Govt lifts 30% bumi rule for 27 services sub-sectors

STAR, 22 April 2009

PUTRAJAYA: The government has removed the 30% bumiputra equity condition in 27 services sub-sectors, with immediate effect.

Prime Minister Datuk Seri Najib Tun Razak said the sub-sectors, which involved health and social services, tourism services, transport services, business services and computer and related services, would have no equity conditions imposed.

He said the liberalisation was aimed at creating a conducive business environment to attract more investments, bring in more professionals and technology, encourage competitiveness and create higher value employment opportunities.

“We will be progressively undertaking liberalisation of the other services sub-sectors,” he told a press conference at his office on Wednesday.

Saying that the services sector would become a new growth sector of the economy, Najib said it contributed 55% to the GDP in 2008, and accounted for 57% of total employment in Malaysia.

The Government wanted to tap the sector’s full potential and raise its contribution to 60% of the GDP, he said.

However, he assured that the liberalisation would not adversely affect the domestic services industry, which would continue to be supported.

He said a RM100mil services sector capacity development fund was established under the first economic stimulus package, managed by the Malaysian Industrial Development Authority (Mida) to assist the industry to face the more liberalised services environment.

To facilitate investments into the sector, a National Committee for Approval of Investments in the Services Sector had been established under Mida which would receive and process applications of investment in the services sector, excluding investments in financial services, air travel, utilities, Economic Development Corridors, Multimedia Super Corridor and Bionexus status companies and distributive trade.

In a bid to develop Malaysia as an international Islamic financial hub, the legal profession would be liberalised to allow up to five international law firms with expertise in international Islamic finance to practise in Malaysia, Najib said.

Najib also said the liberalisation was in line with Malaysia’s commitment to Asean.

However, some of the measures were better than those undertaken by other Asean countries, he said, adding that they would also make Malaysia more equipped to compete internationally.

“Consultations were carried out and the decision was made based on the reception and acceptance by the sub-sectors,” he said on the selection of the sub-sectors.

Najib said that in 2008, approved investments in the services sector totalled RM50.1bil, exceeding the target of RM45.8bil per annum under the Third Industrial Master Plan.

The share of foreign investments was 11% of the total investments.

“With the liberalisation of the services sector, we expect greater inflow of investments,” he said.

Najib also said he would announce next week the liberalisation of the financial sector.

He declined to give details.

“I want it to be full of surprises” and “It is good for the market to digest (the announcement for the services sector) first.”