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most of this could only come from Britain.
The phasing of this investment cannot be determined at this stage: it will depend upon the rate at which suitable investment opportunities can be created. It would perhaps be reasonable to think in terms of a ten year period beginning in 1968-69 and it would clearly be some while before one could count on such investment making a sizeable impact on the budgetary and employment problems.
Malaysia
52. In early 1967 there were some 10,000 local employees (including domestic servants and Ministry of Public Building and Works employees) of the British forces in Malaysia out of a total labour force of about 3.3 million. The local expenditure of the British services is about £17.5 million a year, with wages of locally engaged personnel including domestics running at £5 million a year out of this figure. Under present assumptions our establishments in Malaysia will be reduced to one or two Gurkha units by 1970-71, with an estimated loss to the Malaysian economy of about £20 million a year (about 2 per cent of the 1966 g.n.p.).
53. The problem is clearly not so large in relation to the economy as is the case with Singapore. However, it would be unwise to conclude from this that it can easily or cheaply be solved. While the Malaysian economy has shown a healthy rate of growth in recent years the future outlook is not promising. Rubber and tin account for 60 per cent of her exports. Rubber prices have fallen far more than had been expected and tin reserves are not inexhaustible. The prospects for growth in Malaysia are therefore less bright than would be implied by past performance and she might be in for a rather difficult period
in the future.
54. It seems clear that even though the economic impact of our withdrawal will be smaller on Malaysia than on Singapore, Malaysia will demand a
comparable measure of mitigatory assistance. The extent to which we are likely to be called upon to mitigate the effects of our withdrawal from Malaysia is thus likely to be determined more by political than purely
economic factors. An additional £50 million in development loans may also
be required. It is relevant, however, that Malaysia is better placed than is Singapore to raise development funds from non-British sources such as the IBRD, and on the London market, which affects our balance of payments but not
the Exchequer. This illustrative order of magnitude for additional develop- ment loans bears a reasonable relation to our assessment of the requirements
of Singapore.
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