Najib expected to trim FIC's role

By Tuesday June 16th, 2009 No Comments

KUALA LUMPUR, June 17 — Prime Minister Datuk Seri Najib Razak is expected to announce measures to boost foreign investments by reducing the powers wielded by a panel that vets and approves such investments.

The “significant announcements” related to the so-called Foreign Investment Committee or FIC will be made at an investor conference in Kuala Lumpur at the end of June, said Bursa Malaysia chief executive Yusli Mohamed Yusoff yesterday.

In Singapore to promote the annual conference, he revealed that “the review of the FIC is going to be one of the significant items in his speech, and that will have an impact on foreign investor activity”.

Over the past few months, Malaysia has reviewed the functions of the FIC with the aim of paring its role so as to better facilitate foreign investments in the country.

Even so, Najib is unlikely to scrap the committee, which currently abides closely by guidelines which mandate that 30 per cent of a proposed investment be owned by Bumiputeras.

But he is expected to curtail the committee’s role to monitoring only six areas of “national interest”. Other sectors would be placed under their respective ministries, which would clearly state the investment criteria on their websites.

A unit in the Prime Minister’s Department with wide discretionary powers to vet proposed investments, the FIC has come under fire for the opaque manner in which it makes its decisions. One involved a proposal by Singapore’s Great Eastern Life Assurance about 2-3 years ago to acquire Wisma Denmark in Kuala Lumpur for RM150 million. The FIC rejected the proposal without providing any reasons.

In April, Najib liberalised 27 services sub-sectors related to healthcare, tourism, transport, social services, and computer and related services by allowing full foreign ownership. The financial sector was also further opened up.

In so doing, however, he has courted the ire of some Bumiputeras who fear the community could lose out.

Nonetheless, Najib has said liberalisation will continue — albeit gradually — because the country needs to be more competitive to attract investments as well as to move its economy up the value chain.

The aim is to increase the service sector contribution to gross domestic product (GDP) to 70 per cent, from 55 per cent currently.

Foreign investors appear to be gearing up to take advantage of the latest moves. The newly-elected head of the international business chambers in Malaysia yesterday said that its members would leverage their global links to help attract new investments to the country.

Speaking at the annual luncheon of the Malaysian International Chambers of Commerce and Industries, its president Irene Dorner said a number of private sector taskforces would soon be established to explore how these areas could be further developed, one being healthcare.

“We will bring together the technical expertise and experience of the private hospital community along with the global networking and promotional capabilities of the Chamber movement to accelerate the development of a best-of-class health tourism sector in Malaysia with global recognition,” said Dorner, who is deputy chairman and chief executive of HSBC Bank Malaysia.

But she pointed out the development of services was not only a question of liberalisation of the local services sector and foreign access to local markets.

Malaysian services should also be promoted globally so that they can take advantage of reciprocal market access in other countries and create opportunities for Malaysian service providers, she added.

Source : Business Times Singapore

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