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Wed, 10 Feb 2010
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 NEWS WITHOUT BORDERS :: Local News |
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PM frees up economy
by Tim Leonard
KUALA LUMPUR (June 30, 2009) : Prime Minister Datuk Seri Najib Abdul Razak today unveiled bold measures to further liberalise the economy, including repealing Foreign Investment Committee (FIC) guidelines that have long hampered efforts to bring in foreign investors.
The FIC is the product of economic policies that have been maintained, almost traditionally, since the 1970s to lift the Bumiputra share of the economy, but is increasingly seen as restrictive to growth. For instance, one of the main requirements for listing on the stock exchange is the 30% Bumiputra equity.
Najib told participants of InvestMalaysia Conference 2009: "After 19 years, the FIC has failed to achieve its objective of increasing Bumiputra equity to 30%. We need a new instrument which is more robust and investor-friendly."
The Bumiputra equity of listed shares currently stands at only 19.4% largely because those who got shares allocated to them sold them almost immediately to realise quick gains.
Najib said although repealing the FIC is to ensure the capital markets become more investor-friendly, the macro objective to achieve 30% Bumiputra equity remains.
Towards this end, he announced the setting up of a new investment institution called Ekuiti Nasional Berhad (Ekuinas), that will act as a private equity fund with an initial capital outlay of RM500 million.
"Ekuinas will be enlarged to RM10 billion and it will focus its investments in sectors with high growth
potential, in line with supporting the New Economic Model," he said.
“The new philosophy is not to help just any Bumiputra company but only those which are really capable and with calibre."
In explaining the new measures, Najib said although the 30% Bumiputra equity requirement for Malaysian companies seeking public listing is now repealed, companies will be required to offer half of the public shareholding spread to Bumiputra investors.
Currently, companies going for an Initial Public Offering (IPO) will need to meet both the Securities Commission's public spread requirement of 25% and FIC's Bumiputra equity requirement of 30%.
"The Bumiputera equity condition therefore becomes subsumed within the public spread requirement," said Najib.
He also said the FICs guidelines covering the acquisition of equity stakes, mergers and takeovers is repealed, and the FIC will no longer process any transaction or impose equity conditions on such transactions.
FIC will also no longer process property transactions, except where it involves dilution of Bumiputra or government interests.
Najib later told reporters the new measures are partly due to the fact that there has been a large number of sell down of Bumiputra shares in the capital markets.
“The sell-down has been enormous (based) on the old model. Out of RM54 billion (of equity) allocated, only RM2 billion remains,” he said.
“The new policy guidelines will ensure a win-win situation for all,” he added. “We want to be fair to all communities…no one must feel marginalised or disincentivised.
“It is a tricky balancing act but it is do-able."
The role of the FIC has come under criticism from various parties, especially as it failed to address the issue of poverty while enriching only a select few.
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Updated: 06:35PM Tue, 30 Jun 2009
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