| Home > South-East Asia >> Malaysia | |
For all Malaysians: new Prime Minister abandons ethnic capitalism
Associated Press - July 1, 2009
Kuala Lumpur – Malaysia took a big step yesterday to liberalise its economy, relaxing a host of restrictions on foreign investment, including a controversial rule requiring businesses to be partly owned by ethnic Malays.
The Prime Minister, Najib Razak, announced that listed companies would no longer be required to allocate 30 per cent of their holdings to Malays as part of an affirmative action program for the country's ethnic majority.
Mr Najib said the rule was neither benefiting poor Malays nor was it sustainable amid the global economic slowdown, which will force Malaysia into its first recession in a decade. The economy is expected to shrink by up to 5 per cent this year.
"The world is changing quickly, and we must be ready to change with it or risk being left behind," he told a conference organised by the stock exchange.
"It is not a time for sentiment or half measures but to renew our courage and pragmatism to take the necessary bold measures to advance the national interests for the long-term benefit of all Malaysians," he said.
Mr Najib will have to walk a political tightrope in diluting the new economic policy, which provides a host of privileges in business, education, jobs and property ownership to the Malays who make up 60 per cent of the country's 28 million people.
Chinese and Indian ethnic minorities have long chafed against the policy, which Mr Najib has been dismantling since taking office in April. Even many Malays have protested against it, saying it mainly benefits the elite Malays.
Mr Najib later told reporters the policy had failed to meet its target of raising the Malay share of corporate wealth to 30 per cent by 2010. It stands at 19 per cent now.
The Government still wanted to meet the target by reforming the system and creating a new investor-friendly economic model, he said. "We will help the best and the good in business. We want to be fair to all communities. No one must feel marginalised... It is a tricky balancing act but it is do-able."
As part of the liberalisation, stockbrokers and trust management companies will be allowed to have 70 per cent foreign ownership, up from 49 per cent. Foreigners could also own 100 per cent of fund management companies, Mr Najib said.
The liberalisation moves take away most powers of the Foreign Investment Committee, a government body that has been the bane of foreign investors.
The Foreign Investment Committee has been derided as an impediment in Malaysia's efforts to become competitive against regional rivals such as Singapore, Indonesia and India by imposing various restrictions on investment.
Foreigners will also no longer be required to obtain the body's approval before buying property, either residential or commercial.
See also:
 |