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copy NATIONAL INTELLIGENCE ESTIMATE
2 ,'V.'
Prospects For The Proposed
Malaysian Federation
OF CENTRALINTELL'iSeNCE
Concurred rn by ffcs '.
. UNITED STATES INTELLIGENCE BOARD
A. Sr.dico.ed ov.rl.af V .
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CfNTRAL INTELLIGENCE AGENCY
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NATIONAL INTELLIGENCE ESTIMATE
2
Prospects For The Proposed Malaysian Federation
PROSPECTS FOR THE PROPOSED MALAYSIAN FEDERATION
THE PROBLEM
To estimate the prospects for achievement of the proposed Federation of Malaysia1 and for its political and economic viability.
CONCLUSIONS
Federation of Malaysia will probablyear; agreement on generalbe announced as early asheto achievement of the merger comes from theBarisan Socialis Party (BSP) of Singaporeseeking an opportunity to upset the precariouslyGovernment and to halt further progress )
projected merger is essentially theMalaya of the four other territories. Althoughwillonsiderable degree of localcentral Federation government in Kuala Lumpurcontrol of internal security, foreign policy, andTunku Abdul Rahman's moderately conservative and
'The proposed Federation or Malaysia la to beup of (s) the Federation of Malaya, which became Independentb) Singapore, which wu granted partial self-governmentnd <c> the three British dependencies on Ihe Wand of Borneo: the Protectorate of Brunei and the Crown Colonies of Sarawak and North Borneo.
pro-Western coalition, known as the Alliance, will probably dominate the government of the new Federation in its early years. The new state will have the benefit of the proven stability of the governmental and economic structure of Malaya, and the support and protection of Britain, Australia, and New Zealand. (Paras.
C. The chief threats to the new Federation will beantagonisms, easily aroused because of the ethnic diversity found in each of the component states, and the opposition of Communists and other radical elements. The leftists will probably find additional support within thecommunities, in Singapore and elsewhere, which are resentful of the political discrimination In favor of the Malays as announced in the proposals for the new Federation.resentments may emerge among the non-Malaypeoples of the Borneo territories. The future ofwill be largely influenced by whether the Tunku continues successfully to control these various frictions. It will also depend in large measure on the economic progress of the new Federation and its component territories.)
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DISCUSSION
INTRODUCTION
1 The conceptederation of British Commonwealth territories in southeast Asia has been discussed ever since the end of World War H. However, until recently, the British were reluctant to commit the politicallyBorneo dependencies toederation; and the Malayan leadership feared that merger with Singapore, where Chinese outnumber Malays' by moreo I, would threaten the carefully designedof Malay-Muslim political dominance In Malayaoreover, the conservative Malayan leaders regarded Singapore as aof communism which must remain lso-
The termu&lon*.nrUy used tothe Indigenous Inhabitants of the Malay Peninsula, who tpeak the Malay language and profess the Islamic faith; the icrm Malayan li used lolUxen ot tbe Federation of Malaya.
'See TableUinlc Composition of the Proposed Fedeinllon ot
lated lest It add to their own internal security problem.
aradoxically, it was the rapid growth of leftist Influence In Singapore afterlimited self-government9 that was most influential in bringing Malayan Prime Minister Tunku Abdul Rahman to accept the merger concept. By the springhe moderate Singapore Government of Primee Kuan Yew, confronted withpressures and public apathy, appeared to be crumbling. New elections would probably have brought toro-Communist Lee urged the Tunku to accept merger as the only feasible way to preventommunist-oriented stale on the doorstep of Malaya. Lee was also hopeful that the general popularity in Singapore of the economic aspects of union with Malaya would help sustain his weakened government until merger could be accomplished, when the stringent internal security laws of Malaya could be used to control his leftist opponents.
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The Tunlcu's willingness to risk linking Malaya with Singapore was conditioned upon British agreement to Include the Borneowhose predominantlypopulation would serve to offset thepreponderance ln Singapore. By this time, the British were themselves alarmed at the growing threat to their Singapore bases, and desirous of forestalling the review ofstatus which was scheduled forhe British had also becomedoubtful of the long-term politics! and economic viability of the Borneo dependencies. Henco. London was attracted by the proposal to merge all these problem areas into astate based on the relatively conservative and smoothly functioning governmental structure provided by Malaya.
short, the Federation proposal ispolitical maneuver, essentiallyin nature, and designed for thepurpose of checking theIn Singapore while protectingpolitical position of thothe area. It amounts, lna merging of Singapore and theterritories Into the existingMalaya
II. PROSPECTS FOR ACHIEVEMENT OF FEDERATION
toward federation hasrapid. Lee and theagreed that Singapore will join theunion,igh degree ofTheir plans have been endorsedMalayan Parliament and. despiteby the SingaporeThe UK and Malaya havethe former will be permitted to usebases "to assist ln the defensefor Commonwealth defense, andpreservation of peace In southeast Asia."
Unofficial representatives of the Borneohave Joined with delegates from Malaya and Singapore to work towardA Joint Malaya-UK commission (the Cob bold Commission) has examined the merger proposals and popular viewsmerger In North Borneo and Sarawak, and will shortly Issue Its report. This report will almost certainly endorse the principle of merger, but will probably make no specific recommcndntlons concerning
The Federation of Malaysia will probably be formally establishedear;on general principles may be announced as early ashe transfer of administrative authority over the Borneomny, however, have to beIn stages. The controlling sources of authority In theTunku, Lee, and theclearly determined to realise the merger as scon as possible. In Malays, the Tunku's firm grip on governmentalwill probably continue to overridefrom the left and the extreme right until merger is achieved. As for the Borneo territories, despite some misgivings on the part of local British administrators, London will almost certainly press forward withThe Sultan of Brunei has already been converted to the merger idea. Latent popular opposition in all three Borneomay como Into the open after theof the Cobbold report, but the pace of the drive toward federation has been so swift that the opposition will probably notaffect the outcome.
In these circumstances, the mostopposition will come from the leftists of Singapore, led by the Influential andBarisan Socialis Party (BSP) and its allies In local industrial unions and Chinese schools. The BSP seeks to weaken the slim
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support of Lee's People's Action Parlyring down the government, and open the wayegal takeover either alone or in coalition with other antimerger factions. So far Lee has succeeded inthese efforts.
in1 Lee promisedfederation was actually achievedwould be held. Thecould triggereries of strikesas to require the interventiontroops This in turnpostponement of the merger and,the ouster of Lee. In an effort tosuch incidents, Lee and the Tunkuurging the British to agree to thearrest of selected BSP leadersreferendum. Lee's position isthe alternatives open to him Involverisk, and the success of hisby no means assured. On balance,we believe that he will manage tointo the larger Federation.
III. PROSPECTS FOR THE FEDERATION OF MALAYSIA
A. Political
concessions to localin the case ofheadministration will have undisputedof internal security, foreign policy,The political supremacy ofpeoples over the Chinesepreserved. Top leadership will almostbe in the hands of Tunku Abdulalthough Important secondarygo to Chinese in sympathy with hisand domestic policies. For severalleast, the Tunku will be the dominantin the new state.
SE< NOJ
The Tunku has been notablyas Prime Minister of Malaya due to his political astuteness, his skill in compromise, and hi3 moderate approach to racialSince independenceheof Malaya has been in the handsoalition, known as the Alliance, within which the Tunku's own Malay Party (UMNO) has worked in remarkable harmony with the Malay Chinese Association (MCA)esser Indian party The future of Malaysia will be largely influenced by whether the Tunku continues successfully to controlfrictions. These frictions, together with regional separatist tendencies andradicalism, will pose the chief political problems for the new state.
Regional Separatism. For Singapore, merger holds potential economic benefits of some Importance. Under British rule it was the entrepot for the wholewhich was impaired when Malaya emerged as an Independent state and began to establish rival facilities of its own.interest in checking this trend will tend to reduce separatist sentiments, at least at the start. There will be resentment of the citizenship and franchise regulations, civil service quotas, and language andrequirements that discriminate against the Chinese in favor of the Malays, but the opposition Is more likely to agitate for anposition within the Federation than for secession from it
The Bomeo territories will have been whirled into the Federation too rapidly toits implications thoroughly or toeffectively. Nevertheless, many ofnon-Malays fearew Imperialism, far less beneficial u> them, Is being substituted for British administration. Pagan andtribal groups will findiny minorityentral government dominated
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Muslim-Malays. Unless Immigration from Malaya and Singapore is restricted in some fashion, it could bring competition with which the Borneo natives would be unable to cope. Nevertheless, once part of an independentfew in Borneo are likely to seek ato British colonial rule, nnd membership in the new Federation docs give them more protection from external dangrrs than they would have if they were wholly on their own.
Interracial Frictions. More important than the doubts of the Borneo natives will be the attitudes of the Chinese population throughout the new Federation. Thecommunity Is the largest single ethnic group, and It has superior economic strength and ls by and large more enterprising and better educated than the Malays. In their haste to achieve merger, the Tunku and Lee have been less careful than they might to avoid estranging Chinese opinions. As aln Malaya the Chinese component of the governing coalition is continuing to lose strength to less cooperative and more radical Chinese parties, thus Increasing communal frictions and placing strains on the Alliance. Ln the new Federation, the Tunku clearlyto preserve political primacy for the Malays. It will take all his skill andto accomplish this withoutthe bases of interracial understandingoint where fear of Malay dominationmistrust of political radicalism.
ajor potentialthreat to the new Federation'swill center on the strength of theand other extremist groups. Inthe BSPubstantial capability for organizing strikes and demonstrations by labor and Chinese student groups, though for some time it has avoided these tactics. After merger, the BSP will probably seek to avoid being brandedommunist Party andoutlawed under the rigid Malayan security regulations. If this effort isor even if the BSP itself is outlawed, thereood chance that the moderate Singapore Government will be defeatedore radical party In the next elections, now due to be held sometime beforeadical party In Singapore would probably provide the rallying point for leftist strengthMalaysia.
IS. In Malaya, the Communist Party Isand Its leadership largely in hiding or in exile, but the party retains some potential to assist legal leftist groups. The Tunku's own party, the UMNO, has derived much of Its strength from Its identification with emergent Malay nationalism. This has enabled it to reconcile within its structure diverse Malay elements, ranging from ultraconservative,Moslems to radical nationalistic youth groups. Since Independence, leftistand even some moderate socialists havealienated by the Tunku's essentiallyand pro Western policies. Hiswill probablyajority of the seats in the new Federation parliament, but Its vigor and cohesivencss have somewhat diminished, and It will confront more opposition than It has in the past, though this opposition Is likely itself to be somewhat disunited. In these circumstances, the loss of the Tunku's vigorous leadership through death orwoulderious blow to the Alliance.
espite the artificial nature of the new Federation and the hazards which itit will start life with some advantages First of all. It Is organized around the core ofstate only five years old, but proven politically and economically viable, reasonably prosperous, and well-led. For at least some time, separatist forces ln Borneo and Singapore are not likely to emerge In any very effective fashion. The UK, Australia,
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New Zealand are all committed to the success of the new Federation, and lt willtheir strong political and economicas well as the protection offorces based within Its borders. It can also countontinuing US interest in its territorial Integrity and economic well-being. The success or failure of thewill depend in large measure on itsprogress and that of its component territories.
B. Economic
Malaysia has been conceived primarily for political rather than economic reasons; only Singapore can see the economic benefits of merger as an Important motivation for membership. As the leading entrepreneurs throughout the region, the Chinese will be the recipients of substantial economicand this may temper their distress over Malay political dominance. Singapore, stronghold of the Chinese community, stands to gain because its status as the entrepot for the area could be reinforced, snd creationingle Malaysian market would offer greater scope for its industrial investment program
The Borneo territories are relativelyto the economic benefits ofand even see some disadvantages. Each already has currency links with Malaya and the use of Singapore's trading facilities, as well as established sources of Commonwealth economic aid. They feel that Malayaneither the capital nor the managerial resources to provide them much development assistance, and there Is concern that theof Malaya's own current development plan will lead to neglect of Borneo's needs. Additionally, there is apprehension lest the tariff union of the Malaysian territoriesthe development of local manufacturing industries.
Malaysian state will have aefficientlarge resources of tin. ironand timber, one of the greatthe world,ompetent civilthe short term, therefore. Itsare good. However, in thethe country will face seriouseconomy is heavily dependent uponexport commodities, rubber and tin,former is especially vulnerable toin worldustained dropprice of natural rubber or failure tocompetitive with synthetic rubberaffect the government's abilityout the development programsits popular support may largelyThe problem of Malaysia will beits economy by diversificationagricultural export crops and steppedto exploit untapped mineral andresources, as well as increasing localof foodstuffs (particularly rice)consumer goods.
C. International
With the Tunku in charge, Malaysia's Government will almost certainly remainpro-Western. It will avoid affiliation with SEATO, but the Tunku has already agreed to Commonwealth use of existingbases under conditions which implicitly permit SEATO purposes to be served. He has volunteered and provided active support to the South Vietnamese against the Viet Cong, and has allowed Commonwealth combatbased In Malaya to deploy into Thailand withetour via Singapore to mask the enterprise.
Neutralist tendencies, long evident among opposition parties in Malaya as well as among the bulk of Singapore's Chinese, arc likely to Increase. Opposition to the station-
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of Commonwealth troops in Malaysia can also be expected to grow. The practical effect of these pressures could well be to limit the usefulness of the bases. However, it lsthat the complete severance ofmilitary and economic ties would be advocated, even by neutralists, in the next several years.
Malaysia will have close economic and cultural ties with neighboring Thailand and the Philippines, continuing Malaya's roleember of the Association of Southeast Asiahe recent Philippine claim to sovereignty over North Borneo could prove troublesome if carried far enough to arouse public opinion on either side.
Malaysia will probably maintain cool, though correct, relationships with neighboring Indonesia so long as Sukarno remains in power. As an Asian leader, the Tunku has sought to avoid identification with "colonial" forces by according token moral support to Sukarno's West New Guinea campaign and has even permitted the recruitment offrom Malaya. In the event of full-scale warfare between Indonesia and TheIt is well understood that any UKto the Dutch could not be funneled through Singapore. The Tunku ls aware that his generally pro-West position and hisantlcommunism have alienatedleft-wing supporters in Djakarta. Should they gain ln Influence. Indonesia could become the operational base for dissidents plotting against the Malaysian state.It is possible that Indonesianmay agitate for the annexation of the Borneo territories.
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