Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

464. Despatch From the Consulate General at Kuala Lumpur to the Department of State¹

No. 31

Kuala Lumpur, August 1, 1957.

REF

• Deptel 5, July 10, 1957²

SUBJECT

• Progress Report on NSC 5612/1

Where We Have Progressed

Events in Malaya have developed during the period from mid-March to date in directions generally favorable to United States interests in the following respects (numbers in parentheses indicate the paragraph number in the OCB Outline Plan of Operations:³)

1. The transfer of power from the British to the Malayans will have been accomplished in an orderly fashion by August 31. The new constitution provides that the government as now constituted will remain in power until the next national elections, which are scheduled to be held at the end of 1959. Relations with the United States have been good during the period under review. Ambassador-designate to the United States and to the United Nations Dr. Ismail bin Dato Abdul Rahman, who will retain his Ministerial rank in the Cabinet, is the highest ranking diplomat to be sent abroad, and his appointment is indicative of the importance with which the Malayan leaders attach to Malaya’s relations with the United States, as well as their desire to have an able man represent Malaya in the United Nations. The United States will be represented at the Independence ceremonies by Under Secretary Herter and Ambassador James P. Richards, and the United States will extend diplomatic recognition immediately upon the attainment of Independence (36).

2. The present government is well aware of the dangers of Communist subversion. The government, through its Emergency Regulations, prevents the large-scale circulation of Communist propaganda, although the introduction of such propaganda through irregular channels continues (7). Subversion in Chinese schools is one of the principal concerns of the government, which has not hesitated to take strong action when necessary. The government believes that the threat of subversion in the Chinese schools, though present, is not of widespread or of serious proportions at the present time. Nevertheless, because the type of education given by Chinese schools does not prepare most of their graduates for the type of jobs awaiting them, the problem of unemployable youth prone to emotional radicalism continues to pose a threat to the future political stability of the country (13). USIS has shown films to 42,000 members of labor and youth organizations and has distributed publications on a regular basis to these and other groups (8, 14) in its program to counteract Communist influence.

3. The government is continuing its war against the Communist terrorists and has announced that the only basis upon which the government will negotiate with the Malayan Communist Party is one of unconditional surrender. Local security forces appear adequate to maintain internal security with the help of the Commonwealth forces (20) and are doing their best to protect the citizens from Communist intimidation (5). However, the cost of the emergency has been the subject of attack by opposition elements, and the Chief Minister has stated that he hopes that he can conclude the war by the end of 1958 (the year before elections) in order to release funds for economic development.

4. Malaya has made it clear that she will not recognize Communist China and has not invited any Communist countries to the independence celebrations (16). The government forced the cancellation of a trade fair this spring in Kuala Lumpur in which the Chinese Communists had substantial interests, although Malayan rubber still goes to Mainland China in small quantities. USIA in its various publications and USIS and Consulate officers have pointed out to Malayan leaders the dangers of trading with Communist China, citing examples such as Burma and Ceylon (24, 26). Visits by students to Communist China have slackened within the past year because of some waning of enthusiasm for Communist China and a lack of educational facilities there (13).

5. The problems of communalism are very much on the minds of the Malayan leaders and the new constitution represents a reasonable compromise between the Malays and non-Malays. Criticisms of it by the fringe opposition of the Malays on one hand and the Chinese on the other contribute to the tension between the races, but no large-scale inter-racial conflicts are expected. Both Malays and non-Malays in the government realize that moderation is necessary and have made efforts to assure those Chinese who desire to give their loyalty to Malaya that they should feel no undue qualms concerning the present constitution and government (25, 27, 31). The government is attempting to inculcate loyalty to Malaya among all races through the introduction of a common syllabus in all the schools (25), and through its information services is trying to reduce foreign Chinese political and cultural influence, whether Communist or KMT (26). USIS has supported the non-communal effort through the translation of ten U.S. books during the past year, selecting leader grantees from small communities, and the extension of publications, films, and sport programs to the secondary schools (38). The Malayan Chinese Association, the principal vehicle for Chinese political expression, is attempting to strengthen its organization and increase its membership, but is still generally regarded as an organization with little mass support (30).

6. Malayan leaders have indicated that they are willing to establish diplomatic relations with all non-Communist countries in South and Southeast Asia, including South Korea and South Vietnam, except the Republic of China, as soon as personnel are available. No diplomatic relations with any Communist countries are contemplated at the present time (16, 17). Government leaders have stated that they will not be prepared to make a decision as to whether or not to join SEATO until after the 1959 elections (47). Malaya will apply for membership in the U.N. and in the IBRD and the IMF. The training of Malayans for their defense establishments and foreign office has taken place primarily in the U.K. and in Australia. Some foreign service officers have been attached to the British High Commissions in Pakistan and India and may have been influenced by the policies of those countries. There are indications that the Malayans would like the U.S. to assist in the training of their diplomatic officers, and this is a subject which the Malayan Ambassador-designate may take up with the Department (9).

7. … The themes contained in all USIS output has supported U.S. objectives (17, 18, 24, 25, 26, 37).

8. Most responsible government leaders and European business managers realize that it is in their own interests to develop free trade unions as a barrier to Communist subversion, although Chinese tow-kays are generally unfavorably disposed toward union activity. Both the government and business in Malaya, however, are relatively conservative and the government has been attacked by opposition elements as being opposed to development of labor union activity. The ICFTU has been active in encouraging the growth of non-Communist labor organizations. U.S. attempts to influence the unions have been primarily through sending leader grantees to the U.S. (29).

9. The Federation’s economic activity continues to operate at relatively high and profitable levels. Budget surpluses for 1955 and 1956, and the prospect for a small surplus this year now make it less likely that Malaya will request direct U.S. economic assistance in the near future. A shortage of trained personnel, however, would appear to increase the possibility that Malaya may ask for technical aid, particularly in the form of personnel and training, although there have so far been no indications that such a request is being considered (49).

10. The U.S. trade delegation which came to Malaya in May attracted considerable interest among local businessmen and it is expected that independent Malaya will be more liberal than the Colonial Government in the past in granting foreign exchange to buyers who wish to trade with the U.S. (35).

Where We Have Failed:

1. The prospects for a merger between Singapore and the Federation seem less favorable than before. The Malays continue to feel that the largely Chinese population of Singapore can only affect their position in Malaya adversely and the government believes that the Federation can control subversive elements from Singapore operating in the Federation more efficiently if Singapore is separate from the Federation (41, 43, 45). Although the members of the Alliance have stated that they are taking steps to strengthen their organization in Singapore, the fact that the Alliance Government does not desire a merger with Singapore tends to vitiate its influence there (42).

2. Malayan recognition of the Republic of China is not envisioned in the foreseeable future and seems more remote than ever. During the period under review the Chief Minister has repeatedly attacked certain elements in the Federation for being sympathetic with the KMT and for trying to alienate the loyalty of Malayans of Chinese ancestry. The Chief Minister and many other Malays fear the Republic of China for much the same reason they fear Communist China; i.e., they fear that any outside Chinese influence will tend to defeat the government’s policy of inculcating a loyalty in local Chinese to Malaya (19).

3. The Malayan Government does not yet recognize American university degrees. Some agitation for this step is coming from local people. It is believed that U.S. support for this objective should be behind the scenes until after the achievement of independence, after which time it may be desirable for U.S. representatives here to take a more active part in persuading the government of the desirability of recognizing U.S. degrees (33). Many government officials now favor this step.

4. There continues to be some concern over the possibility that the price of rubber might fail as a direct consequence of actions taken by the U.S. synthetic rubber industry. U.S. representatives here have attempted to show that Malayan rubber will continue to command an important part of the market and that the market for rubber, both synthetic and natural, is expanding to such an extent that the local rubber industry should have no fears of the future (34).

Where Policy Needs Revision:

1. With the coming independence of Malaya, the references to the British in the referenced document need to be revised. Close collaboration with the British continues to be desirable and the influence of the British High Commission, British officers in the service of the Independent Malaya, and British businessmen will continue to be considerable, but the responsibility of administration of the country will be entirely in Asian hands after August 31.

2. It may be desirable to amend a number of the paragraphs to take into consideration the government’s awareness of the dangers of subversion, but the U.S. should continue to emphasize to local officials the constant threat which Communist ideology and tactics present.

3. The language in paragraph 11 of the OCB paper should be revised to omit mention of the specific publications like Bebas and Chinese News Letter, since it is quite possible that local circumstances may require the renaming of a publication or a shift of technique.

Emerging Trends:

1. The antagonistic attitude shown by the Malayan Government toward the Republic of China is increasing because high Malayan ministers feel that the Kuomintang is trying to capture the loyalty of the Malayan Chinese at the expense of Malaya.

2. The independent Malayan Government has shown signs of desiring to lessen its dependence upon the British and to look toward the United States for guidance. To date this has manifested itself in small ways; e.g., the sending of its most prominent ambassador to the U.S., the stratagems used to provide the Americans with favorable seats at the independence ceremonies, the using of American cars during these ceremonies, the request for an American central bank advisor, etc.⁴

3. The government is remaining firm in its determination not to permit any increase in Communist influence in the country, either through the Malayan Communist Party or through subversion from abroad. However, there are elements in the opposition parties who favor recognition of Communist China, and there are elements within the governing parties who desire increased trade with Communist China. It is highly doubtful that the minor parties will be able to win a substantial voice within the national government within the next six years. Some increase in trade with Communist China may take place, but probably only on a small scale.

4. Closer relations with the Arab countries may be established. The Malayans have stated that they plan to establish diplomatic relations with Egypt and Saudi Arabia soon after independence. Some Malays have studied in the university in Cairo; their influence in Malaya to date has been negligible but may increase slightly after independence.

5. Domestic opposition to the Alliance, which has been fragmented thus far, is showing some signs of uniting to form an alliance to fight the Alliance on a socialist, non-Communist platform. This group will attempt to present to the voters the picture of the present government as one dominated by moneyed interests. The Labor Party of Malaya and Party Ra’ayat, the promoters of the “Socialist Front”, hope to attract other splinter groups, but their own spokesmen have no hope of capturing the government before about 1965 at the earliest when the second national elections are to take place.

6. The government’s announced policy on the treatment of foreign investment capital continues the relatively favorable conditions which have prevailed in the past. Provided the present government can manage its affairs so as to hold the confidence of investors, and the announced willingness of several foreign firms to increase their Malayan investments indicates that such a confidence exists, it is believed that Malaya will continue to prove attractive to foreign capital. This will enable the latter to play its part in the further economic development of Malaya, thereby helping to lessen the possibility for any request for direct U.S. economic assistance.

7. Radical union leaders in Singapore are attempting to extend their influence in the unions in the State of Johore where the Federation unions are the weakest. The leaders of the national unions are aware of this threat and are taking steps to strengthen their own organizations in Johore.

Officers participating in the preparation of this despatch: John M. Farrior; Robert J. MacQuaid; Henry B. Siemer (USIS).

For the Consul General:

John M. Farrior
American Consul

1. Source: Department of State, OCB Files: Lot 61 D 385, Singapore and Malaya, General. Secret.
2. In telegram 5 to Kuala Lumpur, the OCB working group for Southeast Asia asked for a progress report on the implementation of NSC 5612/1. (Ibid., Central Files, 611.90/71057)
3. Supra.
4. In telegram 196 from Kuala Lumpur, February 13, the Consulate General reported that Malayan officials were considering the establishment of a Malayan central bank and had requested that the United States recommend an American bank adviser. (Department of State, Central Files, 897.14/2–1357)