Real test for new measures


Plain Speaking - A Weekly Column By Yap Leng Kuen

OVER the next few months, the real test for the recently announced liberalisation measures will emerge as Malaysia races to catch up on the pace of capital market recovery that is being experienced in far greater doses by some other Asian countries.

No doubt, life is returning to the fund raising market for some small initial public offerings (IPOs), placements, rights issues, project financing, refinancing, topping up of bank capital and other purposes, such as working capital and plant refurbishment.

But the new money is yet to surface in a big way and many fingers have been pointing at impediments such as the Foreign Investment Committee (FIC) ruling on acquisition of equity stakes, mergers and acquisitions; treatment of fund raising by listed companies and acquisition of properties.

The function of the FIC ended yesterday when Prime Minister Datuk Seri Najib Razak announced that those guidelines were repealed or deregulated.

Market players generally reacted well to the measures, saying it would be easier for foreigners to invest in Malaysia across many asset classes from financial securities and properties to acquisition of companies. It is also a lot easier for Malaysian companies to list on Bursa Malaysia.

New money may also be attracted to the knowledge-based and higher end industries as Malaysia announces significant liberalisation of high-end foreign labour, in a move that could be a prelude to others in line with its aim towards greater competitiveness especially with some of its neighbouring countries.

Expressing his optimism, Minister in the Prime Minister’s Department in charge of the Economic Planning Unit, Tan Sri Nor Mohamed Yakcop, said: “By removing the obstructions, it will increase the scope of investments and level of investments by leaps and bounds.

“It is a bold and transformational move, in line with previous moves made by the Government in the 1986 recession and 1997 Asian financial crisis, to ensure growth with equity,’’ he said at a media briefing yesterday.

Describing these measures as providing “overnight relief,’’ he said they were at the same time investor friendly and competitive.

In view of the sensitivities, which are seen as a major constraint for the present government, the move to dismantle the FIC ruling of a 30% bumiputra quota on IPOs is seen as a brave step in the right direction.

However, we have to be mindful eventually of the lessons gleaned from liberalisation moves by other countries that usually do it with a “big bang’’ to achieve the maximum result.

We should also comb the marketplace for misconceptions that may also become impediments. Wrong or negative perceptions can spring from anywhere especially among discontented people who can spread stories like wildfire.

● Senior business editor Yap Leng Kuen believes that apart from coming up with measures, managing perceptions should also form part of the Government’s campaign for new investments.

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