'Good riddance to crony-ridden economy'
Emily Chow & Wong Pheak ZernPublished: Jul 1, 2009 1:05 PM | Updated: Jul 1, 2009 4:18 PM
The measures to further liberalise the economy have received positive feedback from prominent Malaysian economists and politicians. However, they urge attention to implementation.
UPDATED 2.35PM
Economists and politicians laud the latest measures toward liberalisation, but call for close watch on implementation to ensure effectiveness and transparency.
The measures to further liberalise the economy have received positive feedback from prominent Malaysian economists and politicians. However, they urge attention to implementation.
Prime Minister Najib Abdul Razak announced the measures yesterday.
Among others, rules have been changed with regard to initial public offerings that had previously to reserve 30 percent of stock for Malays.
The government also abolished the requirement for regulatory approval by the Foreign Investment Committee (FIC) on property transactions unless it dilutes the interests of bumiputeras as sellers.
The measures follow on from a previous announcement in April, which relaxed foreign ownership in 27 service sub-sectors and in the financial sector.
An edited version of the reactions follow.
Lim Teck Ghee, director, Centre for Policy Initiatives
The repeal of the 30% bumiputera equity requirement for listing is long overdue but still welcome. It is not so much the percentage share issue that is at the heart of concern, it is whether we are really transitioning to a freer, more robust, more race-blind and investor- friendly economy.
We have been stuck in a crony-ridden, inefficient, racially-biased and corruption-prone economic system for too long. Even the government now admits that the failure to achieve set targets was due to leakages - deviations and abuses that were clear for a long time but which were tolerated.
The bumiputera equity leakage over the years has amounted to over RM52 billion alone if the government's estimates are to be believed.
What is important now is to see whether these new principles - in the PM's own words of "a freer economy, of being fair to all communities, of helping all those who are really capable and with calibre, of a win-win situation for all" - will be implemented or will remain rhetoric as has happened with much of the BN's promises.
The methodology used for measuring corporate equity ownership - for example, if is it still par value or market value as called for by many quarters; how the bumiputera and other ethnic shares have been computed; how the new institution Ekuiti Nasional Berhad (Ekuinas) will work - should be fully disclosed to the public in the interest of transparency and accountability. Otherwise we are likely to see more wayang kulit on the corporate equity issue.
Paul Low, president, Transparency International Malaysia
We welcome the removal of the 30% bumiputera equity requirement for listing (as it will) achieve clarity in our economy.
Najib’s measures will lead to better governance and reduction, if not elimination of demand for payback, ‘rentier entrepreneurship’ and corruption, all of which violate business ethics and integrity.
Previously the powers given to the FIC had blocked and generated uncertainty in investments. Reducing its functions or even eliminating its existence will have an immediate effect in achieving a freer economy.
Tony Pua, DAP parliamentarian for Petaling Jaya Utara
This has been a call from DAP and PKR for a long time. We are happy that Najib has taken steps to free the economy and make it a more efficient one.
The next thing he needs to do is to put in affirmative actions to remove poverty in Malaysia, to help the people based on their needs.
For example, poor people who buy houses that cost under RM1 million should be provided with a 5 percent discount as assistance, instead of (giving the discount only to) bumiputeras who can afford to buy houses above RM1 million. In this way, the government will be more effective in (facilitating) an equal economic environment.
I think that the measures announced will take a while to be effective, as it will take some time for the foreign investors to be aware of our changes. The government needs to step up promotion of changes in our policies, to let others be aware that we are attempting to remove corruption and bureaucracy to achieve liberalisation in our economy.
Ramon Navaratnam, former president, Transparency International Malaysia
I think this is a major breakthrough in the Malaysian economy, and it is a bold move which has been urged by the government for a long time. Foreign investors will be delighted and all right-thinking Malaysians will welcome this move.
The people who may object will be those who have benefitted from the previous unreasonable and unproductive (policies). They would be the officials who exerted inordinate powers in the administration. Unfortunately, many of them are strong political party members, so they might pose problems.
The guidelines must now (be framed) clearly (and) in a way that removes all doubt. Otherwise the civil service may not be clear-minded itself in implementation. (The guidelines) must be monitored closely and be transparent.
(Everyone, including the government) should take it upon themselves to watch the developments closely. The government should be highly commended for these initiatives.
The government also abolished the requirement for regulatory approval by the Foreign Investment Committee (FIC) on property transactions unless it dilutes the interests of the bumiputeras who are sellers.
The measures follow on from a previous announcement in April, which relaxed foreign ownership in 27 service sub-sectors and in the financial sector.
Koh Tsu Koon, president of Gerakan
Lifting of FIC restrictions together with other liberalisation measures will greatly enhance the chances of Malaysia not only combating the global economic crisis, but also achieving the status of high-income economy in the next 10-20 years.
It is extremely important for Malaysia to keep attracting quality investments, both foreign and domestic, for the economy to continue to grow.
It is in the context of an expanding cake that all can get more to share. Otherwise, we may be fighting over crumbs under the table.
We must not be afraid of liberalisation. We must be confident that fair competition will bring out the best in every Malaysian entrepreneur or worker, irrespective of race. It is only by pushing ourselves to the limit that we become more capable, committed and competitive.
The various measures will also enable Malaysians to leverage on our diverse cultural affiliations and linguistic capabilities to attract investment from China, India, Muslim countries and their diaspora throughout the world, in addition to traditional investors from the western world and Japan.
Equally important, liberalisation will earn us respect and reciprocity so that Malaysian entrepreneurs can move even more effectively into these three huge markets, taking the ‘1Malaysia’ concept abroad.
Mah Siew Keong, vice-president, Gerakan
We hope that all government agencies and the civil administration will embrace this new spirit of liberalisation. Policies of the government are articulated through the performance of the civil administration. Consequently if they are reluctant to breathe this air of liberalisation, then all else will fail.
The whole world is going through great socio-economic changes. As a country with unlimited potential we need to synthessze these changes and potential to propel us into greater economic prosperity and diversity. Only an open policy will suffice. Malaysia needs this to stay competitive.
Prime Minister Najib Abdul Razak announced the measures yesterday.Among others, rules have been changed with regard to initial public offerings that had previously to reserve 30 percent of stock for Malays.
The government also abolished the requirement for regulatory approval by the Foreign Investment Committee (FIC) on property transactions unless it dilutes the interests of bumiputeras as sellers.
The measures follow on from a previous announcement in April, which relaxed foreign ownership in 27 service sub-sectors and in the financial sector.
An edited version of the reactions follow.
Lim Teck Ghee, director, Centre for Policy Initiatives
The repeal of the 30% bumiputera equity requirement for listing is long overdue but still welcome. It is not so much the percentage share issue that is at the heart of concern, it is whether we are really transitioning to a freer, more robust, more race-blind and investor- friendly economy.
We have been stuck in a crony-ridden, inefficient, racially-biased and corruption-prone economic system for too long. Even the government now admits that the failure to achieve set targets was due to leakages - deviations and abuses that were clear for a long time but which were tolerated.The bumiputera equity leakage over the years has amounted to over RM52 billion alone if the government's estimates are to be believed.
What is important now is to see whether these new principles - in the PM's own words of "a freer economy, of being fair to all communities, of helping all those who are really capable and with calibre, of a win-win situation for all" - will be implemented or will remain rhetoric as has happened with much of the BN's promises.
The methodology used for measuring corporate equity ownership - for example, if is it still par value or market value as called for by many quarters; how the bumiputera and other ethnic shares have been computed; how the new institution Ekuiti Nasional Berhad (Ekuinas) will work - should be fully disclosed to the public in the interest of transparency and accountability. Otherwise we are likely to see more wayang kulit on the corporate equity issue.
Paul Low, president, Transparency International Malaysia
We welcome the removal of the 30% bumiputera equity requirement for listing (as it will) achieve clarity in our economy.
Najib’s measures will lead to better governance and reduction, if not elimination of demand for payback, ‘rentier entrepreneurship’ and corruption, all of which violate business ethics and integrity.Previously the powers given to the FIC had blocked and generated uncertainty in investments. Reducing its functions or even eliminating its existence will have an immediate effect in achieving a freer economy.
Tony Pua, DAP parliamentarian for Petaling Jaya Utara
This has been a call from DAP and PKR for a long time. We are happy that Najib has taken steps to free the economy and make it a more efficient one.
The next thing he needs to do is to put in affirmative actions to remove poverty in Malaysia, to help the people based on their needs.For example, poor people who buy houses that cost under RM1 million should be provided with a 5 percent discount as assistance, instead of (giving the discount only to) bumiputeras who can afford to buy houses above RM1 million. In this way, the government will be more effective in (facilitating) an equal economic environment.
I think that the measures announced will take a while to be effective, as it will take some time for the foreign investors to be aware of our changes. The government needs to step up promotion of changes in our policies, to let others be aware that we are attempting to remove corruption and bureaucracy to achieve liberalisation in our economy.
Ramon Navaratnam, former president, Transparency International Malaysia
I think this is a major breakthrough in the Malaysian economy, and it is a bold move which has been urged by the government for a long time. Foreign investors will be delighted and all right-thinking Malaysians will welcome this move.
The people who may object will be those who have benefitted from the previous unreasonable and unproductive (policies). They would be the officials who exerted inordinate powers in the administration. Unfortunately, many of them are strong political party members, so they might pose problems.The guidelines must now (be framed) clearly (and) in a way that removes all doubt. Otherwise the civil service may not be clear-minded itself in implementation. (The guidelines) must be monitored closely and be transparent.
(Everyone, including the government) should take it upon themselves to watch the developments closely. The government should be highly commended for these initiatives.
The government also abolished the requirement for regulatory approval by the Foreign Investment Committee (FIC) on property transactions unless it dilutes the interests of the bumiputeras who are sellers.
The measures follow on from a previous announcement in April, which relaxed foreign ownership in 27 service sub-sectors and in the financial sector.
Koh Tsu Koon, president of Gerakan
Lifting of FIC restrictions together with other liberalisation measures will greatly enhance the chances of Malaysia not only combating the global economic crisis, but also achieving the status of high-income economy in the next 10-20 years.
It is extremely important for Malaysia to keep attracting quality investments, both foreign and domestic, for the economy to continue to grow. It is in the context of an expanding cake that all can get more to share. Otherwise, we may be fighting over crumbs under the table.
We must not be afraid of liberalisation. We must be confident that fair competition will bring out the best in every Malaysian entrepreneur or worker, irrespective of race. It is only by pushing ourselves to the limit that we become more capable, committed and competitive.
The various measures will also enable Malaysians to leverage on our diverse cultural affiliations and linguistic capabilities to attract investment from China, India, Muslim countries and their diaspora throughout the world, in addition to traditional investors from the western world and Japan.
Equally important, liberalisation will earn us respect and reciprocity so that Malaysian entrepreneurs can move even more effectively into these three huge markets, taking the ‘1Malaysia’ concept abroad.
Mah Siew Keong, vice-president, Gerakan
We hope that all government agencies and the civil administration will embrace this new spirit of liberalisation. Policies of the government are articulated through the performance of the civil administration. Consequently if they are reluctant to breathe this air of liberalisation, then all else will fail.The whole world is going through great socio-economic changes. As a country with unlimited potential we need to synthessze these changes and potential to propel us into greater economic prosperity and diversity. Only an open policy will suffice. Malaysia needs this to stay competitive.
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