First Malaysia Plan

The First Malaysia Plan (1966–1970) was an economic development plan implemented by the government of Malaysia. It was the first economic plan for the whole of Malaysia—Sabah and Sarawak included—as opposed to just Malaya, which previous economic plans (such as the Second Malayan Five Year Plan) had confined themselves to. The Plan's objectives were to promote the welfare of all citizens, and improve the living conditions in rural areas, particularly among low-income groups.

The Plan attempted to increase access to medical facilities in rural areas through the formation of the Rural Health Service. District hospital facilities were upgraded to handle referrals from the clinics the Service operated. Medical subcentres were also founded in urban areas, and by the end of the Plan, the gap between rural and urban areas in terms of quality of healthcare had been narrowed, but not entirely eliminated. East Malaysian (Sabah and Sarawak) medical facilities in particular were less-well equipped and staffed than those in West Malaysia (formerly Malaya).

Over M$470.8 million was allocated for education under the First Malaysia Plan. However, less than 70% of this allocation was spent; in particular, the cost of training teachers and technical education had been overestimated. Between 1957 and 1970, the national literacy rate improved from 51% to 59%.

Shortly before the implementation of the First Malaysia Plan, the former colonial masters of Malaysia, the British, announced they would withdraw their defense and economic commitments to Malaysia. As a result, the government sought financial aid from the United States (US) to avoid having the First Malaysia Plan crippled by a lack of funding, going as far as to express support for the Vietnam War, which was unpopular among certain segments of the Malaysian populace. However, Malaysia never directly provided military support for the United States, in accordance with its policy of neutrality, and as a result, failed to receive substantial economic assistance from the US.

The First Malaysia Plan also had to address the problem of unemployment, which reared its head for the first time in the 1960s; despite encouraging growth in the Gross Domestic Product (GDP), employment rates had not grown at a commensurate pace. In addition, there was also the problem of ethnic specialisation in certain professions, with the Chinese dominating the marketplace, the Malays dominating the civil service, and the Indians largely participating in specialist professions such as law. The income disparity between rural and urban areas that the Second Malayan Five Year Plan had sought to resolve was also not satisfactorily eliminated.

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