THE BEGINNING OF COLONIAL RULE
Malay vegetable and fruit farmers marketing their produce in a town. The Malays were granted land titles in the hope they would stop moving from place to place.
In the Malay states, colonial rule began with the rulers of Perak, Selangor and Sungai Ujong (part of Negeri Sembilan) accepting British Residents to advise them in all matters except Islam and Malay custom. Later, a Resident was also appointed in Pahang, and the other districts of Negeri Sembilan were joined with Sungai Ujong into a new confederacy. However, in reality the Residents ruled, while the rulers advised. It was an unequal partnership based on British military might and Malay political survival, on compromise and consultation. The Residential System introduced major administrative changes. To formalize the process of consultation, each state set up a state council composed of Malay officials and representatives of the Chinese community. Although the ruler presided, the Resident set the agenda and directed the proceedings. Nevertheless, revenue increased and the surplus was used for infrastructure such as roads and railways.
The Chinese communities in the various states contributed substantial amounts of capital and taxes to the government, largely through working the tin mines and as tax collectors. Tin mines were initially leased from Malay owners by Chinese entrepreneurs, who later bought them. Malay rulers also benefited from Chinese businessmen to whom they issued revenue farming licences for monopolies on commodity exports or imports—rice, tin, birds' nests, opium—or services, such as ferries and gambling dens. The Residents encouraged the large-scale immigration of Chinese labourers to develop the newly discovered tin fields.
Colonial rule had an adverse effect on Malay economic life. Taxes were imposed on a wide variety of goods, including jungle produce and cash crops such as pepper and coconuts. The new land codes were based on the premise that the ruler owned all the land in his state, effectively giving the government ownership over all land. Land titles were granted to check the Malay practice of moving from place to place. They were encouraged to settle down and plant crops on a piece of land that would become family property. Unlike in precolonial Malaya, land became a commodity which could be mortgaged or sold. This contributed to Malay rural indebtedness and the dispossession of smallholders.
In the late 19th century, Western companies ventured into tin mining and commercial agriculture, gradually breaking Chinese monopolies. They later began shipping, insurance and financial activities. Their growth was facilitated by the formation, in 1896, of the Federated Malay States (FMS), which comprise Negeri Sembilan, Selangor, Perak and Pahang. The federation aimed sustaining so as not to be a burden on Britain. It was hoped that administrative services could be centralized, thus increasing efficiency and saving costs. The federal system became the basis for the present system of government in Malaysia.