Consolidation and Rehabilitation Authority
(FELCRA) and Rubber Industries Smallholder Development Authority
(RISDA) to assist the smallholders, and the Lembaga Padi dan Beras Negara
(LPN) to assist paddy farmers. The government also introduced controls to
stabilise prices of oil palm. The Majlis Amanah Rakyat (MARA) was founded
in the 1960s to assist Bumiputeras. While these organisations have played a
stellar role to alleviate poverty among the Bumiputeras, we believe that their
success would have been more meteoric if the focus had been on the poor in
general as it would not only have solved the problems of the non-Bumiputera
poor it would also have enhanced ethnic integration and assimilation.
One major criticism by authors such as Jomo (1986), Cham (1975), Toh
(1984), was over the implementation of the NEP is the target of achieving 30%
5
Royal Professor Ungku Abdul Aziz: A Key Pillar in Malaysia’s Development
corporate equity for the Malays, which eventually led to the promulgation of
the Industrial Coordination Act in 1975. Under this act, businesses registered
in Malaysia above the mandatory registration oor were expected to offer
30% equity to Bumiputeras. The term Bumiputera refers to all those with
indigenous roots, though the dictionary denition refers to it only as “sons
of the soil”. The Permodalan Nasional Berhad (PNB) and the expansion of
government linked companies to achieve this target have been viewed by
some to have diminished the capacity of corporations to compete in open
markets, reduced government nance available to meet its social obligations
and crowded out the market from private interests in certain sectors (Gomez
and Jomo, 1997; Gomez and Saravanamuttu, 2012). Such was the focus on
achieving “ethnic equity” that it led Jesudason (1989) and Yoshihara (1988)
to argue that the overriding policy had acted to discourage the Chinese
from venturing into industry on a large scale. Rasiah (2011) argued that the
disproportionate emphasis along ethnic lines preferring the Bumiputeras to
lead and head government and government linked organisations, denied the
government the opportunity to hire non-Bumiputeras endowed with good
knowledge to manage key organisations, such as the Malaysian Institute of
Microelectronics Systems (MIMOS) or even the government-owned wafer
fabrication plant, Silterra.
The 13 May 1969 inter-ethnic riot and bloodshed was interpreted
as essentially a signal that the Malays feared losing political power. The
government felt an absolute need to redress inequalities on the economy
dominated by the Chinese in particular and non-Malays in general. The NEP
then took on corporate equity restructuring as one of its goals but it was never
spelt out explicitly in the two prongs that targeted poverty alleviation and
restructuring to remove ethnic identication by occupations. For those who
subscribe to this argument, the 30% equity for the Bumiputeras is viewed as
essential to ensure political stability. This argument implies that under such
circumstances, Malaysia’s economic growth experience to date is remarkable
as any efforts to drastically raise it could have undermined stability, and with
that destroyed whatever that had been achieved thus far. Given his focus on
the poor rather than on the creation of a Malay bourgeoisie, the present study
believes Ungku Aziz did not subscribe to this view.
3. Economic Diversication to Ensure Export Stability
Malaya and later Malaysia was gripped by serious balance of payments decits
caused by volatile uctuations in commodity prices. Tin and rubber had on
several occasions experienced major price crashes (Jomo, 1990). The inability
of tin and rubber exports to maintain steady prices in export markets and
worsening unemployment throughout 1960s (which reached 8.1% in 1970),
encouraged the government to earmark export manufacturing as the engine
of growth when the Second Malaysia Plan was launched in 1971 (Malaysia,
1971). The incidence of poverty and the Gini coefcient of income inequality
Rajah Rasiah, Norma Mansor and Chandran VGR
6
in Peninsular Malaysia in 1970 was 49.3% and 0.513 respectively (Ragayah,
2014: 40-41).
While the incidence of poverty began to fall since the NEP was
implemented, the Gini coefcient as an indicator of inequality rose to 0.529
in 1976. Nevertheless, the aggressive introduction of rural development
programmes and export-led industrialisation helped reduce the incidence of
poverty to 15.0% and Gini coefcient to 0.446 in 1990 (Ragayah, 2014: 40-
41).
While economic diversication was launched in the 1960s when oil palm
began to replace rubber in some plantations, its aggressive promotion only
began in the 1970s. Tun Musa Hitam, who had served as a lecturer for several
months in 1970 at the Faculty of Economics and Administration, Universiti
Malaya, where Ungku Aziz was a Dean, had taken the position of Primary
Industries Minister under the administration of Tun Abdul Razak. Tun Musa
Hitam called for the resumption of research a la the kind Ungku Aziz carried out
to ensure that policy makers in Malaysia are aware of any possible resurgence
of poverty in the country2.Ungku Aziz’s ideas on poverty alleviation, including
solving middlemen exploitation and economic diversication, were absorbed
into government planning. Hence, a massive exercise to diversify the economy
began to take root from 1971. Oil palm cultivation began to expand rapidly
along with efforts to increase self-sufciency in rice production as large scale
drainage and irrigation began to take shape in Peninsular Malaysia (Gopal,
2001). The Farmer’s Marketing Authority (FAMA) began to connect directly
with the poor Malay farmers to eliminate middlemen exploitation. The
Lembaga Kemajuan Perikanan Negara (LKPN) and the Lembaga Padi dan
Beras (LPN) began to play a similar role to assist poor shermen and farmers
respectively. In addition, the government modernised agricultural operations
with supplies of subsidised gadgets, machinery, fertilisers, boats and seeds
(Osman, Pazim and Rasiah, 2011).
Ungku Aziz’s ideas on economic diversication became an important
alternative to the ‘fallacy of composition’ debacle that gripped countries
dependent on a few primary commodity exports. Prebisch (1949) and Singer
(1950) had argued that the demand-supply structure of primary commodities
in which a few importing nations enjoy asymmetric power where demand
moves slowly and over-supply is often the case as developing economies target
export expansion to raise revenue, which tends to apply a severe downward
pressure on the terms of trade of developing economies. Apart from short
term commodity booms when prices rise as a consequence of falling supplies
and soaring demand, the nature of such demand-supply conditions facing a
few narrow commodities saw a trend fall in terms of trade facing developing
economies. Sarker and Singer (1991) extended the fallacy of composition
argument to light manufactured goods from the 1970s. Ungku Aziz is role
as an economic advisor to the Malaysian government was instrumental is in
reducing the deleterious impact of a narrow specialisation in rubber and tin
7
Royal Professor Ungku Abdul Aziz: A Key Pillar in Malaysia’s Development
so that export revenue was not severely affected over the long run (see Salih
and Lo, 1978).
Rasiah, Osman and Rokiah (2000) subsequently showed how the
diversication of agriculture and the promotion of manufactured exports
helped strengthen the economy, which reduced Malaysia’s dependency on a
few narrow commodities. Tin’s contribution to Malaysia’s economy faced an
irreversible fall following the 1979-80 commodity crash, which also adversely
affected the prices of rubber and oil palm (Jomo, 1990). The subsequent
substitution of rubber with oil palm as the main export also generated further
economic advantages. While prices of natural rubber uctuated heavily
because of its dependence on a few large users (mainly in the production of
automobile tyres), demand for edible palm oil was dispersed as end-consumers
were many and the bulk of the demand had moved to the developing economies
of China, India and the Africa where the soybean lobby had little impact. As
a consequence, despite the soybean lobby painting a negative picture of palm
oil, prices of the latter remained high. The government also implemented a
cess that subsidised prices when it fell below a dened band and research
targeted at improving yields. Although natural rubber prices subsequently
improved as demand for rubber gloves and condoms soared in the 1980s,
the massive switch to oil palm that made the crop even more important than
rubber exports. The Malaysian Palm Oil Board (MPOB), as well as major
palm-oil based rms, both Malaysian and foreign, have played an important
role to continue to introduce new products (Rasiah, 2006).
4. Tabung Haji as a Haj Financing Saving’s Instrument
Ungku Aziz (1959) pioneered a helpful and smart way to help Muslims avert
the problem of usury when undertaking the Haj pilgrimage (usuryis prohibited
in Islam). His paper titled Rancangan Membaiki Ekonomi Bakal-bakal Haji
(Programmes to help prospective haj pilgrims improve their economic
conditions) of 1959 became the basis for the founding of Perbadanan Wang
Simpanan Bakal-bakal Haji (Trust fund for prospective haj pilgrims) in 1962.
What is today known as Tabung Haji (Haj Trust Fund) was a product of a
merger between this organisation and Pejabat Urusan Hal Ehwal Haji (the
ofce of Haj Affairs) in 1969. Ungku Aziz’s research on the rural Malays
showed that a major driver behind their efforts to save was to enable them
to perform the haj, the fth tenet of the Islamic principles, in Mecca, Saudi
Arabia. The general idea was to assist prospective Muslim pilgrims while
at the same time contribute to their national economic progress through the
establishment of Malayan Pilgrims Fund (Ungku Aziz, 1959). He quoted the
following two verses of the Quran:
Perform the Pilgrimage and the Umrah (visit to Mecca) for Allah” (Al-
Baqarah: 196)
Help one another unto righteousness and pious duty” (Al-Ma’idah: 2)
Rajah Rasiah, Norma Mansor and Chandran VGR
8
Ungku Aziz had argued that the plan will benet small savers and the
national economy, as well as, help better manages the prospective pilgrims in
Malaysia. Traditionally, rural Malays sold surplus paddy to purchase buffaloes
which were then sold to acquire land. Those with endowments would then
sell land to raise funds to perform the Haj. Ungku Aziz concluded that such
a practice was inefcient, fraught with risks and unsuitable in a modern
economy. In the process of buying and selling buffaloes, farmers could incur
losses and in obtaining and holding land as a form of savings can be perilous
in case of high rents, sub-division and fragmented farms due to the law of
inheritance (Ungku Aziz, 1959). In addition, although savings in the form of
cash was desirable, savings within a formal corporation insured against loss,
re or theft compared with keeping cash at home. The alternative method
of savings with conventional nancial institutions was not palatable to rural
Malays as interest payments or usury is prohibited in the execution of the Haj.
Usury or riba’ is prohibited by the Shari’ah. Riba’, literally means ‘to
increase, to grow or to add’ above the principal amount of the loan or for
extension of maturity (Chapra, 1985; Ahmad and Kabir, 2007). Hence, the
recommendations proposed by Ungku Aziz (1962) were included in the
report of the Pilgrims Economic Welfare Committee, which concluded that
it was crucial to expand and establish institutions to mobilise savings of the
rural community to support economic development. The Pilgrims Savings
Corporation was thus established in 1962. Subsequently, the Pilgrims
Management and Fund Board or Tabung Haji was established in 1969 through
the enactment of the Lembaga Urusan Dana Tabung Haji Act in 1969 (Khiyar,
2012).
The Tabung Haji investment plans follow the Shari’ah principles strictly.
The Al-Musharakah guides shareholder nancing of projects and dividends
or prots. The Bai Bithaman Ajil denes how Tabung Haji provides nancing
with deferred payment where the agreed price comprises actual cost and prot
margin. The Al-Mudarabah describes how capital is provided by one party
while the other provides skills and expertise, and in the event of losses, it is
borne by the capital provider. The Al-Murabahah deals with nancing that
consist of repayment, including prot margin, as agreed by both parties. The
Al-Qardhul Hasan is a benevolent loan where the capital provider is guaranteed
at least the principal amount. Finally, the Al-Ijarah deals with repayment for
the right to use services of an asset (Islamic Development Bank (IDB), 1995).
The Tabung Haji enables the management of a nancial system that
includes savings and withdrawal of funds by depositors as well as investments
from accumulated funds. Throughout the years, Tabung Haji has become a
credible and successful fund management organisation widely viewed as a
successful social innovation (Bajunid, 2013). The Tabung Haji managed to
collect a total of US$49,600 from 1,281 depositors within one year of its
operation (Khiyar, 2012). The total deposit increased from RM23.6 billion
9
Royal Professor Ungku Abdul Aziz: A Key Pillar in Malaysia’s Development
in 2009 to RM45.7 billion in 2013 while the number of depositors rose from
5.04 million in 2009 to 8.3 million depositors in 2013 (Lembaga Tabung Haji,
2013). The application procedures for Tabung Haji funds have been simplied
considerably over the years (Mannan (1996). Despite the absence of riba,
the successful expansion of Tabung Haji has led to its net prots rising from
RM1.1 billion in 2009 to RM2.6 billion in 2013 (LTH, 2013).
Overall, Tabung Haji has become a renowned Islamic nancial institution
that has enabled the realisation many pilgrims to perform the Haj successfully
supplanting the previously and traditionally unreliable and inefcient methods.
Tabung Haji provides evidence that Malaysian Muslims, especially from the
rural community, have been able to perform the Haj in less time while at
the same time insuring against physical losses; additionally the savings have
helped build domestic capital for national economic development (Ҫizakҫa,
2011).
5. ANGKASA’s Unifying Role in Synergising Cooperatives
The cooperative movement in Malaysia began in 1922 with the sole aim
of providing credit facilities to members. However, until the early 1950s,
there was an absence of understanding of the principles and philosophy of
cooperatives owing to a lack of guidelines and programmes. Their activities
were mainly concentrated in facilitating credit and were run based on
members’ preferences without any deep understanding about the principles
of cooperatives. It is only since the 1950s that the scope of the cooperative
movement in the country began to widen as cooperatives started to pursue an
improvement in the socioeconomic status of members.
Since the establishment of Maktab Kerjasama Malaysia in 1956 and
National Co-operative Movement of Malaysia (ANGKASA) in 1971, the
administration of cooperatives in Malaysia has become more focused. Ungku
Aziz, among others, was a major proponent of this movement as he mooted
the idea of targeting cooperative associations as a vehicle for economic
development in Malaysia. While he considered smaller sized cooperatives
to be disadvantageous, his position was not one of dismissing their existence
as uneconomical. Instead, he believed in the pooling of resources to reap the
benets of economies of scale. Ungku Aziz was instrumental in the formation
of ANGKASA, which sought to unite the cooperative movements around the
country, particularly in rural areas. The ANGKASA was founded through the
rst Cooperative Congress in 1966 and Second Congress of Cooperatives
in 1971. ANGKASA started in 1971 with nearly 5,000 cooperatives and
registered membership of six million people and assets worth RM47 billion.
It very much owes its evolution to Ungku Aziz who helmed its leadership as
chairman for 38 years.
Ungku Aziz’s (2000) rst task was to propagate the importance of the
cooperatives and its governing principles and rules. He realised the principles
Rajah Rasiah, Norma Mansor and Chandran VGR
10
and rules of the cooperative movement were poorly understood by the
bureaucrats as well as the farmers. He held that, through cooperatives, farmers
would be able to address the socioeconomic challenges with the consolidation
of various agriculture-related cooperatives. Ungku Aziz passionately believed
and advanced the view that the success of cooperatives depended on “working
together for the benet of all” regardless of ethnic, gender, social, cultural
and religious differences. He highlighted that by understanding the meaning
of cooperative, its leaders would be able to manage successfully to achieve
their desired objectives and mission. He entrusted the value of Truthfulness,
Trustworthiness and Transparency in cooperative movements. He emphasised
that not adhering to these basic principles will give rise to problems within
the cooperatives. Through his writings and wisdom, Ungku Aziz (1966,
1967) propagated the principles of cooperatives and the role of cooperative
movements on national development. Indeed, it is the lack of these virtues
among some ofcials of ANGKASA that resulted in major corruption scandals
which led Ungku Aziz to call for speedy and thorough investigation into their
activities in January 2009 (CAP, 2015).
In pursuing his goals, Ungku Aziz planned various programs to
deliberately bring women into mainstream activities and to also empower
them in cooperatives. He emphasised that women should be given opportunity
to hold leadership positions so that they are in a better position to represent
their gender and to promote women’s welfare. He also emphasised the need
for women to play an active role in the development of cooperatives. Ungku
Aziz (1965) strongly advocated that education and training should play a key
role in advancing the cause of cooperatives in eradicating poverty as well as
to develop the rural economy.
The ANGKASA has continued to play a pivotal role in the progress of
the cooperative movement in Malaysia. It offers a wide range of programmes
while its main services are managed by the Division of Education, Information,
Publications and Services. Services include training courses and continuing
education for its members, distance learning, accounting courses and the
administration of cooperatives courses.
6. A Charismatic Intellectual and Academic Leader
Ungku Aziz began his career in academia in 1952 when he started teaching
Economics at Universiti Malaya. He became the founding Dean of the Faculty
of Arts and subsequently the Faculty of Economics and Administration before
assuming the post of Vice Chancellor at the university succeeding Dr J H E
Grifths in 1968. Having received a Royal Professorship in 1978 he continued
to lead the university with distinction until his retirement as Vice Chancellor
in 1988. In recognition of his career as an outstanding academician and his
contributions to society, Ungku Aziz has been bestowed with numerous awards
and honours, including the Ordre des Arts et des Lettres (France), the Grand
11
Royal Professor Ungku Abdul Aziz: A Key Pillar in Malaysia’s Development
Cordon of the Order of the Sacred Treasure (Japan), the Tun Abdul Razak
Foundation Award (Malaysia) and several honorary degrees from universities
worldwide. Malaysian newspapers used to regularly publish his views and
opinions on poverty. He was and still is widely regarded as a national hero
Malaysia.
As a researcher and professor, Ungku Aziz excelled in the eld of poverty
studies. While his passion propelled him to address the problems of poverty
directly, his academic leadership was indeed exemplary. A scholar who took on
an interdisciplinary set of lens, he was also a philosopher. Like all intellectuals
he stood with the disadvantaged and saw reason, in an epistemological sense,
to analyse problems of poverty and the issues that were considered important
by the poor.
Ungku Aziz was also a strong advocate of empiricism as the basis for
studying poverty. Indeed, he chose to study in Malaysia rather than at the
London School of Economics stating that the Malays he wished to study
lived in Malaysia rather than there. By the time he nished his eldwork ,
which began in Ulu Tiram, Johor, in 1963, he had also studied poverty in
Kedah, Perlis, Terengganu and Kelantan. He found the poor in the East Coast,
especially the shermen, living in abject poverty because they had to sell
whatever little they had to purchase basic necessities. It is through such deep
participative work that Ungku Aziz’s passion to act both as a researcher and
a problem solver led him to develop the theory of the Sarong index to gauge
poverty in Kelantan and Terengganu. The Sarong index simply referred to
a way of measuring poverty through the affordability of the poor to own
sarongs. Hence, Ungku Aziz found that the further one got into the hinterland
of cities where the poor Malays lived, the fewer sarongs per household they
were able to afford.
Recognising the importance of getting to the root cause of poverty, Ungku
Aziz identied education as the key route to alleviate poverty. Ungku Aziz
(1965) had a broad understanding of education, and hence, saw community
education to, inter alia, include the spread of knowledge about dietary factors
that affected the physical and mental development of people. He remarked
that an unbalanced diet caused worm infestation and anaemic condition
affecting mental abilities. A thoroughbred empiricist, even well into his late
80s, Ungku Aziz insisted that hard-core poverty was still rife in the rural areas
though ofcial statistics showed otherwise (see also Osman and Rasiah, 2011;
Maznah, 2012). Ungku Aziz (1972b) advocated good education as a basis
to develop the economy. Indeed, this logic should be continued in Malaysia
to battle poverty and crime as a recent study showed that intergenerational
perpetuation of poverty is an important cause of violent crime in the country
(Lee and Rasiah, 2014, 2015).
It is Ungku Aziz’s profound understanding of the obstacles facing the
poor in the rural areas and his passion for helping them that drove him to seek
Rajah Rasiah, Norma Mansor and Chandran VGR
12
alternative ways of exposing them to the importance of education. Although
his Ungku Aziz (1957) research focus was on the Malays, he also expanded
it to include rural folks from all ethnicities, including the Indians and the Bu-
miputeras from Sarawak and Sabah who he rmly believed faced the same
situation3. Perhaps the government should have carried out an assessment of
poverty irrespective of ethnic groups in Malaysia as non-Bumiputera poor
families shared similar upbringings in estates and other rural locations. Large
poor non-Bumiputera families often accessed rain water and common tap wa-
ter by the streets and oil lamps were the only source of light. Family incomes
were so small that many used them largely to settle debts from money lend-
ers. Attending school on time for poor children was always a daunting task as
most schools were located in urban areas. Many could only afford a pair of
shorts and shoes so that they wore the same apparel each week. Indeed, many
could not afford to buy even a single school book. The government of Ma-
laysia has since the run of the millennium recognised that poverty knows no
racial barriers, and has included other ethnic groups in the Asasi (Foundation)
and Maktab Sekolah Menengah Sains (Science College) programmes.
The Bumiputeras from East Malaysia were co-opted into the Pusat Asasi
Sains (Foundation Science Centre) at Universiti Malaya that Ungku Aziz
helped moot. Unfortunately, the poor Indians and other minority groups did
not enjoy the same privileges. While its subsequent implementation may have
compromised on quality, the initiative was important as Ungku Aziz’s idea
was to expose rural poor students to quality teaching and better educational
infrastructure. The government at the same time had launched well-nanced
science schools across the country to address this problem. Another element
he wanted included is the teaching of professional courses, such as medicine,
law, engineering and accountancy in Bahasa Malaysia. Ungku Aziz was one
of the pioneers in the establishment of the Dewan Bahasa dan Pustaka (DBP)
and became the founding director in 1956. While some continue to claim
that such efforts were only eroding prociency in English, efforts to deepen
the use and knowledge of Bahasa Malaysia was a good initiative as it would
have strengthened a major pillar of national identity. However, through no
fault of Ungku Aziz, Bahasa Malaysia was never developed to embrace all
the elds. Perhaps the late Rustam Sani offered the most cogent reason for
this: that Bahasa Malaysia was led by political rather than national interests
of the country. Hence, while national languages have continued to dominate
communication in the now developed economies of Japan, Republic of
Korea and Taiwan Province of China, it did not evolve sufciently to support
scientic progress and national integration in Malaysia.
Ungku Aziz was also a great role model for emerging scholars. Interviews
show that he often used his reputation to attract research grants, led the
designing of the research framework and guided the formulation of the key
pillars for analysing the phenomenon and eventually co-authored and edited
13
Royal Professor Ungku Abdul Aziz: A Key Pillar in Malaysia’s Development
good research publications. In two such exercises, Dr Chew Sing Buan, a
member of the team headed by Ungku Aziz that prepared publications for the
United Nations Educational, Scientic and Cultural Organization (UNESCO)
noted that Ungku Aziz’s experience and tacit endowments always generated
additional value to the nal output. Indeed, his upbringing gave him the passion
while exposure to the ground led him to transcend disciplinary boundaries
and cultural taboos with interest in philosophy giving him a critical mind.
Ungku Aziz’s outstanding contribution to our understanding of the role of
universities in providing higher education in general, and the labour market
in particular, can be seen in two of his jointly edited volumes (Ungku Aziz,
Chew and Singh, 1987; Ungku Aziz et al, 1988).
Ungku Aziz was also instrumental in the birth of the Journal of
Commonwealth and Political Studies. He was appointed to its editorial board
in 1961. Academics of different ideological backgrounds in the elds of social
sciences and humanities ourished under his leadership at Universiti Malaya.
Some of them included Wang Gungwu, Osman Bakar. Ghani Othman,
Mokhzani Abdul Rahim, Anthony Reid, Syed Husin Ali, Jomo Kwame
Sundaram, William Roff,, Khoo Kay Kim, Cheong Kee Cheok, Radah Aziz,
Raah Salim, Yip Yat Hoong, Selvaratnam Viswanathan, Shaharil Talib,
Asmah Haji Omar, Thillainathan Ramasamy, Mohamad Ariff, Fong Chan
Onn, Lee Poh Ping, Chee Peng Lim, Stephen Chee, Mokhtar Tamin, Lim
Chong Yah, Lim Mah Hui, David Lim, Zakaria Ahmad, and Tunku Shamsul.
Ungku Aziz developed talents in many elds. He was a voracious reader,
an avid photographer, a poet and practiced a regimented and healthy lifestyle
that balanced diet with physical exercise. His daughter, Tan Sri Dr Zeti Akhtar
Aziz, a product of the Faculty of Economics and Administration, Universiti
Malaya, is the current Governor of Bank Negara Malaysia. Like the father,
Zeti’s outstanding service to Malaysia’s Central Bank has earned her and our
country several global accolades in the eld of nancial management. The
stellar contributions of Ungku Aziz as a thinker led to several halls and rooms
at different faculties in Universiti Malaya named after him, such as Bilik
Ungku Aziz at the Faculty of Economics and Administration, Balai Ungku
Aziz at the Dental Faculty and Dewan Ungku Aziz at the Law Faculty, and the
Ungku Aziz Residential College. The Malaysian government introduced the
Ungku Aziz chair of poverty and development studies in 2006 at the Faculty
of Economics and Administration.
We wish to present the following pantun (poem) as a tribute to Ungku Aziz
who was both an acedemic and an intellectual:
Suasananya subur dibanjiri ilmu
(Fertile environment ooded with knowledge)
Fikirannya terang dan bermadah
(His thinking is clear and incisive)
Panjang wacananya dengar tak jemu
Rajah Rasiah, Norma Mansor and Chandran VGR
14
(His long narratives do not bore)
Ribuannya orang menerima faedah
(Thousands of people benetted from them)
Hidupnya lambang cendekiawan bertaraf sedunia
(His life is a symbol of a world class intellectual)
Penghapusan kemiskinan dijadikan matlamat
(Elimination of poverty was his target)
Tumpuannya pada golongan miskin dipuji seluruh dunia
(His passion for the poor is admired all over the world)
Masanya dibelanja memberkati rakyat
(His time is spent blessing the people)
7. Issue Outline
The remaining papers in the issue discuss either directly or indirectly
development issues that address poverty by relating the analysis to the
contributions made by Ungku Aziz. Four such papers are included in this
issue.
Jomo K. S. revisits land policies during colonial Malaya, which in
some sense are in sync with the study on fragmentation of estates by Ungku
Aziz. He argues that colonialism created the conditions for landlordism
and its corollary, the fragmentation of farms owned by the peasantry, and
concentration of productive land among the capitalists and unproductive land
among the peasants.
Rajah Rasiah and Zhang Miao analyse economic growth and structural
change in Timor-Leste in the third paper. Timor Leste, a newly independent
country that is emerging from poverty, is used as a case study by the authors
by applying Ungku Aziz’s prescriptions for Malaysia as lessons to eradicate
poverty. Although it is a small country, and as such is incapable of pursuing
large scale agriculture this article nds a need for Timor-Leste to consider some
of the policy instruments Malaysia implemented, e.g. export diversication,
consolidation of cooperatives and strengthening primary value chains with
downstream processing but adapted to the natural endowments of the country
and with stringent laws and regulations to prevent corruption.
In the fourth paper, using survey data, Hemawathy Nithyanandhan,
Norma Mansor and Sulochana Nair analyse the impact of Self Help Groups on
reducing poverty levels in India by evaluating changes in income before and
three years after its implementation. The evidence shows that the programme
has been successful as poverty levels in the group had fallen.
In the fth paper, Sulochana Nair and Sagaran S. discuss the persistence
of absolute and relative poverty in Malaysia while noting new forms of it.
They argued for a paradigm shift in the way poverty is conceptualised, dened
and measured to take into account inclusive development with a focus on the
bottom 40% of the population.
15
Royal Professor Ungku Abdul Aziz: A Key Pillar in Malaysia’s Development
Amin Mokhtar and Rujhan Mustafa attempt to answer the question
whether poverty in Africa and Malaysia has been dealt with effectively in
the sixth paper. In doing so, this article discusses initiatives by Ungku Aziz
and the Malaysian government on eradicating poverty as well as institutional
developments targeted at promoting research on such topics and tackles the
poverty issues in Africa that were examined by Sachs (2005).
Notes
1. I am grateful to Tan Sri Professor Dr Kamal Salih, Dr Selvaratnam Viswanathan and
Dr Chew Siew Buan in particular but also several persons who willingly answered
several questions on the career of Royal Professor Ungku Abdul Aziz Ungku Abdul
Hamid. Two of us were the Dean of the Faculty of Economics and Administration,
Universiti Malaya over the years 2003-2009 (Norma Mansor), and 2009-2010, and
2013-2014 (Rajah Rasiah), we have often found the seat difcult to ll because of
the supreme standards that Professor Ungku Aziz, and other deans, such as, Yip
Yat Hoong, Mokhzani Abdul Rahim, Ghani Othman, Cheong Kee Cheok and Fong
Chan Onn had set. We feel really lucky and honoured to follow their footsteps. The
usual disclaimer applies.
2. Interview with Yang Amat Berhormat Tun Musa Hitam by Rajah Rasiah on 23
November 2013 at Universiti Malaya, Kuala Lumpur.
3. Rajah Rasiah remembers his family’s early upbringing in a rubber estate where 13
siblings shared common toilet and bathing facilities that catered for all the tapper
families in Salabak Estate, Teluk Intan.
4. Perhaps the government should have carried out an assessment of poverty
irrespective of ethnic groups in Malaysia as non-Bumiputera poor families shared
similar upbringings in estates and other rural locations.
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... It has been decades since the poverty issue raised in Malaysia. It started when Ungku Aziz introduced the Sarong Index as measurement to distinguish the hardcore poor (Rasiah et al., 2015). The measurement is based on the amount of sarong owned because back then, people in Malaysia or previously Tanah Melayu, wore sarong in their daily lives. ...
... Ungku Aziz himself, the 'builder' of the faculty is an intellectual and a highly respected academic recognised not only for building a faculty that is a force to be reckoned with in the country and internationally but also for contributing to the economic thinking in the country which became the basis of many economic policies such as the New Economic Policy, Tabung Haji and Koperasi (Rasiah, Norma Mansor, & Chandran, 2015). Ungku Aziz was later acknowledged as the longest serving Vice-Chancellor of the University of Malaya . ...
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