KUALA LUMPUR, Feb 24 – Malaysia will relax some of its pro-Malay economic policies as part of a major stimulus package to keep the economy from faltering further, Minister of International Trade and Industry Muhyiddin Yassin said yesterday.
This is likely to be announced in the second package on March10, that will be bigger than the RM7 billion (S$2.9 billion) one unveiled last November.
Analysts have suggested that it could be between RM10 billion and RM15 billion.
Tan Sri Muhyiddin declined to give details but said the Cabinet has agreed to liberalise the rules for foreign investment, including the bumiputera equity requirements.
“It has been agreed upon by the Cabinet, and would be announced soon. Even in the FIC (Foreign Investment Committee) where one of the important components is the bumiputera equity. That is also being looked at, and there will be a slight change,” he told reporters. The services sector would also be liberalised.
The local media had reported that the government was likely to scrap the guidelines for the retail sector, with the exception of hypermarkets.
Under the guidelines, retailers and restaurants were required to have 30 per cent bumiputera equity participation if they had more than 15 per cent foreign shareholding. They were also required to have boards, management and staff reflecting the demographics of Malaysia. It had never been fully implemented.
Certain aspects of the controversial pro-Malay policy had already been relaxed, notably in the manufacturing sector where foreigners can have full ownership. The main remaining quota is the 30 per cent Malay equity ownership for public-listed companies. This was relaxed a little last year, with the quota now implemented only for new listings.
Muhyiddin defended the 40-year-old policy as having been “one of the best” for Malaysia’s needs, but acknowledged its flaws in implementation.
He said it was being liberalised gradually but will not be lifted fully until Malaysia was ready for it.
However, he said once it was rolled back, it would not be reimposed.
In general, the policy assists the majority Malay community in the economic sector through share quotas, soft loans and preference for government tenders. It also gives them a helping hand in educational opportunities.
Some Malaysians, including top banker Datuk Seri Nazir Razak, the brother of Deputy Prime Minister Najib Razak, had called for the policy to be scrapped.
Muhyiddin said the full impact of the economic crisis had yet to be felt in Malaysia, adding that it was bracing itself for a fall in exports this year due to slowing demand for its products.
“The best could be 0.5 per cent (rise). We fear that it might be a minus range of 3 per cent to 4 per cent,” he said.
Exports fell 14.9 per cent from a year earlier last December.
Muhyiddin is seen as one of Malaysia’s rising political stars as he is the front-runner for the deputy president’s post in Umno. He is up against two candidates in next month’s party election.
By convention, Umno’s deputy president is also Malaysia’s deputy prime minister.
Muhyiddin said it was imperative for Umno to change to win back the hearts of the people, but acknowledged that it was an uphill task to get its members to realise they can no longer be self- serving.
“There is a need for more political training ... something that we have not paid attention to for a while. Time is not on our side.” – The Straits Times
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