Proposed relaxation of NEP (Series 1)

1.Foreign Investment Committee (FIC) Guidelines.:

Background
•This has been the overriding policy guiding all Bumiputera equity arguments and justification since 1970’s.
•FIC guidelines regulate and approve the foreign investments in Malaysia.
•The guidelines ruled that all foreign investment in Malaysia is subjected to the Bumiputra equity requirement (30%).

Arguments:
•Has not addressed the problem of poverty and income inequality.
•We need more liberal investment policies as FDIs outflows exceed inflows. (In 2007, Malaysia’s FDIs outflows at RM38bil and inflows at RM29bil.)
•Economic liberalization will help to reduce bureaucracies and cost of doing business.

Suggestions:
•Abolish the FIC guidelines and replace it with a more liberal investment policy to attract FDIs.
•Enhance the competitiveness of local businesses with training and new technology adoption to compete with foreign companies.

2.Industrial Coordination Act 1975 (ICA).

Background:
•To regulate the licensing in the manufacturing sectors in the 1970’s and 80’s during the Industrialization Plan by Tun Dr. Mahathir.
•The ICA requires manufacturing companies with shareholders' funds of RM2.5 million and above or engaging 75 or more full-time paid employees to apply for a manufacturing licence for approval by the Ministry of International Trade and Industry (MITI).

Arguments:
•The approval of manufacturing license is not transparent (case by case basis).
•Foreign investors will not invest in the country if their licenses are subjected to changes from time to time.

Suggestions:
•Abolish outdated and irrelevant restriction in the act.
•Abolish the Industrial Coordination Act.