Racial Policy from Merdeka (1957) to the May 13 Racial Riot Incident (1969).

"National Unity" has always been the slogan of the immediate Dost-independence government i.e. the alliance government. The government identified poverty as the major cause of the racial disharmony. In this light, a series of economic development plans (five year plan) were launched with 'national unity' always the declared objective of each and every one of these plans. Through the implementation of these plans, the government intended to eradicate poverty amongst the deprived groups, especially Malays.

'Special Rights' were granted to the Malays to assist this ethnic group in participating in commerce, industry, education and other sectors. However, all the efforts of the Alliance Government failed to improve the economic status of the majority of the Malays. According to the Government's statistics from the period 1957-1970, the poorest 40% of the population (most of them were Malays) had actually become poorer. The incomes of the poorest 20% had fallen by 14% while those of the next poorest 20% had fallen by 3%.

The discontent and frustration of the Malays were made use of by the Malay bureaucratic class to turn their hatred towards the Chinese. The ethnic Chinese which controlled 22.5% of the share capital of limited companies in Peninsular Malaya in 1970, were accused of being the main exploiter and enemy of the Malays. The myth of the Chinese domination of the country's economy, propagated by the past British colonialists was continued—adopted by the ruling Malay politicians for their own personal gains. This view prevailed even though it was foreigners, especially the British which controlled the largest share of the cake, 63% of the share capital during the same year in 1970.

The immediate spark that led to the explosion of Malay anger was the 1969 general election. The May 13 Racial Riot Incident had led to the death of several hundred people of all races. This riot marked the failure on the government's part to ameliorate the racial tension among all races, which became a highly explosive issue when being manipulated by some unscrupulous group.