III - Resource-Based Industries of Malaysia and Thailand

Summary

As stated earlier, in Chapter I, resource-based manufacturing industries are generally taken to mean those industries that are involved with downstream processing and manufacturing of the country's agro- and mineral products, that is, the products of the primary resource industries. In the past and to a great extent even today, these primary products (such as rubber, palm oil, tin and rubber) are being exported with only minimal processing, if any. It is in the countries that import these primary products that further processing and manufacturing into finished products take place. The implication is that much of the potential value- added that comes from the further manufacturing of these primary products is lost to the developing countries that export them. Some of the theoretical considerations of resource-based industrialization were reviewed earlier. While constraints exist, so do opportunities for nations wishing to embark on RBI development. Careful study and planning is required by governments to select and promote the development of the right RBIs within the context of the country's overall industrial development strategies.

In 1987, 36 per cent of Thailand's exports (Bank of Thailand 1988) was made up of primary products, mainly rice, rubber, maize, tapioca products, prawns and sugar. In the case of Malaysia, 47 per cent of exports in 1987 (Ministry of Finance, Malaysia 1987) was made up of primary products. However, 15 per cent of this was accounted for by crude petroleum and 4 per cent by liquefied natural gas (LNG). The remainder consisted largely of rubber, palm oil, saw logs, tin and cocoa.

Primary products, thus, make up nearly 40 per cent of exports of the two countries. The importance of primary commodities in the export structure also calls attention to the vast amounts of produce being exported without much processing or manufacturing. Such raw produce could potentially be used in domestic downstream processing and manufacturing activities to generate further value-added benefits to the country before export.