The redistributive approach of the New Economic Policy in Malaysia has influenced the manufacturing structure of the country. On the one hand, the government used heavy industry and large enterprises to accelerate the advance of the Malays in modern commerce and industry, the predominantly Chinese-owned small and medium scale industry made little progress, and consequently missed gaining a share in international markets for lack of political support. Conversely, multinational capital, focused on electronics, has been used to boost national growth and offset the mostly unlucrative public enterprises. Since 1986, however, the Malaysian Government has taken some measures to gradually readjust the distortions. This article studies how state-owned heavy industry, local small industry and the technologically superior multinational capital interact to give rise to Malaysia's present industrial structure.