Malaysia to partially open services sector
Malaysia said Wednesday it will liberalise parts of the services sector, removing ownership rules linked to a controversial affirmative action policy for majority Muslim Malays, reported AFP.
Prime Minister Najib Razak, who was sworn in earlier this month, said that 27 sub-sectors would be liberalised "to attract more investments, bring in more professionals and technology as well as strengthen competitiveness."
The areas targeted for liberalisation are in the areas of health and social services, tourism, transport, business services and computer and related services.
Businesses in those service industries will no longer have to be 30 percent owned by "bumiputera" -- a term that means "son of the soil" and takes in Malays and indigenous tribes.
The rule is part of the New Economic Policy (NEP), launched after 1969 racial riots, in an effort to narrow the wealth gap between ethnic Chinese -- who control the business sector -- and Malays, who dominate government.
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.
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 per cent 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.
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