My Say: Applying the lessons from 15th-century Melaka

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The Economic Planning Unit is right now in the last phase of preparing the 10th Malaysia Plan, which will be tabled in Parliament on June 10.  The 10th Malaysia Plan will cover the period 2011 to 2015.  By some strange coincidence, 2011 also happens to be the 500th anniversary of the fall of Melaka to the Portugese in 1511.  Prior to the fall, for much of the 15th century, Melaka was a successful and prosperous major international trading port for the region.

I believe there are many important lessons that we can learn from the success of the Melaka Sultanate during the 15th century. In particular, I would like to highlight three critical factors that contributed to the glory of the Melaka Sultanate.

The first factor was Melaka’s ability to leverage on its geography. Fifteenth century Melaka was blessed in terms of its geography and made the most of it. Trade at that time relied on sailing ships and Melaka was strategically located, halfway along the main shipping route between India and China, with easy access to the spice islands of Indonesia.

Further, the Straits of Malacca was shielded from the monsoons, and thus Melaka was well placed for resupplying ships and for waiting out monsoons.  The monsoon seasons dictated sea traffic and goods coming in from the east or west had to be stored awaiting the arrival of other traders. Between December and March, ships would arrive from the west and the Far East, whereas ships from Java and the eastern Indonesia archipelagos came in from May to September.  Melaka responded to this geographical endowment by:

• building up port and warehousing infrastructure;• protecting the security of warehoused goods and travelling merchants from pirates; and • establishing facilities for the different communities of traders to settle and do business in Melaka.

The second factor for success was Melaka’s ability to integrate with the region.  Melaka was not self-sufficient in terms of security and goods, but was able to thrive through effective alliances for security and through openness to trade.  Early in the history of the Melaka Sultanate, Parameswara established a strong relationship with China, which helped put in check the threats from Siam and Majapahit.  Melaka continued to present all three kingdoms with gifts and tributes, which in turn facilitated trade.

Melaka’s openness to trade facilitated diversity and, at its peak, the port was very cosmopolitan with a diverse trading community, which had speakers of more than 80 languages. The success of Melaka as a trading port was further supported by its own Malay traders, who travelled and traded within the Malay archipelago, particularly for textiles, spices and items prized by traders visiting Melaka from the east and west. Melaka’s regional strategy involved having four syahbandars or harbour masters, each catering to different groups of traders — one for Gujeratis, one for Indians from South India and from Bengal, one for local merchants (including those from Java, Palembang, Borneo) and one for the Chinese.

The third factor was Melaka’s ability to excel in terms of its delivery system. Melaka’s success as a port required efficient and effective public delivery.  Melaka was credited as having a highly organised government and was ruled by a set of laws, known as Hukum Kanun Melaka. Captains of arriving ships would report to their respective syahbandar, who in turn would provide elephants to carry the ship’s cargo to specific warehouses. Traders paid custom duties of 6% based on the value of their cargo. Once duties were paid, the goods would be traded with resident merchants.  The process was viewed as fair and fast. Hence, the traders were assured that they could complete their business in time to catch the monsoon winds home.

Indeed, the Sultanate of Melaka was a marvel, having been the site of a mere fishing village, and surrounded by unfriendly empires, it managed to grow to become among the richest ports in the world.  Melaka achieved this brilliant success not merely on the basis of its position in the straits, but, more importantly, by being able to foster an environment conducive to peaceful trading.

In the face of adversity, the people and leaders of Melaka worked together in a positive and constructive manner. They were internally driven, yet externally aware. They knew what their internal or personal strengths and weaknesses were, and built upon their strengths to take advantage of the external environment. The Sultanate of Melaka did not feel itself inferior to older and more established kingdoms in the region. Instead, it created an extremely well-managed port and positioned itself as a neutral and friendly state, where all could come and go freely and trade peacefully.

Melaka did not rely on others to help it grow.  It did not wallow in self-pity at its own state of affairs when things went wrong.  Instead, it held itself accountable and acted to better itself under whatever challenging circumstances it was faced with.

The success of the Melaka Sultanate some 600 years ago continue to be relevant to Malaysia today. This is particularly the case as we are currently witnessing an Asian renaissance, with the balance of economic power shifting, once again, to Asia. The likes of China, India, Indonesia and the Middle East are emerging as major drivers of economic growth and liquidity, just as was the case 600 years ago.

Malaysia is uniquely positioned in the centre of Asia’s growth and the success factors for Melaka appear to be relevant again. I set out below how the lessons of 15th century Melaka should be applied to 21st century Malaysia.

First, Malaysia needs to leverage on its strategic location in Asia, in a manner relevant to today’s technology.Contributing to this includes the expansion of the network of regional flight routes from Malaysia to the rest of Asia, and the high speed broadband initiative, for greater telecommunications connectivity.

Second, as a relatively small economy, we need to be effectively integrated with the large and fast-growing economies of the region. This is being achieved, through stronger trade links, such as free trade arrangements, and also wider investment links, such as through Malaysian companies with regional operations. The transformation of Malaysia’s domestic industries must evolve hand in hand with the production value chain in the region. For example, in electrical and electronics, we are already witnessing different parts of the value chain undertaken in Malaysia, Vietnam and Singapore.

Third, continued focus on improving the public delivery system is vital for enhancing Malaysia’s attractiveness as a trade and investment destination, for both foreign and domestic businesses alike.

Having been successful once, some 600 years ago, we could say it is in our DNA to be able to succeed again, in an environment where Asia is once again at the centre of growth and trade. The Melaka sultanate was successful during the 15th century in undertaking a path of economic transformation, establishing itself as a hub for regional trade, quite unlike its prior business model. However, it is also useful to recall that Melaka had begun to decline by the end of the 15th century, culminating in its fall to the Portugese in 1511.  It took 446 years for us to regain our independence. The lesson here is that if we do not remain focused on forging ahead, we may fall, and once we fall, it may take a very long time and involve great difficulty to recover again.

On my part, I remain optimistic. As we forge ahead and embrace a new economic model to transform the Malaysian economy, we should look forward to a future of not only an Asian renaissance but also a renaissance for Malaysia and a brighter future for our children.
Tan Sri Nor Mohamed Yakcop is Minister in the Prime Minister’s Department. This article is excerpted from his speech on May 7, in conjunction with RAM’s 20th Anniversary Appreciation Night.
This article appeared in Forum page of The Edge Malaysia, Issue 805, May 10-16, 2010