Introduction

Based on strong macroeconomic fundamentals, the Malaysian economy achieved a high annual growth rate of 8.7 per cent during the Sixth Malaysia Plan (1991-1995). The main contributor to that growth was the export-oriented manufacturing sector which recorded an annual growth rate of 13.3 per cent. The primary sector, on the other hand, recorded an average annual growth rate of only 2.1 per cent. Exports of manufactured products contributed 79.6 per cent of total export earnings in 1995, compared to 58.8 per cent in 1990 (table 1). Among the major exported manufactured goods were electrical and electronic products (65.7 per cent in 1995; 56.6 per cent in 1990), and textiles and wearing apparel (4.4 per cent in 1995; 8.3 per cent in 1990). Other manufactured goods (29.9 per cent) included transport equipment, chemicals, wood-based products, food, beverages and tobacco, rubber-based products, petroleum products, and metals and non-metallic mineral products. Major commodity exports comprised crude oil (3.6 per cent in 1995; 13.4 per cent in 1990), timber (3.3 per cent in 1995; 8.9 per cent in 1990), palm oil (5.6 per cent in 1995; 5.6 per cent in 1990), rubber (2.2 per cent in 1995; 3.8 per cent in 1990) and other agricultural commodities including cocoa (0.1 per cent in 1995; 0.6 per cent in 1990).

The 1980s can be characterized as the decade of development of Malaysia's resource-based industries. The impacts on the environment from the wide range of activities were many and varied. While forging ahead with economic growth, however, Malaysia also took steps to protect its natural environment, exhibiting some sensitivity and foresight. The Environmental Quality Act (EQA) was passed in 1974, followed by the establishment of the Division of Environment (now the Department of Environment) in 1975 with the mandate and the means to accomplish national goals in environmental protection. EQA is aimed at preventing, abating and controlling pollution, as well as enhancing the quality of the environment. Together with its subsidiary legislation, and the establishment of the Department of Environment, it represents an integrated approach to the management of the environment while pursuing economic development. The Department of Environment, which administers EQA, is empowered to gazette regulations and orders, and issue licences to regulate the discharge of wastes.

Table 1. Key Malaysian exports, 1970-1995

(M$ million in current prices)

Source: Seventh Malaysia Plan, 1996-2000.

Notes: * Constant 1978 prices.

n. a.: not available.

In the 1990s, the demand for natural resources and environmental amenities has continued to increase sharply for three principal reasons: population pressure, increasing growth of economic activity and production processes that are increasingly becoming more capital and technology-intensive. In view of the incidental effects on the environment that could result from those processes, it would be much easier to integrate environmental considerations into economic decision-making, at least in the policy formulation and planning. Malaysia has developed both a national development policy and "Vision 2020" which provide a policy framework for seeking new areas of growth and ensuring sustainability within a high technology and skills-driven context, while placing greater emphasis on ethics and the quality of human development.

This study comprises seven chapters that describe and analyse the national institutional arrangements and mechanisms in Malaysia for incorporating environmental considerations into sectoral policy decisions for agriculture. It focuses on the three main agro-industrial products: palm oil, rubber and cocoa.

Introduction

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