Briefer: Islam and its Institutionalization in the Malaysian Economy

by Afroza Chowdhury

In contrast to political and social institutions that inhibit gender empowerment in many Islamic regions, Malaysia has used the tenets of Islam to improve gender development for economic growth. The most important ingredient in this effort has been the institutionalization of Islam and modernity, because modernization, an idea that is accepted and advocated by Islam, facilitates economic growth.

Political Participation

Malaysia consists of two main ethnic groups, the Malays, who make up a majority of the population, and the Chinese. After independence, women’s associations were established in support of nationalist movements for the Malays, and eventually collaborated to form the Kaum Ibu as a section of the United Malay National Organization (UMNO). Some clerics, arguing that such acts were against Islam, opposed the entrance by women into the political sphere, but others found supporting evidence from the Quran that validated women’s political participation.

Increased education of women was seen as an important factor in Malaysian social and economic development, but for a country that had seen limited participation of women in the economy, it was challenging for Malaysian leaders to mobilize and increase women’s participation in a conservative society. Until independence, Malaysian women mainly participated in agricultural activities near their home. In the 1970s and 1980s, young Malay women were encouraged to be “good Muslim” daughters whose first priority was family.  It was therefore necessary to make the image of a working woman acceptable to families and society.  Women from Kaum Ibu went to rural areas to convince other women to undertake social work for the economic development of Malaysia . UMNO members also deemed it necessary to defend political participation of women by citing historical cases of involvement. According to Thang and Leiden’s 2004 piece on women and employment in contemporary Asia, UMNO officers, while organizing its members for the first local elections held in 1952, took care to stress that Islam was not opposed to the involvement of women in politics,”

Modernization without Westernization

Even though UMNO and Kaum Ibu had made significant progress in increasing women’s literacy, and political and economic participation, one of the most crucial ingredients in Malaysia’s economic growth and emancipation of women has been its ideal of modernization. In 1981, Dr. Muhammad Mahathir was elected prime minister. Through his drive and initiative, the UMNO increasingly began using Islam in its regional, domestic and international politics. The government increased its participation in Islamic affairs by augmenting the discussion of Islam through media, schools, universities and social welfare programs, by creating Islamic banks, and by congregating international Islamic conferences.

Mahathir wanted inspiration for growth and development to come from the East itself because he believed that Asian and Islamic values made people hard working, disciplined and progressive. Islam was viewed as a way of life and  as an ideal that encouraged innovation, economic growth and social progress.

Economic Activity Rate

Policy makers of the Malaysian government understood that it was not enough to motivate women to join political national parties and seek wage work, but that it had to be acceptable to their families and villages, and in a larger sense, their society and community. As such, Malaysian policy in recent decades has been to both promote women’s paid work, as well as to reinforce their role as caretakers.

In rural areas, although most of the land was under the official ownership of the men in the family, women received full access to it for agricultural and income generation purposes. During the 1960’s, agricultural products were the bulk of Malaysian exports, and eventually led to very high levels of savings and investment.

Along with physical and social infrastructure, Malaysia used the investments to enhance capital and build a strong foundation for the growth of the industrial sector. Malaysia’s primarily agrarian economy  eventually evolved so that by around 1970, the industrial sector had surpassed the agricultural sector and by the 1980’s had overtaken the service sector.

The proportion of income Malaysia generates from net exports is a reflection of the extent that the country contributes to global trade. Along with a favorable environment to invest in, by the 1970’s Malaysia also had a highly literate and educated population. Multinational corporations were therefore keen to invest and take advantage of their cheap resources. They demanded cheap, unskilled and docile labor to work for long hours, thereby decreasing their costs of production and increasing their competitiveness in the global market. As of today, they are responsible for 80 percent of foreign direct investment and are the main employers in the region.

With the gradual increase in multinational corporations and the expansion of trade in Malaysia, women’s economic participation has increased considerably. Expansion has led to economic growth and therefore increasing demand for female workers. This, in turn, has led to widespread migration of women from rural to urban areas to seize higher paying opportunities. Their contribution to agriculture has decreased, while service employment has increased from 36 percent to 61 percent, and industrial sector employment has risen from 20 percent to 27 percent.


The inherent matrilineal society of Malaysia made the tasks of emerging leaders and political parties much easier. Political and social institutions used the traditional and Islamic mindset of the people to encourage a more visible participation of women, while still adhering to Islamic guidelines and Malay tradition. Through trade, investment, agricultural and industrial policies, Malaysia has achieved impressive rates of growth and attracted the attention of foreign capital and investments. The country has come a long way from a subsistence-based agricultural economy to a developed industrial economy, where women, who enjoy a high social status in society, now have rights to employment, mobility and political participation.


Afroza Chowdhury is a guest contributor to The Online Review. She received her undergraduate degree in Economics from Bard College in 2006 and is currently pursuing a Master’s degree in Public Policy at Georgetown University, with a concentration in International Policy and Development. She is from Bangladesh.

Email Afroza Chowdhury at



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