, a blend of old and new In 1970, three-quarters of Malaysians living below the poverty line were ethnic Malays, most of whom were rural workers largely excluded from Malaysia's modern economy. The government introduced the
New Economic Policy (NEP) in 1971 to address these disparities, with a series of four five-year plans scheduled from 1971 to 1990. The NEP aimed to achieve two main goals: reducing poverty, especially in rural areas, and addressing the economic imbalance by eliminating the association between race and economic prosperity. To increase Malay participation in the modern economy, the government established several state-owned enterprises and agencies, including
Perbadanan Nasional Berhad (PERNAS),
Petroliam Nasional Berhad (PETRONAS), and the
Heavy Industries Corporation of Malaysia (HICOM). These entities not only directly employed Malay workers but also invested in growing sectors of the economy, creating new technical and administrative roles often allocated to Malays. Consequently, Malay equity in the economy increased from 1.5% in 1969 to 20.3% by 1990.
Mahathir administration was the leading force in making Malaysia into a major industrial power.
Mahathir Mohamad was sworn in as the fourth
Prime Minister of Malaysia on 16 July 1981. One of his initial actions was to release 21 detainees held under the
Internal Security Act (ISA). During his early tenure, Mahathir implemented an assertive economic strategy, exemplified by the
Guthrie Dawn Raid on 7 September 1981. This strategic economic maneuver, executed by
Permodalan Nasional Berhad (PNB), enabled Malaysia to reclaim control of
Guthrie Corporation, a British-owned plantation company, by rapidly acquiring its shares on the
London Stock Exchange. The operation transferred approximately 200,000 acres of agricultural land into Malaysian ownership, aligning with the
New Economic Policy (NEP) objectives of increasing Bumiputera equity. However, the raid strained
diplomatic relations with the
United Kingdom. In response,
British Prime Minister Margaret Thatcher tightened stock market regulations, while Malaysia introduced the "Buy British Last" policy in October 1981, prioritizing non-British suppliers in government procurements. To promote economic development and reduce dependence on Western models, Mahathir introduced the
Look East Policy in 1982, encouraging Malaysians to adopt the work ethics, industrial strategies, and economic practices of
Japan and
South Korea. Alongside this policy, the government emphasized
industrialisation to diversify the economy away from agriculture. The establishment of the Heavy Industries Corporation of Malaysia (HICOM) in 1983 led to the launch of Malaysia's first national car, the
Proton Saga, in 1985 by
Proton, Malaysia's automotive company. The government introduced its
privatisation policy in the early 1980s to improve efficiency, reduce government expenditure, and encourage private-sector growth. Privatization efforts spanned key sectors, including
telecommunications,
utilities, and
transportation, attracting foreign investment and supporting Malaysia's economic growth. This program complemented Mahathir's broader focus on industrialization and infrastructure, establishing a foundation for major development projects in later years. Mahathir sought to redefine the balance of power between the
monarchy and
Parliament through a constitutional amendment in 1983. This amendment required the
Yang di-Pertuan Agong to assent to any bill within 15 days of its passage by Parliament; otherwise, it would automatically become law. Additionally, it proposed transferring the power to declare a state of emergency from the Agong to the prime minister. Initially supported by the Agong at the time, the proposal was later met with hesitation from him and the Sultans, who baulked at its implications for state-level legislation. A public standoff ensued, with Mahathir organizing rallies to gather public support. The crisis concluded with a compromise, retaining the Agong's emergency powers but allowing Parliament to override a veto by re-passing the bill. Mahathir sought to appeal to religious voters by establishing institutions such as the
International Islamic University of Malaysia (IIUM) to promote Islamic education within a framework overseen by the government. Mahathir's government also employed repressive measures against more extreme exponents of Islamism. In 1985, the
Memali Incident occurred, resulting in a confrontation between police and followers of Islamist preacher Ibrahim Mahmud, known as Ibrahim Libya, in Kampung Memali,
Baling,
Kedah. This clash led to 18 deaths, including four police officers.
Al-Arqam, a religious sect, was banned in 1994, and its leader,
Ashaari Mohammad, was arrested under the
Internal Security Act (ISA) due to the movement's deviation from Islamic principles and its perceived potential as a political threat. Following rising racial tensions and political unrest,
Operasi Lalang was launched in 1987. The government detained 119 individuals, including opposition politicians, activists, and intellectuals, under the
Internal Security Act (ISA). These detentions, carried out without trial, were criticized by human rights groups. In 1988, the
High Court declared UMNO to be an unlawful society due to unregistered branches that violated the
Societies Act 1966. Mahathir also worked to resolve the
long-standing insurgency by the
Malayan Communist Party (MCP). Building on
Malaysia's bilateral relations with
China established in 1974, the Malaysian government encouraged Chinese leaders, including
Deng Xiaoping, to influence the MCP to lay down their arms. By 1988, the MCP, weakened by diminishing support and the
collapse of the communist bloc, agreed to peace negotiations mediated by
Thailand. The talks culminated in the
Hat Yai Peace Accord, signed on 2 December 1989, which required the MCP to cease militant activities, disband armed units, and pledge loyalty to the
Yang di-Pertuan Agong. The conclusion of the New Economic Policy (NEP) in 1990 led Mahathir to introduce
Vision 2020, aiming to transform Malaysia into a fully developed nation by the year 2020. Achieving this objective required an average economic growth rate of seven percent per annum. The New Economic Policy (NEP) was succeeded by the
National Development Policy (NDP) in 1991, which expanded certain government programs to include non-Bumiputera ethnic groups. By 1995, the NDP had contributed to poverty reduction, with fewer than nine percent of Malaysians living in poverty, and it had helped to narrow income inequality. The administration also reduced corporate taxes and liberalized financial regulations, attracting foreign investment and boosting economic growth rates to over nine percent annually until 1997. Mahathir's second
constitutional amendment in 1993 further curtailed royal privileges by removing the legal immunity of the royal family, allowing them to be prosecuted in a special court. This amendment reinforced the government's stance that all citizens, including royalty, should be subject to the rule of law. Throughout the 1990s, Mahathir prioritized large-scale infrastructure projects. Among them was the development of the
Multimedia Super Corridor, aimed at establishing Malaysia as a center for
information technology. Other key projects included the creation of
Putrajaya as the administrative capital and the establishment of the
Formula One Grand Prix in
Sepang. Among the more controversial was the
Bakun Dam in
Sarawak, a hydroelectric project intended to supply electricity across the
South China Sea to Peninsular Malaysia. However, its construction was halted during the
1997 Asian financial crisis. in Kuala Lumpur in Kuala Lumpur was the tallest building in Southeast Asia.The
1997 Asian financial crisis significantly impacted Malaysia, with the Malaysian ringgit depreciating, foreign investment declining, and the stock market index dropping by over 75%. Initially following
International Monetary Fund (IMF) recommendations, the government implemented spending cuts and raised interest rates, exacerbating economic strain. In 1998, Mahathir shifted policies by increasing government spending and pegging the ringgit to the US dollar, allowing Malaysia to recover faster than some neighboring countries. The year 1998 also marked the dismissal of Deputy Prime Minister
Anwar Ibrahim by Mahathir, leading to the
Reformasi movement, which advocated for political reform and an end to corruption. Anwar's subsequent arrest and
trial on charges of sodomy attracted widespread attention and criticism from international human rights organizations and fueled mass protests in
Kuala Lumpur. The Reformasi movement led to the formation of the National Justice Party (
KeADILan), the predecessor to the
People's Justice Party (PKR), in 1999, strengthening the opposition. The government responded with arrests and media restrictions, including curbs on
PAS's
Harakah newspaper. In the
1999 Malaysian general election,
Barisan Nasional retained a two-thirds majority, though PAS and
KeADILan made gains under the
Alternative Front (BA) coalition. In February 2003, Malaysia hosted the 13th
Non-Aligned Movement Summit, where Mahathir condemned the
United States'
plans to invade Iraq as a violation of international law and urged NAM members to oppose unilateral military actions. Although he had announced his retirement in June 2002 and named
Abdullah Ahmad Badawi as his successor, Mahathir officially stepped down in October 2003 after over 22 years in office, making him the world's longest-serving elected leader at the time.
Abdullah administration Abdullah Ahmad Badawi was sworn in as
Malaysia's fifth prime minister on 31 October 2003, beginning his term with a pledge to combat corruption by strengthening anti-corruption agencies, expanding public channels for reporting corruption, and improving transparency in the award of government contracts. He promoted
Islam Hadhari, an approach to Islam emphasizing compatibility between Islamic principles and economic and technological development. Aligning with this approach, his administration introduced the j-QAF programme in 2004 to strengthen Islamic education in schools. In the same year, he also introduced the
National Integrity Plan and
Malaysian Integrity Institute to foster ethical governance. Additionally, Abdullah's government sought to improve
access to higher education and bolster Malaysia's standing as a regional educational hub, expanding funding and infrastructure for
tertiary education. Following the
2004 general election, Abdullah led the Barisan Nasional (BN) coalition to a major victory, securing over 90% of parliamentary seats. Later that year, the
Indian Ocean tsunami affected parts of Malaysia, particularly Penang and Kedah, prompting Abdullah's administration to coordinate relief efforts and establish a tsunami warning system to improve disaster preparedness. In 2005, Malaysia hosted the
inaugural East Asia Summit under Abdullah's leadership, aiming to enhance cooperation among
Southeast Asian nations and major global powers. in 2005, led by Prime Minister
Abdullah Ahmad Badawi, to promote regional cooperation.To advance economic development, Abdullah launched the
Special Task Force to Facilitate Business (PEMUDAH) in 2007 to streamline business processes and reduce bureaucratic inefficiencies. Between 2006 and 2008, his administration introduced five economic corridors—
Iskandar Malaysia,
Northern Corridor Economic Region (NCER),
East Coast Economic Region (ECER),
Sabah Development Corridor (SDC), and
Sarawak Corridor of Renewable Energy (SCORE)—to drive regional development. The government sought to transition into a value-chain economy while maintaining its manufacturing base by revitalizing
Malaysia's agriculture sector to enhance
food security, incorporating modern
agrotechnology and implementing a national food security plan in 2008 amid the
world food price crisis at the time. Abdullah also faced criticism over rising petrol and electricity costs linked to subsidy restructuring, as these changes were seen as potentially undermining Malaysia's traditional advantage as an exporter.
Sheikh Muszaphar Shukor became Malaysia's first astronaut on 10 October 2007, travelling aboard the Russian
Soyuz TMA-11, a milestone for Malaysia's
space exploration program. That same year, two major anti-government rallies took place. The first
Bersih Rally on 10 November in Kuala Lumpur called for
electoral reform amid corruption allegations and criticisms of a system favouring Barisan Nasional. Later that month, on 25 November, the
HINDRAF rally organised by the
Hindu Rights Action Force (HINDRAF) protested perceived ethnic discrimination policies. The government subsequently banned HINDRAF in October 2008, labelling it a security threat. that was held in Kuala Lumpur The
2008 financial crisis led to reduced demand for Malaysian exports such as electronics, palm oil, and rubber, causing the country's GDP growth to slow significantly and contract in early 2009 before beginning a gradual recovery. To mitigate the impact, Abdullah's government introduced two stimulus packages totalling approximately RM67 billion, supporting domestic spending, infrastructure projects, and vulnerable sectors. These measures, alongside Malaysia's diversified economy, contributed to a relatively swift recovery. In 2009, his administration established the
Malaysian Anti-Corruption Commission (MACC), replacing the Anti-Corruption Agency (ACA), to enhance anti-corruption efforts. That same year, his administration also established the Judicial Appointments Commission (JAC) to improve transparency in judicial appointments, strengthening judicial independence. In the
2008 general election, Barisan Nasional lost its two-thirds majority for the first time since 1969, a result of the
political tsunami brought about by the
2008 Malaysian Opposition Wave, which signaled a significant decline in public support. Mounting criticism over unmet anti-corruption promises and perceived ineffective leadership led Abdullah to announce his resignation in October 2008, with his departure finalised in April 2009 when
Najib Razak took office as his successor.
Najib administration Najib Razak was sworn in as
Malaysia's sixth prime minister on 3 April 2009. Early in his tenure, he introduced the
1Malaysia campaign, a national unity initiative aimed at fostering ethnic harmony, service efficiency, and equitable opportunities. The concept expanded into a public service brand covering various social and economic policies aimed at unifying Malaysia's multicultural society. On 15 September 2011, Najib announced plans to repeal the
Internal Security Act 1960 (ISA), which had been criticised for allowing indefinite detention without trial. It was replaced by the
Security Offences (Special Measures) Act 2012 (SOSMA), which came into effect on 31 July 2012. However, critics argued that SOSMA was misused to silence dissenting voices, with several activists detained under the law. In early February 2013, an
incursion occurred in Lahad Datu when hundreds of militants, some armed, arrived by boats in
Lahad Datu District, Sabah, Malaysia, from
Simunul Island,
Tawi-Tawi, in the southern
Philippines. The group was sent by
Jamalul Kiram III, a claimant to the throne of the
Sultanate of Sulu. In response, Malaysian security forces launched a major operation to repel the militants, resulting in a decisive Malaysian victory that concluded the conflict by late March 2013. Following this, the
Eastern Sabah Security Command (ESSCOM) was established to enhance security along Sabah's eastern coast. In the
2013 general election, Najib led the Barisan Nasional (BN) coalition to victory, retaining a majority in Parliament. However, the election was marred by allegations of electoral irregularities, including accusations of
gerrymandering and alleged misuse of government resources. This led to widespread public protests, which demanded electoral reform. On 8 March 2014,
Malaysia Airlines Flight 370 disappeared en route from Kuala Lumpur to Beijing, leading to one of the largest and most costly search efforts in aviation history. Four months later, on 17 July 2014,
Malaysia Airlines Flight 17 was shot down by a
surface-to-air missile over
Eastern Ukraine while flying over territory controlled by
Russian-backed militants, resulting in the deaths of all 298 passengers and crew on board. tainted the tenure of Prime Minister, Najib Razak. On 1 April 2015, Najib's administration introduced a
controversial 6% Goods and Services Tax (GST) on most goods and services to expand Malaysia's tax base. The GST was widely unpopular, with many Malaysians expressing concerns over rising living costs. Later that year, Najib's administration was engulfed in
scandal when Najib and other officials were implicated in a multibillion-dollar
embezzlement and
money-laundering scheme involving
1Malaysia Development Berhad (1MDB), a state-owned investment fund allegedly masterminded by
Low Taek Jho. This triggered widespread calls and protests from Malaysians, including opposition parties, demanding Najib's resignation. These protests culminated in the
Malaysian Citizens' Declaration, a declaration from a coalition of political and civil leaders calling for Najib's removal from office. protesters marching the streets of
Kuala Lumpur peacefully before the police confronted them. From 2011 to 2016, the
Bersih movement held several large rallies calling for electoral reform, transparency, and accountability in governance. The Najib administration's response included arrests of activists and restrictions on media coverage, which garnered both domestic and international scrutiny. Amid growing dissent, Najib removed his then-deputy,
Muhyiddin Yassin, suspended several newspapers, and enacted the
National Security Council Act 2016, granting unprecedented powers to the prime minister. Additionally, living costs surged due to subsidy cuts, and the
Malaysian ringgit experienced a sharp decline. In 2017,
diplomatic tensions flared between Malaysia and
North Korea after the
assassination of Kim Jong-nam in Malaysia, an incident that sparked a major diplomatic row and brought international media attention. Najib's tenure ended after the
2018 general election, in which Barisan Nasional lost its parliamentary majority for the first time in Malaysia's history.
Second Mahathir administration Mahathir Mohamad was sworn in as the seventh
Prime Minister after winning the
election on 10 May 2018. A number of issues contributed to
Najib Razak's defeat, including the ongoing
1Malaysia Development Berhad (1MDB) scandal, the 6% Goods and Services Tax, and the rising cost of living. Mahathir promised to "restore the
rule of law" and conduct elaborate and transparent investigations into the
1Malaysia Development Berhad scandal.
Anwar Ibrahim was given a full
royal pardon and was released from prison on 16 May 2018. He was designated to take over the reins from Prime Minister
Mahathir Mohamad as planned and agreed by the coalition before GE14. in a meeting with Mahathir in the
Malacanang Palace in 2019 The unpopular tax was reduced to 0% on 1 June 2018. The government under Mahathir tabled the first reading Bill to repeal GST in
Parliament on 31 July 2018. GST was successfully replaced with Sales Tax and Service Tax starting 1 September 2018. Mahathir's administration promised to review all
Belt and Road Initiative projects in Malaysia that were initiated by the previous government. He characterised these as "unequal treaties" and said some were linked to misappropriated funds from the 1MDB scandal. The government suspended work on the
East Coast Rail Link and continued it after terms had been renegotiated. Mahathir cancelled approximately $2.8 billion worth of deals with
China Petroleum Pipeline Bureau, stating that Malaysia would not be able to repay its obligations to China. Mahathir was supportive of the
2018–19 Korean peace process and announced that Malaysia would reopen its embassy in North Korea and resume relations. On 28 September 2018, Mahathir addressed the
United Nations General Assembly, stating that his government would promise to ratify the
International Convention on the Elimination of All Forms of Racial Discrimination (ICERD). However, after weeks of receiving racially and religiously charged demonstrations against the convention, particularly from
Bumiputras, the Pakatan Harapan government chose not to accede to the ICERD on 23 November 2018. Mahathir announced the
Shared Prosperity Vision 2030 in October 2019, which aimed to increase the incomes of all ethnic groups, focus more on the technology sector, and for Malaysia to become a
high-income country by 2030. Malaysia's
freedom of the press improved slightly under Mahathir's tenure, and the country's rank rose in the
Press Freedom Index. Political infighting within the Pakatan Harapan coalition, as well as the uncertainty of the date of the transition of power to his designated successor, Anwar Ibrahim, soon culminated in a
political crisis known as the Sheraton Move in February 2020.
Muhyiddin administration and its surroundings in Penang were deserted on 22 March 2020 during the
Malaysian Movement Control Order to combat the
COVID-19 pandemic. On 1 March 2020, a week after the country was thrown into a
political crisis,
Muhyiddin Yassin was appointed as the eighth
Prime Minister by the
Yang di-Pertuan Agong, following the abrupt resignation of Mahathir Mohamad. The fallen government was replaced by the new
Perikatan Nasional (PN) coalition government, led by
BERSATU leader Muhyiddin. During his administration,
COVID-19 spread throughout the nation. In response, Muhyiddin implemented the
Malaysian movement control order (MCO) on 18 March 2020. On 28 July 2020, the
High Court convicted former Prime Minister
Najib Razak of
abuse of power,
money laundering and
criminal breach of trust, becoming the first Prime Minister of Malaysia to be convicted of corruption. After failing several appeals, he entered
Kajang Prison on August 23, 2022, to serve his sentence. In mid-January 2021, the
Yang di-Pertuan Agong declared a
national state of emergency until at least 1 August in response to the COVID-19 crisis and political infighting. Parliament and elections were suspended while the Malaysian government was empowered to introduce laws without approval. Muhyiddin commenced
the country's vaccination programme against COVID-19 in late February 2021. On 19 March 2021,
North Korea announced the
severance of diplomatic ties with Malaysia, after the
Kuala Lumpur High Court rejected North Korean businessman Mun Chol Myong's appeal from extradition to the United States. Muhyiddin officially resigned as prime minister on August 16, 2021, after losing the majority in parliament support due to the country's political crisis, as well as calls for his resignation due to
economic stagnation and the government's failure to prevent COVID-19
infections and
deaths. He was afterwards appointed back as
caretaker prime minister by the Yang di-Pertuan Agong until a replacement can be selected.
Ismail Sabri administration Ismail Sabri Yaakob was sworn in as the ninth
Prime Minister on August 21, 2021. During his inaugural speech as prime minister on 22 August 2021, Ismail Sabri introduced the
Keluarga Malaysia idea. During his tenure, he lifted the
Movement Control Order (MCO) following the expansion of the
vaccination programme and oversaw the
Twelfth Malaysia Plan. The
Constitution (Amendment) Act 2022 was passed, restoring Sabah and Sarawak as equal partners to Peninsular Malaysia per the
Malaysia Agreement of 1963, effective from 11 February 2022. Later in the same year, a constitutional amendment prohibiting members of parliament from
switching political parties was also passed. Several UMNO lawmakers called for a
snap election before the end of 2022 to resolve ongoing infighting in the party and obtain a stronger mandate. This led to an earlier
general election in November 2022, which resulted in a
hung parliament, the first federal election to have such a result in the nation's history. He launched the
Malaysia Madani concept as a national policy on January 19, 2023, in Putrajaya which replaced the
Keluarga Malaysia concept from the previous administration of Ismail Sabri Yaakob. with Russian President
Vladimir Putin at the
Eastern Economic Forum in
Primorsky Krai, Russia, 4 September 2024 On June 18, 2024, Anwar announced Malaysia's intention to join
BRICS, emphasizing that this decision would not impact domestic politics. Malaysia officially submitted its application in July 2024. Anwar attended the 9th
Eastern Economic Forum in
Vladivostok,
Russia, in September, where
Russian President Vladimir Putin invited Malaysia to the upcoming BRICS Summit. On October 24, 2024, Malaysia, represented by
Economy Minister Rafizi Ramli, attended the
16th BRICS Summit and formally attained BRICS partner country status on January 1, 2025, enhancing its economic and trade collaborations with BRICS nations. In April 2025, Malaysia hosted
Chinese President Xi Jinping for a
state visit, his first to the country in 12 years. The two nations signed 31 agreements across sectors such as trade, infrastructure, technology, and cultural exchange, and issued a joint declaration to strengthen
bilateral relations. ==See also==