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Modern Asian Studies: page 1 of 42 C Cambridge University Press 2010
doi:10
...
edu
...
WHITE
Department of History, School of Social Science, Liverpool John Moores
University, 68 Hope Street, Liverpool, L1 9BZ, United Kingdom
Email: n
...
white@ljmu
...
uk
Abstract
In a ‘dawn raid’ on the London Stock Exchange on 7 September 1981, the
premiere British rubber and oil palm conglomerate in Malaysia, the Guthrie
Corporation Limited, was taken into local control in less than four hours
...
Nicholas White
would additionally like to thank the International Institute of Public Policy and
Management (INPUMA), University of Malaya, where he was a visiting fellow during
October and November 2007
...
The authors are grateful for the comments of participants at these
academic colloquia
...
However, the authors alone are responsible
for any errors of fact or interpretation
...
WHITE

was the most dramatic Malaysian acquisition of a foreign company during the
restructuring of the country’s post-colonial economy during the 1970s and 1980s,
and the Guthrie Dawn Raid remains a celebrated but, at the same time, contested
juncture in contemporary Malaysian memory
...
In particular, it stresses the long-term aspirations of a key
(but often overlooked) figure within the late and post-colonial Malay bureaucratic
and economic elite, Ismail Mohamed Ali
...


Introduction: The Setting and the Controversy
The term ‘dawn raid’ refers to a surprise assault on the shares of
a target company by a ‘raider’ soon after the opening bell of the
stock market
...

This was precisely what happened on the London Stock Exchange
(LSE) on the morning of 7 September 1981
...

(GCL) from around 25% to more than 50% of the British company’s
31
...
1 This shocked the senior executives of GCL, the
premiere British-controlled plantation group in Malaysia
...
Another UK
observer commented that Guthrie’s executives had been left ‘with
their trousers round their ankles’
...

1
‘Requiem for a rubber planter’ in Economist, 280, 12 September 1981
...
Interview with Mark Gent, Sherborne,
Dorset, UK, 19 April 2007
...
3
This event appeared extraordinary in the context of Malaysia’s postcolonial economic development strategy, which in contrast to fellow
Southeast Asian states had exhibited a remarkably liberal attitude
towards foreign—and especially ex-imperial—investments
...
During 1957 and 1958 the Indonesian government, within
eight years of independence from The Netherlands, chose a wholesale
sequestration of Dutch assets and expulsion of the majority of
the remaining Dutch business personnel
...
As the ruling Alliance Party’s election manifesto of 1969
unashamedly declared, ‘we do not share the specious reasoning of
many of our critics who believe that foreign capital is exploitative
in character’
...
5 After 1970, Malaysia’s New
Economic Policy did aim to reduce the expatriate share of the
corporate economy to 30% by 1990, but this would be achieved
by growth in the indigenous business sector, purchases of shares
in foreign-owned companies by Malaysian private investors and
negotiated transfers to Malaysian government agencies
...
81; ‘Malaysia swoops for Guthrie’ in Far Eastern
Economic Review (hereafter FEER), 13 September 1981 cited in Jean-Jacques van
Helten and Geoffrey Jones, ‘British business in Malaysia and Singapore since the
1870s’ in R
...
T
...
186; ‘It was a bargain
for PNB, says Guthrie MD’ in New Straits Times, 9 September 1981; ‘The sun sets on
Guthrie’ in Financial Times, 8 September 1981
...
White,
‘The Diversification of Colonial Capitalism: British Agency Houses in Southeast Asia
during the 1950s and 1960s’ in Ian G
...
Doel, Rex Y
...
Li and
Yongjiang Wang (eds), Dynamic Asia: Business, Trade and Economic Development in Pacific
Asia (Aldershot: Ashgate, 1998), pp
...
The latest study of Indonesia is J
...

5
Cited in Nicholas J
...
58–9
...
WHITE

Dawn Raid significantly broke the mould, therefore, and represented
a ‘watershed’ event which continues to inspire and evoke nationalist
sentiments in contemporary Malaysia for both the takeover itself
and the daring mode in which it was executed
...
Likewise, the creation of Malaysia between 1961 and 1963—
involving the fusion of Malaya with North Borneo (Sabah), Sarawak
and (temporarily) Singapore—had been achieved at the conference
table and the ballot box rather than through non-cooperation or
violent confrontation with the colonial power
...

At the same time, because of the swift and secretive nature of the
GCL takeover and the momentousness of this event in Malaysia’s
post-colonial history, the causes of the Dawn Raid remain contested
...
The first is
the argument that British business leaders’ conservatism, their desire
to maintain the status quo and their squeamishness with regard to
entering the emerging world of ‘crony capitalism’ drove the Malaysian
government to encourage complete local control of the agency houses
during the 1970s and 1980s
...
Mahathir
Mohamad who became prime minister of Malaysia in July 1981
...
J
...
J
...
), Malaya, Part I: The
Malayan Union Experiment, 1942–1948 (London: HMSO, 1995), pp
...
,
‘Introduction’ in A
...
Stockwell (ed
...
xxxv–xcv
...
White, Business, Government, and the End of Empire: Malaya, 1942–1957
(Kuala Lumpur: Oxford University Press, 1996), p
...
, ‘The beginnings of
crony capitalism: Business, politics and economic development in Malaysia, c
...
405–11; idem
...
238–40; idem
...
67–8, 214–7
...
640–1; Chew Huat Hock, ‘Changing
directions in foreign policy trends: A comparative analysis of Malaysia’s bilateral

‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

5

Finally, and more persuasively (as will be argued), the Dawn Raid
can be viewed as a logical outcome of Malaysia’s New Economic
Policy (NEP) and the longer-term aspirations of a key figure within
the Malay elite, Tun Ismail Mohamed Ali, the former governor of
Malaysia’s central bank—Bank Negara—and the chairman of PNB
from 1978 to 1998
...

This article can provide a more objective and searching analysis of
these issues given its interrogation of the currently available primary
sources
...

Meanwhile, the Guthrie archives at the School of Oriental and African
Studies, London, consist of a few ledger books and marketing records
rather than high-level policy-making material
...

Moreover, under the UK government’s Freedom of Information Act,
access was granted to the Bank of England files which deal with the
raid and its aftermath
...

In the course of the authors’ research, the Dawn Raid became a live
issue once again in Malaysia in the context of 50 years of merdeka
...
351–3; Khoo Boo Teik, Paradoxes of Mahathirism: An Intellectual
Biography of Mahathir Mohamad (Kuala Lumpur: Oxford University Press, 1995),
pp
...

9
T
...
Harper, The End of Empire and the Making of Malaya (Cambridge: Cambridge
University Press, 1999), p
...


6

SHAKILA YACOB AND NICHOLAS J
...
However, Khalid’s
recollections were immediately disputed by Deputy Prime Minister
Najib Abdul Razak, claiming that Khalid had neglected to mention
the role of Najib’s late father, Tun Abdul Razak (the prime minister
of Malaysia, 1970–1976) in the GCL takeover, and that as chief
executive officer between 1995 and 2003 Khalid had attempted to
exploit the reconstructed Guthrie Berhad as a vehicle for his own
personal enrichment
...
Nevertheless, Khalid’s credentials
in ‘bringing Guthrie back home’ were also challenged by Mohamad
Desa Pachi, the first general manager and chief executive of PNB
(1978–1982) and member (albeit ‘non-active’) of the United Malays
National Organisation (UMNO), the dominant political party in
Malaysia’s ruling coalition
...
10

The ‘Conservatism’ of the Guthrie Group
Guthrie was an exemplar British agency house, tracing its origins to
the early nineteenth century
...

The commerce in goods, however, was only one of the functions of
the agency house
...
11 Of the dozen or so agency houses
that continued to dominate the commanding heights of the Malayan
(peninsular Malaysian) economy at the time of merdeka (independence)

10
‘Najib dead wrong on Guthrie’s history’ in Malaysiakini, 25 April 2007; ‘Bukan
Khalid Bawa Balik Guthrie’ (Khalid did not bring Guthrie back) and ‘Khalid Perlu
Cakap Benar—TPM’ (Khalid Needs to Tell the Truth—DPM) in Utusan Malaysia, 22
and 23 April 2007; ‘Najib: Khalid wanted bigger stake in Guthrie’ in The Star, 27
April 2007; Interview with Tan Sri Desa Pachi, Kuala Lumpur, 12 September 2007;
Desa Pachi to Shakila Yacob, 20 May 2008
...
White, ‘AGENCY HOUSES, European’ in Ooi Keat Gin (ed
...
1, pp
...


‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

7

in 1957, Guthrie remained the most prestigious
...
The firm also continued
to maintain a significant merchanting business, worth over £600,000
annually to Guthrie at the beginning of the 1960s
...
14 As late as 1970, it is
estimated that over 60% of Malaysian corporate assets were still owned
by foreigners, and of that non-Malaysian stake two-thirds remained
British-controlled
...
16

12

The standard text on the development of the Guthrie group is Sjovald
Cunnyngham-Brown, The Traders: A Story of Britain’s South-East Asian Commercial
Adventure (London: Newman Neame, 1971)
...
J
...
Tate, The RGA History of
the Plantation Industry in the Malay Peninsula (Kuala Lumpur: Oxford University Press,
1996); G
...
Allen and A
...
Donnithorne, Western Enterprise in Indonesia and Malaya: A
Study in Economic Development (London: Allen & Unwin, 1957); and, J
...
Drabble and
P
...
Drake, ‘The British Agency Houses in Malaysia: Survival in a Changing World’
in Journal of Southeast Asian Studies, 12 (1981), pp
...
On one of the group’s
key plantation companies, see C
...
Parkinson, The Guthrie Flagship: United Sua Betong
(edited and abridged by J
...
Gullick) (Kuala Lumpur: The Malaysian Branch of the
Royal Asiatic Society, 1996)
...
4–5
...

15
van Helten and Jones, ‘British business’, p
...
14 n
...

16
N
...
Funston, Malay Politics in Malaysia: A Study of the United Malays National
Organisation and Party Islam (Kuala Lumpur: Heinemann, 1980), p
...


8

SHAKILA YACOB AND NICHOLAS J
...
Yet, Sir John was
opposed to diversification into manufacturing industries and into
countries other than Malaysia, essentially arguing that Guthrie’s
competitive advantage lay in its expertise in managing Southeast
Asian plantations—a specific skill which was not transferable to other
activities or parts of the world
...
His fellow directors, Bank of England officials
and City of London investors combined to overthrow Hay, fearing
that substantial British assets could easily fall prey to takeover bids
from Malaysian interests supported by American financiers
...
His successor as chief
executive, Sir Eric Griffith-Jones (a former civil servant far more
amenable to the ‘gentlemanly capitalists’ of the City) was concerned
by the uncertainty induced by Singapore’s expulsion from Malaysia in
1965, the dangers of communal violence and low rubber prices in the
late 1960s
...
18 But these new ventures
were not particularly fruitful and, at the time of the PNB takeover
in 1981, the core plantation business still produced 80–90% of group
profits
...
White, ‘British business groups and the early years of
Malayan/Malaysian independence’ in Asia Pacific Business Review, 7, 2 (Winter 2000),
p
...
, ‘Diversification of Colonial Capitalism’, p
...
G
...
C
...
P
...
O’ Brien and the Governor, 14
October 1963; Sir Eric Griffith-Jones to Lord Cromer, 30 July 1964
...
45, 129, 170; Cunnyngham-Brown, Traders,
pp
...
318
...
M
...
M
...

The former colonial civil servant, John Gullick, was company secretary at Guthrie’s
London Office between 1959 and 1962, London solicitor to GCL between 1966 and
1973 and subsequently a non-executive director of GCL between 1973 and 1982
...
Leslie Bateman, Malaysia’s rubber research supremo,
reported to UK Ministry of Overseas Development officials that
Guthrie was ‘the most far-sighted’ of the plantation agencies in
Malaysia but the firm’s executives combined their entrepreneurial
dynamism ‘with a lack of appreciation of the political and psychological
realities’; Malaysians did ‘not like being patronised’
...
21 Among the agency houses, Guthrie
had pioneered an on-the-job training scheme to Malaysianise the
management of its plantations after 1954, and, by the mid-1960s,
was offering scholarships for Malaysian assistants to undergo further
training either locally, in the United Kingdom or in The Netherlands
...
However, the Kuala Lumpur head office still
retained expatriates in a handful of key supervisory posts such as
planting and engineering advisors and in the management of group
affairs
...
In 1958, Hay
had appraised shareholders and the Malayan press on the need for
‘free economic cooperation’ between Malaya and Britain
...
23

20
The National Archives, Kew, London (hereafter TNA), OD 39/136, note of
meeting at the Ministry of Overseas Development, 15 August 1968
...
208–9; idem
...
433
...
597, n
...
F
...
, 14 June 1966, enclosed in ‘Note of a Discussion on Malayanisation, United
Planting Association of Malaysia Proprietors’ Section Meeting, 15 July 1966’; White,
Post-colonial Malaysia, pp
...
321–2
...
87
...
WHITE

From the mid-1960s, the new chief executive, Griffith-Jones, as
advised by the merchant bankers, Baring Brothers, did seek to make
major changes in Guthrie’s organisation
...
The holding company, Guthrie &
Company, was registered in Singapore with the board of directors in
London enjoying de facto authority
...
In 1961, Guthrie’s trading and estate
agency businesses had formally separated
...
In the far more
important latter, the plantation companies took over the management
service from Guthrie & Company and shared its ownership in the
Guthrie Estates Agency Limited, registered in the United Kingdom
with a local subsidiary, Guthrie Agency (Malaya) Limited
...
24 Although publicly justified on grounds of economies of scale
and administrative efficiency, the formation of GCL was primarily
motivated by a fundamental fear of losing financial control
...
In particular, the Malayan/Malaysian Chinese
Association senator, Lee Loy Seng, was beginning a process of
acquisitions which would see him emerge by the 1970s as one of
the country’s largest rubber plantation owners
...
It was not his intention,
however, to ‘peddle out shares’ in Malaysia
...
314, 316–7; Gullick note, 26 April
2007
...
157–8
...
However, ultimate
financial control would still reside with GCL in London since no
more than 49% of the Malaysian subsidiary’s shares would be offered
locally
...

Dr
...
27 Instead, Mark Gent, the son of Sir Edward (the illfated first and last governor of the Malayan Union), became head of
GCL’s operations in Kuala Lumpur after 1969
...
28 It fell to Gent, therefore,
to implement the Griffith-Jones financial scheme, designed to appease
Malaysian economic nationalism but without surrendering ultimate
control from the City
...

Guthrie Ropel Sendirian Berhad was first registered in 1966, and
the initial step was to transfer one block into a Malaysian subsidiary
of Guthrie Ropel, and then offer 40% of the shares of that subsidiary
to Malaysian investors on the Kuala Lumpur Stock Exchange (KLSE)
...
When the first stage was successfully completed
26
BoE, ADM 14/82, note for the Governor and the Deputy Governor by L
...

Thompson-McCausland, 10 March 1965
...
171, 181; Tunku Abdul Rahman,
Looking Back: Monday Musings and Memories (Kuala Lumpur: Pustaka Antara, 1977), p
...
Race riots broke out on 13 May 1969 in Kuala Lumpur after ‘victory’ processions
and counter-processions in the immediate aftermath of the gains made by opposition
parties in the general election
...
White, 21 April 2003
...
WHITE

and running smoothly, the process would be repeated with another
group of estates, passing to what would become a partly Malaysianowned Guthrie subsidiary
...
In 1974, 26% of the equity in Guthrie Ropel
(which by then owned about one-sixth of the group’s planted area)
was finally placed with the Malaysian public, and three years later
a further 15% was offered to approved bumiputera individuals and
institutions, thus giving Malay interests the intended 30% of issued
capital
...
29 But, crucially, the steadfast intention of
the Guthrie board was that 60% of ownership would still reside in the
hands of GCL’s shareholders
...
This also laid the sincerity
of GCL’s Malaysianisation plans open to question
...
31 But the determination of
the London board to maintain control increasingly conflicted with
Malaysian economic aspirations
...
Guthrie’s restructuring falls far short of this target,
and Malaysian institutions may understandably want to see that this group
is made to fall into line
...
32 This was resisted but Sime Darby was left
29
Gent interview, 19 April 2007; Gullick note, 26 April 2007; Drabble and Drake,
‘Agency Houses’, pp
...

30
Interview with Henry Barlow, Kuala Lumpur, 17 November 2007
...

32
Controlled by the Ministry of Finance Incorporated, the Malaysian Treasury’s
holding company, PERNAS, was under the presidency of Tengku Razaleigh Hamzah,
who was Minister of Finance at the time of the Dawn Raid
...
An expected re-bid never materialized, but
as Sime Darby saw its holdings diluted by other Guthrie takeover
bids, it sold its interests to other Malaysian investors, notably 25%
to PNB in December 1980
...
Meanwhile, 58,000
acres had been acquired in Liberia, including 18,000 acres of planted
rubber from B
...
Goodrich of the United States
...
Moreover, GCL sold its 73% stake in Guthrie
Berhad
...
34 But, as
PNB chairman, Ismail Ali, told the press in September 1981, he had
been deeply unhappy with this geographical diversification—despite
being the leading minority shareholder, PNB had been denied board
representation and had not been consulted on the divestment strategy
...
35
It is easy, therefore, to argue that Guthrie and indeed other
British agency houses in Malaysia ultimately ‘failed’ by not fully
embracing the possibilities of a post-colonial, Commonwealth
economic partnership
...
Mark
Gent recalls that the governor of Bank Negara, Ismail Ali, was ‘always
civil to Eric [Griffith-Jones] and myself’ (although ‘in a rather sphinxlike way’ and before meetings Griffith-Jones and Gent were ‘nearly
always’ ‘kept waiting outside his office for 1/2 an hour’)
...

Gullick note, 26 April 2007; Gent interview, 19 April 2007; ‘A respite, not a
reprieve’ and Hugh Peyman, ‘Plantation giants eye new conquests’ in FEER, 19 and
26 December 1980; Barlow interview, 17 November 2007; Abdul Khalid Ibrahim,
‘Business investments and growth’ in Malaysian Management Review, 20, 2 (August
1985), pp
...
352; Interview with Tan Sri Abdul
Khalid Ibrahim, Petaling Jaya, Malaysia, 2 November 2007
...

34

14

SHAKILA YACOB AND NICHOLAS J
...
36 Harrisons
was ‘deeply resented’ by leading bumiputera, given its intransigent
attitude towards Malaysianisation
...
PNB held only about 8% of H&C
in 1981 compared to one quarter of Guthrie
...
M
...
, acting on PNB’s behalf
...
With the 25% which PNB already held, acquisition of these
congenial holdings would allow the investment agency to control over
40% of GCL’s equity, and hence the London board
...
39
As it turned out, the OCBC chairman, Tan Chin Tuan, decided not
to sell his bank’s block of Guthrie shares despite a long, late lunch
36

Letter to White, 21 April 2003
...

38
Interview with Khalid Ibrahim, 2 November 2007; Leela Barrock, ‘When the big
boys came home’, Merdeka Special in The Edge, 3 September 2007, pp
...

39
‘Genting group: Farewell to our founder: Tan Sri Dato Seri (Dr
...
49–58
...
However, the other Kuwaiti and
Malaysian ‘friendly’ shareholders did agree to sell, while, in London,
Rothschilds was able to secure the support of the M&G Investment
Trust, which held 11% of GCL
...

C
...
G
...
75p per share was too low
...
25 following Sime Darby’s sale of Guthrie shares to PNB
...
Gent
was aware that Hopkinson had been approached to sell his holding,
and Hopkinson’s response was that M&G was not a seller below £9
a share
...
01
...
The principal
remaining British shareholders—the Anderson Trust, Barings and
Save & Prosper—were left out in the cold
...
With the
assistance of Sir John Hay in London, Sir John Anderson had been the dominant
influence upon Guthrie’s diversification into the promotion and management of
rubber companies
...
oxforddnb
...

41
‘Guthrie: What happens now?’ and ‘PNB launches 901p a share bid for Guthrie’
in Business Times, 17 December 1980 and 8 September 1981
...
Khalid had calculated that it was futile approaching Save & Prosper, the other
UK investment trust holding substantial shares in GCL, because its directors were
considered too ‘anglophile’
...
30–31
...


16

SHAKILA YACOB AND NICHOLAS J
...
45 GCL was also attractive to
PNB because it held prime properties for industrial and residential
development outside of Kuala Lumpur along the Klang Valley: as
Khalid appreciated at the time, by increasing the value of Guthrie
land by 20–30% PNB would be able to recoup its purchase price of
£282 million
...
Necessarily, the Guthrie board had
obligations to its existing British shareholders
...
But as directors of a
UK public company they deemed it essential to retain majority control of its
enterprise, if only at a level of 51 per cent
...
47

Ranked 68 out of the top 100 British companies on the LSE in
September 1981, GCL shares were also well worth hanging on to
...
The group did have plans to develop
new plantations in partnership with state development corporations
in both peninsular and East Malaysia, but, as the FEER appreciated,
plantation companies had not been able to expand their acreage in
Malaysia since the early 1970s
...
The only alternative—again to meet shareholder obligations—
was to expand outside Malaysia
...

‘A respite, not a reprieve’, 19 December 1980
...

47
Gullick note, 26 April 2007
...

45

‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

17

provided the casus belli for PNB to move against Guthrie
...
Hence, to avoid overloading the
local capital market, GCL had to proceed slowly through six stages
...
50
The board was ‘indignant’, therefore, when in the course of 1980 PNB
proposed to GCL that the investment agency should acquire a 51%
shareholding in a single Malaysian subsidiary of GCL to which all
the estates would be transferred
...
51 Perhaps, then, it is better
to locate the causes of the Dawn Raid within the ‘bigger picture’ of
Anglo-Malaysian relations in the early 1980s
...
There remains an obvious suspicion that
this relationship may have constituted a significant influence on
PNB’s resolve to take over GCL
...

50
Letter to Nicholas J
...

51
Gullick note, 26 April 2007
...

See Susan Martin, The UP Saga (Copenhagen: NIAS Press, 2003), pp
...
, ‘European Plantation Firms and Malaysia’s New Economic Policy since
1970’, paper presented at the International Economic History Congress, University
of Helsinki, August 2006, Session 94: Foreign Companies and Economic Nationalism
in the Developing World after World War Two
...
WHITE

‘never socialized in the British tradition’
...
’53
Through his own admission, Mahathir had no British friends
...
55 As early as 1966, as a back-bench
MP, Mahathir had criticized the ‘old lion’ whose ‘Empire, the blissful
source of booty, is now disappearing’ in the Dewan Ra’ayat (the lower
house of the Malaysian parliament)
...
Yet, ‘the only ethnic group towards which The Malay Dilemma was
unmistakably hostile was the British’, holding the colonials ‘primarily
responsible for aggravating the economic backwardness of the Malays
when their liberal immigration policy in the late nineteenth and early
twentieth centuries swamped Malaya with immigrants from India and
China’
...
It is true that British firms
...
Usually this help took the form of large
contracts negotiated not officially but over whiskies in the various exclusive
clubs in the country
...
[As such] there was no real competition between the British firms and the
local firms
...
The British businessmen and the British administration
together ensured that certain businesses remained in British hands
...
357
...

54
Interview with Tun Dr Mahathir Mohamad, Kuala Lumpur, 17 July 2007
...

56
Cited in Khoo, Paradoxes, p
...
15
...
630; Chew, ‘Changing directions’,
p
...

53

‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

19

became the principal beneficiaries
...
58

This disenchantment with things British was exacerbated by
Mahathir’s interactions with the UK prime minister, Margaret
Thatcher, whose government had in 1979 withdrawn subsidies for
Malaysian students wishing to study at British universities (as part
of the general monetarist policy of reducing UK public spending and
emblematic of the economic disengagement from the Commonwealth
in favour of the European Economic Community)
...
The Guthrie takeover
was, therefore, regarded as retaliation for this Scrooge-like British
government action
...
The Malaysian premier outlined the potential
ramifications in terms of government procurement orders, consultancy
services and loss of the Malaysian market to the British higher
education industry
...
Malaysian students pursuing their tertiary
education in the United States, Japan and Korea would forge new
alliances that would eventually lead to new directions in business
and economic relations
...
60 A further source of Anglo-Malaysian tension
was the Concorde issue
...
39, 52
...

60
Cited in Kershaw, ‘Anglo-Malaysian relations’, p
...
349–50
...
WHITE

supersonic aircraft on its flights to Australia
...
62
Moreover, immediately after the Dawn Raid, Malaysian leaders
were convinced that the amendment of the Substantial Acquisition
of Shares Rules on the LSE, allowing minority shareholders a
greater period of reflection during takeover attempts (see below for
more details on this complex issue), was directed at Malaysia as a
consequence of PNB’s acquisition of GCL
...
63
The Malaysian view was that the amended legislation was another
hangover from the colonial past, demonstrating Britain’s stubbornness
in clinging to its economic legacy in Malaysia
...
64
Three months after his appointment as prime minister and just over
a month after the Dawn Raid, Mahathir officially announced the ‘Buy
British Last’ campaign
...
This hit certain British companies hard—for
example, Dunlop Malaysia Industries, the local manufacturing plant
of the British multinational, had held a government contract for the
supply of truck tyres since it began production in 1963
...
637,
n
...

62
Mahathir interview, 17 July 2007
...
353
...
Mahathir was still smarting
in 1996 during an address at St
...
Since we did it before it was declared illegal, it should have been
accepted in good spirit
...

‘Market Economy and Moral and Cultural Values—A Malaysian Perspective’, 16 April
1996
...
Mahathir also made the decision to introduce Malay
rather than English as the official language in the lower courts by
1985
...
65 Three months later, on 15 December 1981,
Mahathir issued his first statement on the ‘Look East’ policy, which
would be officially announced in February 1982, and which aimed
to introduce new forms of Japanese-, Korean- and Taiwanese-style
industrial management methods and work ethics as part of Malaysian
aspirations to ‘re-orient’ towards becoming a newly industrialized
country
...
For one, the relative ease
with which relations were restored between Britain and Malaysia
after the Dawn Raid suggests that Anglo-Malaysian relations had
not reached a terrible impasse
...
5 million over three years to help Malaysian students
abroad
...
But, at the same time, Foreign Minister
Ghazali Shafie emphasized that the ‘Buy British Last’ campaign did
not amount to a boycott of British goods, and action taken against
some British firms had gone against the spirit of Mahathir’s directive,
while, in London, Deputy Finance Minister Najib parlayed with the
Treasury, the Bank of England and the Council for the Securities
Industry, and sought to redress the UK surplus in Anglo-Malaysian
trade by increasing Malaysian exports of manufactured goods to
Britain
...
Lord Carrington, UK Foreign
Secretary, also visited Kuala Lumpur as part of an ASEAN tour in
65
‘Message from Mahathir’, ‘Tough guy takes over’ and ‘Exit Dunlop, smiling’,
in FEER, 25 September and 30 October 1981, and 23 July 1982; Kershaw, ‘AngloMalaysian relations’, p
...

66
Kershaw, ‘Anglo-Malaysian relations’, p
...
65–74
...
WHITE

February 1982 in which bilateral relations, particularly with regard
to trade and education, were discussed
...
Over
600 Malay students were now able to enter Oxbridge
...
68 The following month, the ‘Buy British Last’
directive was withdrawn
...
to enhance their
management expertise and skills
...
69 Despite Mahathir’s bravado, therefore, there was
never any intention of ditching the Commonwealth relationship—
British investments were still welcome in Malaysia, so long as these
complied with NEP requirements, and British firms were assured that
if they were taken over, expatriate managers would be retained as
long as they cooperated with Malaysia’s development objectives
...
As Deputy Prime Minister
after 1976, and particularly after his additional appointment as
Minister of Trade and Industry in 1978, Mahathir had certainly
been concerned with boosting bumiputera equity participation, and
was therefore fully in support of PNB’s objectives to acquire large
companies to rapidly increase the Malay share of the corporate
economy
...
52–3; Chew, ‘Changing
directions’, pp
...

68
Mahathir interview, 27 July 2007; Interview with Sir Donald Hawley, Salisbury,
UK, 10 April 2007; ‘Malaysian students get more British aid’ in FEER, 24 February
1983
...

70
Chew, ‘Changing directions’, p
...


‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

23

Investment Foundation) was PNB’s parent organisation, and till 1981
was headed by Mahathir as deputy prime minister
...
But planning within PNB preceded
these meetings
...
72
Moreover, as the Bank of England records reveal, no stock exchange
rules were actually broken during the raid, suggesting longer-term
planning before Mahathir became prime minister, and an intimate
knowledge of City of London procedures which, however omnicompetent or omnipresent Mahathir may have been, he could not
have been aware of or mastered
...
Prior to 1980, the purchaser(s) could buy up as
many shares as they could in a mere matter of hours, and by extension
exceed the 30% limit through which effective control of the company,
under the takeover code, would pass to the same purchaser(s)
...
On the morning of 12 February 1980, De Beers acquired
11% of the shares of Consolidated Gold Fields within 45 minutes at
a price substantially higher than the closing market price
...
De Beers’ dawn raid proved contagious and
by July 1980 there were five cases involving De Beers-style takeovers
...
74
71
‘Najib dead wrong’, 25 April 2007; ‘When the big boys came home’, 3 September
2007; Interview with Khalid Ibrahim, 2 November 2007
...

73
BoE, General File No
...

74
Ibid
...


24

SHAKILA YACOB AND NICHOLAS J
...
The rules sought to provide a level
playing-field for minor shareholders who either in practice were not
well informed of prevailing market conditions or who constituted a
negligible proportion of the ownership, so that they too could be
advised properly and profit from the high (or above the market) price
which was offered at dawn raids by the purchaser(s)
...
A seven-day provisional
‘taking stock’ period was imposed for this category
...
Dawn raids effectively presented a fait accompli to the
directors and shareholders who were not given adequate time and
opportunity to consider and debate the issues relating to the future
of the targeted company
...
This was
implemented with the same intention of slowing down the buying
process and allowing a period of reflection and mental ‘stock-taking’,
alongside debate and formulation of views within the target company
...
The only difference was that
the stalling mechanism was in place when the purchaser was already
in sight of control of the target company, that is, on the verge of the
takeover rather than setting its sights on moving towards the takeover
stage
...
75 The existence of this loophole
in the amended 1980 rule led to two cases of rapid acquisitions by
British companies on British companies in mid-July 1981
...

75

Ibid
...
Ibid
...

76

‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

25

In order to plug the loophole, the CSI decided on 24 September 1981
that ‘anyone who announces a takeover bid, or who is endeavoring to
secure control by acquisitions, is not allowed for seven days to acquire
shares carrying 5% or more of voting rights, from more than one
shareholder, if his [sic] existing holding gives voting rights of 15% or
more’
...
Such a scenario was interpreted as a gradual
step leading to a takeover of the target company
...
At the time, it
was thought that because a 30% acquisition or more amounted to a
de facto takeover, the 1980 Rules need not apply
...
Therefore, the CSI’s decision was not directed solely
at Malaysia but reflected a wider concern in the securities industry
about the ramifications of dawn raids on the affected parties
...

Moreover, the central issue for the CSI was the international
reputation of London as a financial centre
...
strengthen the widely held conviction that
the City is the home of sharks and charlatans more than aggressive
market transactions leading to an immediate change of control
...
79 PNB
began by purchasing 5% equity in GCL
...
Later in the morning, PNB purchased a further
12% outside the market in Malaysia and London
...
80 Hence, PNB did not act arbitrarily
77
Ibid
...

78
Ibid
...

79
Ibid
...
, copy of note by G
...
Campbell and S
...
Taylor, Far East and South-East
Asia Department, Confederation of British Industry of a meeting with John Hignett,

26

SHAKILA YACOB AND NICHOLAS J
...
As Chew appreciated, ‘The PNB’s success was the
culmination of a meticulous effort to master the technicalities of the
LSE’
...
82 This suggests long-term aspirations
and planning before Mahathir’s arrival at the helm of the Malaysian
state and a more extended set of origins of the Dawn Raid within the
requirements of the NEP and the interpretation of those requirements
by PNB and its chairman, Ismail Ali
...
A huge, unique
exercise in social engineering, Malaysia’s NEP was promulgated
in 1971 to restructure the country’s economy and society and
achieve a much more equitable distribution of wealth among the
various Malaysian ethnic groups, extending affirmative action for the
bumiputera into the corporate economy
...


director general of the panel on takeovers and mergers, LSE, 16 October 1981
...
01) per share as it had paid in
the raid
...

Thus PNB came to own 100% of the share capital by the end of 1981
...
Ismail Ali replaced Gent as
chairman and PNB nominees also took the place of the British managing and finance
directors
...
for the nervous expatriate staff’ (Gent to White, 11 November 2007),
especially those in the non-Malaysian enterprises which PNB had little knowledge of
...
At the
intermittent board meetings held in London ‘a few very general financial statements
were tabled but hardly discussed’ (Gullick note, 26 April 2007)
...

81
Chew, ‘Changing directions’, p
...

82
‘When the big boys came home’, 3 September 2007
...
The Malay ‘anglophiles’ were replaced by
the ‘ultras’ such as Harun Idris, Mahathir Mohamad and Musa Hitam
who questioned the viability of economic liberalism being pursued by
the Alliance government and insisted that Malay/bumiputera economic
and political ‘rights’ be addressed via the restructuring of the economy
...
Indeed, as early as November 1974, the
Sunday Telegraph’s Kuala Lumpur correspondent reported that ‘the
winds of change are now blowing strongly’ through Malaysia’s primary
industries, and the Malaysian government ‘will press ahead with its
policy of bringing 70 per cent equity control plus the management of its
major industries to Malaysia and it could happen in a shorter time than
anticipated’
...
83
This determination to reduce British control of the primary
producing sectors coincided with increasing state intervention in the
economy and public–private partnerships in ‘Malaysia Inc
...
84 The growth of government-linked corporations from the
mid-1960s, and particularly after 1971, led to an increased volume
of equity assets in the Malaysian economy being held ‘in trust’ for
the ‘indigenous’ peoples by bumiputera-dominated institutions
...
From the mid-1970s, under the leadership
of Tengku Razaleigh, PERNAS turned away from majority control
of joint ventures with foreign interests in the manufacturing sector
83
Ivan Fallon, ‘British firms under pressure to toe the line’ in New Straits Times, 5
November 1974
...


28

SHAKILA YACOB AND NICHOLAS J
...
But this
had not led to increased equity participation by the Malay and other
‘indigenous’ masses
...
The creation in 1978 of YPB,
and its subsidiary PNB, represented an attempt to turn some of the
poorer classes into stockholders (and ultimately entrepreneurs) by
boosting individual bumiputera participation in private enterprises
...
PNB was thus charged with creating
a pool of shares which could be subsequently sold as ASN units
to mobilize bumiputera savings
...
But this was believed to be a brake on
development and capital formation through tying up vast potential
savings in relatively unproductive assets
...
As early as 1961, the Malayan federal
government had organized the National Investment Company (NIC)
which had worked to increase the ratio of Malay-owned capital in
nascent import-substitution industrialisation
...
However, neither the NIC
nor the MCI could prevent Malay shareholders from selling to nonbumiputera Malaysians
...
88

85
‘A dividend for the people’ in FEER, 23 January 1981; interview with Khalid
Ibrahim, 2 November 2007; Keiko Saruwatari, ‘Malaysia’s localisation policy and its
impact on British-owned enterprises’ in The Developing Economies, XXIX, 4 (December
1981), pp
...

86
Rajah Rasiah and Ishak Shari, ‘Market, government and Malaysia’s new
economic policy’ in Cambridge Journal of Economics, 25, 1 (2001), p
...

87
Saruwatari, ‘Localisation’, p
...

88
Khalid interview, 2 November 2007
...
The business was covertly run by Baba with Ali remaining a sleeping partner
...
TNA, FCO 24/250, enclosure by Guy Duncan in High Commissioner to
Commonwealth Secretary, 2 April 1968
...

Promising a minimum 10% annual dividend, the attraction would be
the superior rates of return on ASN units compared to those from
existing Malay-Muslim savings institutions such as Tabong Haji (the
Mecca pilgrimage fund)
...
The minimum
individual investment would be M$10, and while certificates would be
issued in amounts of 100 units, small investors could save through a
passbook scheme until they had accumulated sufficient savings to buy
the certificates
...
In other words, public assets were being pooled
in anticipation of their sale to bumiputera commoners
...
PNB would warehouse these shares
and, at the same time, buy and sell further issues on behalf of ASN
...
Additionally,
PNB was able to borrow interest-free and non-collateral loans from
the government
...
The PNB release of unit shares finally went public on 20
April 1981 and there was an unexpectedly enthusiastic response: by
the beginning of 1982, 841,000 bumiputera individuals had invested
M$200 million in ASN units, and the trust announced a bonus issue
of one unit for 10 plus a 10% dividend; the equity owned by bumiputera
individuals dramatically rose by M$375 to M$1,504 million in the
course of 1981 alone
...
375
...
73
...
WHITE

result, and the investment agency’s executives were forced to turn
to Bank Negara for its computing needs
...
91
Behind this was the powerful and determined personality of Ismail
Ali, who as governor of Bank Negara had chaired the working party
which in 1977 recommended the establishment of PNB
...
92 As the FEER
had been made aware in October 1980, Ismail Ali was a hands-on
chairman at PNB with staff ‘talk[ing] of his constant questioning of
all aspects of the operation and his full time commitment to his new
job’
...
His early career in the 1940s
and 1950s had been in the colonial civil service, rising to become
the controller of the trade division of the Ministry of Commerce
and Industry between 1955 and 1957
...
Gullick counted Ismail as a ‘friend’ but during
‘our occasional disagreements it was evident even then that he had
great determination’
...
In the early 1950s, Ismail had been rescued from
his isolation as head of the economic affairs outpost in Penang, and
seconded to the Canadian government and then the World Bank,
by Oscar Spencer, the Malayan government’s maverick economic
advisor, who himself became increasingly alienated from his more
conservative expatriate colleagues in the Malayan Civil Service
...
The
UK Commonwealth Relations Office regarded Ismail’s accession as
91
Khalid interview, 2 November 2007; ‘When the big boys came home’, 3
September 2007
...

93
‘Localisation without fuss’ in FEER, 3 October 1980
...


‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

31

detrimental to British interests and would have much preferred H
...

Lee, the Malayan Chinese business and political leader and former
finance minister, to have been appointed governor as a boost to the
confidence of expatriate investors
...
Out-andout nationalisation of Malaya’s main industries was impracticable as
bureaucratically inefficient and ‘administratively very expensive’
...
At the same time, Ismail Ali
wished to see the Alliance take ‘immediate measures’ to ‘correct’ the
economic imbalance between the Malay and non-Malay communities,
which he regarded as ‘a source of danger towards the well-being of
the people as a whole and towards the rapid development of the
peoples of Malaya as a Nation’
...
97
95
TNA, DO 35/9863, Minute by Humphrey for Smith, 25 April 1960; on Spencer
see note by J
...
Gullick in Gullick to White, 21 January 2008; John Gullick, ‘Prelude
to Merdeka: Public administration in Malaya, 1945–57’ in South East Asia Research,
5, 2 (1997), p
...
White, ‘Spencer, Oscar (1913–1993)’ in Oxford
Dictionary of National Biography, online edn (Oxford: Oxford University Press, May
2009)
...

97
Collin Abraham (former Associate Professor of Sociology, Universiti Sains
Malaysia and author of various books on Malaysian history and politics) thus joined
in the Ijok debate by claiming that it was the former left-wing Singapore activist,

32

SHAKILA YACOB AND NICHOLAS J
...
The Alliance
did introduce systematic five-year planning after 1956, and also
established the Federal Land Development Agency (FELDA) which
aimed to build up a large sector of small-scale Malay agriculturalists
alongside the British plantations
...
This
approach meant a continuation of the colonial laissez-faire system where
British and Chinese capital retained their control over the commercial and
industrial sectors
...
Moreover, state government accounts were increasingly
transferred from the British banks—HSBC and Chartered—to
Malaysian-owned ones, and in 1965 legislation was introduced
which prevented foreign banks from opening additional branches in
Malaysia
...
He was ‘a strong
nationalist’ and ‘often regarded as anti-British by British bankers and
businessmen’ in Malaysia; ‘he is certainly out to rid the country of
expatriate officials and businessmen as soon as practicable’
...
Where the government deviated from Puthucheary’s
advice, however, was that the Malaysian Indian rubber tappers did not receive
compensation for their ‘near slavery’ and denial of a ‘monthly living wage’ during
the initial take-off of the rubber industry in the early twentieth century
...
A discussion of
Puthucheary’s influence on the NEP can also be found in K
...
Jomo, ‘Afterword’ in
J
...
Puthucheary, Ownership and Control in the Malayan Economy, 2nd reprint (Kuala
Lumpur: INSAN, 2004), pp
...

98
Saruwatari, ‘Localisation’, p
...

99
White, Post-colonial Malaysia, pp
...
For more on Ismail Ali’s role at Bank
Negara during the 1960s and 1970s, see Catherine R
...
197–220
...


‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

33

Indeed, by the mid-1970s, British business leaders in Kuala Lumpur
were recognising Ismail’s pivotal role in the implementation of the
NEP
...
Ltd
...
This localisation had gone ahead notwithstanding the intransigent attitude of the majority of the board concerned
dominated by Henry Barlow’s father, Tom
...
101
Ismail Ali had been trying to encourage overseas firms to comply
voluntarily with NEP requirements
...
, which aimed to retain a majority stake on behalf of the parent
company’s shareholders in London
...
103 Liberated from the Malaysian Civil Service, and international
banking niceties, following his retirement from Bank Negara in 1980,
Ismail Ali could finally ‘get tough’ and unleash the more radical notions
of his youth: in Khalid’s words ‘enough was enough’
...
Henry Barlow and given to
Mr
...

102
‘When the big boys came home’, 3 September 2007; Khalid interview, 2
November 2007
...

104
‘When the big boys came home’, 3 September 2007; Khalid interview, 2
November 2007
...
WHITE

ownership
...
105
It would also seem that Ismail Ali and PNB had been involved in
an earlier attempt to ‘bring back’ Guthrie
...
This
aborted bid appears to have been supported by both Bank Negara
and Ismail Ali
...
106 Gent and Gullick are
probably justified, therefore, in supposing that the Sime Darby bid
was a front for PNB
...
108
Sime Darby was certainly very close to, and almost a component of,
the Malaysian state
...

Rather than purchasing further shares in a dawn raid style manoeuvre,
PERNAS combined with OCBC (which also held a 9% stake in the
British-managed transnational) to oppose the re-election of four of
the six British executive directors
...

Three years later, Sime Darby’s domicile was moved to Kuala Lumpur,
and, with 9 of the 13 directors of Asian ethnicity, PERNAS was in
de facto control of Sime Darby
...

See, for example, ‘A new chapter for Sime’ in FEER, 19 December 1980
...
Drabble and Drake,
‘Agency Houses’, p
...

107
Gent described the failed takeover of Guthrie by Sime Darby as ‘no less a
nationalistic coup’ than the successful swoop of September 1981
...

108
Desa Pachi interview, 12 September 2007
...
185–6; Saruwatari, ‘Localisation’,
pp
...
324–5; Grace Loh, Goh
Chor Boon and Tan Teng Lang, Building Bridges, Carving Niches: An Enduring Legacy
(Singapore: Oxford University Press, 2000), pp
...

106

‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

35

to buy the Guthrie shares from Sime Darby at £7
...
88, hence the bumiputera investment agency
effectively compensated and subsidized Sime Darby to the tune of
£2
...
This transaction came within a few months of Ismail
Ali’s appointment to the Sime Darby board, following his retirement
as Bank Negara governor
...
Ismail Ali
eventually succeeded Tan as chairman of Sime Darby in 1987
...
110
Clearly, Ismail and Khalid had learned much from Sime Darby’s
bungled attempt to take over GCL
...
In accordance with the City of London’s takeover
code, there was no requirement for a formal bid if a company was
to acquire 5% equity in a firm
...
6 million ordinary shares
...
8 million shares, making a total
ownership of 13,155,500 shares and representing 42% of Guthrie
share capital
...
111 According to Khalid, the precise details of this
manoeuvre were known only to the chairman and the investment
manager at PNB in Kuala Lumpur and to Evelyn de Rothschild and
a junior executive at Rothschilds in London, Jock Green-Armitage
...
112
The active participation of Rothschilds re-emphasizes the centrality
of Ismail Ali in the Dawn Raid project
...

111
Khalid, ‘Investments and growth’
...


36

SHAKILA YACOB AND NICHOLAS J
...
Another factor in the change of merchant
bank, however, was that Rothschilds was financial advisor to Bank
Negara and that the London finance house and Ismail’s central bank
were ‘so close that they have a chat on the telephone every day’
...
M
...
As such, the City financier gained a reputation
as one of the few British business leaders willing to acquiesce with NEP
requirements
...
Immediately after the Dawn Raid, Ismail
was made chairman of Guthrie with Green-Armitage as managing
director charged with the specific task of dissecting the Malaysian
interests from the remainder of the Guthrie group
...
Tengku Razaleigh had organized the
first Bumiputera Economic Congress in 1965 which, inter alia, led to
the formation of the Malay-owned Bank Bumiputera (which by 1981
was nearly 70% owned by PNB) and where the idea of an ASN-style
unit trust scheme was first mooted
...
116 Indeed, it was Rothschilds which advised PERNAS—headed
by Razaleigh—in both the parastatal’s successful tussle for board
control of Sime Darby and its takeover of the London Tin Corporation
(LTC) during 1976
...

114
Interview with Sir Evelyn de Rothschild, Chelsea, London, 29 November 2007
...

116
Ranjit Gill, Razaleigh: An Unending Quest (Petaling Jaya: Pelanduk Publications,
1986), pp
...

117
P
...
It was Rothpura Nominees, a subsidiary of Bumiputera Merchant Bankers,

‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

37

in late 1979 (Barings it will be recalled were GCL’s financial advisors
and held some Guthrie stock before the Dawn Raid)
...

Indeed, this familiarity with City regulations and accepted practices
was a key consideration because Tun Ismail had long been at
pains to maintain foreign investor confidence during the imposition
of the NEP
...
In particular, foreign investment, with
resultant technology transfer, was actively sought out in the exportorientated manufacturing sector in a number of Korean- and
Taiwanese-style Free Trade Zones
...
As Henry Barlow appreciated in 1975,
Tan Sri Ismail is an extremely tough negotiator, and a nationalist
...
118

Hence, Ismail had been determined during Razaleigh’s attempts to
take over the LTC that cash bids in the market should be offered to
minority shareholders in UK-based companies, as demanded under
the Takeover Code, as opposed to spectacular forced expropriations
which might be favoured by senior Malay politicians anxious to win
nationalist kudos with the Malay electorate (without considering the
negative impact upon foreign investor confidence)
...
Drabble and Drake, ‘Agency Houses’, p
...
87
...

119
Ibid; see also Gullick note, 26 April 2007
...
However, a financial scandal
concerning Slater and Haw Paw foiled this
...
Subsequently, Chartered’s and LTC’s interests
were merged to form the Malaysia Mining Corporation, over 70% of which was
owned by PERNAS
...
184–5; Saruwatari,
‘Localisation’, pp
...


38

SHAKILA YACOB AND NICHOLAS J
...
The £282 million required to purchase the GCL shares
was transferred from Petroliam Nasional Berhad (PETRONAS; the
government-owned national petroleum company) and PERNAS since
such a huge sum could not be covered by PNB’s unit trust funds
...
Hence, a Swiss bank account was opened in
Khalid Ibrahim’s name, allowing Rothschilds to abide by established
‘gentlemanly’ City norms and assure the LSE that the Dawn Raid
did not amount to government sequestration
...
121
In identifying the wider Malaysian context of the Dawn Raid, it
should also be appreciated that PNB’s swoop on GCL, notwithstanding
its drama, was not an isolated case
...
Being also
an owner of nearly 35% of Malayan Tin Dredging (MTD), PNB was
instrumental in the merger of Malaysia’s two leading tin companies,
MMC and MTD, which was formally announced in October 1981
and would create the world’s largest tin-mining operation
...
122 After the Dawn Raid,
‘like a cleansing ale after a strong shot’, PNB ‘quaffed’ 40% of Barlow
Plantations for just over M$60 million, leaving Barlow Holdings, the
British parent, with a 30% minority share in the company’s 35,000

120
Khalid interview, 2 November 2007; ‘When the big boys came home’, 3
September 2007
...
According to Bank of England officials, the dawn raid
technique had largely been developed by Rowe & Pitman during the summer of 1980
...
161890, Note by Fuggle for Dawkins, 8 December 1981
...
380
...
123 The drama of the Dawn Raid
also brought the recalcitrant board of H&C to heel: after six years of
inconclusive and stalled discussions between H&C and the Malaysian
authorities, PNB entered the ring in mid-April 1982 and within six
weeks a deal was struck whereby H&C finally gave up its demand to
have majority control of its 167,000 acres of Malaysian rubber and
oil palm
...
PNB would
control over 50% of the new Harrisons Malaysian Plantations Berhad,
with H&C permitted to retain a minority 30% shareholding
...
GCL’s
poorly performing manufacturing, trading, chemical, consumer goods
and engineering equipment firm, Guthrie Berhad (Singapore-based
but with extensive interests in Malaysia as well as Brunei), was sold to
Multi-Purpose Holdings (MPH) for over S$100 million three months
before the swoop
...
MPH, a public, non-listed company, acted as the
investment wing of the MCA, and was chaired by Lee Loy Seng
...

‘Sunset on British estates’ in FEER, 11 June 1982; Peter Pugh et al
...
249–53
...

H&C, renamed Elementis in 1997, was thus able to ‘re-invent’ itself as a speciality
chemicals group
...
1900–c
...
79–80; Jones, Merchants to Multinationals, pp
...
In
contrast, GCL’s non-Malaysian business was sold off in one block, and the group’s
British identity swiftly ended
...
As Khalid commented, ‘we literally got
Guthrie for free’
...

125
Mahathir had also been angry at the actions of Dunlop Holdings, which was
negotiating with PNB for the localisation of its plantation subsidiary, but eventually
sold the majority of its shares to the highest bidder
...
‘Tough guy takes over’, 30 October 1981; see also
Saruwatari, ‘Localisation’, pp
...

124

40

SHAKILA YACOB AND NICHOLAS J
...
MPH, however, had only finally been incorporated in
1975 after which the acquisition of plantation, manufacturing and
property interests grew apace
...
MPH could
boast 27,000 Malaysian Chinese direct shareholders and some 83,000
attached to KSM
...
Finance Minister Razaleigh
defended MPH’s right to proceed with ‘a straight commercial deal’ but
bumiputera politicians, led by UMNO’s youth wing, attacked the UMBC
takeover as an onslaught on the NEP
...
127
Meanwhile, Lee’s own flagship company, KL-Kepong, which he had
acquired from British interests between 1969 and 1972, also owned
over 25% of Highlands and Lowlands, formerly controlled by Barlows,
and there was a distinct possibility that Barlow Holdings would fall to
KL-Kepong too
...
However, Malay ownership was still lagging behind in the NEP
aspiration of reaching equity ownership of 30% by 1990
...
1 billion (US$954 million)
in 674 companies on behalf of the bumiputera
...
2% of total corporate equity, while individual bumiputera ownership
was barely half that at 4
...
A 12
...
83–6
...
87
...
Chew, ‘Changing directions’, p
...

128
‘Out of the doldrums’, 26 June 1981; Gomez, Chinese Business, pp
...


‘UNFINISHED BUSINESS’ OF MALAYSIA’S DECOLONISATION

41

sector had admittedly leapt from the 1970 share of just 2
...
129
Conclusion: The Prioritisation of Causation
The prime causal factors of the Guthrie Dawn Raid which have
been examined in this article—the conservatism of British enterprise
in Malaysia, declining Anglo-Malaysian relations and the demands
of the NEP—were not necessarily mutually exclusive
...
130 But certain causal factors can still
be more important than others
...
The assault on GCL was part
of the wider objective of reversing the repatriation of profits to the
former imperial power and guaranteeing that the wealth generated
by Malaysia’s natural resources was fully enjoyed by Malaysians
...
This was part, therefore,
of a justified revanche given the sale of concessions at very low prices
in the late nineteenth and early twentieth centuries from bamboozled
Malay rulers at a time when corporation and export taxes did not
exist
...
That juncture was not significant in the context of external
factors, that is, poor Anglo-Malaysian relations, but rather in terms
of internal domestic considerations, namely, the launch of ASN to
increase individual Malay equity participation which coincided with
intensified Sino-Malay business rivalry within the NEP in which the
bumiputera were in danger of falling behind the better established
129
‘Dividend for the people’, 23 January 1981; Chew, ‘Changing directions’,
pp
...

130
A classic example here is the process of Britain’s retreat from empire generally
...
White, Decolonisation: The British Experience Since 1945 (Harlow:
Longman, 1999)
...


42

SHAKILA YACOB AND NICHOLAS J
...
The rise of MPH, for example, brought to the fore
longer-term Malay concerns
...
132 Ismail Ali
was particularly significant here because as has been demonstrated in
this article the head of PNB in 1981 had been deeply concerned since
the mid-1950s that limited state intervention in the post-colonial
economy would prejudice the bumiputera in favour of foreign and
Malay(si)an Chinese and Indian interests
...

Guthrie’s directors were actually on far better terms with the Malay
elite, and Ismail Ali especially, compared to H&C
...


132
During 1946, for example, there was much concern among UMNO members
that a proposed transfer of US$50 million from Nationalist China to rehabilitate
Malayan Chinese industries following the Japanese occupation would further boost
the Chinese business grip at the expense of Malays who lacked similar funding
opportunities
...
Similarly, foreign
multinationals tended to be favoured by the UMNO-dominated government after
1957 in the development of import substitution industrialisation for fear of Chinese
business preponderance, and a proposed wholesale buyout of British plantations in
the later 1960s was shelved on similar grounds
...
167, 215–6

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