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November 16, 2008

Malaysia to ease race-based rule to support bourse

Malaysia may relax race-based ownership rules in listed firms to boost interest in its stock market, Reuters reported, quoting a business weekly Saturday.

Companies that want to be listed on the Malaysian stock exchange must allocate 30 percent of their shares to bumiputra investors, who are mainly ethnic Malays. Firms are required to have a free float of at least 25 percent too.

The bumiputra rule is part of a government drive to give ethnic Malays -- who make up over half of the population of 27 million -- preference in jobs, education and business to narrow a wealth gap between Malays and minority ethnic Chinese.

The government is considering putting a portion of the amount allocated to bumiputra shareholders into the public free float portion, The Edge Weekly said quoting unidentified sources.

A spokesman of Finance Minister Najib Razak was not immediately available for comment.

This comes after the government announced this month that non-Malays would be able to buy shares not subscribed to by ethnic Malays.

Analysts have said the reform could improve Malaysia's economic competitiveness but trigger a backlash against the government which relies heavily on the ethnic Malay vote to stay in office.

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