Review of Indonesian and Malayan AffairsVol 14, No. 11980

URBANIZATION AND URBAN GROWTH DURING COLONIAL RULE AND

INDEPENDENCE IN PENINSULAR MALAYSIA *

Suan-Pow Yeoh

Charles Hi rschman

Contrary to popular impressions, the pace of urbanizationin contemporary developing countries is no more rapid than were thepatterns of a century ago in the West (Preston, 1979) While it istrue that most third world cities are growing very rapidly oftenat rates of two or three percent per annum the pace of populationgrowth in rural areas has been almost as rapid. This results inonly moderate increases in the relative urban share of the totalpopulation in most developing countries. The dynamics of urbaniza-tion and its relationship to social and economic change can onlybe revealed by intensive historical studies of individual countriesduring the process of development.

Peninsular Malaysia is a most interesting case for analysisof urban change. Except for the city-state of Singapore, PeninsularMalaysia has been the most successful of Southeast Asian countriesin terms of socio-economic development, especially since Indepen-dence in 1957. Yet, it comes as a surprise to learn that the rateof change in urbanization in Peninsular Malaysia slowed down duringthe post-Independence era of the 1960s, a period of much more sus-tained economic growth and diversification than the preceding pre-Independence era. While there were some unique political factors(the "Malayan Emergency" and a major resettlement program) thataccelerated urban-ward movements during the early 1950s, theseevents are only part of the explanation for the changing pace ofurbanization.

Another issue that draws attention to the study of urbani-zation in Peninsular Malaysia is the present government’s explicitgoal to "restructure Malaysian society so that the present identi-fication of race with geographical location is reduced andeventually eliminated" (Malaysia, 1973:61) In a plural society

* The research reported in this paper has been supported by aresearch grant (Social Change and Ethnic Inequality in Malaysia)from the United States National Institute of Mental Health.

2 Urbanization and Urban Grouth in Malaysia

with significant socio-economic divisions that closely parallelethnic communities, urbanization is seen as a primary stepping stonetoward the achievement of a more integrated society. The Malaycommunity comprises more than half of the population and dominatesthe polity, even though they remain largely rural and agrarian.Making up somewhat more than a third of the population, the Chineseare disproportionately located in urban areas and have a moresubstantial foothold in the established commercial sector (largelysmall scale retailing) and in the emerging industrial and tertiarysectors.

In this paper, we examine these aspects of urbanization inconsiderable depth, not only as an analysis of Malaysian trends andethnic differentials, but also as a potential contribution to thecomparative study of social change and urbanization. The analysisextends our earlier research (Hirschman, 1976; Hirschman and Yeoh,1979) with an explicit focus on individual towns as units of analy-sis in the study of urban growth. We test regression models ofurban growth, using characteristics of towns at the initial timepoint as predictors. The models are estimated for the total townpopulation and separately for the three ethnic groups for both thepre-Independence period (1947-1957) and the post-Independence era(1957-1970) Before the analysis of urban growth, we present abrief introduction to Malaysian society and review recent urbaniza-tion trends.

Brief Overview of Malaysian Plural Society.

Peninsular Malaysia, also known as West Malaysia and formerlyas Malaya, consists of the eleven states of Malaysia located on themainland of Southeast Asia. Malaysia was formed in 1963 as thefederation of the then independent (since 1957) Malaya and the threeBritish colonies of Singapore, Sabah, and Sarawak. The latter twoare sparsely settled states on the island of Borneo. Singaporeleft Malaysia and became an independent state in 1965. Because ofthe lack of comparable data prior to 1970 and quite different pat-terns of historical development, our analysis is limited to Peninsu-lar Malaysia.

In 1970, Peninsular Malaysia had a population of 8. 8 million,of whom 53 percent identified as Malays, 36 percent as Chinese, 11percent as Indians, and less than 1 percent of other ethnic groups(Department of Statistics, 1972:27) Considered the indigenouspopulation, the Malay population are descendents of migrants whocame from central Asia about 2,000 years ago. The Malay community

Urbanization and Urban Graujth in Malaysia 3

has absorbed a considerable number of immigrants from nearbySumatra and Java up through the 20th century. The majority ofMalaysian Chinese and Indians are second and third generationMalaysian residents, whose parents and grandparents migrated fromChina and India during the latter half of the 19th century and thefirst three decades of the 20th century. Initially drawn as cheaplabour for the tin mines and rubber plantations of the colonialeconomy, many Chinese and Indian immigrants and their childrensubsequently entered the urban economy as petty merchants. As aconscious part of colonial policy, ethnic divisions in residenceand economic activities were reinforced, and Malays were encouragedto remain in their traditional village environment, apart from themodernizing urban society.

At the time of Independence in 1957, there were substantialsocio-economic disparities between the ethnic communities in termsof education, occupational structure, and income. Many of theseinequalities can be traced to differences in urban-rural backgroundand the consequent differential exposure to opportunities forachievement (Hirschman, 1975a; Hirschman, 1979a) The colonialregime had adopted a paternalistic policy which favoured the Malayaristocratic elite, but did little to economically assist the ruralMalay population or to bring about greater ethnic integration inthe social institutions of the country (Rudner, 1979; Lim, 1973;Hirschman, 1979a)

The newly independent government of the late 1950s and1960s sought to reduce ethnic inequality by accelerating economicgrowth through a laissez-faire strategy with an expanded governmentrole in the construction of physical infrastructure and the develop-ment of human resources (education and health) In order to alle-viate the urban bias of the colonial era, the independent govern-ment directed much of its developmental activities to the ruralareas to aid the predominately Malay rural population. Accordingto almost all conventional measures of development, the 1960s wereyears of considerable socio-economic progress, even though unemploy-ment and income inequality and, most importantly, ethnic disparitiesappear to have worsened (Hirschman, 1979b; Lim, 1973; Snodgrass, 1980)

Urban Areas: Definitions and Data.

There is no official definition of the minimum size of anurban area in Malaysia. The government designates most populationsettlements as gazetted areas in order to confer administrativestatus. In both the 1957 and 1970 Population Censuses, population

4 Urbanization and Urban Grcuth in Malaysia

data were published for each gazetted area in the country. Someof these gazetted areas were very small, including a few with lessthan 100 persons. There are probably many large villages, whichlack both urban characteristics (retail shops, a post office, etc.)and administrative status, but whose populations number in thethousands. For localities such as villages and agriculturalestates which are not designated as gazetted areas, census countsof population size are not available.

Analyses of urbanization patterns in census reports, govern-ment documents, and by social scientists have tended to use diffe-rent minimum size criteria to define urban places. The 1957 Censusand most research publications during the 1960s used gazetted areaswith a minimum size of 1,000 to define an urban place. The 1970Census and subsequent works, noting the ambiguity of classifyingsmall towns and large villages, have relied upon a definition of10,000 as the minimum criterion of an urban place. Rather than torely upon a simple urban-rural dichotomy, in our analysis, we usea size-of-place classification of small towns (1,000-4,999) mediumsize towns (5,000-24,999) and large cities (25,000 or more) Inthe multivariate analysis of urban growth, each town is coded toits exact population size at each census.

Another recurrent problem in trend analysis of urbanizationis the comparability of the universe of towns (and the boundariesof individual towns) across censuses Not only do some townsdisappear and other are bom (as they are settled and recognizedas a gazetted area) over time, but some towns are merged together(or separated) and almost all larger cities have grown throughexpansion of boundaries. Failure to control for these changes (orto at least be sensitive to the potential biases) may result inerroneous conclusions about trends in urbanization, especiallyregarding the association between town characteristics and urbangrowth. For this study, we use a data file containing a completeinventory of all towns in one or more of the population censusesof Malaya (or Peninsular Malaysia) of 1947, 1957, and 1970. Specialefforts were made to match individual towns between censuses byname, and to achieve as much comparability as possible with theavailable information. For instance, if it was evident (from townnames or from footnotes in the published census reports) that twotowns recorded separately in one census were merged together in alater census, we have listed one comparable town for both censusdates (by adding together the populations of the separate towns inthe earlier census) The most common examples of this type were"new villages" listed individually in the 1957 Census but weresubsequently merged with existing towns in the 1960s, before the1970 Census. Other adjustments included reconciling name changes

Urbanization and Urban Grouth in Malaysia 5

and joining parts of a single town that were divided in the censusreports because the town spanned district boundary lines The netresult was a list of 730 "comparable census towns" that existed inone or more of the censuses from 1947 to 1970 (for a listing offrequencies of comparable census towns from 1947 to 1970, seeTable 1 in Hirschman and Yeoh, 1979)

Review of Urbanization Trends, 1947-1970.

Urbanization is typically defined as the proportion of thepopulation that lives in towns above a minimum urban threshold.Comparison of urban population/total population ratios over time,using percentage point change as a summary indicator, is thestandard method to measure trends in urbanization. Both intercensalperiods, 1947-1975 and 1957-1970, have been the subject of severalstudies of urbanization trends in Peninsular Malaysia (Caldwell,1963; Hamzah, 1962; 1964; 1965; Narayanan, 1975; Ooi, 1976; Pryor,1973; Saw, 1972; Sidhu, 1976; Soon, 1975) We extend these earlierstudies by an examination of both intercensal periods with a compa-rable universe of towns (which allows for an assessment of theinclusion of new towns and of the shifts of towns across size-classboundaries) and a size-of-place urban-rural classification ratherthan a simple dichotomy.

The proportion of a population that lives in urban areasthe level of urbanization is a function of the number of townsand the number of people in individual towns. Over time, both ofthese components may change as new settlements are founded or, morelikely as small places pass the minimum population threshold andare designated urban. Population gains are also registered whenexisting towns grow through migration and natural increase. Allof these processes have occurred in Peninsular Malaysia, between1947 and 1957 and between 1957 and 1970. In order to examine boththe trend -in urbanization in all towns (old and new) and populationredistribution within a constant universe of towns. Table 1 presentstwo sets of figures on the pace of urbanization from 1947 to 1970.The top panel is based upon a variable universe of towns all townsabove 1,000 in each census year. There were 157 census towns above1,000 population in 1947, 386 in 1957 and 409 in 1970. The lowerpanel computes similar urbanization ratios (urban population/totalpopulation) for a constant universe of towns for each intercensalinterval For instance, the 1947-1957 urbanization levels are basedonly on the 1947 universe of 157 towns, by size of the town in 1947.Similarly, the 1957-1970 figures are based upon the 1957 universeof 386 towns The figures in this lower panel can be interpretedas the trend in population redistribution within the existing urban

TABLE DISTRIBUIION OF THE POPULATION, BY SI/E OF PLACE, DY ETHNIC COMMUNITY;PENINSULAR MALAYSIA. 1947. 1957, 1970

Variable Universe of Towns

Size of Town

25,000 more5.000 24.9991.000 4,999

Balance of CountyTotalPop. (000)

Total1917~

16.15.25.2

73.5loo.oi! loo.oi ioo.o

Urbanization and Urban Grcuth in Malaysia 7

hierarchy. The size of town classification used in this analysisis a simple one: (1) Large Towns, those above 25,000, (2) MediumSize Towns, those between 5,000 and 24,999, (3) Small Towns, thosebetween 1,000 and 4,999, and (4) Balance of Country, includes townsof less than 1,000 and rural areas.

(a) 1947-1957 Trends.

The 1947-1957 period was one of significant social andpolitical change in Peninsular Malaysia (then Malaya) The Britishcolonial administration returned in 1945 upon the end of the Japa-nese occupation. The reconstruction of the export-based economyand the "Malayan Emergency" were the most important developmentsuntil Independence was achieved in 1957. A rather slow economicrecovery from the depressed conditions of the 1930s and the Japaneseoccupation of the early 1940s was aided by the 1950-51 boom inrubber prices caused by stockpiling of natural rubber by the UnitedStates during the Korean War (Stubbs, 1974) As the colonialregime was re-established, a war of national liberation ("TheMalayan Emergency") was initiated by indigenous communists, prima-rily Chinese, against the colonial government and the management ofBritish owned plantations and mines. In order to deny the insurgentforces a rural base of support, the colonial government resettledhundreds of thousands of rural residents into "new villages" (re-settlement communities that were meant to be permanent)

Accompanying these economic and political changes was arise in urbanization in the country. From the top panel of Table 1,the proportion of the population in towns of all size-classes rosesharply from 1947 to 1957 e.g. the proportion of the populationin towns above 1,000 increased from 26 percent to 42 percent. Therewas a marked population increase in large towns (over 1/5 of thepopulation lived in towns above 25,000 by 1957) but most dramaticwas the virtual doubling of the populations in small and medium-size towns Most of these gains were a result of the appearance ofnew towns (many of which were new villages) not of redistributionto the universe of 1947 census towns For instance, the lower panelshows a rise of only seven percentage points in the urbanizationratio (all towns over 1,000) compared to the 16 percentage pointchange registered in the variable universe of towns. Most of thisdifference appears in the small and medium-size towns. Thus, thereal jump in urbanization from 1947 to 1957 occurred in towns thatdid not exist (as gazetted areas above 1,000 population) in 1947.Earlier studies (Sandhu, 1964; Caldwell, 1963; and Hamzah, 1962)have pointed to the resettlement program of the colonial administra-tion as the primary cause of urbanization during the 1947-1957 period.

8 Urbanisation and Urban Grauth in Malaysia

Sandhu (1964: 164) reports that over 573,000 persons were relocatedinto 480 "new villages", which ranged in size from a few hundredto more than 10,000 population. This undertaking relocated over10 percent of the total population of the country from scatteredrural areas into compact settlements, many of which were adjacentto existing towns

The resettlement programme was primarily directed at theChinese community. Many Chinese farmers did not have legal claimto their land; they had turned to subsistence agriculture in remoteunsettled areas in order to survive the hardship years of theDepression and Japanese occupation. Labeled as "squatters", ruralChinese could be legally evicted from their farms by the govern-ment. The rationale of the colonial government was the expressedfear that many rural Chinese supported (or were coerced to support)the communist insurgents in the jungle. According to Sandhu, 86percent of the new villagers were Chinese. Overall (top panel)the percent of Chinese in rural areas (less than 1,000) droppedfrom 57 to 27 percent from 1947 to 1957. Only 14 points of this30 percentage point change was the result of redistribution toexisting (1947 Census) towns, the balance went to new towns. Ofcourse, the resettlement programme added to the urbanization in"old towns" by encouraging voluntary movement to these areas andthrough the creation of "new villages" that were part of or adjacentto existing towns.

In contrast, the net urbanization shift among Malays andIndians was relatively modest, especially within the 1947 universeof towns. The proportion of Malays in all urban areas (above1,000) rose by eight percentage points from 1947 to 1957, but onlythree percentage points of this shift was directed to establishedtowns. For Indians, the comparable figures were seven and threepercentage points For all three ethnic communities, urbanizationlevels rose in large, medium, and small towns

The uneven pace of urbanization from 1947 to 1957 signifi-cantly widened the urban-rural gap between the Chinese communityand the rest of the population, especially Malays In 1947, basedupon a size criteria of 5,000 or more, 35 percent of Chinese werein urban areas compared to 29 percent of Indians and 8 percent ofMalays in 1947. By 1957 the comparable figures were 55 percentof Chinese, 35 percent of Indians, and only 14 percent of Malays.

Urbanization and Urban Groisth in Malaysia 9

(b) 1957-1970.

The first 13 years of Independence coincided with thesecond intercensal interval under consideration. In general,these were years of moderate economic expansion, under the newlyindependent government which sharply increased spending for educa-tion, health, and physical infrastructure in the form of roads,bridges, and irrigation projects (Ness, 1964; 1967) The entireeconomy grew, led by the manufacturing sector, which increasedfrom a miniscule 9 percent share of Gross Domestic Product in 1957to 15 percent in 1970 [comparable figures for the experiencedlabour force are 6 percent in 1957 and 10 percent in 1970, Hirsch-man, 1976:448,449) The government had no explicit aims toencourage urbanization. In fact, the most celebrated governmentprogramme of the 1960s was the Federal Land Development Authority(FELDA) which created numerous land development schemes throughoutthe country to provide land and economic opportunities for land-less villagers, primarily Malays.

In contrast to the 1947-57 period, the pace of urbanizationfrom 1957-70 was very slow indeed (for prior studies of urbaniza-tion during this interval, see Pryor, 1973; Ooi, 1976:Chapter 6;Saw, 1972; Narayanan, 1975; Soon, 1975; and Hirschman, 1976)Even for the variable universe of towns in the top panel of Table 1,increases in the level of urbanization can be clearly observed onlyin the largest size-category of towns, those above 25,000. Per-centage point gains were negligible in the medium size-class andwere actually negative for Chinese. The percentage of the popula-tion in small towns (1,000-4,999) declined for all ethnic communi-ties.

Holding constant the universe of towns by size-class in1957 (lower panel of Table 1) reveals that a good share of themodest trend toward urbanization from 1957 to 1970 was due to ashift in the number of towns across size-class boundaries. Therewas a net reduction in the proportion of Chinese in towns of allsize-classes within the constant universe of 1957-1970 towns. Withan urban definition of towns above 5,000, there was only a threepercentage point gain in urbanization for Malays from 1957 to 1970,and a two percentage point gain for Indians These are real changes,but hardly what would be expected given the economic growth andsocial change which occurred during this period.

These basic findings would not be altered, if Singapore, theneighbouring city-state with two and one-half million population,were included as part of the urban population (Hirschman, 1976)

10 Urbanization and Urban Growth in Malaysia

There has been a moderate amount of migration to Singapore (Hirsch-man, 1975b) but not enough to register a significant differencein the percentage point change of the urbanization ratio from 1957to 1970. It is important to note that slow urbanization does notnecessarily imply slow urban growth. In fact, most urban areashave been growing at fairly rapid rates from 1957 to 1970 (overtwo percent per year) but the rural areas have been growing justas fast. The result is only a miniscule change in the proportionurban.

From 1975 to 1970, Malays and Indians increased theirshare in urban areas relative to Chinese, but the absolute ethnicgap remained very wide. The 1957 figures (for towns above 5,000)showed that 55 percent of the Chinese population were urban ascompared to 14 percent for Malays. By 1970 the gap showed littlechange 57 percent of the Chinese population were urban and 18percent of Malays For cities above 25,000, the 1957 Chinese andMalay figures of 37 percent and 9 percent urban increased to 41percent and 12 percent. Even with larger relative gains in Malayurbanization, the absolute differences were as wide as ever.

The interpretation of most earlier studies has assumedthat rural to urban migration was the major factor responsible fortrends in urbanization. Thus, the rapid urbanization from 1947to 1957 is attributed to the resettlement programme of the early1950s and associated flight from remote areas (Narayanan, 1975;Hamzah, 1962) The slow-down in urbanization from 1957 to 1970is attributed to a low level of rural-urban migration, due prima-rily to a lack of job opportunities in urban areas (Narayanan, 1975;Hirschman, 1976) We agree with this general assessment, butacknowledge that it ignores the possible confounding effects ofdifferential natural increase and the expansion of urban boundaries

One important factor that may have inhibited urbanwardmigration was the lack of strong push factors out of rural areasin Malaysia. In spite of declining rubber prices over the years,the production of many rubber smallholders in rural areas hasincreased through replanting with higher yielding varieties (thegovernment sponsored replanting programme is financed through anexport tax on rubber) This expanded output has maintained amoderate level of cash income for many rural families. Althoughthere has been a significant drop of employment in the rice sector,smallholding rubber has held a steady share of employment over thepostwar era (Hirschman, 1979b) Coupled with a lack of job oppor-tunities in cities, this factor may have restrained some of thepotential rural to urban migration. In fact, rural to rural

Urbanization and Urban Growth in Malaysia 11

migration may be the primary mechanism for population redistributionfrom places of surplus labour to places of opportunities. Mostnoteworthy in this regard is the number of FELDA Schemes, or statesponsored agricultural (rubber and oil palm) resettlement schemesopened up to landless farmers (primarily Malays) during the 1960s.

One of the primary sources of urban job creation has beengovernment employment, mostly after Independence in 1957. Perhapsthe largest growth in government employment has been in the armedforces and the police This would have primarily affected Malays,and this may account for their above average increase from 1957 to1970. The sizeable amount of Chinese emigration to Singapore andelsewhere from 1957 to 1970 (Hirschman, 1975b) was probably selec-tive of Chinese from urban areas. This loss coupled with probablyvery low urban fertility among the Chinese, may have accountedfor their relative decline in urbanization from 1957 to 1970.

Analysis of Urban Grouth.

Urbanization does not sweep over the country as one evendevelopment; it is the aggregate summary of varied populationchanges in many individual towns and cities. Even as urbanizationhas proceeded slowly, most Malaysian towns have been growing rapidlythough the rural areas have grown at almost the same pace. Butthere is considerable variance in the growth of towns as well.During the last intercensal period, some towns grew at averageannual rates of over four percent, while others barely grew at alland some even experienced population loss (Hirschman, 1976) Tounderstand the urbanization process as a whole, we need to examinethese differential patterns of urban growth and to explore thefactors which may account for them. To do this, we shift the focusof our analysis to individual towns with the dependent variablebeing the average annual growth rate for the two intercensal periods;the last decade of colonial rule (1947-1957) and the post-Indepen-dence period (1957-1970)

The universe of towns is restricted to those towns which

existed and had at least 1,000 population at the initial census (T^)and which were still recorded in the second sensus (T2) For the1947-1957 period this universe consists of 154 towns, and for thesecond period the universe of eligible towns is 360. Only townsabove 1,000 (at T^) are included because of the questionable statusof the many very small settlements and of the large percentagechanges caused by small absolute shifts in these places. By onlyconsidering towns that existed at both the first and second census

12 Urbanization and Urban Growth in Malaysia

(for each interval) we exclude urban growth in towns that appearedor disappeared during the intercensal interval. As shown in Table 1,a considerable share of urbanization, especially during the 1947-1957 period, was due to an increase in number of towns. Thus bydefinition, our analysis is limited to a search for the factorsthat account for the relative differences in town growth within aconstant universe of towns.

The set of independent variables used to predict urbangrowth is limited by extent of detail in the published 1947 andthe 1957 Census reports. Nonetheless, it is possible to constructseveral indices that tap some important predictors of urban growth:(1) town size at T^, (2) administrative status, [3) ethnic compo-sition, and (4) "new village" status. These variables have beendiscussed as potentially important determinants of urban growth inMalaysia and elsewhere.

Initial population size has been identified as one of themost important variables, both theoretically and empirically, inthe study of urban growth. Larger cities have generally experiencedfaster rates of growth than smaller towns, especially in developingcountries (Mookherjee, 1973; Goldstein and Goldstein, 1978) Thepositive association between town size and subsequent growth isexplained by the relative opportunities for expansion in towns withan established infrastructure. Not only are the government andthe private sector most likely to invest resources in locationswith the largest labour pool, and the most diversified institutio-nal framework, but cumulative inertia usually favours expansion inlarger urban areas. On the other hand, the attraction of growingmarkets and cheaper labour in smaller towns could cause a shift ininvestment which would reverse the association between town sizeand growth.

Administrative status of towns is indexed by two variablesstate capitals and district headquarters. There are eleven statecapitals and 70 administrative districts in Peninsular Malaysia in1970. Not all of the district headquarter towns were above theminimum size of 1,000 in 1947 and 1957. (Towns below the minimumsize of 1,000 population are excluded from our analysis) Almostby definition, towns designated as administrative centres are thelocation of government offices, as well as related central servicessuch as post offices, hospitals, police stations, and schools.Other factors being equal, we would expect a positive associationbetween administrative status and urban growth, especially of theMalay population. With the commercial sector traditionally dominatedby Chinese, the government (especially the police and armed forces)

Urbanisation and Urban Growth in Malaysia 12

has been the primary source of urban employment for Malays. Thus,administrative status may be an indication of government employmentwhich would attract Malay urbanward migration (Hamzah, 1966:485)

The ethnic structure of a town may also affect the relativegrowth rate of specific ethnic communities While most towns havea Chinese majority, there is considerable variance in ethnicproportions, with Malays forming the majority in some towns (Sidhu,1976; Hirschman and Yeoh, 1979) Earlier analysts of urbanizationin Malaysia have discussed the potential links between ethnic com-position and ethnic growth rates in towns (Caldwell, 1963; Hamzah,1966) Chinese dominance of urban institutions may limit employ-ment opportunities for Malays if there are family, clan, and lin-guistic preferences in hiring. Conversely, a larger share ofMalay population (and participation in the urban economy) mightbe a base for greater expansion of Malay opportunities whichattracts Malay migrants. This hypothesis assumes that ethnicproportions of the population are a rough index of dominance inor influence over urban employing institutions.

Our last independent variable is the "New Village" statusof individual towns. As noted earlier, hundreds of new villageswere created by the colonial government in the early 1950s asresettlement centres for rural residents, largely Chinese, whomight be supporting (either voluntarily or unwillingly) theinsurgent forces. Because these settlements were created withoutregard for the development of an urban economy (most new villagerscontinued to work in agricultural activities) we might expectconsiderable out-migration to other towns (or back to rural areasafter the end of the Emergency, see Saw, 1972 on this point)In our analysis, we encounter a measurement problem in the classi-fication of new villages. Many new villagers were created adjacentto existing towns to which they were subsequently merged in the1960s Our "comparable towns" data file only contains new villagesthat were so identified in 1957 and did not merge (or share a commonname) with an adjacent town. Only 22 such "new villages" can beidentified in our 1957-1970 data file of 360 towns (it is not avariable in the 1947-57 analysis) These 22 "new villages" are asmall subset of those originally in this status, and the generali-zation of any findings to all new villages is problematic. None-theless, it does provide an assessment of new villages which haveretained their status and are not adjacent to other towns.

All of the variables in our analysis are presented in Table 2,which contains means (or proportions) and standard deviations forboth intercensal periods, and the correlation matrix of all variables.

TABLE 2 CORRELATION MATRIX. MEANS. AND STANDARD OEVIATIOHS OF TOWN VARIABLES’: PENINSULAR MALAYSIA. 1947-57 AND 1957.1970(1947-57 below diagonal and 1957-70 above the diagonal)

TC

TOT-GROWTH1’M-GROWTH1’C-GROWTII1’I-GROWTH11POP-T)’STATE CAP’101 ST IIQ’1NEW VILLAGE’1 M-^1t C-T,"X I-T,"

IT-GROWTI

0.72

0.08

0.59

-0.05

-0.01

0.03

-0.27

0.23

0.11

H-GROWTH

0.54

0.51

0.44

0.01

0.03

0.07

-0.26

0.20

0.1B

C-GROWTII

0.61

0.19

0.51

-0.06

-0.0)

-0.01

-0.24

0.100.15

1-GROWTH

0.35

0.14

0.37

-0.02

-0.02

0.01

-0.33

0.37

-0.08

POP-T)

0.07

0.10

0.07

0.04

0.65

0.2B

-0.09

0.03

0.12

STATE CAP

0.10

0.09

0.10

0.04

0.66

0.3U

0.06

-0.09

0.02

01 ST HQ

0.10

0.14

0.06-0.01

0.31

0.33

0.20

-0.33

0.24

NEW V1LLAGI

-0.02

0.02

-0.14

0.15

-0.06

-0.05

-0.12

M-T)

-0.09

-0.01

-0.30

-0.20

-0.04

0.04

0.11)

-0.09

-0.92

-0.29

I C-TI

0.10-0.05

0.28

0.20

-0.01

-0.08

-0.27

0.09

-0.94

-0.11

I’I-TI

-0.10

0.16

-0.00

-O.OB

0.14

0.06

0.24

-0.11

-0.1B

-0.11

1947-Mean or

’roportlon

5.13

5.09

5.31

3.59

8.41

0.07

0.38

0.27

0.60

0.11

1957

(S.D.) P

4.37

6.24

4.65

5.11

23.07

0.26

0.49

0.24

0.23

0.011

1957-"TteanroporHon

1.42

1.34

0.99

1.13

7.25

0.03

0.19

0.06

0.?6

0.66

0.0/

1970

(S.I).)

2.72

5.94

2.55

7.51

24.74

0.17

0.39

0.240.211

0.21)

o.nn

Notes and Definitions:

() 1947-57 N 154 and 1957-70 N 360. The universe of towns for each Intercensal Interval consists of all townscensused at both T] and T;, with population above 1,000 at Ti.

(b) Average Annual Growth Rate expressed as percentage, for the total town population, Malay town population.Chinese town population, and Indian town population.

’c) Population slie In thousands for ^. the first census, and Ti, the second census.d) Ihe capital cities of the eleven states of Peninsular Malaysia.ej Ihe district headquarter towns of administrative districts of Peninsular Malaysia.if) The towns designated as new villages In tlie 1957 Census. This category excludes new villages that merged with

other towns at a later date.(g) The percentage of the total town population which Is Malay Chinese Indian of T^, the first census.

Urbanization and Urban Growth in Malaysia 15

Town growth is computed as the average annual growth rate, computedby the formula: r In (P^/P^) t, and is presented for the totalpopulation and for all three ethnic communities. The initial popula-tion (POP-T^) is the census count, rounded to the nearest 1,000.Ethnic composition is measured by three variables: Percent Malay(% M-T^) Percent Chinese (% C-T]^) and Percent Indian (% I-T^) atthe initial census. The three administrative status variables:State Capital (STATE CAP) District Headquarters (DIST HQ) and NewVillage, are scored as dummy variables (1 status, 0 absence ofstatus) The correlations for the 1947-57 interval are presentedbelow the diagonal and the 1957-70 period are above the diagonal

As towns are the units of analysis, the growth rates repre-sent unweighted averages of individual town growth rates. In priorstudies (Hirschman, 1976; Hirschman and Yeoh, 1979) growth ratesfor size-classes of towns have been weighted by the population ofeach town. Because of this fact, the average growth rates inTable 2 cannot be compared with the other studies.

Average town growth rates slowed considerably during thesecond interval, from above five percent per year during the colo-nial era to somewhat above one percent per year during the 1960s.From 1947 to 1957, the average town Chinese growth rate was thehighest of any ethnic community (though only slightly above theMalay rate) but was the lowest during the post-Independence era.

With few exceptions, the correlations between town growthand the independent variables in Table 2 are fairly low. Initialpopulation size is only slightly associated with growth, generallynegative in the first period and slightly positive in the second.The administrative status variables are weakly predictive of growthduring the 1957-70 period. Ethnic composition has the strongesteffects on the urban growth of any community, although the patternis not consistent. Percent Malay and Percent Chinese are almostperfectly negatively correlated with each other (-.92 in 1947 and-.94 in 1957) while Percent Indian is weakly related to both.

In order to assess the direct effects of each of theseindependent variables on growth, we now turn to a multiple regressionanalysis of urban growth on the independent variables Using thesame data file of towns (above 1,000 population at T^) we regressedaverage annual growth on five independent variables POP-T^, STATECAP, DIST HQ, %C-TI, and New Village (for 1957-70 only) Separateregression equations were computed for the growth rates of the totaltown population and of each ethnic group for both intercensal periods.Only Percent Chinese was used to index ethnic composition because of

16 Urbanization and Urban Growth in Malaysia

its high correlation with Percent Malay (alternative ethnic groupswere used in preliminary analysis, but the results are essentiallythe same as reported here)

Table 3 presents the unstandard!zed regression coefficientsof the independent variables in separate equations for each ethnicgroup (Total, Malay, Chinese, Indian) of urban growth for both thecolonial era (1947-57) and the post-Independence period (1957-70)Because we have the complete universe of observations, statisticaltests of significance do not have their conventional interpretation.As a guide to the strength of effects, standard errors are reportedbelow each coefficient, and asterisks are added when a coefficientis twice its standard error. In all cases the explanation of varianceis rather modest, indicating that many significant predictors oftown growth are not included in this set of independent variables.

In none of the equations is initial population size ofany significance. Knowledge of the population of a town giveslittle prediction for subsequent growth in either period. Admini-strative status, indexed both by state capitals and district head-quarters, has a consistently positive effect on town growth in bothperiods, ranging from a .5 to 2.1 percentage point boost in theannual growth rate. The district headquarters variable has thestrongest effect on the average Malay town growth, but the statecapital effect is highest for Chinese urban growth in the 1947-57period. A good share of the effect of administrative status may bedue to increases in government employment, but there are probablyspillover effects on private sector expansion as well

The single strongest variable is ethnic composition; PercentChinese (which is almost the inverse of Percent Malay) as a verypositive effect on town growth for all ethnic communities (least forChinese) during the 1947-57 period, and also for the 1957-70 period(except for Malays) For Malay growth, the results are contrary tothe expected relationship. Malay urban growth was negatively corre-lated with Percent Malay during the first period and uncorrelatedwith ethnic composition during the second period. It appears thatany interpretation of Malay migration as a movement primarily directedto areas of Malay settlement is untenable

These findings require further interpretation. Recall thatour original hypothesis was that growth of economic opportunities forany ethnic community (migration) in a town would vary with the ethnicproportion of the town population (which was thought to be a roughmeasure of dominance in employing institutions) Since the proportionChinese in a town is a strong predictor of Malay growth from 1947-57

TABLE 3 REGRESSION ANALYSIS3 OF URBAN GROWTH ON TOWN CHARACTERISTICS, BY ETHNIC COMMUNITY: PENINSULAR MALAYSIA,

1947-1957 AND 1957-1970

IndependentVariables

POP-TI

STATE CAP

OIST HO

X C-T^

NEW VILLAGE

1947-195Total

-0.03(0.02)

0.96(1.77)

.33(0.80)

0.06*(0.02)

7 Average AiMalay

-0.02(0.02)

1.09(2.55)

2.10(1 .14)

0.07*(0.02)

inual Town GChinese

-0.03(0.02)

.22(1 .92)

0.69(0.85)

0.04*(0.02)

rowthIndian

-0.02(0.02)

0.70(1 .97)

1.81*(0.88)

0.10*(0.01)

1957-19Total

0.00

.29(1 .12)

0.77(0.41)

0.01*(0.005)

-0.18(0.60)

70 AverageMalay

0.01(0.02)

0.42(2.45)

.71(0.90)

0.01(0.01)

0.96(1 .31)

Annual TownChinese

0.00

.57(0.99)

0.73*(0.36)

0.03*(0.005)

-1 .62*(0.53)

Growth6Indian

0.00

1.94(3.04)

0.77(1 .10)

0.05*(0.01)

4.2*(1 .6)

CONSTANT 1.44 0.15 2.53 -2.8

R2 (Variance 5.3% 3.7% .8% 14.1%Explained)

Number of Towns 154

0.38 1.21 -1 .07 -2.94

.8% .1% 11 .8% 4.9%

Number of Towns 360

Notes: (a) Unstandardized partial regression coefficients with standard errors below in parentheses,(b) Town average annual growth rate In (P2/Pl) + t, where Pg and PI are the town populations at time 2

and time 1, respectively, and t is the length of the intercensal interval.* Regression coefficient is twice its standard error.

Source: Same as Table 1.

18 Urbanization and Urban Grouth in Malaysia

and, ethnic proportions are unrelated to Malay urban growth from1957-1970, this hypothesis is rejected. Nonetheless, the strongempirical effects of Percent Chinese on urban growth for all ethnicgroups (except for Malays from 1957-1970) presents us with ananamoly that requires some speculation. An alternative explanationwould be that the ethnic composition-town growth relationship isspurious, but both are related to other urban characteristics. Per-haps towns with a higher fraction of Chinese have a strong primary(agricultural, mining) or secondary industrial base in addition tothe usual trading functions of towns. Such an economic structuremay affect the relative growth of employment opportunities whichattracts migrant and/or discourage out-migrants. This issue deservesfurther empirical investigation than is possible here.

The New Village variable has a very strong negative effecton Chinese growth after Independence (the positive Indian effectmay reflect the low initial number of Indians in such towns) Thisconfirms the hypothesis that the "artificial" economy of the newvillages did not serve to support future growth. We expect that thisfinding based upon 22 new villages is true for all new villages, butcannot test this assertion with the available data.

Conclusions.

While the preceding analyses have not completely unraveledthe complex fabric of urbanization trends and urban growth in post-war Peninsular Malaysia, we do have a solid account of basic patternsand changes The complete explanation of the varied patterns andchanges is far less clear.

A substantial share of the rapid urbanization during the1947-1957 period was due to the increase in the number of towns inthe urban universe (many of which were new villages or resettlementtowns) After Independence in 1957, there was a slow-down in therate of change in urbanization. The ethnic gap in urbanizationwidened dramatically from 1947 to 1957. With little net change inpopulation redistribution during the 1960s, only a minimal reductionof the ethnic gap in urbanization was achieved by 1970. The vastrural-urban difference in ethnic population distribution is perhapsthe most fundamental barrier to more integrated institutions in theeconomy and society at large.

Our study did not uncover the major causes of inter-urbanvariations of growth. But the negative results do address some ofthe conventional hypotheses that are frequently posed. Town size does

Urbanization and Urban Grwt’h in Malaysia 19

not seem to be a significant factor of urban growth in Malaysia inspite of what has been found elsewhere Malay growth (assumingthat migration is the source of inter-town variation) does notappear to be directed toward towns with larger Malay populations.Malays have increased rapidly in towns that function as administra-tive centres, but so have Chinese and Indians. The single mostimportant predictor of urban growth is the percent of Chinese inthe town. We suggest that this may be a spurious association,reflecting the relative availability of economic opportunities.More than any other variable, the absence of empirical indicatorsof economic structure and opportunities limit our present analysis.This limitation is dictated by the absence of any data on theeconomic attributes of individual towns in the 1947 and the 1957Censuses. It may be possible to use some information on thecharacteristics of administrative districts (as a contextualinfluence on towns within a district) to indirectly address thisquestion.

The slow pace of urbanization in the post-Independenceperiod suggests that most Malaysian towns have not been centres ofsignificant economic opportunity, at least no more so than in ruralareas. Many of the government’s developmental programmes have beenprimarily directed at rural areas, and the relatively good prices ofexport crops (rubber) may have restrained a good share of the poten-tial exodus from the agricultural economy. A corolarry interpreta-tion is that the urban industrial economy was stagnant during the1960s, at least in terms of providing expanding employment opportu-nities for migrants from rural areas. Unless the urban economybegins to provide much greater employment prospects in the nearfuture, major problems may arise. Not only are the goals of socialmobility and therefore of ethnic integration frustrated, but thestrategy of rural agricultural development may be reaching its limitsof employment absorption of the younger generations.

20 Urbanization and Urban Growth in Malaysia

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