Although, in the smaller Straits Settlements, there were a larger number of non-Malays who were employed in the British Civil Service. There was a rapid increase of Malay officials. For example, in the leadership training schools, 70% of trainees were Malays and were given high appointments.
The Japanese did not bother to restore the Economic infrastructure which was destroyed in Malaya. The economic activities were thus disrupted. There were depletions in resources. For example, tin declined from 79000 tons in 1941 to 3000 tons in 1945. The lack of resources meant that Malaya was unable to generate revenue.
Malaya could not export or import anything. Its trade with the world was closed and thus Malaya’s economic declined which led to many becoming unemployed and thus poverty.
Inflation also escalated as the Japanese printed countless amount of money, which resulted in the value of notes becoming basically worthless. Since the people were unable to earn a living to support their families, it caused the standard of living in Malaya to decline.
The prices of essentials also increased greatly. For instance, the price of 500g of rice soared to $120 from 1941 to 1945.
There were shortages basic essentials such as water gas and etc. Rubber trees were cut down to grow subsistence crops for the Japanese, mainly tapioca, millet and maize. However, many people continued to suffer from starvation and malnutrition
In a way, the occupation has created various new emerging industries in Malaya to cater the shortage of goods. For example, the fuel consumption of the latex
Black markets began to rise during this period. Goods were sold at very high prices. However, the masses did not have money to purchase such goods. Corruption also increased.
The effect on the economy at that time has created political awareness among the people especially the Malays to heighten the patriotism spirit amongst the Malays in achieving independence from the Japanese and British. Malays were aspired to rule the country based on the experience in the administrative work during Japanese rule in Malaya. Furthermore, tendency of anti-colonial was growing among the Malays as well as the conflict between Malay and Chinese at that time. The conflict was propagandized by the Japanese when they instilled Nationalism spirit amongst the Malays and as a result, the Chinese and Indians did the same as well amongst them. Thus, this has widened the gap between Malays, Chinese and Indians and created racial tension which further complicated the process of national unity.