Thursday, April 23, 2009

Removal of 30% Bumi quota - Why? Opening the door to foreign control of Malaysian businesses..?

What really happened?

Removal of the 30% Bumiputra quota... WHY?

A radical move by a new Prime Minister to bring about much needed reforms of a system that really benefited only the rich 'bumiputras' rather than fulfilling one of the 2 original objective of the NEP, i.e. the eradication of poverty

OR - was it an just an act that Malaysia was forced into doing to comply with its obligations as stated in the various World Trade Organization Agreements [WTO Agreements] and maybe even some of them Free Trade Agreements?

I believe it is the later - because when the UMNO led-BN signed those agreements, I am of the opinion, that they also did sign away the special privileges of the Malay, natives of Sarawak and Sabah that existed in Malaysia since independence. [Maybe, it is time that the Malaysian government come and explain the consequences of their signing the WTO Agreements, and its benefits - and their evaluation of benefit and cost to Malaysians today]. Who is the traitor to the Malays and the natives of Sabah and Sarawak? Is it not the UMNO-led BN?


In a sweeping move towards liberalising the economy, the government yesterday removed the 30 per cent Bumiputera quota on equity ownership in 27 service sub-sectors (see list at right).
Prime Minister Datuk Seri Najib Razak will take the move a step further next week with a major announcement involving the financial sector.

The sub-sectors affected with immediate effect are health and social services, tourism services, transport, business and the computer industry and related services.

He also announced that the legal profession had also been liberalised to allow up to five top international law firms with expertise in international Islamic finance to practise here.

Najib, who is also finance minister, said the move would attract more investment and bring in more professionals and technology, besides strengthening competitiveness in the sectors.

"The services sector is an important component of the national economy, contributing 55 per cent to the gross domestic product last year. Of this, 47.6 per cent was contributed by non-government services."

He said the sector accounted for 57 per cent of total employment in the country.

The government, he added, would intensify the tapping of the full potential of the services sector as a new growth area in the economy to raise its contribution to 60 per cent of GDP as targeted in the Third Industrial Masterplan.

Najib said the government would be progressively undertaking liberalisation of other services sub-sectors on an ongoing basis.

"The liberalisation of the services sector is being pursued with the view of creating a conducive environment to attract investments, technology and create higher-value employment opportunities.

"The initiatives will not adversely affect the domestic services industry as the government will continue to support the industry in capacity-building and in the opening up of export markets.

"In fact, this move was decided based on response and acceptance of the sector," he said.

It was also part of Kuala Lumpur's commitment towards an Asean agreement in liberalising the sector.

Najib said a services sector capacity development fund of RM100 million had been established under the first economic stimulus package.

The fund is being managed by the Malaysian Industrial Development Authority to strengthen the industry in facing the more liberalised services environment.

Najib also announced the formation of a national committee for approval of investments in the services sector under the Malaysian Industrial Development Authority.

The committee will act as a focal point to receive and process investment applications in the services sector but will not touch on investments in financial services, air travel, utilities, economic development corridors, Multimedia Super Corridor, Bionexus status companies and distributive trade.

"With this, we expect a greater inflow of investments," he added.

Approved investments in the services sector totalled RM50.1 billion last year, exceeding the investment target of RM45.8 billion per annum, with the share of foreign investments at 11 per cent.

In terms of exports, the sector contributed RM102.1 billion while imports totalled RM99.8 billion last year.

Najib said the World Trade Organisation had placed Malaysia among the 30 leading global exporters of services.

"With the focus on services, our promotional efforts in manufactured goods will be complemented by greater intensity given to export of services.

"The Malaysia External Trade Development Corporation has been tasked with coordinating and spearheading all export promotion initiatives."

Najib added that the liberalisation of the legal profession was part of measures to develop Malaysia into an international Islamic financial hub.

Successful law firms will be determined based on credentials and their business plans in respect of offices to be set up in Malaysia.

"These firms will only be allowed to offer legal services in international Islamic finance," he added. - New Straits Times, 23/4/2009, Move to liberalise economy: Services sub-sectors to soar with bold revamp

Najib - please be honest - and tell us the real reason why this 'liberalization' took place? Tell us also about the other impacts of signing these WTO Agreements?

Removal of 30% Bumiputra Equity - in favour of Malaysian ownership or foreigners... Will there be any requirement of Malaysian equity ownership of these companies. I think NOT...and that will not be good for Malaysians, will it now?

Not at all - now anyone can own these companies. There is also no quota requirement that will ensure that ownership is still Malaysian. The door seem to be OPENED to everyone - and nothing is stopping 100% foreign owned foreign companies coming in and competing with local companies, is there now.

Najib's announcement opens the door for further foreign colonisation of Malaysian companies - it is not a move that will protect Malaysians....[As I mentioned earlier, the UMNO-led BN sold us out manly years ago when they signed the various WTO (and also FTA Agreements)].

This move will not affect the rich much (and in fact may benefit many of the rich) - but for the poor, it will certainly be BAD....

Was this policy/practice of ' 30 per cent Bumiputera quota on equity ownership in 27 service sub-sectors' permissible by the Malaysian Federal Constitution in the first place? I think not - because our Federal Constitution is very clear about the permissible areas of special preferences for Malays, native of Sabah and Sarawak...Art. 153 of the Federal Constitution also do not provide for any magical '30%", and does it really cover these that are being liberalized now... [See also earlier posting:- Constitution can be discussed...can be changed - it is not sacred or infallible]

There is provision for reservation of certain proportion of permiits and licences for Malays and natives - but there really is nothing about any '30% share' in the equity ownership of a company..., is there.

Is there a Rule, Regulation, Order ...Gazzette Notification of sorts that talk about this '30%' ...and what it applies to? Or is it an arbitrary figure that is thrown around from time to time? Openness...transparency...that is what we need. We need to know...we need to be educated - based on 'facts' and the truth.



153. Reservation of quotas in respect of services, permits, etc., for Malays and natives of any of the States of Sabah and Sarawak.

(1) It shall be the responsibility of the Yang di-Pertuan Agong to safeguard the special position of the Malays and natives of any of the States of Sabah and Sarawak and the legitimate interests of other communities in accordance with the provisions of this Article.

(2) Notwithstanding anything in this Constitution, but subject to the provisions of Article 40 and of this Article, the Yang di-Pertuan Agong shall exercise his functions under this Constitution and federal law in such manner as may be necessary to safeguard the special position of the Malays and natives of any of the States of Sabah and Sarawak of such proportion as he may deem reasonable of positions in the public service (other than the public service of a State) and of scholarships, exhibitions and other similar educational or training privileges or special facilities given or accorded by the Federal Government and, when any permit or licence for the operation of any trade or business is required by federal law, then, subject to the provisions of that law and this Article, of such permits and licences.

(3) The Yang di-Pertuan Agong may, in order to ensure in accordance with Clause (2) the reservation to Malays and natives of any of the States of Sabah and Sarawak of positions in the public service and of scholarships, exhibitions and other educational or training privileges or special facilities, give such general directions as may be required for that purpose to any Commission to which Part X applies or to any authority charged with responsibility for the grant of such scholarships, exhibitions or other educational or training privileges or special facilities; and the Commission or authority shall duly comply with the directions.

(4) In exercising his functions under this Constitution and federal law in accordance with Clauses (1) to (3) the Yang di-Pertuan Agong shall not deprive any person of any public office held by him or of the continuance of any scholarship, exhibition or other educational or training privileges or special facilities enjoyed by him.

(5) This Article does not derogate from the provisions of Article 136.

(6) Where by existing federal law a permit or licence is required for the operation of any trade or business the Yang di-Pertuan Agong may exercise his functions under that law in such manner, or give such general directions to any authority charged under that law with the grant of such permits or licences, as may be required to ensure the reservation of such proportion of such permits or licences for Malays and natives of any of the States of Sabah and Sarawak as the Yang di-Pertuan Agong may deem reasonable; and the authority shall duly comply with the directions.

(7) Nothing in this Article shall operate to deprive or authorise the deprivation of any person of any right, privilege, permit or licence accrued to or enjoyed or held by him or to authorise a refusal to renew to any person any such permit or licence or a refusal to grant to the heirs, successors or assigns of a person any permit or licence when the renewal or grant might reasonably be expected in the ordinary course of events.

(8) Notwithstanding anything in this Constitution, where by any federal law any permit or licence is required for the operation of any trade or business, that law may provide for the reservation of a proportion of such permits or licences for Malays and natives of any of the States of Sabah and Sarawak; but no such law shall for the purpose of ensuring such a reservation -

(a) deprive or authorise the deprivation of any person of any right, privilege, permit or licence accrued to or enjoyed or held by him; or

(b) authorise a refusal to renew to any person any such permit or licence or a refusal to grant to the heirs, successors or assigns of any person any permit or licence when the renewal or grant might in accordance with the other provisions of the law reasonably be expected in the ordinary course of events, or prevent any person from transferring together with his business any transferable licence to operate that business; or

(c) where no permit or licence was previously required for the operation of the trade or business, authorise a refusal to grant a permit or licence to any person for the operation of any trade or business which immediately before the coming into force of the law he had been bona fide carrying on, or authorise a refusal subsequently to renew to any such person any permit or licence, or a refusal to grant to the heirs, successors or assigns of any such person any such permit or licence when the renewal or grant might in accordance with the other provisions of that law reasonably be expected in the ordinary course of events.

(8A) Notwithstanding anything in this Constitution, where in any University, College and other educational institution providing education after Malaysian Certificate of Education or its equivalent, the number of places offered by the authority responsible for the management of the University, College or such educational institution to candidates for any course of study is less than the number of candidates qualified for such places, it shall be lawful for the Yang di-Pertuan Agong by virtue of this Article to give such directions to the authority as may be required to ensure the reservation of such proportion of such places for Malays and natives of any of the States of Sabah and Sarawak as the Yang di-Pertuan Agong may deem reasonable; and the authority shall duly comply with the directions.

(9) Nothing in this Article shall empower Parliament to restrict business or trade solely for the purpose of reservations for Malays and natives of any of the States of Sabah and Sarawak.

(9A) In this Article the expression "natives" in relation to the State of Sabah or Sarawak shall have the meaning assigned to it in Article 161A.

(10) The Constitution of the State of any Ruler may make provision corresponding (with the necessary modifications) to the provisions of this Article.



4 comments:

donplaypuks® said...

What's your beef Charlie?

Let there be open competition.

That will sort out the men from the boys, the genuine entrepreneur from the rent and 10% commission seeker and the hard working and industrious from the gaji buta.
http://donplaypuks.blogspot.com

general said...

Dear Sir,
I am baffled. Will you ever be happy? Prior to this, Malaysians complained that the 30% bumi quota is making Malaysia non-competitive as the globalized world competition heats up and I believe, you ,like most other right minded Malaysians, probably also wanted the 30% Bumi quota to be dropped. If not, ok I apologize for making a stereotypical statement. Either way, here's my argument.

Now that the government has decided to liberize some sectors, you complain about this too? Folks like you probably will always be suspicious and the grass will always been greener on the other side.

So, who cares if its because of WTO or free trade agreement or just because the government thinks it's the right time to liberalize? Do you think the would-be foreign investors cares if the 30% went to a BUMI or another Malaysian whether Malays, Chinese or Indians? The bottom line is they don't want to be forced to give up 30% to anyone else. So, they would rather go to another country thus making Malaysia less competitive.

And are you so blind that you are still worried about colonization. Wake up a smell the coffee! Your fear is already obsolete with the advent of globalization. There is no more localized colonization because the whole world is competing against each other, so in that effect, the entire world is already virtually colonized by the economic superpowers. Just look at how the US or the China financial meltdown affected us.

It's the survival of the fittest now and only the best will win. So, countries with the best incentives and advantage will attract the best investments and be more competitive.

I think it's about time you get out of your little box and throw away your old fears and suspicions. I don't like the 30% forced quota and I think we should dismantle all of it. Positive discrimination should be applied to all Malaysians who need help to erradicate poverty instead of by race.

This is the good move and even if it because of WTO or AFTA etc, I don't care. It's the right step in the right direction.

nckeat88 said...

Why cannot? You critise any protection policy of bumi but you agree that non bumi have to be protected against foreigner. Hypocrite!

Charles Hector said...

If it is open season, and any company (even with 100% foreign ownership, etc) can come in to Malaysia and compete with the locals, it is something that we need to be concerned about.

Malaysian mentality is that the foreign is always better than the local - and hence we may be seeing the death of local companies. I do not advocate free and open competition (with no restrictions) not when there is already inequality amongst the participants of this race, and also a 'colonial' mentality that still dominates Malaysians.

We allowed the MNC mega-supermarkets like TESCO, Giant, Macro, ...in and look at the effect it has had to the Malaysian sundry shops and other shops (even the local Supermarkets). In some countries, there is NO more provision/sundry shops, clothes shops, etc in town anymore.

A free market system is not good - and we can see the effect of this system in the US, where there a growing new 4th World (poor and suffering population). Losers in this competitive free market system is just dumped by the side of the road. A free market system also leads to the emergence of monopolies - hence depriving consumers of choices.

Removing the 30% bumi quota is good - but just allowing total foreign ownership of companies is dangerous.