This book analyses the ebbs and flows of globalization on natural resource-rich Perak over two centuries. It brings together interconnected sub-themes: the institutional legacy of colonialism, the increasing centralization of federalism, economic agglomeration, and migration. It shows how Perak's rise and subsequent struggles resonate with localities in other parts of the world, and provides important lessons for regeneration.

Part 1  describes how in the 19th century natural resource rich Perak was brought into the embrace of a rapidly globalizing world. The invention of the tin can had transformed the packaging and preservation of food in many industrialized countries and with it demand for tinplate. As international shipping costs fell, deep-lode and costly Cornish tin deposits came under pressure in British and international markets from easily accessible sources in Australia; Banka, Dutch East Indies; and then Perak. As the sun started to set on the Cornish tin industry in the late 19th century, Perak and other parts of Malaya tapped Cornish mining expertise and capital, helping to propel the fortunes of its fledgling mining industry.

Part 1 also outlines Perak's unique geographical features, its 19th century settlement patterns, and the diversity and growth of its people through high rates of inward migration. Rival groups from outside Perak, allied to competing local royal interest groups within, fought bitterly for control of Perak's lucrative tin resources. The ensuing chaos and instability that disrupted mining activities eventually led to British colonial intervention, the signing of the Pangkor Engagement in 1874, and Britain’s subduing of initial resistance to its indirect rule.

Perak's traditional Malay system of governance was unable to withstand the competitive strains that came with the modern capitalist mode of production and vastly increased trading networks. The British administration increasingly tightened and extended its political control and institutional arrangements to promote its strategic and economic objectives.

Part 2 documents the rise in Perak's prosperity driven by its abundant natural resources. With political stability and new state institutions imposed by the British colonial administration, Perak's economy became more integrated into the global economy. Colonial policies, helped by favourable economic geography, created a dynamic export-led natural resource–based enclave that overshadowed its traditional agricultural sector.

British capital dominated the growth of Perak's commodity industries in the first half of the 20th century, and foreign investors derived huge profits from Perak's industries, largely repatriating the windfall. British commercial interests had little or no incentive to reinvest in more diversified economic activities. And the British authorities made few efforts to address the economic dualism that had been created between the export-oriented side of Perak’s economy and the traditional low-income and low-productivity sectors, such as small-scale agriculture.

Perak's economy was also propelled through international labour mobility, another major dimension of globalization. Huge migrant inflows since the late 19th century fundamentally changed the state's demographic composition, giving Perak a distinctive multicultural identity.

During the turbulent post–World War II period of decolonization and insurrection, the British administration sought to protect British investments in Perak and elsewhere in Malaya, and to ensure a politically compliant new order at all costs. Yet already, economically viable tin deposits had been gradually depleting and synthetic rubber had begun to challenge natural rubber, even though these commodities would remain important to Perak's economy in the early decades after independence.

Part 3A analyses the collapse of tin and rubber industries, as well as the period of continued British economic dominance in post-independence Malaysia between 1957–1970. Perak's tin industry, which had largely defined its economy, population, and social organization, steadily waned, and by the early 1990s had faded into insignificance.

After independence, Perak faired less favourably than other Malaysian states, despite entering nationhood as one of the country's wealthiest and most urbanized states. Its continued heavy reliance on exports of natural resources and its exposure to swings in global demand and competing sources of supply of tin and rubber, saw it start to trail some of the peninsula's other states, which benefited more from the globalization of manufacturing industry.

A sequence of six International Tin Agreements to regulate supply and support tin prices, dramatically unravelled in 1985, beset by collapsing tin prices and chaos on the international tin market. The once-vibrant tin-towns of Perak faltered as the fortunes of the mining industry retreated. Economically, some areas stagnated and others went into decline, shedding population through outward migration. Perak’s scattered townships just did not offer the scale, diversity, and connectivity needed to attract new industries.

The fallout from the tin collapse was felt globally. In the UK, the surviving high-cost Cornish mines closed. In Perak, as elsewhere in Malaysia, tin-mining companies struggled to survive, and its tin towns were economically and socially devastated, causing widespread suffering with the loss of jobs and incomes among mine workers, their families, and their communities.

Part 3B describes how after ethnic riots in May 1969, laissez-faire economic policies gave way to heavily interventionist central government management. The New Economic Policy marked a turning point for British-owned companies which had dominated the tin, rubber, and oil palm industries. It led to a dramatic change in ownership through Malayanizing some of Perak’s largest publicly listed foreign-owned resource-based companies.

Diversification was a policy imperative, at first within agriculture to palm oil, and later into manufacturing and services. Perak’s scattered townships did not, however, offer the scale, density, and international connections needed to attract new manufacturing industries.

In absolute terms Perak's economy became gradually much more prosperous, productive, and diversified. All communities are now more urbanized, have far higher real (inflation-adjusted) incomes, and are living much longer lives than their parents’ generation. Incomes are distributed more evenly, and the absolute poverty rate has tumbled.

In relative terms, however, Perak has had a much slower structural transformation than its neighbouring states of Selangor and Penang. Forces of agglomeration favoured locations that, with the aid of federal policies, moved first on industrial development, had greater economic density, and possessed better air transport links to the outside world. As gaps in incomes and job opportunities with neighbouring states widened, Perak began to lose population. A negative feedback loop has been created in which a shrinking base of human capital has narrowed economic opportunities and has propagated further out-migration of the talent that the state so badly needs.

Part 3C examines the extent to which Perakians have enjoyed higher standards of living over the three decades since 1990; how far the benefits of economic growth have been shared by Perak's population groups and across the state; and how far its demography has changed.

By the early 1990s, the tin and rubber industries—on whose revenues the modern state was built—were fading into insignificance. The state had to diversify, into manufacturing and services, and modernise agriculture. But as a late mover to manufacturing, Perak was at a disadvantage from which it could never quite recover.

By the early 21st century, Perak had become further entrenched in the increasingly globalized trading system through its export of agricultural and manufactured goods, its income from tradeable services, such as tourism and education, its dependence on FDI, and its heavy reliance on a growing, lesser-skilled labour force of foreign migrants. Perak's economy, now much less reliant on the primary sector, has become increasingly dependent on services.

By 2020, Perakians living in the median income household were almost four times as well off in real terms as 30 years earlier. Yet even into the 21st century, this and other advances were not enough to stem continuing outward migration, particularly of the most educated and skilled, to places offering better opportunities—undermining Perak's human capital base, sapping vitality in townships, weakening traditional family support systems, and changing the state's ethnic composition.

Part 4 outlines of a New Vision for Perak based on the state’s comparative advantages and lessons learned from international experience of regions and towns left behind by globalization—Cornwall and Sheffield in the UK, and Pittsburgh and Scranton in the US.

Perak’s economy will require conditions that will both encourage local talent to stay and attract new talent into the state. Providing high-quality education and training on a large scale is part of the solution. Perak must also create an institutional climate for nurturing SMEs that will incubate entrepreneurship and stimulate capital investment, while at the same time drawing foreign investment into new industries that will retain and attract skilled workers.

With its New Vision, Perak can look forward to a period of renewed prosperity that will put the state at least on a par with the leading Malaysian states. Promoting a fair distribution of income must remain a key objective though, including providing all communities with equitable access to opportunities and social protection. Arresting the secular outflow of its people, and working towards creating decent, skill-intensive, and higher-value-adding jobs must be another aim. And effective management of Perak's bountiful and beautiful environment must be at the forefront of the New Vision.

Perak's New Vision will also have to be ready to adapt to the increasing possibility of a second wave of de-globalization. As with the Covid-19 pandemic, Russia’s war in Ukraine has seriously disrupted trade and supply chains causing a big setback for the global economy.

c/o Asia-Europe Institute
University of Malaya,
50603 Kuala Lumpur

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