The author analyzed major elements of Malaysia's economic policy which assured its rapid economic growth and transformed the agricultur al and raw-supplying country into a newly-industrialized country of the next generation. A substantial element of this policy was and still is the connection between free-market principles and state interventionism as well as introduction of the 5-year socio-economic plans in steady develop ment both public and private sector. . The foundations of the new economic policy and the national develop ment policy were presented. A particular role of various specialized gov ernment agencies was indicated which deal with planning and monitoring of development of specific economic branches such as industry, agriculture, foreign trade, construction or tourism. The measures taken by the government to neutralize the effects of the East Asian economic crisis were also treated.