Updated 3.10pm on 23 April 2009
PETALING JAYA, 23 April 2009: The DAP has described the prime minister’s liberalisation of 27 services sub-sectors as a “baby step forward” in the right direction but said much more needed to be done.
DAP national publicity secretary Tony Pua said the move demonstrated Prime Minister Datuk Seri Najib Razak’s commitment towards unwinding the policies and regulations imposed and expanded under the pretext of the New Economic Policy (NEP).
Among others, Pua, who is the Member of Parliament for Petaling Jaya Utara, said the measures announced only covered “very selected” sectors that had conditions attached.
“There are hundreds of sub-service sectors classified,” he said in a statement today.
Pua was responding to an announcement by Najib, who is also finance minister, that the 30% bumiputera equity requirement imposed on health and social services, tourism, transport, business, computer and related services, and sporting and other recreational services, and rental or leasing services was removed as of yesterday.
Pua also questioned if companies would be exempted from Bursa Malaysia’s bumiputera equity requirement before they could be listed on the local stock exchange.
“By liberalising ownership but not their ability to raise funds locally will only serve as a handicap for these companies,” he noted.
He added that the liberalisation of bumiputera ownership conditions on the local stock exchange would help revive the financial services sector to make the Malaysian market relevant in the region again.
More importantly Pua said, the liberalisation of 27 sub-sectors did not address the demand aspect of the industry “which are still very protected”.
“Government agencies and government-linked companies (GLCs) are severely constrained by finance ministry guidelines on procurement.
“[These agencies] are only allowed to procure goods and services from companies which are registered with and possess approved classifications from the finance ministry based on strict bumiputera ownership controls,” he said.
Pua cited the banking sector where there was a rule that legal firms engaged by banks must have at least 50% bumiputera partnership regardless of the professional nature of the services provided.
“These persisting barriers to entry will continue to discourage investments in these sectors. Why would investors consider setting up operations when they have no opportunity to offer the services to the government and the GLCs, which combined, is the single largest consumer of services in Malaysia?”
Pua argued that the liberalisation of supply-side constraints without the corresponding reforms on the demand-side was akin to “clapping with a single hand”.
He said the DAP looked forward to other measures by the government to ensure the success of its liberalisation exercise.
MCA deputy president Datuk Seri Dr Chua Soi Lek said the liberalisation of the services sector was a move in the right direction and “long overdue”.
Chua also called for a “total review” of the NEP.
“Najib with his wealth of experience should be able to take the lead. Affirmative action should be based on needs.
“The bumiputra special rights are entrenched in the constitution. Nobody can take that away. So, a review of the NEP should not be construed by some bumiputra as a challenge to their special rights as this is enshrined in the constitution,” he said in his blog today.
MCA secretary-general Datuk Wong Foon Meng said MCA had always maintained that quota restrictions should gradually be disbanded.
“The removal of quotas in any commercial sector should be accepted as a means of encouraging economic competitiveness,” he said in a statement.
He noted that the liberalisation announced by Najib was in line with Asean’s trade liberalisation which will soon be implemented.
“MCA also hopes that liberalising the 27 sectors will be sustained permanently and that quota requirements will not be reinvoked in future.”
He added that the MCA hoped the government would gradually liberalise nine other sectors which currently had quota restrictions.
The sectors are property, defence and national security, utilities supply, government investment agencies, airports, publication, printing and republication of all recorded media, telecommunications, public transportation, and banking and financial institutions for conventional banking.
Gerakan vice-president Datuk Mah Siew Keong, who is also the party’s central economic bureau chief, urged further liberalisation measures on other sectors to make Malaysia a more viable country to invest in and trade with.
“While strengthening our economy, we also want Malaysia to be more competitive at the international level,” Mah said in a statement today.
He added that the move was a “bold revamp” and in line with Najib’s promise of 1Malaysia which was underpinned by power-sharing and equitable wealth distribution.