The Historical Development of Japanese Investment in Malaysia (1910-2003)

Contents

Tables and Illustrations

Foreword

Introduction

List of Abbreviations

CHAPTER 1 Introduction

CHAPTER 2 Japan’s Economic Activity in Malaya before the Second World War: A Historical Perspective

CHAPTER 3 Japan’s Economic Importance in Malaya during the Second World War (1941-1945)

CHAPTER 4 Malaysia’s Economic Landscape before the New Economic Policy: The Role of Japanese Investment

CHAPTER 5 Malaysia’s Economic Landscape after the New Economic Policy: The Role of Japanese Investment

CHAPTER 6 The Historical Development of Japanese Investment in Malaysia During the Look East Policy

CHAPTER 7 Malaysia-Japan Relations After Mahathir Era

CHAPTER 8 Conclusion

Bibliography

Tables and Illustrations

TABLE 2.1 Number of Visas Granted in Nagasaki Consulate to Japanese Immigrants to the Straits Settlements and the Federated Malay States between 1924-1925

TABLE 2.2 Total Exports of Iron Ore from Malaya to Japan Between 1932- 1941

TABLE 5.1 Japanese Investment by Industry in Production Company by December 31, 1977 (M$)

TABLE 5.2 The Number of Japanese Related Manufacturing Companies by Industry and Location by June 1978

TABLE 5.3 Japanese Trade Companies Joint Venture in Malaysia by June 1978

TABLE 5.4 Malaysia’s Major Exports to Japan from 1978 to 1980

TABLE 6.1 Japan Direct Investment Abroad 1 April 1980-31 March (US $ Million)

TABLE 6.2 Japanese Investment in Malaysia by June 1981

TABLE 6.3 Japanese Joint Venture Project in the Timber Sector in June 1982

TABLE 6.4 Projects Approved in Malaysia with Japanese Investment Interest (1981-1990)

TABLE 6.5 Japanese Related Companies in Malaysia (1983-1996)

ILLUSTRATION 2.1 Malaya

ILLUSTRATION 3.1 Expansion of the Empire of Japan by 1942

Foreword

I’m grateful to Allah for giving me enough health, time and maturity of mind to prepare this book in such a way. In the limited space and this means I express my thanks at their great contribution that helps this success. This writing project actually began after writer successfully completed a research doctorate at the National University of Malaysia. First, millions of thanks to my main supervisor, Professor Dr. Nordin Hussin for such a huge help, guidance, advice and counsel that so helpful throughout this writing project. Do not forget also to my co-supervisor, Dr. Ahmad Ali Seman, with his expertise that helped reinforce my passion for the completion of this writing project. Thanks also go to the Centre for Graduate Studies on the Research University Fellowship Scheme which helped financially at the beginning of this writing project. Thank you next to the Ministry of Education on MyPhD Financing Program MyPhD which helped financially at the end of this writing project.

In terms of methodology, the early stages of this writing project is to identify and collect resources from primary and secondary libraries, archives and reports from various government organizations. Therefore, I would like to express my thanks and appreciation to all employees of libraries, archives and government organizations that become the reference for helping me in terms of providing data and guidance throughout the process of preparation of this writing project. Appreciation to friends in arms, especially Victor Anthony Aga that much help during field work in Sarawak and Juslin Sajok that much help during field work in Sabah. Appreciation to the national historian figure, Professor Emeritus Tan Sri Dato' Dr. Khoo Kay Kim and prominent politician from Sabah, Datuk Dr. Jeffrey Kitingan that became my source of motivation and inspiration during the production of this book.

Finally, do not forget my family that much help in this effort, especially my mother, Nor Akmar binti Haji Alauddin, my father, Muhammad Iqbal bin (Dr.) Haji Shaharom who will be graduating Doctor of Business Administration at Universiti Utara Malaysia, Sintok in 2016 and my second brother, Muhammad Al Farabi bin Muhammad Iqbal who expects to complete his PhD in Electrical Engineering at the Delft University of Technology, Delft, the Netherlands in 2016. Only Allah alone can reply and give blessings to you all. Without their services, it is not likely this writing can be completed. This book will complement previous studies by collecting the characteristics of Japanese investments in Malaysia as well as the push and pull factors involved before and after Malaysia’s independence as a reference for later researchers.

UQBAH IQBAL

Introduction

Malaysia's economic development nowadays inherited from the three previous stages, starting with the level of growth and the rapid development of industry, the natural resources of the mid-19th century until 1914, followed by periods of volatility or instability of industry natural resources between the First and the Second World War and finally, the level of industry consolidation and rationalization of natural resources together with the diversification of the economy after 1945. Although Malaysia is a former British colony, the importance of the Japanese economy have contributed to the change in the foreign policy of Pro-Western Policy during the colonial and post-colonial to the Look East Policy during the administration of Tun Dr. Mahathir Mohamad. The objective of this book is collect the author publishing articles with supervisors about Japanese investment in Malaysia during the period of study to help readers scour the economic interests of Japan with more accurate and easier in one book. This book also aims to add a collection of readings on Malaysia-Japan relations. This book is suitable to be read by those interested in understanding the relationship between Malaysia and Japan, East Asia lecturers, East Asian thinkers, those involved economic relations with Japan, the university students of various schools and to the general reader in society. For articles published in Malay, the author change it became English in accordance with the publication of this book in English. For articles which use footnotes reference system, the author change it becomes a text reference in accordance with the publication of this book for the public reading.

List of Abbreviations

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CHAPTER 1 Introduction

This writing is an in-depth research on the historical development of Japanese investment in Malaysia from 1910 to 2003. It is organized by chronological order so that Japanese investment significant in Malaysia will be commonly traced to clearly and comprehensively. The economic importance of Japan to Malaysia has contributed to changes in foreign policy from Pro-Western Policy during the colonial and post-colonial to the Look East Policy during the administration of Tun Dr. Mahathir Mohamad. The main purpose of this book is to unravel the characteristics of Japanese investment and the push and pull factors that involved in each study period.

Studies Relating the Historical Development of Japanese Investment

Reading on other studies, the author found no scientific studies, thesis or public works that have touched on Japanese investment in Malaysia completely from the time of British colonial administration until the time of Tun Dr. Mahathir Mohamad, it is a long time for 93 years. This vacancy will be the mainstay of this book further examines the same issue at different times. There are many previous studies that touch on areas of British decolonization in general and the history of Malaya after the Second World War to assist the author in depth the main focus of this paper. Among them are William Roger Louis (1978), Christopher Thorne (1978), R.F. Holland (1985), John Darwin (1988), Nicholas Tarling (1993) A.J. Stockwell (1995), and Tilman Remme (1995) which analyzes the British plan to maintain control and influence in Malaya after the Second World War. Economic historians such as P.J. Cain & A.G. Hopkins (1993), Michael Havinden & David Meredith (1993), Martin Rudner (1975) and Nicholas J. White (1994) dismantling the economic interests of Malaya to the British in the period after the Second World War. William Henry Chamberlin (1937) dismantling South Sea importance to the Japanese economy, which led to conflict with Western countries in the region is inevitable. Andrew J. Rotter (1987) revealed a correlation between Southeast Asia with Britain and Japan economic reconstruction after the Second World War. Lawrence Olson (1970) analyze the role of compensation in promoting relations between Japan and Southeast Asia after the Second World War. Denis Koh Soo Jin and Tanaka Kyoko study (1984) touch competition between British and Japan in terms of trade in Malaya before the World War. Junko Tomaru study (2000) using primary sources from the United Kingdom and Japan, and the main focus of his research is dismantling the British position in the restoration of bilateral relations between Malaya and Japan happens very quickly after the Second World War behind a legacy of Japanese occupation.

Zaibatsu is a business group in Japan. Zaibatsu play an important role in the development of Japanese industry beginning of the 19th century until the Second World War. Four largest group of Zaibatsu are Mitsubishi, Mitsui, Sumitomo and Yasuda which controls 25 percent of Japan's total trade volume. Before the Second World War, Zaibatsu control 50 percent of Japanese financial and banking institutions, 35 percent of total investment and 32 percent of heavy industry. More information about the Zaibatsu history can be seen in the study of Adams & Kobayashi (1974), Allen (1981), Nakamura & Grace (1985) and Morck & Nakamura (2005). Zaibatsu groups founded on family wealth in traditional sectors such as Mitsubishi, which was founded by ex-bureaucrats knights Yataro Iwasaki, who was first a shipping firm that developed under government protection. Mitsui family, representing the merchants of the Edo period, is actively involved in various activities such as banking, insurance, production of cotton, sugar and machinery. Sumitomo and Mitsui also started from the Edo period, while Mitsubishi and Yasuda beginning from the Meiji Restoration Period. During the Meiji to the Showa eras, the Japanese government uses Zaibatsu financial skills and expertise for a variety of businesses, such as tax collection, military procurement and foreign trade.

P.J. Drake (2004) in the study Currency, Credit and Commerce: Early Growth in Southeast Asia discusses the economic structure of Malaya before 1914 that are fundamental to the economic development of Malaysia today. Before the First World War, Malaya export growth is based on domestic sources and supply-driven market opportunities and entrepreneurship. This leads to the importance of short-term trade credits, the availability of capital and the reinvestment of profits. The initial driving force of economic development of Malaya is the government, labor, capital and companies that are concentrated in raw materials. International payment systems, financial mechanisms and exchange rate fluctuations play a role in influencing capital investments in Malaya. Because London is a center of international trade at the time, merchant firms play a role as British trade representative in Malaya (Allen & Donnithorne 1957; Stahl 1951; Puthucheary 1960).

Communication and transportation systems are two important aspects in the development of the economic, social, administrative and defense of Malaya. The arrival of British has improved this two systems to smoothen the administration and safeguard the interests of its investments (Azharudin 2001). Malaya economic development is highly dependent on foreign investment and currency exchange is highly emphasized freedom of foreign investors. Before gaining independence from the British, Malaysia’s financial system is similar to other British colonies. The most important financial institutions at that time were the commercial banks, the British monopoly. The interbank market in domestic currency and foreign exchange developed but there is no long-term capital market. London is a repository of local long-term savings and a major source of long-term funds for investment in Malaya.

While studies from Malaya economic history researchers such as Wong Lin Ken (1965), Lim Chong Yah (1967), J.C. Jackson (1968), Yip Yat Hoong (1969), Kernial Singh Sandhu (1969), J.H. Drabble (1973) and A.J. Stockwell (1976) only take certain aspects of Malaya economics, such as rubber, tin, population and economic characteristics that are different without trying to relate, this book discusses the economic history of Malaya before 1914 in general. This study takes J.H. Drabble study (1974) which concluded that the arrival of the British in Malaya did not determine the pattern of economic development that appears later. 'Vent-for-surplus' Model of Hla Myint (1965) describes the process according to Malaya’s initial economic growth.

Myint shows two ways how the people of Malaya engaging in a money and wages economy. The first way is by supplying agricultural products to the export market. The second way is by getting the wages of the mines and plantations of foreign ownership has been established in the country. In the Myint analysis, transport is required to open the remote areas in Malaya, and foreign export-import firm is also required to act as a mediator between the people and the world market. Government activities, events and company migration and capital are the three powers that drive Malaya’s early economic growth. British intervention in Malaya gives advantage to those who want to improve the economy. For example, the new land law, namely Torren system influenced the pattern of Malays economic growth and also an element of individualism. Besides, there is an opportunity to borrow money from the government. Better communication system also helps the development of various types of commercial activities (Milner, 1994: 17). P.J. Drake study is important because it helped the author to understand the early structure of Malaya’s economic during the British colonial era.

Shakila Yacob (2008) in the study The United States and the Malaysian Economy, she discusses impact of United States investment in Malaya and the Federation of Malaya and its impact on the bilateral relations in economic terms between 1870-1957. Lack of this study is that it is more focused on the United States investment, rather than the Japanese in Malaya. However, the importance of this study is that it helped the author to understand the British administration policy in dealing with the influx of foreign investment. Any form of interaction that occurs between the United States and British in addressing the United States investment, of course, is a same form of interaction when the Japanese do investment.

Japanese investment in Malaya during the British colonial era have been touched by many previous researchers, the important studies are from Yuen Choy Leng (1973, 1974, 2001), Shiho Kato (1992) and Kassim Thukiman (1992). Yuen Choy Leng (1973, 2001) in the study Japanese Expansion Interest in Malaya 1940-41 and Japanese Rubber and Iron Investments in Malaya, 1900-1941, he said the first wave of Japanese investment in Malaya was in the rubber and iron ore mining (Yuen 1973: 126; Akashi 2008: 21-32). This study view Japanese interest in these two sectors. British will impose obstacles when there is a conflict of interest between them and the Japanese in rubber cultivation sector, and encouraging when there is no conflict of interest (Norberts 1988: 98-126) as in the iron ore mining sector (Yuen 2001: 141). This study was chosen because it discussed the Japanese investment in Malaya, especially rubber and iron ore sector before the Second World War (Kee 1965: 48-88).

Shiho Kato (1992) in the study Japanese in Malaya Mining Company before the Second World War, he was focusing on the Japanese mining companies in Malaya before the Second World War. He did this study after receiving guidelines from Johor state budget information. From that budgetary data, it is found Malaya, especially Johor is a major supplier of iron ore to Japan before the Second World War. This study was chosen because it helped the author to understand better the Japanese mining activities in Malaya at the moment.

Paul H. Kratoska (1998) in the study The Japanese Occupation of Malaya from 1941 to 1945 and Yoshimura Mako (2002, 2008) in the study Japanese Occupation and Economic Policy in Malaya, and Japan's Economic Policy for Occupied Malaya, they concluded that Malaya was subjected to Japan during the Second World War because Japan seek raw materials, particularly tin reserves and vast farmlands in Malaya (Yee 1966: 48-88; Yuan 1978: 163-179). Malaya also deemed important geographical position for military purposes of Malayan Military Administration (MMA). In the long term if Japan is successful in war, the supply of tin and rubber from Malaya can be used by the industrial sector in Japan within the Greater East Asia Co-Prosperity Sphere.

Japanese investment in the Federation of Malaya after independence, followed by the formation of Malaysia after it has been touched by many researchers before, the key studies are from Chee Peng Lim & Lee Poh Ping (1979 & 1983), Mehmet Sami Denker (1990 & 1994), Makoto Inazawa (1994), Sumanthy a/p Murugaiah (1998) and Md. Ali Hasan (1996). Kiyoshi Kojima (1978) in the study Foreign Direct Investment: A Japanese Model of Multinational Business Operations said that in the 1960s and 1970s, the main factors determining Japanese investment in developing countries is a comparative advantage. The Japanese industry after the Second World War is labor-intensive. When the Japanese development is booming, the cost of labor and materials also increased, and these caused Japanese firms began to move their operations to developing countries which have labor supply more and cheaper than in the capital.

Terutomo Ozawa (1979) in the study Multinationalism, Japanese Style: The Political Economy of Outward Dependency also stressed the importance of limited natural resources in Japan. He said that for a country like Japan, which has limited natural resources, to avoid this constraint of limiting economic growth, Japan should ensure the production of raw materials and cheap from abroad through direct investment in countries that have a supply of natural resources many. Direct investment is necessary because it provides direct control over the production process and price. Japanese Government played a key role in ensuring that overseas investment is successful through the assistance provided as financial assistance, assistance for infrastructure development; improve the image of Japan in the developing countries after the Second World War, other assistance through organizations such as the Japanese Economic and Trade Organization (JETRO) etc.

Chee Peng Lim and Lee Poh Ping (1979) in the study The Role of Japanese Direct Investment in Malaysia, they state in more than a decade after 1945, there was no Japanese investment in joint ventures in the Federation of Malaya (Chee & Lee, 1979: 4). By the late 1950s, Japan began to change its foreign policy towards the Federation of Malaya from inactive to active. At this time Japan also started its investment policy. This study was chosen because it discusses the development of Japanese investments in Malaysia during the tenure of Tunku Abdul Rahman, Tun Abdul Razak and Tun Hussein Onn. Lack of this study is that it is not appropriate to talk about the beginning of Japanese investment in Malaya after the Second World War Mehmet Sami Denker (1990) in the study Internationalization of the Malaysian Economy: Role of Japan, he discusses the development of Japanese investment in Malaysia after the Second World War, between 1957-1986. This study is more economical to discuss the role of Japanese investment and aid in changing the structure of the economy derived from primary commodities to economic diversification. The study did not use any archival sources, in contrast to this book writing more of a history. This study was chosen because it helped the author to better understand the activities of Japanese investment in Malaysia at the moment, and facilitate the collection of data as the author for not having to go to Japan as this study has provided data on investment derived from Japan.

Lee Sheng-yi (1974) in the study The Monetary and Banking Development of Singapore and Malaysia, he discusses the historical development of financial and banking system in Malaysia and Singapore, the evolution of its currency board system and the impact of this evolution of trade activities during the British colonial era. British banks are banking pioneer in Malaya (Ruby & Sieh 2007: 317). Their early businesses are mostly in exchanges, with silver and gold at first, and then sterling with local dollars. The history of Malaya’s financial system starting with the Currency Ordinance 1899 and Currency Reform 1903-1906 (Lee 1974: 28-29; Wong, 1965: 211-239), which has established a Currency Board system and Sterling exchange rates. Subsequent legislation such as the Currency Ordinance 1938, and the Treaty of Malaya and British Borneo Currency in 1950 and 1960 aimed at making amendments to the Currency Board system (Lee 1974: 27, 29). This study helped the author to understand in greater detail the financial system in Malaysia and Singapore to form the structure of the national economy so that foreign investment can be brought in to the country's development.

Mahathir bin Mohamad (1981) in the study The Malay Dilemma and Sivamurugan Pandian (2006) in the study The Malay Dilemma - Pemikiran Awal Tun Dr. Mahathir Mohamad explains the problems of the Malays from Mahathir glasses. British colonization, the presence of Chinese and Indian and the reign of Japan has created the Malays living standards dilemma. His study of the system of values ​​and ethics of the Malays tried to pinpoint the fundamental errors that must be corrected and adjusted so that other actions to develop the Malays have a better chance to succeed. These two studies have been choosen because of the Look-To-The-East thought existence that emphasizes Japanese involvement in the economy before the tenure of Tun Dr. Mahathir Mohamad is due to the problems of the Malays at that time.

Summary

This writing is an in-depth research on the historical development of Japanese investment in Malaysia from 1910 to 2003. 1910 was selected as beginning year because Japanese investment in Malaya began with an investment in the rubber sector in 1910. 2003 is taken as the closing year of the study to look at the characteristics of Japanese investment in Malaysia as well as the push and pull factors involved during the time of Tun Dr. Mahathir Mohamad. Before Malaysia was formed in 1963, Malaya was under British colonial administration, Sarawak under administration of 3 Rajah of Sarawak and North Borneo under the administration of the British North Borneo Chartered Company. As a result of British colonization, the Malayan economy is a market economy shackled by the international capitalist system give priority to the development and favorable foreign private investors and a small number of local operators. British colonial era has brought changes in the economic structure of Malaya. Agricultural activities Malaya growing rapidly and this prompted the British to bring in foreign workers from India and China to work on agricultural plantations, mostly owned by them and also the mining sector. It also marks the beginning of a new history of the people of Malaya with a diverse country containing three major ethnic Malays, Chinese and Indians until now.

Although after independence Malaya closely associated with the British, but Tunku Abdul Rahman still working with Japan to reduce dependence on the British. This was driven by the needs of the country to get an alternative source of economic development. Economic ties between Malaysia and Japan continued during the administration of Tun Abdul Razak when Japan's Official Development Assistance (ODA) channeled to Malaysia to finance most of the project development. Malaysia and Japan economic ties strengthened during the administration of Tun Hussein Onn through the establishment of the Malaysia-Japan Economic Association (MAJECA) and Japan-Malaysia Economic Association (JAMECA). The continuity of the Look-To-The-East thought that passed by the three Prime Ministers saw Japan emerge as the largest foreign investor in Malaysia when Tun Dr. Mahathir Mohamad took over leadership of the country. Although the author have seen too many previous studies about Japanese investment in Malaysia, this book will complement previous studies by collecting the characteristics of Japanese investments in Malaysia as well as the push and pull factors involved before and after Malaysia’s independence as a reference for later researchers.

CHAPTER 2 Japan’s Economic Activity in Malaya before the Second World War: A Historical Perspective

This chapter analyzes the historical development of Japanese investment in Malaya between 1910 and 1940, and also to collect all the data of Japanese investment in this period. Attitude and policies of the colonial government in limiting or stimulating the kinds of Japanese investment in Malaya will also be analyzed. At this time, Malaya was under British administration. Japanese investment in Malaya was in rubber cultivation industry, fisheries, mining bauxite, iron ore and other minerals. During the colonial era, while the tin industry remains monopolized by the British, the conflict between Britain and Japan mainly in the rubber industry. Local fishermen in Malaya had been unable to compete with Japanese fishermen in the fisheries sector. British justifying the exploitation of Japan in the iron ore industry in the Federated Malay States to assist the development of these states.

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Illustration 2.1 Malaya (http://www.mangomaven.com/wp-content/uploads/2011/01/Malaya-Map.jpg)

Rubber Planting by Japanese

Rubber price boom between 1909-1912 have prompted the Japanese to acquire land in Malaya. At this time Japan had entered the rubber trade industry by producing bicycle tires and rubber footwear (Yuen 2001). Rubber plantation area under Japanese ownership increased from just 92 acres in 1907 to 83.750 acres in 1911 (Kassim 1992, Yuen 2001). Most of these farms acquired in 1910 and 1911 (Yuen 2001) when the price of rubber is at its highest level (Drabble 1973) the impact of developments in the technical field latex processing, growth and development in the electrical industry in the use of tires for vehicles. Before 1909, the Japanese people are not actively involved in the Malayan rubber investments because they are not confident in the ability and humble response of Japan as a country that is underdeveloped by Western countries (Hirokazu 1989). There is also involvement of Japan in coffee plantations in the state in 1910 (File of Setiausaha Kerajaan Negeri Sembilan No. FEDERAL 1769-1910). In Senaling, Kuala Pilah is found from Y. Tatematsu application for a land area of ​​55 acres for the cultivation of rubber (File of Setiausaha Kerajaan Negeri Sembilan No. K.P. 1188-1910).

Japanese interest in rubber led to the establishment of the Japanese Planters' Association in Singapore in 1912 and the Japanese Rubber Planters Association in Selangor in 1913 (File of Setiausaha Kerajaan Negeri Selangor No. SECRETARIAT SELANGOR 5469/1913a; File of Setiausaha Kerajaan Negeri Selangor No. SECRETARIAT SELANGOR 5469/1913b). In 1913, the total area of ​​rubber plantations were planted by members of the Japanese Planters' Association in Johor is an area of ​​23,180.25 acres than planted by non-members over 1,270 acres (Yuen 2001). With an area of ​​114,116 acres planted rubber in Johor, we can see Japan dominate one-fifth of rubber acreage in Johor. Johor become a major domestic investment for Japanese rubber because the basic land lease for 999 years (Mako 2002). In 1912, the Japanese government has set up a South Facilities Fund which was created to encourage capital investment. Employers Japanese banks such as Bank of Taiwan and Kanan Bank is also involved (Mohamad 1992).

While the Japanese in Malaya buy land for planting rubber, their counterparts in Japan has entered the rubber trade industry by manufacturing bicycle tires and rubber footwear (Denker 1990). Industrial rubber trade does not exist in Japan before 1900, it only began to develop after 1909 when the Dunlop Company build their factory in Kobe for manufacturing bicycle tires (Allen 1962). Although the Japanese rubber imports increased throughout the manufacturing industry, there are no figures to show the contribution of Japanese rubber production in Malaya against the use of raw materials in Japan (Yuen 2001).

When the British rubber planters saw the potential threat posed by the development of Japan’s rubber cultivation, coupled with the entry of the United States into rubber cultivation, they have asked the British to create restrictions on the transfer of rubber land to foreigners (Tomaru 2000). Rubber Growers Association (RGA), which represents the interests of the British rubber in Malaya, had convinced the Secretary of State for the Colonies about rubber benefit as raw material and the need to protect British control over the industry (Denker 1990).

British mindful of this restriction proposal as the basis for this bias may negatively affect the United States and Japan, which are allies in the First World War. Sir Edward Brockman, Chief Secretary to the Federated Malay States has warned that any sanctions will affect their allies, especially Japan, which has planted rubber on a large scale inside and outside Federated Malay States, with a focus in Johor (Tomaru 2000 ). British War Cabinet in the discussion also voiced concern about the impact of these sanctions against their ally. However members of the cabinet finally give their approval when assured that any objection would come from the United States and Japan are formal (British Colonial Office File No. CO273 / 464).

In July 1917, Rubber Lands ( Restriction ) Enactment was introduced in Malaya. Under this regulation, the control of the British economy strengthened as British citizens allowed to acquire more land, and foreigners may only carry on the business of land transactions with others who have the same nationality (Denker 1990). At this time the rubber plantations owned by the Japanese has grown to about 100,000 acres but due to the restrictions imposed by the Act, and subsequently by various control schemes international rubber, acreage has been reduced to about half by the Second World War (Tempany 1934). Although not important in terms of supply to meet the demand of the Japanese market, the interests of 100,000 acres of rubber held Japan in 1917 was an important beginning for their economic expansion in Malaya.

Japan considers Rubber Lands (Restriction) Enactment as a major obstacle to the development of their rubber investment (Yuen 2001) as among foreigners, the Japanese are the worst affected by this restriction (Denker 1998). The United States is taking calm action against these restrictions as it has no interest in rubber planting industry in Malaya. Most other foreign nationals involved in the cultivation of rubber are the Europeans in which they are not a lot of investment capital due to the impact of the First World War.

Japan Growers Association has sent a telegram to the Japanese ambassador in London to protest against these restrictions. Similar protests by the Japanese consul to the High Commissioner of Malaya. In Tokyo, the Japanese government under pressure by the big traders such as Fusanosuke Kuhan, Fujita, Furukawa, Okura and Mitsui to take action against restrictions imposed on their rubber planting activities (Denker 1990). The Japanese government sees this as a restriction contrary to the provisions contained in the Anglo-Japanese Treaty of Commerce and Navigation (1911) (File of Setiausaha Kerajaan Negeri Selangor No. 4132/1911), which allows the two countries to lease the land for residential, commercial, industry, and other legitimate purposes is the same as locals.

Under the indictment, British had to comply with this agreement (Tomaru 2000) .However from removing restrictions, British expand and incorporate previously excluded groups. This will not affect British interests, and also to eliminate Japanese protests that under the agreement without giving any advantage to them. Japanese rubber plantation in Malaya before and during the First World War was the result of the interest shown by individual traders and other entrepreneurs in Singapore or wealthy businessmen in Japan (Yuen 2001). A Japanese newspaper, Nanyo Nishi Shimbun was published in 1919 to record the events and circumstances of the Japanese in Malaya and Singapore (Shamsul & Zahra, 1990). Between 1906-1920, in addition to Johor, Japan also have rubber estates in the Straits Settlements, Johor, Negeri Sembilan, Selangor, Perak, Pahang, Terengganu, Kedah and Perlis (Yuen 1973).

Rubber cultivation by Japanese Companies

After the First World War, rubber cultivation is done by large Japanese companies. For example, Toyo Takushoku Company (Oriental Development Co. Ltd.) with a capital of 20 million yen has gained the rubber plantations in Malaya (Yuen 2001). Even during the era of the First World War, there is a rubber companies incorporated in Japan was interested in purchasing rubber estates in Malaya. Among the corporation is Gomu Nanyo Company (South Seas Rubber Co. Ltd.), which in 1915 acquired its first property in Malaya through land grants were transferred from a Japanese owner has died, namely Teikiu Okamoto. Immediately after Rubber Lands (Restriction) Enactment abolished in 1919, the company is trying to apply the rubber land ideal for the cultivation of rubber in the interior Johor (Yuen 2001). By the Second World War, the majority of Japanese estates with an area of ​​one hundred acres and has been owned by limited companies, many of them have been incorporated in Japan.

One of a handful of companies that are not incorporated in Japan but in the Straits Settlements is Consolidated Sangyo Koshi Company (CSK), which has large rubber estates in Johor Bahru, Batu Pahat and Kota Tinggi. CSK Company has expanded its assets by purchasing Main Thye estate in Tanjung Surat, which covers an area of ​​813 1/2 acres (Yuen 2001). Transfer of ownership of Tan Hin Cheng to the company conducted on August 3, 1935 and valued at $ 47,000 dollars. Japanese Estates are mainly located in Kota Tinggi, which has the largest number of Japanese estates in Malaya. Among estate operator was Nan Ah Koshi Company (Nan Ah Company Ltd.), which in late 1930 had joined with another company, Daiichi Godo Gomu (First Amalgamated Rubber Co. Ltd.) to form Showa Rubber Company.

Another company is Nanyo Gomu (South Seas Rubber Co. Ltd.) in which the first rubber estate have been bought from a Japanese individual. Nanyo Gomu Takushoku Company (South Seas Rubber Development Co. Ltd.) also bought it first estate, covering an area of ​​2,013 acres from two European partners who are employed by the law firm Rodyk and Davidson, whose services are often used by the Japanese. There are also Nettai Sangyo Company (Tropical Produce Co. Ltd.), Toyo Takushoku Company (Oriental Development Co. Ltd.) with estates focused in Johor Bahru, Johore Gomu Saibai Company (Johore Rubber Planting Co. Ltd.) and Nippon Industrial Company with estates concentrated in Batu Pahat (Yuen 2001). In 1937, Showa Gomu Company merged with Nan'a Company, Sumatra Kogyo Company, Tokyo Gomu Kogyo Company and Meiji Gomu Kogyo Company. As a result, Telok Sengat estate being part of Johor estates owned by Showa Gomu Company (Mako 2008).

After the First World War, Japanese estates growing under the ownership of the company because of the inability of Japanese individuals with limited capital to maintain their investment during the recession. During the First World War, the supply of raw materials needed from the East but subsequently exports exceed the amount that can be absorbed by the manufacturing industry, especially in the United States. Thus between 1920 and 1922 severely affected the rubber industry, involving Japanese estates Tomaru 2000). The unfavorable situation of the rubber industry resulted in no increase in Japanese investment, but then the explosion occurred rubber prices between 1925-1926 (Denker 1990) along with an increase in car production. Japanese owners who open their farms through capital have taken advantage of the rise in rubber prices to sell at a profit, which in turn allows them to repay the interest on their loans. Between June and December 1925, about 25,000 acres or 20 percent of total Japanese rubber grip in Johor have been sold (Yuen 2001). Table 2.1 shows number of visas granted in Nagasaki Consulate to Japanese immigrants to the Straits Settlements and the Federated Malay States between 1924-1925:

Table 2.1

Number of Visas Granted in Nagasaki Consulate to Japanese Immigrants to the Straits Settlements and the Federated Malay States between 1924-1925

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Source: File of Pejabat Setiausaha Kerajaan Negeri Selangor No. SEL: SEC: 4073/1925.

Nanyo Kyokai (Association of South Sea) through the issue of its journal in January 1926 expressed annoyance when some Japanese estates were sold to British interests. It has urged the Japanese government to help growers Japanese in Malaya by providing loans at low interest rates. Nanyo Kyokai also advises growers to expand their operations in Sumatra, Borneo, New Guinea, Siam and Indo-China (Denker 1990). Through the Bank of Taiwan and Yokohama Specie Bank, the Japanese government provided financial assistance to Japanese companies in Malaya, including cultivation of rubber (Yuen 2001), and they offer loans at low interest rates have helped them cope with the difficulties caused by the recession.

There is also a project among Japan influential individuals to set up a company with a capital of 10 million yen for the prevention of Japanese real estate sold to foreigners (Yuen 2001). Department of Finance in Tokyo is also considering setting up a loan fund that will provide financial assistance to the Japanese rubber growers to develop their estates (Kee 1965). Despite all these efforts, the spirit of the Japanese people in rubber cultivation is seen as discouraging early years of the industry (Denker 1990). Japanese rubber plant in Johor remained in third position after Europe and China, an area that belongs to them in the 1930s is about half of 1917 when the Rubber Lands (Restriction) Enactment approved. The decline in the importance of the Japanese rubber can be seen in terms of area fell from about one-fifth in 1913 to almost one-tenth in 1934 (Kee 1965). Besides Johor, Japanese investors have also expanded their rubber investment activities in Selangor and Negeri Sembilan (Kassim 1992).

Fishing Industry

The Japanese in Malaya has long been involved in the fishing industry since the beginning of the 20th century again. The Japanese government has taken the initiative to promote a Japanese fishing activities in Singapore as early as 1911. This is in line with the Japanese fisheries sector since the First World War to penetrate foreign markets. The Japanese government also sent fisheries experts to the area to investigate and as a result, one of them, Tora Yeifuku has set up a new firm in Singapore in 1914 with the help of Japanese capitalists in Kyoto (Tomaru 2000). After the First World War, there was an increase in the number of Japanese fishermen who go into Malaya. In 1924, there were only about 215 people of Japanese fishermen in the Straits Settlements and the Federated Malay States, but a decade later, the number increased to 1,050. The increase is probably due to the growth in the Japanese fishing industry abroad (Yuen 1978). Until 1912, Japan has managed to build ships weighing 41, 229 tons. This shows the shipping industry have to do with the fishing industry advances pioneered by Japanese fishermen in Malaya (Ahmad 1991).

Fishing is a Japanese tradition. Thi is because Japan has a limited land area and indirectly the majority of the citizens are fishermen. In the Meiji Period, the fishing industry is carried out in coastal areas only and the method used in catching them is very primitive. Then fishing techniques have progressed when the modernization was introduced. Most of the catch is canned and shipped to markets outside Japan. In 1931, there were 3 thousand Japanese fishermen and their annual income is 6 million yen. This industry has many bases in several places, starting from Manila to Singapore. Japanese fishermen who were in Singapore already carry out their activities along the coast of the Malay Peninsula, Sumatra and the islands between Singapore, Java and Borneo (Yuen 1978).

The fishing industry in Malaya was dominated by the Japanese. Among the Japanese fishing company is The Taichong Kongsi owned by Tora Yeifuku and Ishizu Fishing Company owned by Tojora Ishizu. Ishizu Fishing Company supplying as much as 40 percent of Malaya’s needs (Yuen 1978). The Taichong Kongsi which located in Singapore was established in 1922. It carries out fishing activities from Redang Island in Terengganu to Batavia in Jakarta. Fishing activities for fishermen Japan is different from the local Malays as they will be at sea for six months or longer compared with Malay fishermen who normally fish near the coast and rarely catch a fish in the deep sea. Japanese fishermen are accustomed to staying in their fishing boats. They do not have to worry about shipping their catch to Singapore as a ship would be sent to collect their catch (Roszaima 2011).

In the 1930s, advances in both these companies in the use of modern techniques, has enabled them to work further on the sea. Previously by the 1920s, they have managed to supply more than half the needs of fresh fish required by Singapore, which is approximately 5,000 tonnes per year and it increased to 44 percent in 1938 (Tomaru 2000). The bulk of the catch is frozen to be sent to Japan through the Japanese ships that stop in Singapore (Tregonning 1981). Local fishermen in Malaya cannot compete with Japanese fishermen as Japanese fishermen using engine ship and preserving facilities while local fishermen still use boats (Yuen 1978). Japanese shipping industry in fact has helped their investment in the fishing industry in Malaya.

Bauxite, Manganese and Tungsten Mining

Malaya has two bauxite mines in Johor, one near Batu Pahat and another at Kim Kim River along the straits of Johor, operated by Ishihara Sangyo Koshi Company (ISK) (Kratoska 1998). Before the Second World War, the Japanese companies have run bauxite mining activities in Malaya and the results are exported to Japan. Starting with only 36 tonnes of bauxite in 1936, Malaya exporting 13,098 tonnes of bauxite in 1937, 55.751 tonnes in 1938, 84.377 tonnes in 1939 and 55,380 tons in 1940. As of late October 1941, when production ceased, Malaya has exported a total of 50,825 tons in that year (Thompson 1941b). Manganese is mined in Terengganu and Kelantan. Terengganu produce 25,000 tons of manganese a year while Kelantan issued a total of 9,000 tons of manganese a year. Tungsten is mined in Perak. Its annual production is 400 tonnes per year (BMA File No. 506/10).

Iron Ore Mining in Johor

Concentration of iron mining in Johor is owned by Ishihara Sangyo Company Koshi (ISK) (Denker & Sharifah 1988-1989) who had a good relationship with state officials as a result contributed. ISK was established by Hirochiro Ishihara in Singapore in November 1920, as a branch of Nanyo Kogyo Koshi Company (NKK), which he founded in Japan in September 1920. In January 1921, ISK has been exporting iron ore from Batu Pahat, Johor to Japan. This is the first iron ore exports from Malaya (Kato 1992).

In 1928, export of Johor’s iron ore supply 40 percent of Japan's raw materials needed for the iron and steel industry (Thompson, 1941). Iron ore mining industry development in Johor was further strengthened when, in 1931, the iron ore has become the second largest and unlike other mineral mining, mining of iron ore proved to be harmful to agriculture because of the use of a small area (Yuen 2001). Agriculture is one of the economic pillars of Johor and any adverse effects it will cancel all the benefits derived from mining iron.

In August 1931, Tochigi Shoji Kaisha (TSK) has obtained permission to mine iron ore in Muar, Johor. Although TSK has been trying to carry iron ore mining operations in the region, but its operation was discontinued because the TSR to know that the area does not contain a lot of iron ore (Kato 1992). In 1932, the TSK has been conducting "prospecting" of iron ore around Gunung Jerai, Kedah (File of Setiausaha Kerajaan Negeri Kedah No. 2389/1350). However, the company does not resume iron ore mining operations because there is no sufficient iron ore mine to open. Apart from iron ore, TSK has shown interest in the ilmenite ore in Malaya. In 1935 Okabayashi and Oyashi, TSK representative bought ilmenite ore from Ulu Klang Ltd, a tin mining company in Selangor. Ilmenite ore bought by TSK were transported by train from Selangor to Hodai Company in Singapore. A total of 2,544 bulk ilmenite has been delivered to Hodai Company by TSK in 1935 (Kato 1992).

When ISK which have long mining on the west coast of Johor apply for the prospects deposit sessions that are known to exist in Endau in Johor East Coast, various incentives were given to it. Although the applied area is in the area gazetted Malay Reserve Land, state officials have agreed to open up land for mining purposes, while the minerals in it can still be sold (Yuen 2001). By the mid-1930s, ISK iron mine in Johor almost run out of supplies and other areas are being evaluated. Although there are promising new hope, but the existence of iron ore in the deposit cause things get complicated (Johor Mines Department, 1936).

International Tin Control Scheme which seeks to restrict the production of tin at the international level, starting from 1 January 1937 until 31 December 1941 does not allow mining of any deposit of iron that contains lead. The cause of ISK is not granted the lease. But existing permit renewed by the authorities to ensure that the handle is still there, if need be until the end of 1941, when the scheme expires tin restrictions. Johor government concerned ISK mine closures that have brought huge returns to the country. Almost all the ore produced in Johor comes from ISK mine in Sri Medan (Yuen 2001). This led to the Johor government to prepare early to allow full production begins in 1942 when the Tin Control Agreement expires. British officials have also been a lot of help in this matter. ISK was promised mining lease once the Tin Control Agreement expires (Johor Mines Department, 1937). Table 2.2 shows the total iron ore exports from Malaya to Japan between 1932 to 1941:

Table 2.2 Total exports of Iron Ore from Malaya to Japan Between 1932-1941

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Source: The Singapore Free Press and Mercantile Advertiser (1884-1942) 6 September 1934: 6; The Straits Times 5 September 1934: 11; The Straits Times 30 July 1934: 23; The Straits Times 2 February 1935: 11; The Straits Times 1 June 1948: 1; The Straits Times 22 September 1936: 12; The Straits Times 12 August 1937: 10; The Straits Times 29 April 1937: 7; The Straits Times 26 May 1939: 7; The Straits Times 24 June 1939: 6; The Straits Times 25 September 1939: 4; The Singapore Free Press and Mercantile Advertiser (1884-1942) 14 March 1940: 3; The Straits Times 14 March 1940: 10; The Straits Times 30 October 1939: 5; The Straits Times 7 January 1941: 5; The Straits Times 17 February 1941: 5; The Straits Times 27 March 1941: 4; The Straits Times 2 July 1941: 4.

The increase in the price of bauxite in 1936 and the discovery of this metal in Johor (Fermor 1939) helped ISK Sri Medan mine maintain its existence efficiently. Johor government's concern over the diminishing returns of iron resources in the country has eased through the opening of another Japese mine, Iizuka mine by Shigeru Iizuka in Bukit Langkap, Endau (Kato 1992) in 1935 (Yuen 2001). A year later the mine exports its first ore capacity (Kato 1992). Although the north-east monsoon affecting mining operations, 14,570 tonnes were exported in 1936 and 53,852 tonnes in the following year (Yuen 2001). This new mine output can not match ISK mine but it helps to alleviate the situation.

Another Japanese company showed interest in the mining of iron ore is Nanyo Gomo Takushoku Kaisha (NGTK or South Seas Rubber Development Company) which has a capital of 2 million yen in Japan (Kato 1992). K. Okumura as NGTK director has requested "prospecting license" from the Johor government to find iron ore in Endau, Kota Tinggi in 1934. The government has approved the application. However, the company is running a "prospecting" of iron ore only and does not continue its operation.

In 1928, T. Murai of Japanese Commercial Museum that is located in Singapore have applied "prospecting license" from the Johor government to find iron ore in Tanjong Setajam, Kota Tinggi. Johor Government does not approve the request for a study of the area has not been carried out by the Johor government and the government at that time was making plans to build a health center in the area (Kato 1992). Iron mining industry in Johor was no longer such a glorious past and start switching to Terengganu in 1934 (Thompson 1941a).

Iron Ore Mining in Terengganu

In Terengganu, ISK began producing iron ore from mines Machang Setahun Mine in 1925, and Nippon Mining Company (NMC) has issued an iron ore mine in Bukit Besi 1930 (Kato 1992). Production of Bukit Besi Mine output often exceeds Machang Setahun Mine. Bukit Besi Mine also has a way of its own train (File of Tan Sri Datuk Haji Mubin Sheppard (a). In 1934 Bukit Besi Mine has released iron ore as much as 492, 484 tonnes, while Machang Setahun Mine only issued a total of 152,836 tons (Kato 1992). The total ore exports iron ore production is not as high as its export activity was often hindered by the lack of fire ships in both mines. In 1935 total exports of iron ore from Terengganu have exceeded the total iron ore exports of Johor.

In 1936, output of iron mines in Terengganu nearly doubled from Johor (Denker & Sharifah 1988-1989). But the quality of the iron deposits mined by ISK is much lower than the quality of the mined iron in Johor. This problem is exacerbated by the problem of transport to Machang Setahun Mine. Therefore ISK focus its capital and labor on better deposits in Johor. Machang Setahun mine were also involved in the production of manganese ore, it began to be exported in 1928 (Fermor 1939). Generally the production of iron ore and manganese ore are run in separate mines (Kato 1992).

Besides iron ore mining in Johor, Shigeru Iizuka also been working on tungsten ore mine in Tanjung Laut, Johor in 1937. For Kuhara Iron Mine, only in 1938 the concession area was first developed, and the following year contributed to a doubling of Terengganu’s iron ore exports. When these assets were taken over by the NMC in 1930 (Kato 1992), the total domestic output increased from 87,364 tonnes in 1930 to 203,109 tonnes in 1931 (Denker & Sharifah 1988-1989). Iron ore started to be an important revenue source to Terengganu. Culminating in 1934 when iron ore is the main source of revenue, with revenue of $ 2,102,104 dollars. Even the Sultan of Terengganu went to Kemaman to visit the Japanese iron ore mine (File of Tan Sri Datuk Haji Mubin Sheppard (b).

Iron Ore Mining in Kelantan

Iron ore mining in Kelantan grow slowly. Only in 1935 did the iron ore found in Temangan area in Kelantan (Yuen 2001). Earlier, the NMC has been running manganese ore mining in Bukit Tandok Mine. Began in 1932, the results of its exports shipped to Japan (Kato 1992). British welcomed the inclusion of Japan’s company; the British adviser who expect high returns has directed cooperation should be given to them (Denker & Sharifah 1988-1989).

Only in 1937 Southern Mining Company (SMC) began iron ore mining operations in Temangan Mine (File of British Adviser's Office Kelantan No. KELANTAN.58/1941). The Kelantan government has always supported SMC Company operating and expects SMC will bring benefits to the economy of Kelantan. Kelantan mining history lackluster lead this state to put all it hopes on Japanese iron mines. Even so, the transport problems faced by NMC and SMC in Temangan have affected its export activities. This is because the slag in Temangan located deep in the interior (Kato 1992).

Japan Iron Ore Mining Donations

Japanese iron mine contributed to the development of the Unfederated Malay States by creating new revenue sources (Thompson, 1941). Only Japanese investors actively involved in exploiting these deposits because the Europeans and Chinese are busy with the tin mining and does not like iron mining (Denker 1990). Unlike the Europeans, who loved the way of mining dredges, Japanese people do not shy away from mining method that is more laborious manpower (File of British Adviser's Office Kelantan No. KELANTAN.58/1941). Because of this, the iron mining industry is left open to be exploited by Japan (File of British Adviser's Office Kelantan No. 342/1938). Japan has an interest in the iron ore. Along with increased production, imports are constantly increasing (F.M.S. 1937, Roszaima 2011). Because the drive to meet the needs of their country, and with momentum that resulting from the open attitude of the British authorities, the position of the Malaya near Japan and good quality ore, has attracted the involvement of Japanese efforts to Malaya (Thompson, 1941).

Contribution result indirectly from Japan’s iron mining industry to the development of the Unfederated Malay States is important. Duties imposed on various items used by the mine (eg ships, lighters, tugs, gasoline, etc.) and their workforce (Kato 1992) (such as tobacco, alcoholic beverages) is an indirect source of income. The importance of this indirect income formulated by W.E. Pepys, British Advisor in Johor (Denker 1990). British adviser in Terengganu also expressed to the High Commissioner about NMC operations contribution to Terengganu’s economy (Kato 1992).

In addition to contributing to the economic and land development in the Unfederated Malay States, Japanese iron mining also helps in developing the iron and steel industry in Japan (Yuen 2001). All ore mined and produced by the Japanese in Malaya were exported exclusively to Japan (Jomo 1994). Because of all the steel companies of Japan operating in Malaya is a branch or affiliate with a company that has its headquarters in Japan (Fermor 1939), funded by capital from Japan and managed by Japanese staff, it is normal iron ore produced in Malaya was to use in Japan's iron and steel industry. This led to the monopoly of Japan as a source of iron Malaya holds a major stake in the Japanese market.

In the 1920s and 1930s, Malaya along China had supplied 90 percent of the ore required for the use of blast furnace in Japan (Allen 1962). Before 1921, nearly all iron ore imports came from China. Iron ore from Malaya imported by Japan after 1921. Since that year iron ore imported from Malaya showed a constant increase until the Second World War. In terms of the cost of transport, carriage with steamer available in Malaya is cheaper than transportation by train in China. Thus the cost of transport of iron ore from Malaya is cheaper (Kato 1992).

Developments in the freight shipping industry also contributed to the increase in iron ore exports. Japanese mining company with operations in Malaya obtain favorable conditions for the delivery of ore to Japan by taking advantage of the vessels return to their home country (Thompson, 1941). These vessels prefer to take a cargo of ore at lower rates than let it return empty (Yuen 2001). After Malaya ahead of China in the list of major suppliers of iron ore to Japan, Yawata Iron Works (YIW), a company owned by the Japanese government, which bought most of the iron ore from Malaya changed the technology of production of steel, to suit the iron ore Malaya quality height. During this time production technology have tended to China iron ore inferior (Kato 1992).

Summary

Japan began to be interested in investing in Malaya following the explosion of world rubber prices in 1909-1911. Unbalanced competition from the British during the First World War led to the Japanese government under pressure by various groups with an interest to take action against restrictions imposed on their rubber planting activities. The development of the rubber industry fluctuations after the First World War and also difficulties in sourcing bauxite discouraged investment in the development of these two industries of Japan. Although Japanese investment is not a great impact on the cultivation of rubber and bauxite industry in Malaya, but it is different about the investment in Japan’s fisheries and iron ore. Japanese fisherman pioneered the fishing industry in Malaya as the result of Japanese shipping industry progress. Japanese iron ore investment help in developing the iron and steel industry in Japan. Japanese iron mine contributed to the development of the Unfederated Malay States by creating new sources of income and also assist the British in developing the Unfederated Malay States economies. This causes no obstruction from the British to the Japanese mining activities.

CHAPTER 3 Japan’s Economic Importance in Malaya during the Second World War (1941-1945)

This chapter will analyze the development of Japanese investment in Malaya during the Second World War (1941-194). Malaya became the focus because its economic development is conducive to the formation of the Malaysian economy. Sectors which became the focus of the study is the food, transportation, manufacturing, rubber, other commercial crops, timber, tin ore, bauxite, iron ore and coal sectors. During the Japanese occupation, the economic situation in Malaya did not develop. This is because the British had previously run Scorched Earth Policy. Japan also unable to run the affairs of trade either in or outside Malaya as being blocked by the Allied Forces. Overall, the tendency of Japanese policy towards centralization of power and the government's economic plan to achieve the goals of Greater East Asia Co - Prosperity Sphere. But without access to overseas markets, the Malayan economy collapsed. Can be seen no opportunity given to Malaya in the Greater East Asia Co - Prosperity Sphere because Japan’s policy is to maintain Malaya as permanent colony of Japan and exploited by Japanese immigrants. As a result the Japanese army after overthrowing the Western powers are established in advance, with their brutal behavior has caused the local population may not accept the concept of the Greater East Asia Co - Prosperity Sphere. This means converts one form of colonization with one form to another. Japan's brutal colonial exploitation also betrays all propaganda and promises them on the Greater East Asia Co - Prosperity Sphere anti-Western colonialism.

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Illustration 3.1 Expansion of the Empire of Japan by 1942 (http://www.kingsacademy.com/mhodges/03_The-World-since-1900/07_World-War-Two/pictures/map_War-in-the-Pacific_1942-45.jpg)

Food Sector

In agriculture, the main emphasis of Japan to add the production of food (Suhaimi 2001: 85-86; Elsbree 1970: 16; Mohd 1991: 68) to ensure that food supplies are adequate. When war broke certainly matters worse. When the Japanese occupied Malaya, there is a stock of rice for a year. But it was sent to Japan (Denker & Sharifah 1988 to 1989: 45). Since the outset of rice is decreasing, while it became the staple food of the population (Mako 2008: 118; Ooi 1997/1998: 22; Khoo 1985: 173; Noor 1992: 29; Gulick 1969: 79; Suhaimi 2001: 89; Denker 1990: 84 ; Mako 2002: 40; Rus 1988: 29). This occurs because when the Second World War, Malaya relations with neighboring countries, particularly suppliers of rice has been lost (Kennedy 1962: 259-260; Rus 1988: 30). Even at the time of rice imported from Burma and Siam also unacceptable (Noraini 1998: 57). This occurs because the ships laden with rice and other ingredients that have been seized by the Japanese during the war in Southeast Asia in order to save its army and it is more important than importing rice (Malai Sinpo October 16, 1943).

Rice lay out as a controlled item under the administration of Japan. All rice collected or managed by government agents, all the rice should be declared, and import rice exports can only be done with the permission of the Division of Trade and Industry. Rice rations carried out since the beginning of the occupation (Rus 1988: 40), although some agricultural areas not implement rationing system (Suhaimi 2001: 88; Mohd 1991: 81; Awang 1977: 97) to force the population to grow rice. Local rice sales were initially run by Rice Dealers Association and then by the Food Control Office (Kratoska 1988b: 27).

Kedah is a rice producer for Malaya (Jabil et al. 2010: 176; Noraini 1998: 59; Faith & Nora 2002: 1). Therefore Malayan Military Administration (MMA) tries to make Kedah as a supplier of rice for military use. In order to add a new area of ​​rice plants, Japan has allowed rubber to be harvested rice (Ooi 1997/1998: 23; Office 1994: 24; Jabil et al. 2010: 176; Noraini 1998: 60; Rus 1988: 30). However, this step is not successful and rice production continued to decline (Mohamad 1992: 96). Therefore strict controls have been imposed on the production. Among the measures taken include making regular census of farmers (Baharum 1952: 56). Some had been given the responsibility to ensure strict control is implemented. Local officials were used for this purpose include chief and spy rice (Cheah 1980: 101). Department of Agriculture ordered the District Officer to ensure that the people trying to grow rice (Mohamad 1992: 87; Mako 2008: 118; File of Malayan Union Secretariat No. MALAYAN UNION NO. 6999/1946). Paddy areas are the rights of the Malays were also given to other communities to encourage people to plant more rice and other crops (Denker & Sharifah 1988-1989: 45; File of Setiausaha Kerajaan Negeri Selangor No. R.C. SEL. 36/1946; Jabil et al. 2010: 176).

On the basis of sufficient food, MMA plans to plant paddy twice a year (Mako 2008: 118; Chin 1976: 46-47, 57-58; Office 1944: 24; Tan, 1979: 239; Jabil et al. 2010: 176; Rus 1988: 30; Noraini 1998: 58). MMA also introduced seeds from Taiwan (Noraini 1998: 58-59; Semangat Asia No. 2, Kugatsu 1943; Semangat Asia No. 9, Kugatsu 1943; Semangat Asia No. 8, Hachigatsu 1943), new techniques and expert technical assistance (Suhaimi 2001: 99; Office 1944: 24; File of Setiausaha Kerajaan Negeri Selangor No. R.C. SELANGOR 362/1946; Jabil et al. 2010: 176; Rus 1988: 30). The plan failed because of disease, natural disasters and pests (Mohamad 1992: 88; File of Setiausaha Kerajaan Negeri Selangor No. 11/1945; Jabil et al. 2010: 176). Plan paddy twice a year (Ooi 1997/1998: 23; Cheah 1987: 38) also received no response from the farmers because it interferes with their traditional living habits (Halinah 1975). As a result of rice continues to be a major problem and the supply of goods to the people rationed with strict (Mohamad 1992: 88; Mako 2008: 118). Cassava as the main food source to replace the rice has caused this age is also known as 'the cassava age' (Nor 1992: 30; Jaafar 1978: 58; Suhaimi 2001: 86-89; Mohd 1991: 80; Rus 1988: 32).

Under the Japanese occupation, Malaya separate from the supply of meat and fish that being the only supply for locals (Denker 1990: 85). To develop the fishing industry, fishermen have learned how Japanese fishing method. All catches will be sold through the association appointed by MMA alone. The new fish ponds were opened in rural areas, while the factory was opened at Pulau Pangkor for canning result of excessive fishing. However, fisheries in Malaya are not very productive. With the Japanese themselves loved eating raw fish, most of the best shots often go to them first (ibid .: 85; Denker & Sharifah 1988-1989: 45).

Transport Sector

Shortage of transport is one of the problems plaguing Malaya during the Japanese occupation. It prevents the development of local trade, industrial development plans and the difficulty in obtaining supplies from foreign sources (Ooi 1997/1998: 22; Thambirajah 1979: 183). MMA uses a variety of ways to solve this problem, but the problem of transportation remains a major obstacle to economic development and course of the war. Motor vehicles are not owned by many people, and because companies cannot get public transport gasoline, workshops modify local bus to operate using fuels derived from coal (Kratoska 1998a: 159).

Long distance bus services were consolidated under the Tokyo Kyuko Bontetsu Company (Tokyo Express Tramcar Company) and assisted by the activities carried out by Kuala Lumpur Sanitary Board in 1942 to assist Japanese companies this. In August 1943 MMA ensure privately owned motor vehicles and spare parts, are placed under the control of the ingredients essential to prevent the use of motor vehicles for the purpose unnecessary. Members of the public who wish to continue using their vehicles had to apply to MMA, and justify the reasons for the request (ibid.: 160).

MMA build a new road along the east coast of Malaya, but the maintenance of the existing roads are not encouraging. Train service resumed on the west coast of Malaya in June 1942, but there is a breakdown in the track where there is a bridge that has been destroyed (Mohamad 1992: 85). It is only in 1943 the railway service between Singapore and Bangkok has been announced (Kratoska 1998a: 160). Due to security requirements, strict regulations on business and would have been imposed (Mohamad 1992: 96). Even with limited travel authorization, a person is not allowed to carry more than 100 dollars with him (Office 1944: 22).

Shipping space during the occupation of Japan is very limited. This is because during the Japanese invasion, the British act of leaking or moving vessels operating in the waters of Malaya. Although there are operational overhaul by the Japanese navy in the waters around Singapore, where in September 1942 they claimed to have recovered 94 vessels, there is still a shortage in shipping capacity. MMA on March 20, 1943 has announced the establishment of the Southern Region Shipping Company which aims to combine the interests of all Japanese shipping company in Singapore, and also move the steamships and sailing ships to carry goods in the southern region. In January 1944 Malayan Marine Transport Association brings together all local ship owners. The agency handles shipping operations, monitor the fares, charges for repairs and supplies, and commissions, salaries and allowances paid in the industry. Director General of the Southern Region Shipping Company, a Japanese citizen, became the Director General of the Malayan Marine Transport Association (Kratoska 1998a: 161).

To overcome the shortage of shipping space, Japan has launched a major program to build ships across the Greater East Asia Co - Prosperity Sphere. Japan ordered all districts in the southern region to give the highest priority to this endeavor, which receives about 30 to 40 percent of the fund public enterprises in 1944 (ibid.: 161). In Malaya at least 10 shipbuilding yards was built under the scheme with the MMA to bring in an experienced boat builder from Canton to help local artisans.

However, most of the ship consists of simple wooden boats that only come with a screen. It was announced in Singapore in July 1944 that shipbuilding operations will focus on simple and light construction vessel, the boat weighs 10 to 15 tons to be used along the coast of Malaya (ibid .: 164). Most ships built under the Japanese during the occupation were not built properly. Few cargo ships operating in the waters of Malaya at the end of Japanese colonial rule.

Manufacturing Sector

Japan is not able to supply manufactured goods to Southeast Asia during the war, and had to promote industrial development in the region to meet local needs. The goal is to make the Southern Region as a whole, and ideally each sector within it will build itself. If the existing plant should be built or refitted, machinery will be shipped from Japan to set up new factories. Although Malaya has deposits of iron ore, there is no local steel industry. This is because soft coal mined in Malaya is not suitable for use in foundries. When the demands of the war and the lack of shipping make it impossible to obtain steel from Japan, MMA has developed a scheme to produce iron and steel. Most of the output from this operation is for the Japanese army (ibid.: 174).

There are also plans for the chemical industry for the production of explosives. Japan Nitrogen Company began to build a large plant in July 1943, but require a period of one year for existing plants in operation. In August 1945, this factory only produces as much as 100 tons of carbide, while the facility to provide ammonia gas is still pending. Nippon Soda Company also produces caustic soda, hydrochloric acid, bleaching powder and sulfur chloride in the factory in Seremban and Johor Bahru. Construction of the facility began in February 1944, and production began in October of the same year. The facility uses sulfur from Java, Java and salt from Port Dickson, as well as chalk from Kuala Lumpur (ibid.: 174-175).

Oxygen and carbonic oxide is produced by Nippon Rikka Kokyo Company in premises owned by Far East Oxygen and Acetylene Company in Penang and Singapore. Both these factories have been damaged during the withdrawal of the British, but the Japanese have been repairing factory in Singapore in less than a month, and keep the plant in Penang operational by October 1942. Between June 1942 and August 1945, the company produced a total of 1.2 million cubic meters of oxygen and 35 thousand kilograms of carbonic oxide. Dai Nippon Toryo Company took over the Malayan Paint Works Company in Singapore, and Nippon Yusai Company built a new plant in Singapore. The new factory started production in November 1944 using equipment transferred from Japan. During the ten months of operation before the surrender of Japan, Nippon Yusai plant produces about 300 tons of paint, mostly for use hull (ibid.: 175).

MMA also encourage light industry (Ooi 1997/1998: 21) with local manufacturing various goods for daily use (Mohamad 1992: 89; Ooi 1997/1998: 21; Abdul & Ghazali 2003: 219; Suhaimi 2001: 99; Arkib 1987: 3; Rus 1988: 29). Tropical Products Exhibition was held in Singapore in May 1943 and then in cities throughout Malaya. It aims to showcase new products, existing products are produced in a new way or to new uses, and products that can be used as an additive to other products. Goods used for the promotion of products including paper, produced with pulp derived from local plants such as rubber trees and a variety of grasses, along with cardboard, rope fiber, oil, grease, ink, rubber oil, biscuits, shoes, disinfectants , wine, toothbrush, pottery, ironware, lighters, red palm oil emulsion, tooth powder, soap and perfume. From Penang, there are fish oil, ghee, margarine, vitamalt, emulsions red palm oil, tomato sauce, vitamin powder, vinegar, lipstick, condensed milk and soap (Kratoska 1998a: 175).

Starting mid-September 1943, the Feast of Subsistence displays the same items in the Great World Amusement Park in Singapore. The machine was installed in the park to allow visitors to see directly manufacture goods and to encourage them to produce their own goods at home. About commodity new exhibition took place in Singapore in February 1944. The aim is to emphasize though progress has been made, there is still room for further improvement. The exhibition also aims to encourage the implementation of self-sufficiency in several states of Malaya (ibid.: 178).

Local factories producing substitute soy milk, peanut, coconut, potato and starch. According to local media, soy sauce manufacturing methods previously monopolized by the Chinese and Japanese methods have advantages in terms of nutrition, taste and economy. The weakness of the Chinese people considered to be related to the difficulty of obtaining materials for the salt soy sauce, soybean and rice. Two factories soy sauce in Kelantan with a monthly production of 6,000 gallons requires about 2,720 bushels of salt, 25 tons of soybeans and 11.6 tonnes of rice per month (ibid .: 178).

Industrial rag of Malaya became dark at the beginning of the Japanese occupation when run out of potassium chlorate to make a match head. One of the two factories in Selangor was shut down in August 1942 after being out of stock of chemicals, while another, Elkayes Match Factory remain operational until December. A match factory in Kelantan with a production capacity of 90,000 boxes per month also had to halt production because it cannot get the chemicals. As the match got a huge demand on the black market (Ooi 1997/1998: 19; Ibrahim 1981: 24; Purcell 1954: 54; Cheah 1987: 37; Noor 1992: 24; Suhaimi 2001: 85), the Japanese administration have created a scheme for rationing and distribution of matches (Kratoska 1998a: 178). Due to shortages of matches, people use various other tools to start a fire. One is a water buffalo horns in which holes have been drilled to accommodate sawdust which is then rubbed with a piece of iron until it is hot enough to burn.

There was a significant increase in the cottage industry during the Japanese occupation, the villagers make mats, coconut oil, palm sugar, soap and other products for personal use and to sell at the party weekly. There are more women who bring their products to be sold and also make their purchases. Laborers from nearby estates and Chinese farmers also brought their wares and vegetables for sale (ibid.: 179). To make mats and other containers, residents had to use traditional techniques that have been lost as a result of the introduction of imported goods manufacturing during the British era.

Soaps are also experiencing shortages due to the absence of caustic soda. In Perak, the government has introduced a new soap based on caustic potash (potassium hydroxide), which is marketed as a silver soap. There are also companies make sweet coconut and oil lamps with the use of coconut (Mohamad 1992: 90; Ooi 1997/1998: 22; Khoo 1985: 174; Suhaimi 2001: 99). To overcome the problem of clothing, attempts were made to cultivate cotton but failed (Tunku 1980: 361-362). Villagers produce soap substitute by burning coconut shells or wooden sticks and mixing the ash with lime and coconut oil, and also by mixing together a mixture of leaves, flowers and cinnamon (Kratoska 1998a: 179).

To substitute for toothpaste, residents use finely ground salt or charcoal, and the replacement brush their teeth will chew the end of a certain tree branches so the fiber can be used as a brush (ibid.: 180; Aisha 1990: 137). The manufacturing sector during the war has quality temporary. This is because the resulting product to act as a substitute for imported goods cannot be brought in. The quality is lower and may not be sold under normal atmosphere. At present, the Japanese industry in the Klang district covers two steel mills, an oil refinery the rubber, a pencil factory, a sawmill and a shipbuilding yard (Kratoska 1998a: 179).

The Japanese are very secretive visits by their management and in all enterprise carried on by them; they do not want the locals to know their activities. When they have to deal with the land office, they will only provide the minimum information and more details if asked, they will usually answer the "secret army" (ibid.: 180). Local officials also do not know the actual activities undertaken by Japanese firms and the most known is based on rumors. Most of the machinery used by Japan also taken from the actual owner during the period of occupation. Although there are a large number of goods produced in the domestic market, industrial production is still far from sufficient during the Japanese occupation.

MMA aware to nurture the industry in Malaya, they have to import a lot of equipment from Japan. But if the Japanese government sent supplies equipment, military supplies will be disrupted. In addition, a long time is also required for the delivery of the equipment. Under these circumstances, it is not encouraged to send the supply of equipment. The result in Malaya there is no plans for planting. Production of materials is also important not to move as smoothly as expected, given the unfavorable environment. Daily lives of the local population are gradually getting worse. Support to the Japanese military relies heavily on the welfare of the population and the development of production and raw materials. This is in line with the establishment of MMA in which the welfare of the people has a preference industry. However when the war situation became worse, public welfare had to be set aside to give priority to military operations (ibid.: 181).

Rubber Sector

In 1941, the Southeast Asian region exports 1.3 million tons of rubber, about 85 percent of the total rubber which enters the world market. Malaya alone produces more than 547 thousand tons of rubber in 1940, but the Japanese occupation caused it to separate from the main buyer, and the needs of the Japanese war just as much as 70 to 80.000 tons per year. Japan seized approximately 150 thousand tons of rubber during his march to the South East Asia region, including 143 thousand tons of rubber in Malaya and the Dutch East Indies. MMA plans to deliver supplies to the Japanese rubber, which enable it to meet the needs of the country for two years (ibid .: 225).

In 1944, the Japanese rubber imports fell to about 35 thousand tons, and rubber supply mostly comes from Indochina and Thailand than in Malaya. Although the ally of Japan, Germany needs 40 thousand tons of rubber a year, but delivery to Europe is via submarine and involving sea where there are restrictions by Allied Forces. Germany imports in 1944 amounted to only 5,000 tonnes. Malaya has an area of ​​3 1/3 million acres of rubber, with 3 million acres involved in active production. Two-thirds of this area consists of the estates, while the remainder is made up of smallholders, which is defined in Malaya as the owner of the land is less than 100 acres. Most of the Malayan rubber is grown in West Coast, with Johor, Melaka, Negeri Sembilan, Selangor, Perak and Kedah controls more than 87 percent of the land area of ​​Malaya’s rubber (ibid.: 225; Mako 2002: 27).

It is difficult to estimate production capacity Malayan rubber industry for the production of rubber in the late 1930s has been limited by the terms of the International Rubber Regulation Scheme 1934. Between 1935 and 1941, an average rubber production stood at 442 thousand tons per year. Between 1942 and 1944, the average production of rubber stood at 114.466 tonnes per year and the average of exports stood at an average of 41,000 per year (Kratoska 1998a: 227). Although MMA is not able to absorb production of rubber Malaya (Mako 2002: 24), but it sees rubber as an important asset for the development of post-war economy. Although MMA announced in 1942 that the acreage of rubber will be reduced to allow for the development of food production (Noor 1992: 28; Suhaimi 2001: 99; Denker 1990: 83; Mako 2002: 29-30; Office 1944: 24; File of Setiausaha Kerajaan Negeri Selangor No. PK. SECRETARIAT. 810/1948; File of Setiausaha Kerajaan Negeri Perak No. P.K. SECRETARIAT. 822/1948), but it changed this policy in the next year and then make an effort to maintain the productive capacity of the rubber industry.

Rubber consumption in the domestic manufacturing industry and fuel production has increased local consumption, but with omissions exports, demand remained lower than before the war (Kratoska 1998a: 227). Only the Japanese firms involved in the rubber industry before the month of December 1941 allowed handling the rubber industry of Malaya during the occupation (Mako 2002: 49). These firms take over the operations of the estates of the enemy and occupying an area of ​​1,727,575 acres. 79 per cent of the area has been planted with rubber (File of Setiausaha Kerajaan Negeri Selangor No. R.C. SEL 626/1946), although ownership remained under Japanese Custodian of Enemy Property.

To oversee the rubber industry, MMA has set up a syndicate consisting of 18 pieces of rubber Japanese firm, known as the Rubber Association of Singapore (Syonan Gomu Kumiai) (Kratoska 1998a: 227: Mako 2008: 122; Mako 2002: 28). Founded on May 1, 1942, the association has branch offices in Johor Bahru, Kuala Lumpur and Ipoh. Production Department will decide on farms where to operate, restore factory, gather statistics, manage operations and deliver sap for processing, the Department of Commerce will handle the selection of rubber, organized the local market, to buy rubber from smallholders through the firms involved in the purchase of rubber, namely Mitsui Bussan, Nomura (Higashi-Indo), Shokusan, Senda & Co., Koei Shokai, Kasho and Mitsubishi Shoji (Mako 2008: 122), and sent to a rubber sheet manufacturer in Singapore and Penang. Members of the association will supply the workforce but do not invest capital in the association, financed through a loan from the Development Bank of Southern Region (Kratoska 1998a: 228).

Rubber Industry Supervision Plan which was introduced in June 1942 left about 40 percent of the farms in the hands of the enemies of private firms, with the remainder in the hands of the administration of MMA (Mako 2008: 123: Mako 2002: 30; Denker & Sharifah 1988-1989: 44). In September 1942, a total of 1,249 rubber plantation has been dealt with under the Rubber Association of Singapore. The total area under rubber cultivation is 1,981,000 acres and a total workforce of 237,000 people. Total monthly production is 6,800 tons and the amount of stock on the farm is 30 thousand tons (Mako 2002: 28-29). At the end of October 1943, the Rubber Association of Singapore has been dissolved and replaced by the Malay Rubber Management Association (Gomu Malai Kanri Kumiai or MGKK) (Mako 2008: 127; Mako 2002: 32), which is a combination of Rubber Importers Association of Japan. Singapore once again be the site of the headquarters and is responsible for operations in Johor, Singapore and Riau. A branch office in Kuala Lumpur in charge of Selangor, Negeri Sembilan, Melaka and Pahang, and another branch in Taiping control of Penang, Perak and Province Wellesley (Kratoska 1998a: 228). Estates will sell rubber to MGKK a set price and compensation to members for any losses after the financial period.

Rubber purchases from independent producers will be handled by firms that are subject to MGKK regulations and sell their rubber obtained to MGKK. Estates controlled by MGKK continue to operate until March 1945, working under the quota set by the MMA's where they failed to comply. For example, in the fiscal year ending March 1945 quota is 52 thousand tons but MGKK farms only supply as much as 30,789 tons. The government set the price at 20 cents a pound (Mako 2008: 122; Mako 2002: 28) until April 1945, when shortages caused prices to double (Kratoska 1998a: 228; Mako 2008: 124; Mako 2002: 30; File of Setiausaha Kerajaan Negeri Selangor No. D.C.I. 171/1946).

Estates and smallholders who continue to operate have found it difficult to get machinery and chemicals. In many estates, the British had destroyed machinery, smokehouse, freeze tanks and other equipment before retreating, and these items can not be replaced easily. However, the greatest obstacle to rubber production during the Japanese occupation was the lack of acid to process raw latex. The total area of ​​rubber plantations were cut down during the Japanese occupation is an area of ​​89,737 acres (File of Setiausaha Kerajaan Negeri Selangor No. SEL. CIVIL AFFAIRS 282/1945).

Other Commercial Crops

Enemy estates planted with oil palm, coconut (Suhaimi 2001: 97) and tea continuing operations in Selangor under the Department of Agriculture in March 1942. The establishment of the Research Department under the Agriculture Department has mobilized efforts to develop new uses for palm oil. It also promotes the production of soap, grease, diesel oil substitute, and nutritional supplements known as Red Medical Palm Oil. In October, oil palm plantations have been submitted to the Syowa Rubber Company, although the Agriculture Department continues to manage a soap factory and by the end of 1942 issued 2,200 bar in a day (Kratoska 1998a: 235).

Malaya also produces 75 thousand tons of copra or dried coconut each year before the war. In Selangor, smallholders to resume the processing of copra in July 1942 but the price is very low until November when refineries began operations. Oil industry became important because of the lack of due process oil supply and self-sufficiency for our daily needs. After rice, coconut plays an important role in the local economy (Denker & Sharifah 1988 to 1989: 45). As a source of food and oil products (Suhaimi 2001: 97), coconut subject to trade restrictions and this creates a black market developments. In February 1944 the Perak government announced new rules to stop the illegal export of copra from the state (Kratoska 1998a: 236). Palm tree owner would then be required to sell their copra half the monthly output to the government at a fixed price for processing at refineries under state control.

Timber Sector

Before the Second World War, the jungles of Malaya was cut at systematically by sawmills under the control of the Forest Department. Forest Department also oversees the replanting program has increased the quantity of wood that can be used from 16 tons to 200 tons per acre per acre, increase the value of its economy (ibid.: 237).

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