30% Bumi Equty lifted For 27 Service Sectors

Republised this article which was published on 22 April 2009 by Malaysiakini.

The government has lifted the 30 percent bumiputera equity rule for 27 service sectors involving health and social services, tourism, transport, business, computer and related services. "The liberalisation of the services sector is pursued with the view of creating a conducive business environment to attract investments, technologies and higher value employment opportunities," Prime Minister Najib Abdul Razak told journalists. He said the government would progressively be liberalising the other service sub-sectors on an on-going basis. With today's announcement, businesses in the 27 service industries will no longer have to be 30 percent owned by bumiputera. The rule is part of the New Economic Policy (NEP), launched after 1969 racial riots, in an effort to narrow the wealth gap between Malays and non-Malays. Critics say the policy has failed and that its biggest beneficiaries have been Malay entrepreneurs who cash in on an array of perks including discounts on property purchases and specially allocated government projects. "The liberalisation of the services sector is pursued with the view of creating a conducive business environment to attract investments, technology and to create higher value employment opportunities," Najib said. "These efforts are expected to enhance the level of competitiveness of the services sector in the country," he said in a statement. 'More politically correct' Wan Suhaimi Saidi, an analyst at Kenanga Investment Bank, said the move was a response to criticism that the bumiputera policy is making Malaysia more uncompetitive even as it slides towards recession during the global downturn. "The move is clearly about relaxing the equity conditions that have been a bone of contention among some investors," he said. "Eliminating the 30 percent bumiputera equity requirement in these service sub-sectors is good for the market as it will encourage investment in a more politically correct way." Under the measure, up to five international law firms will also be allowed to offer services relating to Islamic finance. The government wants the Muslim-majority country to become a global hub for Islamic banking.