Malaysian Economy Reforms

Prime Minister Malaysia, Datuk Seri Najib Abdul Razak unveiled bold measures to further liberalise the economy, including repealing Foreign Investment Committee (FIC)guidelines that have long hampered efforts to attract foreign investors.

Highlights Of Reform

1. FIC Deregulation

Deregulation of FIC guidelines encompasses:

i) Acquisition of equity stakes, mergers and takeovers;

With immediate effect, FIC guidelines covering the acquisition of equity stakes, mergers and takeovers is repealed.

ii) Treatment of fund raising by listed companies;

>>Currently, companies going for IPO will need to meet both SC’ public spread requirement (25%) and FIC’s bumiputra equity requirement (30%).

>>With deregulation, FIC requirement is removed.

>>SC, as sector regulator will continue to impose public spread requirement.

>>SC will now impose a bumiputra equity requirement as part of public spread requirement (specifically 50% of public spread to be offered bumiputra).

>>There will no longer be any equity condition imposed post-IPO except in the case of RTO and backdoor listing.

iii) Acquisition of properties

>>FIC will only process transactions involving dilution of bumiputra interests (i.e sale of property by bumiputra to non-bumiputra) and government interests in property. Even then, FIC approval is only required for properties above RM20 million, whether bought directly or indirectly.

>>All other transactions will no longer require the approval of FIC.

>>The threshold for purchase of properties by foreigners is increased in general to RM500,000. Above the threshold, foreigners will no longer need to refer to FIC for the purchase of properties. State government however, maintain the right to impose additional conditions.

2. Fund Management Liberalisation

Ownership in the wholesale segment of the fund management industry fully liberalised to allow 100% ownership for qualified and leading fund management companies to establish operations in Malaysia. For the retail segment, the foreign shareholding limits for the unit trust management companies raised to 70% from current level of 49%.

3. Stock Brokering Liberalisation

Foreign ownership shareholding limits in existing stockbroking companies be increased to 70% from its current level of 49%.

4. Visa Application

BNM and SC will review all visa applications for the financial services industry and capital market respectively.

5. Establishing New Institution

>>Ekuiti Nasional Berhad (Ekuinas) to be established with initial capital of RM500 million, eventually to be enlarged to RM10 billion fund.

>>Ekuinas will focus its investments in high growth sectors, in line with supporting the New Economic Model.

>>Ekuinas will jointly invest with private sector, reflecting a genuine partnership and, through a fully commercial approach, will ensure meritocracy of participating bumiputras.