Scrap 30% equity ruling for other sectors too

By Thursday April 23rd, 2009 No Comments

DATUK Seri Najib Tun Razak was true to his promise. He has scrapped the 30% quota for bumiputra equity even though it is only for 27 sub-sectors in the services sector.

It was indeed a bold move many did not expect.

The move signals the opening of opportunities for foreign companies which specialise in the 27 sub-sectors.

They can now set up shop here without having to worry about finding a local partner.

In the past, some of these foreign companies had scrambled to find “suitable” bumiputra partners, only to find that they preferred to remain “sleeping partners.”

Imagine Gray Line setting up an in-bound travel agency in Malaysia, and Wipro or even EDS going big into data processing here.

It certainly will raise standards, intensify competition and create jobs, which will do the domestic economy good.

This removal should have taken place a long time ago.

There are mixed thoughts on this on several blogs.

Some are in favour, others not. One respondent to a blog said “the 30% only goes to the same group of people as though no others exist.”

For the business fraternity, it seems to be well received.

But it is only 27 sub-sectors, and not many are big money earners.

In the case of data processing, it could involve big bucks if the big boys such as DHL, Satyam, Wipro, EDS, and CSC are serious about using Malaysia, now that the 30% ruling has been scrapped.

With the onset of globalisation, this step to lift the 30% rule is necessary for Malaysia to be competitive.

We cannot go on protecting some of our companies; we need to open up sectors, introduce or intensify competition, raise the standards so that all this talk about wanting to be world-class and creating hubs can be a reality.

The lifting of the 30% ruling should also be extended to other sectors.

Next week, Najib will likely spring more surprises to further liberalise the financial services sector.

Those in the know claim there will be goodies for the insurance sector and some rules on investment for Islamic banking will be relaxed.

More changes can be expected, and for some entrepreneurs, the change should be done “swiftly as the old model of doing business is outdated.”

An entrepreneur said “Malaysia should do away with monopolies and government contracts should not go to certain parties even though a revamp of the tender process has been announced.”

“The Government should also scale down its stake to 30% in the many government-linked companies sooner. It should appoint professional boards and management teams to run the business. The Government should stop protecting select industries,” the entrepreneur said.

The lifting of the 30% bumiputra equity ruling in the 27 sub-sectors should be the first of many more changes to come.

The business community knows that to remain relevant, competitive and efficient, changes are necessary.

But there is no point announcing any change if there is no follow through.

Efficient implementation is key and no amount of talk is going to convince anyone.

It is time to walk the talk and keep the promise.

Those entrusted to implement change should shift into high gear now.

What captains of industry say:



Country Heights Holdings Bhd

IT will be easier to talk to foreigners without that 30% equity requirement. When foreign companies seek out opportunities in Malaysia, they always bring up the 30% protection.

It will create more interest if a Malaysian company wants a foreign partner but the world economy is not very good today, so let’s see what the impact will be.


General Manager,

OneWorld Hotel

THERE is no impact on us because we are a private company. Most of the hotels are owned by locals. However, the hotels are managed by foreign hotel operators.

This means they charge a management fee based on a contract. Malaysian hotel rates are too low and the yields are not attractive. In addition, we charge in ringgit.


Executive deputy chairman,

Malaysian Merchant Marine Bhd

I BELIEVE the move is a step in the right direction. In fact, this is part of what the business community has been asking for all these years.

The move can help reduce corruption, in the sense that it minimises the opportunities for people to manipulate the earlier system.

And I can see that the move could help improve transparency, which is important as we are part of the global economy.

Additionally, we will have less explanation to do now when dealing with international companies, as previously they could not understand why we have such a requirement in the first place.


Chief executive officer,

GO Communications Sdn Bhd

KRETSER, who is of Australian nationality, said he had local partners who currently held minority stakes in the public relations agency.

“It all helps when you have a local partner for this particular industry, especially when you go for Government business. For a lot of good reason, it’s always advisable to have a local partner,” he said.

Nonetheless, Kretser said the move would not have a direct impact on the company but he believed it was a good step for the future development of the Malaysian economy, particularly in the communications industry.


Country Manager,

3Com Asia Ltd

AS an MNC, we are not affected by the bumiputra equity ruling even prior to the Government’s decision to remove the 30% bumiputera equity. We have been planning to incorporate a local private entity (Sdn Bhd) here and we’ve received the approval.

I believe more MNCs will be encouraged to incorporate local subsidiary here with the recent move by the Ggovernment.

It will be more transparent and fair. This move will also create a more level playing field and provide equal opportunities.


Asean south general manager (enterprise business),

Nortel Networks Malaysia Sdn Bhd

NORTEL has always recognised the value of running a business in Malaysia, that’s why we are launching Agile Communication Environment to help drive business growth in this country.

For us, creating value and helping companies to achieve their business goals is top priority, and we will continue to focus on doing what we do best as a leader in the telecommunications sector.

Source : The Star

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