‘Dawn Raid’ to blame for plight of displaced?

M KrishnamoorthyPublished: Aug 6, 2015 8:58 AM | Updated: Aug 6, 2015 10:38 AM

COMMENT The present plight of the Indian Malaysians involved in thefts, drugs, crime and other social problems is allegedly linked to the ‘London Dawn Raid’ in 1981 which dislocated them, and there has been no attempt improve their well-being.

The ‘London Dawn Raid’ refers to the attempt by the Malaysian government to take control of the plantation giant Guthrie Corporation at the London Stock Exchange on Sept 7, 1981. It was part of a strategy by which the Malaysian government acquired controlling interest over flagship companies owned by European plantation companies, such as Guthrie, Dunlop Estates and Harrisons & Crossfield (later Golden Hope Plantations).

These companies then were forced to sell their shares to the newly-formed Permodalan Nasional Berhad (PNB) or the National Equity Corporation, the Malaysian government’s investment agency.

With PNB’s takeover of foreign-owned plantations, the plantation workers (most of whom were Indians) had hoped for security in terms of tenure, better wages and working conditions as these plantation groups were now locally-owned and linked to the government.

Unfortunately, Indian Malaysia estate workers’ hopes were crushed and dashed as the new management under PNB companies were allegedly only interested in multiplying profits while ensuring wages remained low. Indians were further displaced when the government also allowed the recruiting of manpower from Indonesia at much lower wages.

Universiti Malaya’s economic history Associate Professor Dr Sivachandralingam Sundara Raja, whose extensive research was published in an international journal, noted that the takeover by the Malaysian government and change in management affected plantation workers, especially Indian Malaysia labourers and the predicament faced by them from the 1980s until now.

His research paper titled ‘The London Dawn Raid And Its Effect on Malaysian Plantation Workers’ published in the journal Indonesia and the Malay World (Routledge), was written while he was a Fulbright scholar at Cornell University. The research paper is the most-read article by scholars in the journal since it was published. It has been read by 1,476 scholars throughout the world.

“Indian Malaysians’ job security in terms of tenure, better wages and working conditions were dampened and crushed with the new PNB management, which ensured wages remained low.

“This resulted in the high incidence of urban poverty, dislocation and high rate of crime among the Indians today,” Sivachandralingam noted, adding, “The London Dawn Raid was masterminded by Dr Mahathir Mohamad in the spirit of the New Economic Policy (NEP) to economically empower the Malay community.”

The findings of the research paper shows that the economic adventurism of the ruling political party (Barisan Nasional) failed to specify the structure and guidelines necessary for successful economic de-colonisation. There was no good infrastructure in place to help the Indian Malaysians when PNB took over from the foreigners.

“The apparent insensitivity on the part of the non-Indian Malaysian politicians to the Indian Malaysian problem could be attributed historically to the colonial situation in which the various communities lived side by side without having to unite to succeed. Even in the political domain the coming together of the various communities was engineered from the top by the British and did not emerge from a common nationalism.

“Dr Mahathir’s domestic and foreign policies in the 80s led to the London Dawn Raid. The raid affected the workers in terms of redundancies, freedom to move, freedom of speech, denial of housing, dislocation due to estates being taken up for the development of Putrajaya and the laws which did not favour them.

Privatisation policy

“Dr Mahathir’s profound change in domestic policy relates to his privatisation policy. He privatised television, telecommunications, railway, electricity, water, and denationalisation of state industries provided an impetus for the nation to move forward through the agenda set by the New Economic Policy for the benefit of the Malays.

“At the same time his foreign policy as prime minister differed from that of his predecessors who were seen to be aligned to the West. Mahathir challenged the West, as reflected in the ‘Buy British Last’ policy of the early 1980s. The policy was enforced, supposedly in response to the withdrawal by then-British Prime Minister Margaret Thatcher’s government of subsidies for Malaysian students to study at British universities.

“This withdrawal in 1979 affected 17,000 Malaysian students in the United Kingdom and the policy lasted for five years,” said Sivachandralingam ( photo ).

When Mahathir became prime minister in July 1981, he strongly felt that the British were still treating Malaysia as a colony. Therefore his administration took the necessary steps to Malaysianise British firms and added a new dimension to the goals of the NEP.

Guthrie was seen as the symbol of British supremacy in the plantation industry. In 1987 it was made a public company and in 1989 it was listed on the Kuala Lumpur Stock Exchange with diverse interests. When Mahathir was deputy prime minister, the Malaysian government formed PNB in 1979.

Plans were made for the purchase of reserved shares of approved companies in the private sector as well as shares held in trust by other government agencies for subsequent sale in the form of unit trusts to the bumiputera community.

Dr Mahathir's actions had a big impact on British businesses in Malaysia at the time and in the future. A Dunlop contract which was to supply tyres to the government since 1963 was instead given to an American company, causing Dunlop to sell its assets to the Chinese Malaysian company, Multi Purpose Holdings.

Within three months, all the shares of Guthrie were slowly sold to the Malaysian government agency, PNB. At the end of 1981, 100 percent of Guthrie was fully owned by locals.

Four months before the Dawn Raid, the Malaysian government agency led by an investment manager named Khalid Ibrahim ( photo - Tan Sri now and former Selangor menteri besar) was given the special task to examine and develop strategies to ensure everything ran smoothly during the Raid.

Khalid, who had worked at Barings London, the firm which was one of a Guthrie's financial advisers, along with Malaysian investment experts and advisers from the merchant bank NM Rothschild & Sons Ltd was asked to study whether Guthrie can be acquired. If it was possible, they were directed to formulate detailed strategies on how it could be done.

The day of the Raid - Sept 7, 9am London time (4pm M’sian time)

Bank Negara governor Ismail Ali eventually took over the management of Guthrie and transferred its operational headquarters from London to Kuala Lumpur to mark the end of British control over the company.

Shortly after the Dawn Raid, Mahathir boycotted the Conference of Commonwealth of Nations led by Britain. According to him, the meeting was another one to meet the white man’s interests and not those of his former colonies.

The Dawn Raid had a large impact on many levels in the long run. For one, British firms in Malaysia which were previously said to have paid little attention to what the Malaysian government had to say started to become more open to negotiating new terms.

Also, not long after the Malaysian takeover of Guthrie, the other three great British plantation companies operating in Malaysia - Highlands & Lowlands, Barlows and Harrisons & Crossfield (H&C) finally sold their interests in Malaysia to the government agency. As a result, the land owned by Guthrie other former British-owned companies in Malaysia were taken over by Malaysians.

Since companies like H&C had rubber estates, palm oil plantations and other assets not only in Malaysia but in other countries such as India, New Zealand and China, the Malaysian government agency also become the new landlord to former British-owned assets around the world.

Khalid later said that the profits gained from all these new assets exceed the cost used to finance Dawn Raid. He was quoted as mentioning something like, “We actually got Guthrie for free”.

Following a meeting that was held in London in 1983 by Thatcher, a few resolutions were made. One of it was that the British government would offer several financial aids amounting to 160 million pounds to subsidise Malaysian students furthering their studies in the UK. Also, Malaysia Airlines would be given added landing rights in Heathrow.

With all these profits made available to PNB, the eradication of poverty agenda of the NEP was so grossly ignored in terms of one of the poorest sectors of the Malaysian landscape, the plantation worker.

None of the vast profits were allegedly channelled back to assist the plantation worker who was given no proper housing, no skills training, no proper money compensation, no proper school facilities, no transitional rehabilitation schemes from plantations to urban life.

In fact, the plantations razed to build Putrajaya, Indian Malaysian workers were cast into the urban slum known as Taman Permata in Dengkil where one of the badly-constructed apartment blocks put up to house them, is leaning even today. Taman Permata itself is next to a field which houses Petronas high pressure gas pipelines.

M KRISHNAMOORTHY is a freelance journalist and local coordinator for CNN, BBC and several other foreign television networks. He was formerly a journalist with The Star and New Straits Times and has authored four books.

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