327. National Intelligence Estimate0

NIE 54/59–62


The Problem

To estimate the prospects for achievement of the proposed Federation of Malaysia1 and for its political and economic viability.


The Federation of Malaysia will probably be formally established within a year; agreement on general principles may be announced as early as 31 August 1962. The chief threat to achievement of the merger comes from the pro-Communist Barisan Sosialis Party (BSP) of Singapore which is seeking an opportunity to upset the precariously situated Singapore Government and to halt further progress toward federation. (Paras. 5–8)
The projected merger is essentially the incorporation into Malaya of the four other territories. Although these areas will retain a considerable degree of local autonomy, the central Federation government in Kuala Lumpur will assume control of internal security, foreign policy, and defense. Tunku Abdul Rahman’s moderately conservative and pro-Western coalition, known as the Alliance, will probably dominate the government of the new Federation in its early years. The new state will have the benefit of the proven stability of the governmental and economic structure of Malaya, and the support and protection of Britain, Australia, and New Zealand. (Paras. 4, 9–10, 16, 20)
The chief threats to the new Federation will be communal antagonisms, easily aroused because of the ethnic diversity found in each of [Page 708] the component states, and the opposition of Communists and other radical elements. The leftists will probably find additional support within the Chinese communities, in Singapore and elsewhere, which are resentful of the political discrimination in favor of the Malays as announced in the proposals for the new Federation. Similar resentments may emerge among the non-Malay indigenous peoples of the Borneo territories. The future of Malaysia will be largely influenced by whether the Tunku continues successfully to control these various frictions. It will also depend in large measure on the economic progress of the new Federation and its component territories. (Paras. 10–15, 17–19)2

[Here follow a 6-page Discussion section and 3 maps.]

  1. Source: Department of State, INR/EAP Files: Lot 90 D 165, NIE 54/59–62. Secret; Noforn. A note on the cover sheet indicates that the Central Intelligence Agency; Department of State’s Bureau of Intelligence and Research; and the intelligence organizations of the Army, the Navy, and the Air Force participated in the preparation of this estimate. All members of the U.S. Intelligence Board concurred with the estimate with the exception of the representatives of the Atomic Energy Commission and Federal Bureau of Investigation, who abstained because the subject was outside their jurisdiction.
  2. The proposed Federation of Malaysia is to be made up of (a) the Federation of Malaya, which became independent in 1957; (b) Singapore, which was granted partial self-government in 1959; and (c) the three British dependencies on the island of Borneo: the Protectorate of Brunei and the Crown Colonies of Sarawak and North Borneo. [Footnote in the source text.]
  3. In a July 10 memorandum to INR Director Hilsman, the Director of the Office of Research and Analysis for the Far East, Charles N. Spinks, recommended that Hilsman concur with the estimate subject to two revisions. Spinks’ office did not agree with a conclusion in the discussion portion that “the vitality of the Tunku’s coalition has flagged.” Spinks suggested that CIA’s Office of National Estimates (ONE) would challenge his objection. The final assessment of the Tunku coalition was a compromise between INR’s and ONE’s points of view. Spinks also stressed that the Philippine claim to North Borneo “was a serious matter in their eyes.” INR’s estimate that it could prove troublesome to the formation of the Federation of Malaysia was incorporated in the discussion section of the estimate. (Department of State, INR/EAP Files: Lot 90 D 165, NIE 54/59–62)