Malaysia: PM Najib announces relaxation of bumiputra policies

Updated On: Apr 27, 2009

Prime Minister Najib Razak announced on Wednesday that the longstanding requirement that foreign investors in the services industry must take on Malay partners to own 30 per cent of any joint venture, will be lifted immediately for 27 sub-sectors, including health and social services, tourism, transport, business and computer-related services.

"Recognising the growth potential in the services sector, the government has decided to immediately liberalise 27 services sub-sectors, with no equity condition imposed”, said Najib.

This has been seen as an attempt to improve Malaysia's competitiveness in the softening global economy.

The Prime Minister, who is also the finance minister, promised further liberalisation, saying that he would announce details of the liberalisation of the financial sector next week.

Reading from a prepared statement the Prime Minister said he expected a greater flow of foreign investments in the services sector  which currently forms 11 per cent of total investment.

The government, he added, would also allow foreign legal firms to practice in the country but to only offer services in Islamic finance.

Critics have already pointed out possible shortcomings in the relaxation of bumiputra policies.

MP Tony Pua who belongs to the opposition DAP lauded the move as a “baby step forward” in addressing the restrictions of the New Economic Policy (NEP), but cautioned that more needs to be done, including the liberalization of the hundreds of sub-service sectors that are still subject to bumiputra ownership conditions, and the liberalisation of bumiputera ownership conditions on the local stock exchange

Government agencies and government-linked companies (GLCs) are still severely constrained by the Finance Ministry guidelines on procurement, which states that these agencies and companies are only allowed to procure goods and services from companies which are registered with and possess approved classifications based on bumiputera ownership controls.

The Government and the GLCs combined, is the single largest consumer of services in Malaysia, and the liberalisation of supply-side constraints without corresponding reforms on the demand-side would be futile.


The Malaysian Insider, Najib drops Bumiputera quota for services sector , 23 April 2009, http://www.themalaysianinsider.com/index.php/malaysia/24151-najib-drops-...

The Straits Times, M'sia eases ownership rules, 23 April 2009, http://www.straitstimes.com/Breaking%2BNews/SE%2BAsia/Story/STIStory_367...

MYsinchew.com, “DAP welcomes govt's business liberalisation move but”, 23 April 2009, http://www.mysinchew.com/node/23545?tid=14

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