Wednesday, July 1, 2009

Liberalization of Investment Policy

The announcement on liberalization of investment policy made by PM Najib came at the right time. This will improve the current economic situation and to attract more local and foreign investors to Malaysia.

According to a Bernama report, the Ministry of International Trade and Industry has announced an increase of 53.4% growth in FDI in 2008 with an amount of US$12.9 billion (RM46 billion) as compared to US$8.4 billion (RM30billion) in 2007. Although there is tremendous increase of FDI is 2008, the United Nations Conference on Trade and Development (UNCTAD) predicts that there will be a further drop in FDI in year 2009 due to the current global financial crisis. With this in mind, we cannot dwell on our past achievements.

Malaysia can no longer depend on foreign workers as cheap labour. We cannot continue to depend on the export of oil as the main source of the nation’s revenue. We have to move up the value added chain, then only can we achieve a high income economic model and a respectable economic growth of a minimum growth of 6% annually.

Based on the current economic situation, there is intense competition in attracting FDI. The current economic slowdown will push foreign investors to seek for lower production and investment costs. According to UNCTAD World Investment Prospects Survey 2007 - 2009, there are three main motives for companies to internationalize their production: market seeking, resource seeking and efficiency seeking. The major factor that affects foreign investors' decision to invest in other countries, however depends on the size of the local market, meaning large economies such as China and the United States are the most popular markets for investments. Therefore, China who is a rising star in the global economy will likely to benefit from FDI. Last year, China recorded a 10.6% increase in FDI. We have to ensure that we are still in the race to compete with huge potential market like China.

Since the 30% bumiputra quota requirement for companies seeking to be public listed on Bursa Saham Malaysia is now scrapped, it is hoped that this policy will be able to attract both local and foreign companies to seek listing in Bursa Malaysia. Lets hope it will put Bursa Malaysia on the radar screen of the international investment community. Through an open, pro-business and stable and predictable investment climate, we hope to promote a more vibrant stock exchange.

Meanwhile, PM Najib has also announced that the Foreign Investment Committee (FIC) is 'no longer exist' because it did not serve its purpose well. The FIC was first established to monitor the 30% ownership rule in Malaysia but it did not manage to sustain the RM54bil in shares allocated to bumiputra. There are only RM2bilion of shares left in the hands of bumiputra. The government should look at economic participation by the bumiputra rather than just the equity participation. The government should not micro-manage the economy. It should look at the economic participation of the bumiputra at the macro level.

It is time that the government also look at the Government Linked Company (GLC). Only a few GLCs can compete at the international level. Within the country, it only serves to compete with locally incorporated companies, including bumiputras. The government has set KPI for the GLC and it is time to open up the GLC so that it will attract talented people of all races, including overseas talent.

The government needs to monitor all the new measures as announced be implemented according to the books. Often, it’s the deviation of implementation by the ‘Little Napoleons and Little Josephines’ that the rakyat is upset with the government. Hence, there is a need for a new KPI whether these policies are implemented accordingly.

PM Najib’s announcement proves that he’s committed to change and reform the government. He has to walk the talk. Then only people have confidence in the new administration. Lets hope these policies changes is just the beginning of many more good policies to come that will bring benefit to all races. Then only can we achieve a ‘Satu Malaysia’ where no race is denied of his constitutional rights to enjoy the fruits of the nation’s development.




首相拿督斯里纳吉刚宣布的一系列吸引外资政策正合时宜,相信能改善我国的经济现状,更重要的是有助于吸引国内外投资者。

《马新社》引述国际贸易及工业部声明时指出,我国在2008年的外商直接投资(FDI)增长了120亿9千美元(460亿令吉),比2007年的84亿美元(300亿令吉)增长了53.4%。虽然2008年外商直接投资大量增加,联合国贸易与发展会议(UNCTAD)预测,由于受到目前的金融风暴影响,有关领域的表现明年将进一步下降。基于这一点,我国不能停驻于过去的成就和荣耀。

大马不能持续依赖外劳廉价劳工,也不能继续依赖石油出口为国家的主要收入来源。相反的,我国要朝高附加值经济体,才能实现高收入的经济模式,以及达致逐年6%的增长率。

根据目前的经济形势,我国在吸引外国直接投资面对激烈的竞争。目前,全球经济萎缩将促使外资目光趋向低生产和投资成本的投资。

继政府废除上市公司30%的土著股权固打,我希望新的政策能吸引本地和外国投资者寻求在马来西亚交易所上市,把大马交易所推上国际投资舞台,并通过构建一个开放、亲商、稳定和可预测的投资环境,促进我国证券交易活动。

与此同时,首相纳吉也宣布撤除外资委员会的限制条例。政府当初成立外资委员会是为了监执30%股权的条例。然而,该委员会却无法维持高达540亿令吉的土著股权。与其讲求土著的股权拥有,政府更应该重视土著在经济活动的参与。换言之,政府应正视土著同胞在宏观经济层面的参与。

政府是时候检讨官联公司的表现。目前,只有少数的大马官联公司能在国际市场上竞争,其他的只能与本地注册公司及土著公司竞争。政府早前也为官联公司设定关键绩效指标,以监督这些公司的表现。但当局应该更开放以吸引国内的各族人才,及及招揽海外专才就业。


政府需要制定新的关键绩效指标来监督这一系列的新措施。否则,政策虽好但小拿破仑办事不力,执行偏差,则会引发民怨。

纳吉的宣布证明了他改革政府的决心。他必须言出必行,才能建立人民对他管理国家的信心。希望这一系列的政策是良好的开端,政府在未来会革兴及推行更多利民政策,让全民受惠。

我们必须确保没有一个族群受宪法保障的权利被剥夺并同享国家的成果,才能实现“一个马来西亚”愿景。



1 comment:

Tuanku said...

Dear Dr Chua,

The Liberalization of Investment Policy announced at Invest Malaysia 2009 is indeed good for the long term economy and financial prospect in Malaysia.

Do UMNO goons are ready to accept such liberalization of their huge interests in NEP wealth to allow other races and foreigners to take over the billion assets and equities participation in Malaysia ? Many foreigners and Malaysians are still doubtful and worried the hidden agendas behind on such liberalization objectives.

Yes, many foriegn investors still believe such liberalization is just a short term carrot to mitigate and improve the situation to stop the high decline of foreign investments in Malaysia.

Analysts, fund managers and foreign investors are still analysing, reading, looking and reviewing many factors beside the liberalization of investment policy in Malaysia.

Five major general factors to be considered by all investors from local and overseas are as follows:-

(a) People constitution rights are rampas away by BN goons in power grab in Perak. Similar, many potential Chinese investors are withdrawing their interests to invest billions in Perak when PR lost their power. BN leaders set a bad example of grabing power from a legitimate state govt voted by Perakians. Hence, foreign investors worried about their rights of their billion investments in Perak and Malaysia should similar "rampasan harta" by UMNO in future.

(b) High crime rate, red tapes, corruptions, poor governance, political instability , injustice and abuse of power deter foreign investors and rich people to park their billions in Malaysia.

(c) The NEP policy remained and the marginalisation and discrimination policies against other minority races. Brain drain in workforce, lack of professionals, poor education system and social problems are several negative investment risks to be studied by many rich investors.

(d) UMNO leaders are still arrogant and big bully against other component parties. The weaknesses and internal conflict in MCA, Gerakan and MIC caused lack of confidence in foreign investors to trust BN leaders now.

(e) The internal conflict in PR state govt and PAS dominance of PR political games. The marginalisation and discrimination against Penangites by BN federal govt also major concern of many investors in Penang.

Last but not least, PM Najib and BN leaders must resolve the five major problems stated above before foreign investors really "DARE" to continue investing their billion USD in Malaysia. Otherwise, the Liberalization of investment policy is irrelevant to many foreign investors when the five main issues deter them away.

A recent short interviewed with my bizfriend, a Middle East investor is withdrawing his million petrol dollars in JB and transfer to Singapore and Brunei. This because he worried about the five major risk factors. He is very doubtful about the transparent issue on the liberalization of investment policy and he dont expect to get free lunch from greedy and corrupted UMNO dominance party.
I have "no positive word" to convince him to change his mind.

Whay say you - Dato'?

Thanks for your publication of this feedback in your good blog.

Best regards,

Tuanku Perakian.

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