Saturday, June 21, 2003
Malaysia lifts curbs on foreign equity in manufacturing sector
Associated Press Kuala Lumpur, June 21
The government has abolished regulations limiting the amount of equity foreign companies can own in manufacturing companies in Malaysia, the trade minister said on Saturday.
Rafidah Aziz said the new regime -- which came into effect last Tuesday -- was aimed at attracting more direct foreign investment to Malaysia. It will apply to all new investment as well as expansion plans for foreign companies already in Malaysia, she said.
Previously, foreign investors were barred from holding full equity in companies in several sectors unless at least 80 per cent of their products were for export.
Foreign direct investment into Malaysia and other Southeast Asian countries has been showing signs of a rebound after declining steadily from about $33 billion in 1997 to a low of $11.5 billion in 2000, according to the Association of Southeast Asian Nations.
But regional governments continue to express concern about losing foreign direct investment to China, which has low manufacturing costs and other advantages.
"We are now able to challenge other countries vying for foreign investments," Rafidah told reporters on Saturday. "We are meeting the aspiration of today's investors, where everywhere they are given 100 per cent equity without hesitation."
Rafidah said locally owned manufacturers should aim to become more competitive with foreign-owned firms, and indicated similar reforms were still to come in other industries under the government's "progressive liberalization" policy. The government would remain cautious, however, about opening up the financial sector, she said.
Rafidah said she believed foreign investors would not shun Malaysia because of comments made by Prime Minister Mahathir Mohamad in a speech on Thursday, when he accused Western countries of warmongering and wanting to take over the world through globalization or military might.
Mahathir has long been an outspoken critic of globalization and the West, but his comments rarely affect Malaysia's trade relationships. Malaysia is a major exporter of electronics goods, palm oil and other products.
"Business people make their decisions not on political reasons but because there is money to be made," Rafidah said. "As long as we can provide the conducive environment, they don't really bother about politics."
For example, China had been criticized by US and European governments about rights and other concerns but this had not stopped foreign investment, she said.
"The private sectors of America and Europe have gone to China by the droves ... like ants to sugar, regardless of what their governments say."
© Hindustan Times Ltd. 2003. Reproduction in any form is prohibited without prior permission