In a league of our own June 22, 2007Posted by elizabethwong in Current Affairs, Economy, Malaysia, Politics.
The very blunt statement by the EU rep in Malaysia made its rounds in major financial news sites from Forbes to Business Week, and even local eateries.
And the sum of all things said:- It ain’t worth the trouble to invest here.
Even my neighbourhood Bak Kut Teh uncle gave his two cents worth last night, “We losing investors to Vietnam, Thailand and China. They are welcomed there. Here, we drive them out.”
Consider the following:- Corruption. Kickbacks to keep the families happy. Greed. Red tape.
Malaysia’s FDI dropped 14% last year. Our Transparency International CPI ranking slid 5 spots down.
Do we care? Nope.
Ok-lor. We’re in our own little league.
So, when those countries, whom we once shared the limelight a decade ago as the ‘Asian Tigers’, galloped light years ahead of us and we can’t even catch up to eat their dust, who is to be blamed?
Anwar Ibrahim? Al Gore?
…….. (Umno-aites, you can fill in the rest of the blanks. But I’m guessing EU will be the next punching-bag)
Meanwhile, there’s no immediate reaction, except Bernama totally ignoring what Rommel said. Malaysiakini.com has a slightly more measured feel to his speech but the substance is still that of a re-examination of the NEP.
(Those who missed out on Rajah Rasiah’s presentation on the NEP last week should go stand at the corner of the room and cry.)
EU Envoy Blasts Malaysia’s NEP
By EILEEN NG
Europe’s top envoy to Malaysia Thursday urged the government to roll back its affirmative action policy for majority Malays, saying it is discriminatory and amounts to protectionism against foreign companies.
In unusually frank comments that ignored diplomatic niceties, Thierry Rommel openly criticized Malaysia’s 37-year-old New Economic Policy, or NEP, that gives a host of privileges in jobs, education, business and other areas to ethnic Malays.
“In a dominant part of the domestic economy, there is no level playing field for foreign companies,” Rommel, the ambassador and head of the European Commission Delegation to Malaysia, said in a speech to local and foreign businessmen.
Ethnic Malays and other indigenous groups, known as Bumiputras, comprise more than 60 percent of Malaysia’s 26 million people. The government says they have a disproportionately low share of the corporate wealth compared to the minority Chinese, and need the NEP to increase their standard of living.
The government did not immediately respond to Rommel’s comments.
Rommel said the government is using the NEP as an excuse to practice “significant protectionism of its own market,” including the automotive sector, steel, consumer goods, agricultural products, services and government contracts.
Malaysia claims these are “infant” industries that need to be protected but “in reality .. it is the Malay-centered Bumiputra policy that drives protectionist policies,” Rommel said.
As part of the NEP, all public-listed companies are required to allocate 30 percent of their shares to Malays. Companies without Malay directors or employees are excluded from lucrative government contracts. Employers have quotas for hiring Malays.
Eric Reuter, sales and marketing director of freight forwarder ABX Logistics, said the Belgium-based company has a 51 percent Bumiputra partner and is required to work with local companies on government-related projects.
The limitations have eroded his profit margin, he said.
“We cannot be as flexible as we want to be and chances that corruption comes into play is higher. It is an interruption to the free market,” Reuter told The Associated Press.
Besides foreigners, minority ethnic Chinese and Indians also see the NEP as a discriminatory tool. Many Malays also have complained the policy has benefited only a few well-connected people.
NEP was started in 1970 when the Malays’ corporate ownership was 2 percent. The aim was to raise it to 30 percent by 2010, from 19 percent now. Chinese, who form a quarter of the population, control 40 percent of corporate wealth.
Rommel stopped short of saying the NEP should be scrapped but told reporters separately: “We (in Europe) have bitten the bullet on a number of sensitive issues, why can’t you?”
He warned the NEP could “lead to problems” in free trade negotiations between the EU and the 10-member Association of Southeast Asian Nations, of which Malaysia is a key member.
The two groups agreed last month to launch free trade talks, which could raise ASEAN’s exports to the EU by up to 20 percent, Rommel said. Senior officials are expected to hold their first meeting in Vietnam next month, he added.