The newly formed government of the Federation of Malaysia recognize the core role and the importance of agriculture in the nation’s economy. Agriculture has become the foundation of economics growth and are main contributor to Malaysia in mid 60’s . Before 1960s, policy of crop diversification due to narrow based economy. Rubber production face stiff competition from synthetic rubber. The rubber price went down and which was cheaper, had negatively affected the development of Malaysian rubber. The ready supply of this cheaper substitute led to the fall of rubber prices resulting in drastic reductions in incomes of those involved in rubber. Malaysia's foreign exchange and the general economy also suffered. The need to diversify the country's agricultural base was pressing and a crop diversification policy was inevitable to find better economic alternatives to rubber. RISDA in the meanwhile, sought to overcome the deficiencies of rubber smallholdings by organizing clusters to reap the benefits of economies of scale in rubber production. These programs invariably, improved the productivity of these commodities , its share declined to about 65 percent of total agricultural output (Lim, 1973). As a share of total national output, rubber fell from 38 percent to 15 percent. Although the successful diversification strategy consisted of a number of elements, the decision to increase the cultivation of oil palm in the 1960s was a very significant policy change and was a key component of agricultural diversification. Public and private investment in oil palm estates gained momentum from the 1960s. The Federal Land Development Authority (FELDA) spearheaded this effort The two main contributor of agriculture is palm oil and natural rubber . The First Malaysia Plan (1966-1970) which objective is to promote the welfare of its citizen ,improve living condition of rural area particularly for low income group.

This eventually result to the effect of increase in oil palm planted area from 103 673 hectare in 1966 to 193 441 hectare in 1970s.besides the new land development and settlement of oil palm, the development program design to improve farming commodities, development of rural infrastructure and reorganizing institution to modernize and develop rural sector and infrastructure is key in 1960s agriculture era. Palm oil processing increased its share of manufacturing output from 3.7 percent in 1963 to 16.2 percent in 1974. Acreage under oil palm increased while that under rubber declined over the period, especially with new plantings under the Federal Land Development Authority (FELDA). Palm oil, compared to rubber, is a more capital‐intensive crop and smallholdings utilize more labor than estates (Thoburn, 1977). Until the development of FELDA in the 1960s, oil palm was an estate crop.

The technological needs of processing oil palm had constrained smallholders from venturing into the industry. Oil palm also requires greater harvesting expertise and utilizes more inputs than rubber. The establishment of the Malaysian Industrial Development Authority (MIDA) in the mid‐1960s was a landmark in the drive towards industrialization. but in the 1960s and 1970s newer industries such as beverages, textiles, chemicals and chemical products, and transport equipment began to emerge, almost entirely in the private sector. From 1971 to 1980s , The New Economic Policy (NEP) was formulated to address these issues with agriculture growth and development being emphasized as the public intervention in agriculture. The government now recognizes the strategic importance of smallholder agriculture development in the attainment of NEP objectives.
This period encompassing The Second Malaysia Plan (1971-1975),which increase the total number of workers employed during last day period from 41 722 to 97 975.this result to equitable income and decrease the number of poverty. This also result in positive growth of the production from 4920915 to 7636569 tonnes The First National Agricultural Policy (1984-1991) was drafted in response to the inability of previous policies to eradicate poverty and sluggish performance of the agriculture sector as the country’s engine of economic growth. The NAP provided for a comprehensive and coordinated long-term policy for an effective development of the agricultural sector (Malaysia 1985). Additionally, the NAP called for agricultural-industrial linkages through the expanded development of agro-based industries, mainly in processing, storage and handling of agricultural commodities to increase their value-added before export emphasis was also given to original development programs to overcome the problems of land fragmentation and low productivity especially among smallholders. In 1980, launching of the first national agric policy that design to ensure a balance and sustained the rate growth, at the same time, maximizing farm income and accelerate new land. Economic diversification has been a key theme of long‐term strategy in Malaysia and is a continuing concern today. The key lessons of policy makingover the past 50 years are anchored in state‐led attempts to diversify sources of income for the Malaysian economy, even as sociopolitical engineering was used to build the Malaysian nation. Another feature related to this diversification imperative was the tendency for new government programs and policiesIn 1990 it is to balance the development between agriculture and manufacture sector that has greater emphasis on food sector The Second National Agricultural Policy (1992-2010) and The Third National Agricultural Policy (1998-2010) updates the policy to reflect current economic challenges and realities. For example, The Second National Agricultural Policy puts greater emphasis was given to address productivity, efficiency and competitiveness issues in the context of sustainable development and linkages with other sectors of the economy. The Third National Agricultural Policy, introduces the product-based approach which emphasizes in satisfying the specific needs of niche markets and consumers world-wide .

By 2000, agriculture is third engine growth. The strong government support for the agriculture sector is evident by the increasing total public development expenditure for agriculture and rural development. This expenditure valued at RM1.8b for The Second Malaysia Plan was increased to RM8.3b for The Fourth Malaysia Plan. The result of these and other agricultural programs was that at the end of this period, estimates shows that During this corresponding period up to 1980, agricultural output expanded by an average of 5.8% per annum with the gross value of agricultural exports rising in large part contributed to per capita income increasing by an average of 2.8% per annum

Manufacturing is the use of machines tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech but is most commonly applied to production, in which raw materials are transformed into finished goods on a large scale., In peninsula Malaysia the manufacturing consist of rubber and oil palm processing and manufacturing, light manufacturing , pharmaceuticals, medical technology, electronics ,tin mining .,smelting, timber processing and logging.
The success of the E&E industry in Malaysia then was dependent on locational advantages in attracting FDI. Although Malaysia has made an impressive development in E&E industry, the reliance on E&E production for export and investment of foreign capital has also caused the country to be impacted impact by global changes. Foreign domination in the E&E sector is very significant especially in the State of Penang. The Bayan Lepas industrial area in Penang is known globally as a leading manufacturer of electronic products in Malaysia.

The Rise of Manufacturing The 1970s ushered in a new phase of economic growth, marked by the rapid rise of construction and manufacturing and a strong strategic emphasis on equitable or fair distribution, specifically through affirmative action policies. By 1990, the economy was more industrialized, despite being buffeted by massive shocks— for example, the oil crises of 1973–74 and 1978–79 and the global slowdown in demand for electronics and primary commodities in 1985–86.
Export‐oriented manufacturing industries gained momentum in the early 1970s. Foreign direct investment (FDI) in export‐oriented firms was promoted actively with the introduction of the Investment Incentives Act of 1968, Free Trade Zone Act of 1971, and the Promotion of Incentives Act of 1986. Prior to these investment promotion instruments, industrial growth was driven by an import substitution strategy (IS) with the introduction of the Pioneer Industry Ordinance, 1958. The establishment of the Malaysian Industrial Development Authority (MIDA) in the mid‐1960s was a landmark in the drive towards industrialization.

agricultural processing was the main manufacturing activity, but in the 1960s and 1970s newer industries such as beverages, textiles, chemicals and chemical products, and transport equipment began to emerge, almost entirely in the private sector he industries that grew were those that had some “natural protection” due to high transportation costs and location advantages. The manufacturing industries that enjoyed such advantages were the primary processing industries, including the processing of agricultural, mining, and forestry products, and domestic market‐oriented industries such as food products, printed materials, furniture, rubber products, and building supplies
Malaysia’s push for industrialization is motivated by three observations. First, although there was rapid diversification away from resource‐based industrial exports towards non‐resource‐based industries, recent years have witnessed slightly faster growth in the latter (table 1). Although agriculture’s share of total output has declined sharply— structural changes that could be anticipated given that agriculture’s share of GDP was, for Malaysia’s level of income, somewhat higher than normal—the recent weaker performance of non‐resource‐based industries has kindled a debate about future government strategy. Second, the future of labor‐intensive industries is a source of concern, not just because of the high dependence on electronics/electrical products and textiles but also because of rapidly increasing labor costs in Malaysia. Third, and related to this, there has been a strategic push in recent years to seek out new growth areas and push towards higher value– added and knowledge‐based industries with the erosion in Malaysia’s comparative advantage in labor costs and labor‐intensive manufacturing industries. the Malaysian manufacturing sector was boosted in the 1970s and 1980s by the extensive growth of the electric assembly and electronics sectors. Malaysia became an important producer of radios, television sets, stereo equipment, and other related products. In the 1980s, the Malaysian government launched its national automobile project, The structure of the Malaysian economy has changed during the last 2 decades. According to the World Bank, the proportion of manufactured production grew from roughly 20 percent of GDP in the early 1980s to 31.5 percent of GDP in the late 1990s. Manufactured products accounted for around 85 percent of gross export earnings in 1999, with electronic goods becoming one of the most important products. The role of mining has steadily declined during the last few decades (Malaysia was one of the world's largest exporters of tin in the 1970s), now contributing just 7 percent of GDP. Malaysia continues, however, to export tin, gold, bauxite, ilmenite (a titanium ore), oil, and gas. Meanwhile, the role of agriculture in the country's economy has also been declining, although it provides employment to large numbers of Malaysians. Nevertheless, Malaysia remains one of the world's leading exporters of rubber and timber and produces almost half the world's palm oil.

Read more: Malaysia Overview of economy, Information about Overview of economy in Malaysia http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Malaysia-OVERVIEW-OF-ECONOMY.html#ixzz1evf37MLF

Read more: Malaysia - Location and size, Population, Industry, Mining, Manufacturing, Services, Tourism http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Malaysia.html#ixzz1evbNWGeD
1987, however proved to be the watershed year when the manufacturing sector’s contribution the country’s GDP exceeded the agricultural sector’s contribution for the first time. The fast expanding manufacturing sector put a big strain on the agricultural sector where demand for labour, land, capital and other inputs was in direct competition with the manufacturing sector. http://www.nationsencyclopedia.com/economies/Asia-and-the-Pacific/Malaysia.html

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