COMMUNIST PROSPECTS IN MALAYA AND BRITISH BORNEO

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A006000030014-9
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 23, 2016
• Document Release Date: July 1, 2013
• Sequence Number: 14
• Publication Date: May 24, 1955
• Content Type: NIE

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0 N I E 6 4-5 5
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24 May 1955
NATIONAL INTELLIGENCE INTELLIGENCE ESTIMATE
NUMBER 64-55
COMMUNIST PROSPECTS IN MALAYA AND
BRITISH BORNEO
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 24 May 1955. Concurring were the Special Assistant,
Intelligence, Department of State; the Assistant Chief of
Staff, G-2, Department of the Army; the Director of Naval
Intelligence; the Director of Intelligence, USAF; the Deputy
Director for Intelligence, The Joint Staff. The Atomic
Energy Commission Representative to the IAC and the
Assistant to the Director, Federal Bureau of Investigation,
abstained, the subject being outside their jurisdiction.
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CENTRAL INTELLIGENCE AGENCY
DISSEMINATION NOTICE
1. This estimate was disseminated by the Central Intelligence Agency. This copy
is for the information and use of the recipient indicated on the front cover and of per-
sons under his jurisdiction on a need to know basis. Additional essential dissemination
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a. Special Assistant to the Secretary for Intelligence, for the Department of
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3. When an estimate is disseminated overseas, the overseas recipients may retain
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quested of the forwarding agency to retain it in accordance with IAC?D-69/2, 22
June 1953.
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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COMMUNIST PROSPECTS IN MALAYA AND BRITISH BORNEO
THE PROBLEM
To estimate the extent of and prospects for Communist influence in the Federa-
tion of Malaya, Singapore, North Borneo, Sarawak, and Brunei over approximately
the next five years.
ASSUMPTION
No war involving the major powers develops during the period of this estimate.
CONCLUSIONS
1. Under present circumstances, the Brit-
ish-led security forces in the Federation
of Malaya almost certainly will be able
to contain the communist guerrilla force,
but not to annihilate it or prevent occa-
sional small-unit operations. If the UK
granted full self-government and with-
drew from the Federation in the next few
years, we believe that the Communists,
who are about 95 percent Malayan Chi-
nese, almost certainly would take over
the territory. However, we believe that
the UK, with the strong backing of Aus-
tralia and New Zealand, will not consent
to Malayan independence or withdraw its
power until it believes that the Commu-
nist insurgence has been reduced to a
police problem that the Malayan forces
?
can themselves control. (Paras. 21, 27,
29)
2. We believe that the Communists will
follow a policy of subordinating guerrilla
warfare to political penetration and sub-
version, avoiding actions which would an-
tagonize any large sections of local opin-
ion, although the broad policy of the
Malayan Communist Party will almost
certainly be guided by the international
Communist movement. (Para. 22)
3. If Vietnam, Laos, and Cambodia fell to
the Communists, and Communist pres-
sure were being directly exerted upon
Thailand and Burma, Communist activi-
ties in Malaya would be intensified and
the general morale of non-Communists in
Malaya lowered. Many non-Communist
Asians would feel that the Manila Pact
was proving ineffective against the ex-
pansion of Communism in Southeast
Asia. Many more local Chinese would
cooperate with the Communists, while
some now supporting the government
would adopt a wait-and-see attitude.
However, we believe that the British au-
thorities could and probably would cope
with this more difficult situation. At
414111smor
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the same time, the British would seek to
determine US intentions with respect to
the defense of Thailand and Burma.
(Para. 36)
4. If, in addition to the foregoing devel-
opments, Indonesia also became Com-
munist, Australia might be less disposed
to commit substantial forces in Malaya.
Nevertheless, the British would continue
to hold Malaya until they estimated that
the forces that could prudently be com-
mitted to its defense were insufficient to
maintain the authority of a non-Com-
munist government. In such event, the
British and Australian determination to
continue their resistance would be de-
pendent upon the kind and amount of
support which the US offered them.
(Para. 37)
5. In any event, if the Communists came
to power in Thailand, recognition would
be widespread that the Manila Pact had
failed in its purpose. The security situa-
tion in Malaya would quickly become crit-
ical. Maintenance of border security
and preservation of internal control
would require an enormous effort. In
these circumstances, we believe that the
The Director of Intelligence, The Joint Staff,
believes that all of this paragraph after the
second sentence should be deleted and the fol-
lowing be substituted:
"In this situation, even though border se-
curity could be maintained at an enormous
effort, British internal control of Malaya
would have been lost as a result of a swing to
active support of Communist operations by
a large number of formerly pro-British or un-
committed Chinese and Malays. In this cir-
cumstance, the introduction of US aid, includ-
ing military forces, would probably not be ef-
fective in recovering Malaya from Communism
and would corroborate in the eyes of Asians
Communist charges of US imperialism and
support of colonialism."
participating Commonwealth powers
would foresee the inevitable loss of Ma-
laya, unless prompt and substantial US
aid was forthcoming. With such aid,
including an agreement to commit US
military forces if necessary, the Com-
monwealth powers probably would elect
to defend Malaya.' (Para 38)
6. Over the next few years the UK in-
tends to continue Malaya's gradual ad-
vance toward self-government. The UK
envisages the eventual grant of internal
self-government, coupled with the union
of the Federation and Singapore, followed
some time later by independence. The
ultimate objective appears to be the crea-
tion of a new Malayan Dominion, in
which British economic and strategic in-
terests will be preserved. The British
program almost certainly will fail to sat-
isfy the more extreme nationalists, who
will probably force some acceleration in
that program. (Paras. 28-29)
7. Singapore's future is bound up with
that of the Federation. Some expan-
sion of Communist strength and capabil-
ities among Singapore's overwhelmingly
Chinese population appears likely over
the next five years, although the Com-
munists almost certainly will be unable
to take over the colony while the British
retain control in the Federation. Com-
munist capabilities probably will be limit-
ed to instigating sporadic strikes, disor-
derly demonstrations, and acts of assas-
sination and sabotage. (Paras. 46-47)
8. In British Borneo, composed of Sara-
wak, North Borneo, and Brunei, Com-
munist activity is at a low level, and
British control almost certainly will re-
main firm through 1960. (Paras. 49-50)
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,SaiiWSW
DISCUSSION
I. THE FEDERATION OF MALAYA
Background
9. Recent Political History. The Federation
of Malaya, under the protection of the UK, in-
cludes nine Malay states and the Settlements
of Penang and Malacca. In accordance with
British colonial policy, the UK has encouraged
increasing participation by Asians in the ad-
ministration of government and has granted
them fairly steady progress toward the goal
of self-government. Although British au-
thorities retain ultimate control, most of the
smaller jobs in the public service and a sub-
stantial number of senior ones, including some
carrying ministerial responsibilities, have
been given to Asians. There has apparently
been general satisfaction with the pace of po-
litical growth, although lately political lead-
ers, as well as student groups and some intel-
lectuals, have begun to demand that the grant
of full self-government be hastened. Over
the past year or so, political consciousness, po-
litical activity, and political demands have ex-
panded significantly.
10. Within the past two years, the first elec-
tions to municipal and state legislatures have
been held and, under pressure from local po-
litical leaders, the British have advanced to
27 July 1955 the first election of members to
a federal legislature. The democratic politi-
cal parties are immature. They were estab-
lished rapidly to meet the purposes of the
elections, and each embraces a wide variety
of views on political and economic questions.
Following the outbreak of the Communist in-
surrection in the spring of 1948, the Com-
munist Party was outlawed.
11. The Population. Of the Federation's ap-
proximately six million people, about 50 per-
cent are Malays, some 38 percent are Chinese,
over 10 percent are Indians, and less than one
percent are Europeans. The races differ
widely in culture, religion, and economic in-
terests. Frictions among them have rarely
been serious, but they are suspicious of each
other, and they have little social intercourse.
Most of the Malays are Moslems, inhabit the
rural areas, and lack the ambitions and skills
of the other races. With very few exceptions,
they have not been attracted to Communism.
The Chinese largely dominate Malayan eco-
nomic activity. Substantial numbers of
them, especially the youth, are attracted by
Mao's "New Democracy" ? or feel threatened
by it ? and they are the sources of local Com-
munist strength. A small minority, mostly
within the older generation, actively support
the Chinese Nationalist government. How-
ever, the great majority are passively anti-
Communist and conservative, for reasons of
economic security. At the same time, they
prefer to withhold forthright cooperation with
the government against the Communists so
long as they consider a Communist take-over
to be possible. The Malayan Chinese are the
wealthiest of the overseas Chinese communi-
ties. The Indians are mostly laborers in
western-operated enterprises, and a number
of these have risen to important positions in
the trade union movement. Communism
has had little appeal for the Indians in Ma-
laya.
12. Over the years, the British have followed
a policy of attempting to balance power
among the races. In practice, this has
meant a series of measures to fortify Malay
rights against the shrewder, more aggressive
Chinese. For example, the British authori-
ties have reserved large land areas and insured
a near-monopoly of government jobs for the
Malays. The British hope that over the long
term the Malays' aptitudes for improving
their standing will be raised by education and
training programs. Meanwhile, such dis-
criminatory actions tend to promote racial
feeling, and to complicate development of a
common spirit of unity and of national, as
against racial, loyalties. Nevertheless, dur-
ing the past year, there has been increasing
evidence of interracial cooperation and com-
promise, particularly in the political sphere.
Except for the Communist insurrection, there
has been virtually no violent anticolonialism.
T
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13. The Economy. The Federation economy
depends largely on the export of natural rub-
ber and tin, with rubber accounting for 50
percent of the value of exports and tin 16 per-
cent. The Federation produces approximate-
ly one-third of world supplies of those com-
modities, and it is extremely vulnerable to ad-
verse fluctuations in their international mar-
ket prices. In addition, production of iron
ore has now surpassed one million long tons
per year. The strategic mineral, columbite,
has been discovered in the tin-bearing region,
and uranium-bearing ore deposits are being
investigated to ascertain whether they are
economically exploitable. Malayan per cap-
ita income is the highest in the Far East,
about US $258 in 1950. The Federation is
dependent on imports for more than 50 per-
cent of its food staple, rice, most of which is
purchased from Burma and Thailand. Its
second important import is textiles. Over
two-thirds of its trade each way is with the
Commonwealth. Trade with the Sino-Soviet
Bloc is small. As the principal net contribu-
tor of dollars to the reserves of the Sterling
Area, the Federation is an important source
of British economic strength.
14. The struggle against the Communist in-
surrection has imposed a sustained heavy
economic burden since 1948. The UK has
borne the whole cost of the British forces em-
ployed against the Communists, the equiv-
alent of about US $182 million per year, and
has also made direct grants to the Federation
government for military uses, totalling the
equivalent of about US $40 million since 1949.
Nevertheless, military allocations by the Fed-
eration over the past five years have averaged
more than 27 percent of the annual internal
budgets. The 1954 cost of the struggle to
the Federation was the equivalent of more
than US $67 million. Although the Com-
munists have failed over the past seven years
to disrupt the Malayan economy, they have
hindered economic development that would
normally have taken place. Nevertheless,
programs are afoot for diversifying the econ-
omy, improving and expanding agriculture,
providing more electrical power and better
communications, and generally expanding the
national income.
4
The Communist Insurrection
15. The Communist rebel forces, now known
as the Malayan Races Liberation Army
(MRLA) , began operations in the spring of
1948, following an international Communist
conference in Calcutta earlier that year. The
MRLA has since maintained forces at a
strength of some 4,500-6,000 under arms. Its
supporting agency is the MM Yuen, a net of
Communist cells spread across the country,
mainly in villages and on the jungle fringe,
which with an estimated strength in excess
of 10,000 performs supply, intelligence, and
recruiting services. There are an unknown
number of additional cooperators throughout
Malaya, some sympathetic but most influ-
enced by intimidation and hopes of insuring
future safety, who aid the MRLA with food
and funds. The subversive complex is com-
posed almost wholly of Malayan Chinese; the
leaders and hard core are largely foreign-
born Chinese. The Malayan Communist
Party is a part of the international Commu-
nist movement, from which it receives pol-
icy guidance. It probably receives some fi-
nancial support from the local Bank of China,
which is Peiping-controlled. The MRLA,
which has required relatively small amounts
of arms and ammunition, relies heavily for
such supplies on stocks retained from the
Communists' guerrilla struggle against the
Japanese during World War II, and on those
captured or stolen locally. Only very limited
quantities appear to have come from outside,
either across the Thailand border or by sea.
16. The original plan of the rebellion appears
to have been the "liberation" of Malaya with-
in a 10 year period and the ultimate estab-
lishment of 'a Malayan Peoples Republic.
The struggle was to begin with guerrilla war-
fare, then become a war of movement with
operations in strength, and end up with the
capture of cities and general revolution. In
fact, the rebellion never passed beyond the
guerrilla stage. The Communist rebels
reached their peak in 1951, when more than
6,000 incidents of violence were recorded, pop-
ular confidence in the protective power of the
Federation government widely declined, and
the Communists found it relatively easy to
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obtain needed food, money, and information.
At this point, the security measures of the
British authorities in both the military and
civil fields began to take effect.
17. By early 1952 the British had built up
land forces composed of some 13,000 British
troops, 10,000 Gurkhas, and 12,000 Malay and
colonial troops. They had raised the police
force, largely Malays under British officers, to
a strength of over 50,000, and had begun to
arm a Home Guard which ultimately reached
three or four times that strength. In addi-
tion, they had built up a small tactical air
force to carry out air support and air resup-
ply missions, and a modest navy for harbor
and coastal patrol. Large-scale military op-
erations were mounted against the MRLA in
successive areas, and military pressures upon
the rebels were maintained. At the same
time rigorous food controls were imposed
throughout the countryside ? at the cost of
some hardship to the civilian population ?
which made food supplies much more diffi-
cult for the MRLA to obtain. An enormous
program was pressed forward for moving
from the jungle fringe the numerous Chinese
squatters who were the major source of the
Communists' supplies. With forceful meas-
ures when necessary, some 560,000 Chinese
eventually were relocated in 546 "New Vil-
lages," each with new schools, utilities, and
police protection.
18. In 1952 and 1953 the initiative passed in-
creasingly to the Federation government.
The MRLA was pressed back deep into the
jungle. Its supply and food problems be-
came crucial as easy access to the civil popu-
lation was denied it. Its morale slipped
somewhat, and surrenders of rebels increased.
In 1952 recorded MRLA operations dropped
to about 3,700, and in 1953, to less than 1,200.
The trend had continued downward, and cas-
ualties among loyal civilians and the security
forces have fallen appreciably, as have cas-
ualties among the Communists.
19. The reduction in guerrilla activity was
brought about only partly by military pres-
sure. In part this reduction resulted from a
revision of tactics by the Communists them-
selves. They abandoned their indiscriminate
terrorism, on the grounds that it was an-
tagonizing the Malayan people, and limited
their actions to attacks on police posts, in-
fantry patrols, and large plantation and min-
ing establishments, mainly to capture arms
and maintain MRLA morale. They set up
training and indoctrination camps deep in
the jungle, and began to use the jungle-dwell-
ing aborigines as sentinels, scouts, and food-
suppliers. With the rise in Communist Chi-
na's prestige, particularly since the mid-1954
Geneva Conference, and with the Viet Minh
success in Indochina, surrenders of Commu-
nist guerrillas initially fell appreciably, and
the morale and discipline of the rank-and-file
improved. Concluding that a broad civil
base was necessary to carry forward the revo-
lution, the Communists embarked on a major
effort to win popular sympathy, including
that of Indians and Malays; to infiltrate and
subvert the native Home Guard and police;
to penetrate and develop fronts in legal poli-
tical, students, labor, and social organiza-
tions; and to stir up nationalist and antico-
lonial sentiments. It is notable that, ac-
cording to captured documents, the Commu-
nists are cautioned in the creation of united
fronts not to permit Chinese leadership of
the party to be jeopardized.
20. The Federation government also has late-
ly begun a switch in military tactics, with the
aim of increasing the pressure on the MRLA.
It is undertaking to base ground force units
for months at a time in Communist-infested
areas deep in the jungle, with the mission of
disrupting the Communist base organizations,
inflicting casualties, cutting communications,
and winning away the aborigines. Mean-
while, many of the army's responsibilities in
inhabited areas are being turned over to the
police and civil authorities in order to maxi-
mize the number of troops available for jun-
gle deployment. On the psychological front
the authorities are widely publicizing lenient
terms for defectors, and rewards for civilians
aiding in the capture or killing of Communist
guerrillas. Recently, the surrender rate has
risen slightly.
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Outlook
21. The Communist Insurrection. Under
present circumstances, Federation security
forces almost certainly will be able to contain
the MRLA, but not to annihilate it or prevent
occasional small-unit operations. Security
forces2 will remain at approximately present
strengths, although there will be some chang-
es in their composition as Australian and
New Zealand contingents arrive. The Brit-
ish intend to maintain offensive pressure
on the Communist military force, and will
continue to hold the military initiative. But
the Malayan jungle will continue to impose
great difficulties for security force operations,
and we believe that a situation of virtual
stalemate will persist.
22. The broad policy of the Malayan Com-
munist Party almost certainly will continue
to be guided by the international Communist
movement. However, we believe that guer-
rilla operations will continue to be subordi-
nated to political infiltration and subversion,
and to consist of selective terrorism and sabo-
tage, rather than actions which would an-
tagonize any large sections of local opinion.
The MRLA probably will concentrate on self-
preservation, recruitment, training, and in-
doctrination of personnel. Its supply prob-
lems, especially that of food, will remain se-
rious, and morale accordingly will be dam-
aged, particularly if the British succeed in
intensifying the pressures on the guerrillas.
On the other hand, Communist successes
elsewhere in Asia ? in Vietnam, for exam-
ple ? almost certainly would improve the mo-
rale of the guerrillas, and would somewhat
ease their difficulties in obtaining supplies by
covert means from the population. The fall
of Thailand to Communist influence would re-
quire a major diversion of military strength
for border defense, and would increase to a
critical degree the problems of the security
forces.
Security forces now consist of:
13,000 British troops 50,000 Police
10,000 Gurkhas 200,000 Home Guard
13,500 Malay and plus air and
colonial troops naval forces
23. Probable Political Developments. Focus-
ing on the July elections for a new federal
Legislative Council, political activity in the
Federation has stepped up appreciably. The
major competing political organizations are
the Alliance, composed of the United Malays
National Organization (UMNO) and the Ma-
layan Chinese Association (MCA) ; the Malay-
an Indian Congress, which is seeking to affil-
iate with the Alliance; the Party Negara
(PN) ; and the Labor Party of Malaya (LPM).
24. The Alliance was formed by UMNO and
MCA more as a vehicle of political expediency
than as an expression of common views and
interests. The UMNO, which itself embrac-
es conservative and increasingly potent lef t-
ist wings, looks to its alliance with the Chi-
nese as providing a source of funds and votes
and also as demonstrating that racial unity
which the British have postulated as prereq-
uisite to independence. The MCA regards
collaboration with the Malays as the best way
of obtaining political influence and of pre-
serving Chinese interests and economic power
in an eventually independent Malaya. How-
ever, many MCA members are alarmed by
the UMNO-sponsored call for early self-gov-
ernment, which is the main electioneering
platform of the Alliance. The Alliance pro-
vides the most outspoken opposition to Brit-
ish political policies, and pursues the most
strongly nationalist line of all the active le-
gal parties. With the best grass-roots or-
ganization, apparently the most appealing
campaign platform, and a record of sweeping
successes in local and state elections, the
Alliance will probably emerge victorious in
the federal elections.
25. The Party Negara is more conservative
than the Alliance. It favors a more cautious
approach to self-government, and cooperates
with the colonial administration. It enjoys
the support of the sultans and, unobtrusively,
of the British authorities, but its popular
backing seems small, and it almost certainly
cannot challenge the Alliance's political su-
premacy. The Labor Party attacks the Al-
liance as a "marriage of convenience," and
the Chinese component as "capitalistic" and
as containing elements of doubtful loyalty.
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It attacks Negara as "British stooges." It
represents itself as the defender of the work-
ing classes, and the supporter of the welfare
state measures of social democracy. The
Labor Party is numerically and financially
weak, and ineptly led, but it is likely to in-
crease in importance in the coming years.
The leaders of all three parties are anti-Com-
munist, but they tend to be complacent about
Communist infiltration and subversion tac-
tics.
26. The new federal Legislative Council will
be composed of 52 popularly elected members
and 46 British-appointed representatives.
The constitutional term of the new legisla-
ture is four years. Excepting financial, le-
gal, foreign affairs, and defense posts, which
will remain in British hands, the Executive
Council (Cabinet) will be appointed by the
. High Commissioner after consultation with
the successful party leader or leaders.
27. It is likely that the British authorities
will be compelled to grant further constitu-
tional advances toward self-government be-
fore the end of the legislative term. With
the steady increase in political activity and
political consciousness, the tide of national-
ism is running ever more strongly in this
last large colonial territory of the West on
the Eurasian continent. Independence is
not an issue between the British and the Ma-
layans, since there is common agreement that
it will be granted eventually. However, the
pace of Malay's advance toward self-govern-
ment is the foremost issue, and it will remain
so. The British have repeatedly asserted
that they would not grant full self-govern-
ment and withdraw their power until the
Communists had been defeated and a "dur-
able" harmony among the races established.
Malayan leaders have urged the British to
agree on a time-table for turning over self-
governmerit. The demands with regard to
timing vary; the earliest which the Alliance
has enunciated is that independence, or
agreement about it, be reached by mid-1959,
with intermediate steps taking place during
the intervening years.
28. The ultimate British objectives are the
attachment of an independent Malayan Do-
minion to the Commonwealth, and the pres-
ervation of British economic and strategic
interests. For the British, the key problem
is to advance the Malayans politically at a
pace neither so slow as to destroy Malayan
trust in British intentions and drive them
into disorderly and revolutionary activities,
nor so fast as to undermine sound adminis-
tration, order, and the defenses against the
Communists. The UK envisages the eventual
grant of internal self-government, coupled
with a merger with Singapore, followed some
years later by independence.
29. The British probably will grant a suc-
cession of small advances toward autonomy
over the next few years. For example, while
retaining control of foreign relations, defense,
finance, and military operations against the
guerrillas, they probably will increase Malay-
an responsibilities in connection with public
administration and social, economic, and
security policy-making; and possibly even
agree to a wholly elected federal legislature.
Almost certainly the British program will
fail to satisfy the more extreme nationalists,
who will agitate against the British and per-
haps produce occasional strife, abetted by
Communists. The nationalists will probably
succeed in forcing some acceleration in the
program, but we believe that the British will
not consent to Malayan independence until
they believe that the Communist insurgence
has been reduced to a police problem that the
Malayan forces can themselves control.
30. For the defense of the Federation the
British are in process of training local mili-
tary units. In addition, to advance their
strategic objectives in the area, the British
are developing three air bases in the Federa-
tion (and one in Singapore) capable of sup-
porting jet bomber operations and have ob-
tained military commitments from both New
Zealand and Australia for Malayan defense.
The British hope for an eventual mutual
defense agreement with the new dominion,
including the preservation of base rights.
31. If the UK granted full self-government
and withdrew from Malaya in the next few
years, we believe that the Communists would
almost certainly take over the country. Ma-
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layan forces, now only seven battalions strong
and lacking native leadership, could not be
built up sufficiently to contain the guerrillas,
and civilian resistence to subversion would
crumble.
32. Communist Prospects. Certain impor-
tant factors are operating to the benefit of
the Communists, and probably will continue.
First among these is the powerful attraction
of Communist China itself for many Malaya-
born Chinese, particularly among the youth,
many of whom are going back to China as
students or visitors. Among other Malayan
Chinese, who are basically antipathetic to
Communism, there is the fear of retribution
for failure to cooperate, if the Communists
should eventually take over Malaya. There
is also the coincidence of the latest Commu-
nist tactics with rising Malay nationalism:
Nationalists and Communists can share a
common anticolonial, anti-British platform.
Moreover, among the Malays there appears
to be increasing complacency about the Com-
munist threat, for which the effectiveness of
the security forces' anti-Communist measures
is largely responsible. The Alliance has
stated that, if elected, it will press the reluc-
tant British authorities to offer amnesty to
the guerrillas, with a choice of rehabilitation
or repatriation to China.
33. The Communist tactics of penetration and
subversion have made some headway over the
past two to three years. The Communists
have had considerable success in penetrating
local Chinese schools, and in turning Chinese
youth against military service. There is
some penetration of the Home Guard in small
towns and rural areas. Communist influence
is apparent in the left wing of the UMNO, es-
pecially in that party's youth organization,
whence the most extreme anti-British and an-
ticolonial sentiments emerge.
34. However, important factors are also work-
ing to the disadvantage of the Communists.
The Party is outlawed, and it cannot operate
in the open. Moreover, none of the inter-
national Communist front organizations is
known to be represented in Malaya. The
Communists remain widely unpopular pri-
marily because of their earlier indiscriminate
policy of terrorism. Their organization in
the main towns appears to be weak, and the
necessity to coerce the population to obtain
supplies for the guerrilla forces hampers Com-
munist political work. Being largely Chi-
nese, the Communists have not had much
success in overcoming the racial prejudice of
the Malay and Indian communities. No ef-
fective "united fronts" have yet been creat-
ed. Trade union penetration has been
sharply limited. Finally, the British authori-
ties almost certainly will continue to adver-
tise and demonstrate their intention to re-
tain ultimate power in Malaya ? while grad-
ually turning over civil responsibilities to lo-
cal leaders ? until the Communist threat has
been extinguished. In the absence of im-
portant Communist successes abroad, these
actions are likely to check defections of the
fence-sitting Malayan Chinese, who are
moved less by ideology and sentiment than
by power realities. So far the only signifi-
cant large Chinese political party, the MCA,
appears to be virtually free of Communist
penetration.
35. Serious economic setbacks, particularly a
substantial and protracted drop in the prices
of natural rubber and tin, would enlarge Com-
munist opportunities for trouble-making.
However, if Malayan prosperity declined se-
riously, the UK probably would provide some
economic aid to minimize repercussions.
36. If Vietnam, Laos, and Cambodia fell to the
Communists, and Communist pressure were
being directly exerted upon Thailand and
Burma, Communist activities in Malaya would
be intensified and the general morale of non-
Communists in Malaya lowered. Many non-
Communist Asians would feel that the Manila
Pact was proving ineffective against the ex-
pansion of Communism in Southeast Asia.
Many more local Chinese would cooperate with
the Communists, while some now supporting
the government would adopt a wait-and-see
attitude. However, we believe that the Brit-
ish authorities could and probably would cope
with this more difficult situation. At the
same time, the British would seek to deter-
mine US intentions with respect to the de-
fense of Thailand and Burma.
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37. If, in addition to the foregoing develop-
ments, Indonesia also became Communist,
Australia might be less disposed to commit
substantial forces in Malaya. Nevertheless,
the British would continue to hold Malaya
until they estimated that the forces that
could prudently be committed to its defense
were insufficient to maintain the authority of
a non-Communist government. In such
event, the British and Australian determina-
tion to continue their resistance would be de-
pendent upon the kind and amount of sup-
port which the US offered them.
38. In any event, if the Communists came to
power in Thailand, recognition would be wide-
spread that the Manila Pact had failed in its
purpose. The security situation in Malaya
would quickly become critical. Maintenance
of border security and preservation of internal
control would require an enormous effort.
In these circumstances, we believe that the
participating Commonwealth powers would
foresee the inevitable loss of Malaya, unless
prompt and substantial US aid was forthcom-
ing. With such aid, including an agree-
ment to commit US military forces if neces-
sary, the Commonwealth powers probably
would elect to defend Malaya.3
SINGAPORE
Background
39. Singapore was organized as a separate
Crown Colony after World War II. Since
then the British authorities have granted to
The Director of Intelligence, The Joint Staff,
believes that all of this paragraph after the
second sentence should be deleted and the fol-
lowing be substituted:
"In this situation, even though border se-
curity could be maintained at an enormous
effort, British internal control of Malaya
would have been lost as a result of a swing to
active support of Communist operations by a
large number of formerly pro-British or un-
committed Chinese and Malays. In this cir-
cumstance, the introduction of US aid, includ-
ing military forces, would probably not be ef-
fective in recovering Malaya from Commu-
nism and would corroborate in the eyes of
Asians Communist charges of US imperialism
and support of colonialism."
the colony more rapid advances toward local
self-government than to the Federation, cul-
minating in the election on 2 April 1955 of
a majority of the Legislative Council and the
subsequent establishment of a native major-
ity in the Executive Council. However, the
British authorities, headed by the governor,
retain an ultimate veto in all important sec-
tors of public affairs and they retain full con-
trol of internal security matters, foreign af-
f airs, finance, and defense. It is British pol-
icy to retain these powers until the eventual
union of the colony with the Federation.
40. Of Singapore's approximately 1.1 million
population, some 79 percent are Chinese, 13
percent Malays, 7 percent Indian, and 1 per-
cent Europeans. In addition to having nu-
merical superiority, the Chinese dominate
economic activity in Singapore as in the Fed-
eration. The loyalties of most are uncertain;
probably the majority have been conservative
and anti-Communist, but the realities of
power are more important to them than prin-
ciple and sentiment; and most of them are
likely to hedge their positions according to
developments in the Far East. A large part
of Chinese youth is attracted by the appeals
of Communist China, and vulnerable to local
Communist agitators.
41. Singapore has enjoyed a fairly stable
prosperity in the postwar period, despite fluc-
tuation in the prices of natural rubber and tin.
Its marketing and primary processing facili-
ties for raw materials have been constantly
busy, and its facilities as a world trade center
have continued to attract traders throughout
a wide area of Asia. Moreover, the colony
possesses numerous active secondary indus-
tries, which have contributed to a moderate
economic expansion. Government finances
have usually shown annual surpluses, and a
substantial monetary reserve has been built.
Welfare measures have begun to be expanded.
Although unemployment may increase some-
what as a result of the population's rapid
growth, emigration to the Federation can of-
fer some relief, and no serious, protracted
economic decline is in prospect for the next
few years.
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?Nik 10
42. The Communists. Singapore has long
been an organizational center for Malayan
Communist activities. It is a source of some
food and arms for use in the Federation, and
it may be a rest center for guerrilla leaders.
The Communist Party in Singapore number
about 200, and has an estimated 1,800 sym-
pathizers, nearly all Chinese. It is under
direction of the Malayan Communist Party.
43. As in the Federation, Singapore Commu-
nists undertook a program of terrorism and
violence in 1948, and after 1951 subordinated
such tactics to infiltration and subversion.
Intensive police work and comprehensive sur-
veillance of suspected subversives, together
with political and social measures, have com-
prised the Singapore government's program
for countering ,the Communist threat. A
force of some 5,000 police and special consta-
bles, officered by the British, was built up,
and British ground forces were raised to
12,500. The very small Royal Malayan Navy
is based on, and financed by, Singapore.
44. At present Communists are most active
in infiltrating Chinese youth groups and Chi-
nese schools, and they have registered con-
siderable success. Moreover, pro-Communist
students are succeeding in intimidating and
disorganizing those who are anti-Communist.
Agitators helped organize student strikes
against compulsory registration for military
service, and resistance to government meas-
ures regulating schools and youth associa-
tions. Chinese youths in increasing num-
bers are going to China for higher education,
and some are returning to Singapore. The
Communists played a large part in obstruct-
ing establishment of a western-oriented Chi-
nese university. They have had limited suc-
cess in penetrating some trade unions, par-
ticularly the dockers. They recently demon-
strated their power to exploit a union griev-
ance by organizing a large-scale disorder, in
which Chinese students combined with strik-
ers to paralyze a section of the city. The ex-
treme left wing legal political party appears
to have been penetrated. The Communists
appear to have been increasingly successful in
intensifying anti-British sentiment, but not
as yet any strong and sustained anti-US senti-
ment, particularly since rubber prices have
regained satisfactory levels and demand for
tin continues good.
Outlook
45. Political. Of the party and independent
candidates who ran in April for the 25 elected
seats of the 32-seat Legislative Council, left-
ists achieved a success that surprised even
their leaders. The conservative parties cap-
tured only six seats. On the extreme left,
the Communist-influenced Peoples Action
Party won three seats. The Labor Front,
moderate socialist in orientation, gained 10
seats, and its leader has formed the colonial
Cabinet under the governor. The Labor
Front campaigned on promises to expand
government-financed welfare state measures,
to achieve union with the Federation, to seek
rapid advance toward independence for Ma-
laya within the Commonwealth, and to end
the emergency regulations under which the
government has fought Communist activity.
46. However, apart from quickening the pace
of social reforms, the Labor Front probably
will be unable to carry out its program very
rapidly. Singapore's future is bound up with
that of the Federation, yet early union with
the Federation probably will be opposed by
Federation Malays, fearing that addition of
Singapore's Chinese to the Federation's would
result in the Malays being outnumbered and
outvoted. Until the Communist menace has
subsided, the British authorities and moder-
ates in the Council almost certainly will block
any attempts substantially to change the
emergency regulations. Moreover, the prob-
lem of daily administration, broader govern-
mental responsibilities, and political maneu-
vering will absorb much of the energies of
the local political leaders.
47. Communist Prospects. Some expansion
of Communist strength and capabilities in
Singapore appears likely, although the Com-
munists almost certainly will remain unable
to take over the colony while the British re-
tain control in the Federation. As long as
Communist China appears to grow in
strength and prestige, retains its romantic
appeal, and offers free education to overseas
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Chinese youth, anti-Communist measures in
the psychological field may be expected to
have little impact. Likewise, most Chinese
probably will remain noncommittal on the
Communist issue, so long as they fear the
possibility of a Communist sweep of South-
east Asia, or feel intimidated by local terror-
ists. However, the government, using its
emergency powers, and with the support of
anti-Communist leaders, probably will pre-
vent the _Communists from gaining full con-
trol of important mass organizations, except
for Chinese student groups. Communist
capabilities probably will be limited to insti-
gating sporadic strikes, disorderly demonstra-
tions, and acts of assassination and sabotage.
The British-led police will continue to main-
tain intensive pressure on the Communists.
British military forces will remain available
for emergencies. In addition, part-time
training of local conscripts is under way, and
those are to be organized into 10 small ground
force units by the end of 1956.
III. BRITISH BORNEO
Background
48. British Borneo, composed of the colonies
of Sarawak and North Borneo, and the pro-
tectorate of Brunei, is politically tranquil.
The area contains about 675,000 natives and
235,000 Chinese. Each of the territories is
ruled under British Colonial Office direction,
and there is virtually no internal pressure for
political development. Economic trends in
each have been moderately favorable, espe-
cially in Brunei, which is prospering from the
expanding production of its rich oil fields.
49. Communist activity is at a low level.
Though the Party is banned, there is some
evidence of Communist penetration in Chi-
nese schools and some propaganda among oil
field workers in Brunei.
Outlook
50. British control of its Borneo possessions
almost certainly will remain firm through
1960, and any nationalist feelings that may
stir probably will be dealt with by small con-
cessions.
51. The Chinese population will be a target
for Chinese propaganda and subversion, and
some Chinese, particularly the youth, can be
expected to develop a sympathetic attitude
toward Mao's China. However, the British-
led police and constabulary in the area almost
certainly will be able to prevent serious dis-
turbances.
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