KUALA LUMPUR, June 30 (Bernama) -- Effective and meaningful participation of Bumiputeras in the economy is more important in raising their status given the complexities in today's economy rather than the 30 percent Bumi ownership ruling in listed firms, Minister in the Economic Planning Unit of the Prime Minister's Department, Tan Sri Nor Mohamed Yakcop said Tuesday.
He said the 30 percent minority stake in a company does not provide an avenue for representative participation as it has shown that the lack of capital results in the 30 percent stake held at company level not being sustainable.
Amid rising competition in the international marketplace, he said that the Foreign Investment Committee (FIC) guidelines, such as the 30 percent Bumi equity, have become "such a blunt instrument" as they constraint growth.
"The reason is that FIC basically focuses on just equity (but) what is important for the Malaysian economy is not equity but participation," he said when elaborating on the deregulation of FIC guidelines announced earlier by Prime Minister Datuk Seri Najib Tun Razak.
Nor Mohamed said the participation of Bumiputeras would now extend beyond equity in areas such as employment, senior positions, entrepreneur development, capacity building and development.
"We are being market-friendly so as to create a win-win situation," he said.
Najib, who is also Finance Minister, announced a comprehensive deregulation of investment guidelines administered by the FIC at the Invest Malaysia 2009 conference.
Among others, the guidelines cover the acquisition of properties, acquisition of equity stakes, mergers and takeovers, and treatment of fund-raising by listed companies.
Nor Mohamed said that one major difference from here onwards would be the post Initial Public Offering (IPO) conditions among which includes the 30 percent Bumiputera (ownership) before approval is given for listing.
However, he said that when there was a dilution of Bumiputera equity, for example, three years after listing, there would be a need for a fund raising exercise and for the company to top up to the required equity.
With the new policy, "there is no longer the requirement to top up," he said.
"This is a major announcement because much of the complaints was about this need to top up as it was a hindrance to the fund raising exercises," he said.
He said the government would continue to support and develop successful Bumiputeras by welcoming others as well to participate which would enhance investments.
"To make it very clear, the FIC has eliminated that 30 percent Bumi equity ruling," he said. "As far as we are concerned, FIC is no more."
However, he said: "We should not confuse it with the 25 percent spread by the SC (Securities Commission).
"SC's 25 percent spread earlier still exists. Fifty percent of (the 25 percent) now will go to the Bumiputeras" which will effectively work up to 12.5 percent of total equity.
SC chairman Datuk Zarinah Anwar that the 12.5 percent was the minimum requirement but if more Bumiputeras were able to subscribe to the shares, the equity could be more than 12.5 percent."
If the company going for listing already has significant Bumiputera shareholders, so the Bumiputera equity level in that company could even exceed 30 percent, she said.
"So, if the company going for the listing already has 20 percent Bumiputera equity and you plus the 12.5 percent, it becomes 32.5 percent," she said.
He said the 30 percent minority stake in a company does not provide an avenue for representative participation as it has shown that the lack of capital results in the 30 percent stake held at company level not being sustainable.
Amid rising competition in the international marketplace, he said that the Foreign Investment Committee (FIC) guidelines, such as the 30 percent Bumi equity, have become "such a blunt instrument" as they constraint growth.
"The reason is that FIC basically focuses on just equity (but) what is important for the Malaysian economy is not equity but participation," he said when elaborating on the deregulation of FIC guidelines announced earlier by Prime Minister Datuk Seri Najib Tun Razak.
Nor Mohamed said the participation of Bumiputeras would now extend beyond equity in areas such as employment, senior positions, entrepreneur development, capacity building and development.
"We are being market-friendly so as to create a win-win situation," he said.
Najib, who is also Finance Minister, announced a comprehensive deregulation of investment guidelines administered by the FIC at the Invest Malaysia 2009 conference.
Among others, the guidelines cover the acquisition of properties, acquisition of equity stakes, mergers and takeovers, and treatment of fund-raising by listed companies.
Nor Mohamed said that one major difference from here onwards would be the post Initial Public Offering (IPO) conditions among which includes the 30 percent Bumiputera (ownership) before approval is given for listing.
However, he said that when there was a dilution of Bumiputera equity, for example, three years after listing, there would be a need for a fund raising exercise and for the company to top up to the required equity.
With the new policy, "there is no longer the requirement to top up," he said.
"This is a major announcement because much of the complaints was about this need to top up as it was a hindrance to the fund raising exercises," he said.
He said the government would continue to support and develop successful Bumiputeras by welcoming others as well to participate which would enhance investments.
"To make it very clear, the FIC has eliminated that 30 percent Bumi equity ruling," he said. "As far as we are concerned, FIC is no more."
However, he said: "We should not confuse it with the 25 percent spread by the SC (Securities Commission).
"SC's 25 percent spread earlier still exists. Fifty percent of (the 25 percent) now will go to the Bumiputeras" which will effectively work up to 12.5 percent of total equity.
SC chairman Datuk Zarinah Anwar that the 12.5 percent was the minimum requirement but if more Bumiputeras were able to subscribe to the shares, the equity could be more than 12.5 percent."
If the company going for listing already has significant Bumiputera shareholders, so the Bumiputera equity level in that company could even exceed 30 percent, she said.
"So, if the company going for the listing already has 20 percent Bumiputera equity and you plus the 12.5 percent, it becomes 32.5 percent," she said.
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