MALAYSIA (REVISION OF CIA/RR GM 62-2, MARCH 1962)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84-00825R000100170001-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 22
• Document Creation Date: December 9, 2016
• Document Release Date: May 17, 2001
• Sequence Number: 1
• Publication Date: December 1, 1963
• Content Type: IM

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CONFIDENTIAL
Copy No. 203
GEOGRAPHIC
INTELLIGENCE
MEMORANDUM
CIA/RR GM 63-3
December 1963
MALAYSIA
(Revision of CIA/RR GM 62-2, March 1962)
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND RERORTS
This material contains information affecting the National Defense of the United States within
the meaning of the espionage laws, Title 18, USC, Secs. 793 and 794, the transmission or
revelation of which in any manner to an unauthorized person is prohibited by law.
CONFIDENTIAL
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Introduction
The federation of Malaysia* was formally inaugurated on 16 September 1963. Comprised of
Malaya, Singapore, Sarawak, and Sabah (North Borneo), it has a total land area of about 129,000
square miles (slightly larger than the state of New Mexico) and a tota__ population of more than
10 million. The area and population of the individual components are as follows:
1961 Estimates
Square Miles Population Percent of Total Population
Malaya
51,000
7,232,000
70
Singapore
210
1,700,000
17
Sarawak
48,250
780,000
8
Sabah
29,388
475,000
5
Malaya and Singapore are the more advanced components of Malaysia. Malaya, with a relatively
cosmopolitan elite of wealthy Chinese, Indian, and Malay businessmen, has the highest per capita
income in Southeast Asia; it is the world's leading producer of natural. rubber and tin. Singa-
pore, whose population is 75 percent Chinese, is the major entrep8t port in Southeast Asia.
Sarawak and Sabah, on the other hand, are characterized by their relatively underdeveloped
economies and their very diversified populations, large segments of which are primitive tribal
peoples. In all the components the population is characterized by its relative youth; more than
50 percent of the people are under 19 years of age.
No part of Malaysia is more than about 7 degrees from the equator. Consequently, most of the
area has a tropical climate, with heavy rainfall and uniformly high temperatures. Much of Malaysia
is not well suited to human settlement and economic development. The interiors of Malaya, Sarawak,
and Sabah are mostly mountainous and are densely forested; the extensive coastal swamps, especially
in Sarawak, not only are unsuited to settlement but also impede access to the interior.
Largely as a consequence of the restricting influence of the forests, the swamps, and the
infertile lateritic soils, an estimated 80 percent of Malaysia is uninhabited and devoid of any
form of productive economy. Concentrations of population and economic activity are chiefly on
the narrow coastal plains, in the foothills, and along some of the valleys. Transportation
routes are restricted and inadequate; in Sarawak and Sabah, rivers often are the only routes
into the interior. Where routes do exist, they not only serve as unifying elements among the
settlements but also set the pattern for future development, as in the case of the Malayan
rubber plantations, which generally became established in areas that could be served by exist-
ing rail lines to the tin mines.
Economic Aspects
The economies of the components of Malaysia are dominated by agriculture, except for Singa-
pore, which is dependent on trade. Nonfood commodities -- principally rubber, palm oil, coconut
oil, and copra -- are the chief agricultural products of Malaya in terms of both acreage and
value, although rice ranks second to rubber in individual crop acreage. In Sarawak and Sabah,
the same crops rank first in value but are surpassed in acreage by food. crops, chiefly rice. The
major nonagricultural products of Malaysia are tin, timber, iron ore, and bauxite. An indication
of the relative importance of these products in the economies of the producing states is given in
the following tabulation:
Principal Exports
Million Malayan Dollars J
Malaya
Sabah
Sarawak
Rubber 1,368.0
36.7
72.6
Tin 599.0
0
0
Petroleum 0
0
2.5 b
Timber 48.o
122.1
40.8
Iron ore 166.0
0
0
Coconut
oil and copra 9.0
18.5
Negl.
Palm oil
65.0
Negl.
Negl.
Pepper
Negl.
Negl.
23.9
Bauxite
0
4.0
a. All monetary units in this memorandum are expressed in Malayan dollars;
at official rates of exchange, US $1 equals Malayan $3.
b. Crude oil from the oilfields in Brunei is piped to Sarawak. Some of it
is refined at the Lutong Refinery in Sarawak, but part of it is reexported
without processing. In 1962, Sarawak produced $2.5 million worth of its
own oil; in addition, it exported $110.5 million worth of refined products
and $106.7 million worth of crude oil of Brunei origin.
* Malaysia consists of 14 first-order administrative units -- the 11 Malay states, Singapore,
Sarawak, and Sabah (North Borneo). It does not include Brunei, which remains a British protec-
torate. The former Federation of Malaya will be referred to in this memorandum as "Malaya."
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Malaya undoubtedly will be the main source of exports from the new federation; and the chief
exports, at least for the near future, will continue to be rubber, tin, timber, and iron ore.
Currently the economies of the Malaysian components are not complementary. Both Malaya and
Singapore are pushing industrial development, however, and new industries will use some of the
primary production as raw materials.
Singapore: In addition to being a focus of interocean shipping, Singapore is a main port of
exit and entry for much of Malaya and has been a center for the coastal trade of Indonesia as
well as Sarawak and Sabah. Normally, raw materials from these areas are sent to Singapore and
after processing, grading, and packing are exported to world markets, but all trade with Indonesia
came to an abrupt halt on 21 September 1963, when President Sukarno broke off trade relations with
Malaysia. Singapore probably will benefit from the establishment of the federation because of an
expanded protected market for Singapore manufacturers and because the component states of Malaysia
can be expected to channel more trade through the port. Timber, most of which goes to Japan, in
the future may be'processed into plywood in Singapore or Malaya. Although protective tariffs will
be set up by the Malaysian common market, special regulations permitting a 12-year period of tran-
sition in the imposition of tariffs on Singapore imports will soften the impact on Singapore's
traditional role as a free port.
In 1962 the total external trade of Singapore, including trade with Malaya, amounted to
$7,453.1 million, of which $4,036.6 million were imports and $3,416.5 million exports, leaving an
unfavorable trade balance of $620.1 million. The main imports were crude rubber, foodstuffs and
beverages, petroleum products, machinery and vehicles, and textiles. By value the chief sources
of imports were Indonesia, Malaya, the United Kingdom, Japan, and the United States; and the
chief recipients of exports were Malaya, Indonesia, the United States, the United Kingdom, and
Japan. Imports from Indonesia declined for the third successive year.
Malaya: Although the financial position of Malaya is considered sound and it has the highest
per capita income of any continental Southeast Asian country, its present economic dependence on
rubber and tin holds hazards for Malaysia beyond those inherent in the erratic prices on the world
market. The Malayan Minister for Commerce and Industry has stated that unless the price of rubber
can be stabilized, Malaya's immediate future is bleak and that it must strive to diversify its
economy. The rubber industry of Malaya received an unexpected bonus from President Sukarno's
trade embargo when rubber prices rose 15 percent in October 1963 -- after the ban on movement
of Indonesian rubber to Singapore. The world market for natural rubber is increasingly threaten-
ed, however, by competition from synthetic production, which in 1962 exceeded natural rubber pro-
duction for the first time in history. In an effort to insure competitive pricing of natural
rubber, Malayan plantations are concentrating on planting high-yielding trees that produce three
or four times present yields.
For tin the future is also uncertain. Although the Kinta Valley of Malaya is still the world's
most productive tin field, deposits of high quality Malayan ore axe being depleted. No important
new tin resources have been found, and a reworking of grounds that have been mined before may
become necessary for continued production, thus possibly increasing the cost of Malayan tin and
making it less competitive on the international market. An encouraging, although probably tempo-
rary, development for the Malayan tin industry occurred in late October 1963 when the tin pool
that is controlled by the International Tin Council became exhausted and the price of tin soared
to a new high for the year.
Trends: All the components of Malaysia have adopted plans for improving and diversifying
their economies. In Malaya, 3.5 million acres are currently in rubber; of these, 2 million are
in estates and 1.5 million are in holdings of less than 100 acres, with the majority less than
10 acres. Although this is a relatively equitable distribution, Malaya is making a significant
effort to broaden the landownership base. The economic plans of Malaya, Sarawak, and Sabah
involve the opening up of new agricultural lands to provide holdings of economic size to more of
their people. Partly because of the uncertain future of natural rubber, the diversification
program has stressed the production of palm oil. As a result, oil palm acreage has increased
annually and some 140,000 acres are now under cultivation in Malaya. Industrialization is of
major importance for Malaya because of the increase in its urban population since 1951 and for
Singapore because of its limited land area, decreasing entrepot trade, and growing unemployment.
The Pioneer Industry programs of Malaysia, with tax-free benefits to approved new industries, and
the work of the Economic Development Board of Singapore provide further evidence of the intense
efforts being made to improve and strengthen the economies of the component states.
Population
Malaya: The following tabulation gives the estimated ethnic composition of the population of
Malaya as of December 1961, by number and by percent of the total population. For purposes of
comparison, the tabulation also gives the corresponding percentages from census figures of 1957
and 1947.
1961
1957
Population Group
Number
Percent
Percent
Malay
3,616,000
50.1
49.8
Chinese
2,670,000
36.9
37.2
Indian and Pakistani
813,000
11.2
11.3
Other (indigenous and
nonindigenous)
133,000
1.8
1.7
Total
7,232,000
100.0
100.0
1947
Percent
49.5
38.4
10.8
1.3
100.0
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Significantly the 1957 census also showed that the inese cons i u e e o the
in urban centers, as against 37 percent of the population as a whole.
Because of restrictions on immigration of other races since 1931 and a higher birth rate among
the Malays, the percentage of Malays in the total population increased slightly between 1947 and
1961, whereas the percentage of Chinese decreased slightly. Projections indicate that the propor-
tion of Malays can be expected to increase to 51.6 percent by 1972 and that of Chinese to decrease
correspondingly.
The Malay population is mainly concentrated along the Johore coast and in the rice areas of
the northeast and northwest, whereas the Chinese and Indians are most densely settled in a belt
about 40 miles wide along the west coast. The concentration in this belt, which coincides largely
with the main areas of tin and rubber production, reflects the importation of Chinese and Indian
laborers during the 1800's.
Singapore: The ethnic composition of the population of Singapore, by number and percent for
1961 and by percent for 1957 and 1947, is as follows:
u
G
ti
P
l
Number
1961
Percent
Percent
1947
Percent
p
on
ro
opu
a
Chinese
1,279,000
75.2
75.4
77.8
Malay
238,000
14.0
13.6
12.1
Indian and Pakistani
142,000
8.3
8.6
7.3
Other (nonindigenous)
41,000
2.5
2.4
2.8
Total
1,700,000
100.0
100.0
100.0
The population increase between 1947 and 1.961 was 81.2 percent. Although the Chinese popu-
lation increased 75.3 percent and the Malay 100.1 percent during this period, the proportion of
Chinese to the total population declined slightly. The over-all population density amounts to
about 8,100 persons per square mile on the 210-square-mile island. Actually, however, 75 percent
of the population is concentrated within the limits of the city of Singapore, which occupies only
some 32 square miles on the south side of the island.
Sarawak and Sabah: An outstanding characteristic of the population of Sarawak and Sabah is
its great diversity. In the complicated ethnic picture are many tribal groups that differ from
each other in language, customs, and economic pursuits. In Sarawak the official census in 1947
listed 181 tribes or groups of indigenous peoples; in the 1960 census these peoples were con-
solidated into 63 tribes under 12 main headings. For many of the indigenous people, group con-
sciousness does not go beyond the confines of the village. Even within groups such as the Sea
Dayaks, the language of a tribe in one area may be unintelligible to a tribe in another area.
The ethnic composition of the population of Sarawak and Sabah by number and percentage is
as follows:
Sarawak
Sabah
Population Percent
Population
Percent
lation Grou
P
in 1960
of Total
in 1960
of Total
p
opu
Indigenous
Malay
129,300
17.4
Sea Dayak
237,741
31.9
Land Dayak
57,619
7.7
Melanau
44,661
6.0
Dusun
145,229
32.0
Murut
22,138
4.9
Bajau
59,710
13.1
Other
5.1
17.5
Bisaya
2,803
10,053
Kedayan
7,207
7,871
Kayan
7,899
Kenyah
8,093
Kelabit
2,040
Murut
5,214
Punan
4,675
Brunei
23,450
orang Sungei
15,112
Sulu
11,080
Tidong
4,417
Sino-native
7,438
Nonindigenous
Chinese
229,154
30.8
104,542
23.0
Indonesian
3,241
0.4
24,784
5.4
European
1,631
0.2
1,896
0.4
Other
3,251
0.5
16,701
3.7
Total
744,529
100.0
454,421
100.0
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 Unlike Sing PP9OV &IhRekea iQIi.OgfQlia9b4,bggP?6lfO1 PPQaIQOI 1i 7the immigration
of migrant workers. Until recently, some 10,000 Indonesian migrant laborers could be found in the
Tawau-Sandakan area at any time. If these workers are now prohibited from entering Sabah, the
results presumably will be economically harmful to both Sabah and Indonesia.
Special Problems
Malaya, which had avoided union with Singapore for fear of being swamped by its predominantly
Chinese population, saw a possible solution to this problem in federation with the Borneo territo-
ries, in which the Chinese form a smaller segment of the population. A comparison of the number and
percentage of Chinese in each component and in the total population of the Malaysian area in 1961
and 1947 is shown below:
1961 Estimates
1947 Census
Chinese
Total
Percent
of Total
Chinese
Total
Percent
of Total
Malaysia
4,302,000
10,187,000
42.2
3,034,005
6,726,670
45.1
Malaya
2,670,000
7,232,000
36.0
1,885,000
4,908,000
38.4
Singapore
1,279,000
.1,700,000
75.2
929,473
938,144
77.8
Sarawak
243,000
780,000
31.1
145,158
546,385
26.5
Sabah (North Borneo)
110,000
475,000
23.3
'74,374
334,141
22.2
As shown by these statistics, the percentage of Chinese has decreased slightly in Malaya and
Singapore but has increased in Sarawak and Sabah; the Chinese still comprise about 42 percent of
the total population of Malaysia. They offer a challenge to the other peoples of Malaysia because
of their greater cohesiveness, dominating position in business, and relatively higher standards
of education. In Sarawak in 1960, less than 35 percent of the school-age population of Malay,
Dayak, and other native groups was in school, in contrast to 80 percent of the Chinese children,
most of whom attended the 231 primary schools that are under Chinese management and in which the
Chinese language has been used for instruction. Most of the Chinese in Sarawak belong to the
largest political party, the Sarawak United Peoples Party (SUPP). The SUPP has large anti-
Malaysian elements from which the militant Communist Clandestine Organization (CCO) has drawn
many of its recruits.
In Sarawak and Sabah, racial pride and a distrust of Malaya and Singapore are among the paro-
chialisms that will have to be faced by Malaysia. Many residents of former British Borneo fear
that the area will be colonized by the more advanced peoples of Malaya, both Malays and Chinese;
of particular concern is the possibility that eventually many of the Chinese in Singapore may
flood into Sabah, where a labor shortage is chronic. As a matter of racial pride, the indigenous
peoples such as the Sea Dayaks and Land Dayaks of Sarawak refuse to use Malay in their schools,
although Malay and English are the official languages. Consequently, Sarawak lacks the unifying
force of a common language.
Geography of Confrontation
The Indonesian confrontation policy proclaimed by President Sukarno is multifaceted, encompass-
ing aspects of political geography, guerrilla warfare, and economic sanctions. In its conception
of the extent of Indonesian territorial seas, Indonesia maintains that because it is an archipelago
its unity must be preserved by special laws which, in effect, close off "internal seas" to free
passage by foreign vessels. Under this concept, Indonesia specifically restricts the right of
passage of foreign vessels in such prominent avenues of sea commerce as the Makassar Strait, the
Java Sea, the Banda Sea, and the Molucca Sea and also in the open seas surrounding the archipelago
up to 100 nautical miles out to sea. This concept of territorial seas has implications of possible
maritime conflict in the narrow Strait of Malacca, the Riau islands, and along traditional sea
routes such as that used by Australia through the Banda Sea to Singapore and Hong Kong. Similarly,
the position of the Natuna Islands -- Indonesian territory lying in the South China Sea roughly
midway between Malaya and Borneo -- suggests an area of possible maritime or aerial conflict.
There is an Indonesian airfield on Great Natuna Island.
Also confronting Malaysia is the Philippine claim to Sabah on behalf of the descendents of
the Sultan of Sulu, who maintain that the Sultan merely leased North Borneo in 1878 to the
British North Borneo Company, which administered the territory until the Japanese invasion in
1942. North Borneo was made a British colony in 1946. Philippine President Macapagal has made
the claim not only a legal issue but also a security issue, holding that should Malaysia eventually
become dominated by Chinese Communists because of the large proportion of Chinese in the Malaysian
population, the Republic of the Philippines would need Sabah as a buffer against Communist-controlled
territory at its southern frontier.
Guerrilla warfare sponsored by Indonesia is generally favored by the natural environment of
Sarawak and Sabah, particularly as the actions involve raids into the two Malaysian components
and retreats to the sanctuary of Indonesian Borneo for rearming and retraining. The border
between this part of Malaysia and Indonesian Borneo generally follows a watershed that is aligned
roughly southwest-northeast and is about 900 miles long. The alignment of the boundary has not
been changed since it was established by the British and the Dutch in 1890. A short segment
southwest of Kuching has been demarcated, but only preliminary reconnaissance surveying has been
carried out along the rest of the border. From the aspect of Indonesian guerrilla crossings,
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(1) The eastern segment, from Pulau Sebatik to Serudong, runs through a swampy area in
which movement on foot is extremely difficult. Although some foot trails probably cross the
border, infiltration by sea and river would be much faster and easier. The Muslim inhabitants
in this area of Sabah probably would assist infiltrators.
(2) The major part of the border, from Serudong to the vicinity of Lubok Antu in south-
western Sarawak, passes through heavily forested, difficult mountainous terrain, generally between
3,000 and 7,000 feet in elevation, in which many of the known routes are a combination of rivers
and foot trails. There is little or no surplus food in this segment of the border, and it is
believed that many of the tribal peoples in the border areas of Sabah and Sarawak would be hostile
to the infiltrators.
(3) From Lubok Antu to Tandjung Datu on the China Sea the border follows a belt of hills
and low mountains (generally less than 3,000 feet in elevation) that can be crossed at any point
without undue difficulty. Within Indonesian Borneo, there is a relatively good road system
emanating northward from Pontianak. This road system, in conjunction with the navigable Sungai
Kapuas, provides the Indonesians with a good lateral transportation net from which guerrillas can
move north to the border over a wide front. In the past, there has been constant and uncontrolled
movement across this segment of the border.
Economic confrontation as a facet of Indonesian policy has taken the form of a cessation of
all legal economic relations with Malaysia, including the severance of all commercial transpor-
tation and communication links, as of 21 September 1963. In the past, however, smuggling
between Indonesia and Malaysian areas has comprised a significant portion of the total volume
of trade, and smuggling may continue in spite of increased patrolling activities. The cessation
of legal trade will have its most serious effect on Singapore, which will experience a worsening
of the chronic unemployment situation, especially among firms engaged in processing rubber from
Indonesian smallholders. For Penang the heaviest blow will result from the interruption of
imports of Indonesian tin ore, which has heretofore been smelted at Butterworth. The impact
on other Malaysian states, which customarily have had only minor economic interchange with Indo-
nesia, will be relatively slight. Although intended as an economic blow against Malaysia, the
break in trade will also have serious consequences for Indonesia. The greatest impact will be
in the disruption of normal trade, shipping, and financial channels for Indonesian exports;
imports from Malaysia are relatively small in volume and can be purchased elsewhere.
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 Sungai trQmP
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MINERALS
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