Malaysia Opens Services Market

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In a bold move to attract new investments,Malaysia has opened its services sector.

New Prime Minister Datuk Seri Najib Razak Wednesday announced immediate abolition of the 30 percent Bumiputra equity requirement for 27 services sub-sectors.

This means Malaysia is opening up the services market with no equity conditions imposed.

The free services market move is aimed at creating conducive business environment to lure more and better foreign direct investments(FDIs), intellectual capital and new technology to enhance national competitiveness and create new jobs.

It is a positive step in the right direction to restructure Malaysia's export and import substitution economy to a more modern services economy.

I believe Malaysia will generate an open and free services sector to maximize its potential and contribution to economic growth and wealth creation in a globalized world of new challenges.

It serves to promote and instil a healthy competitive climate and culture for services investments.

"We will be progressively undertaking liberalisation of the other services sub-sectors," added Najib at a press conference.

Among the services sub-sectors opened up are:-

*Health and social services*Tourism services*Transport services*Business services*Computer and related services*Rental/leasing services*Sporting and other recreational services*Supporting and auxilliary transport services

The open services market policy aims to raise the services sector's contribution to gross domestic product(GDP) from 55 percent last year to 60 percent this year.

The services sector accounts for 57 percent of Malaysia's total employment.

The Malaysian government has set up a National Committee for Approval of Investments in  the Services Sector under the Malaysian Industrial Development Authority(MIDA) to facilitate and speed up investment flows.

Last year,approved investments in the services sector increased to RM50.1 billion with the foreign share at 11 percent.

This figure exceeds the target of RM45.8 billion per annum under the Third Industrial Master Plan.

Najib will announce liberalisation of the financial services sector next week.
It is in line with Malaysia's commitment to the Asean Free Trade Zone(AFTA) and globalization trend for trade in services under the World Trade Organization(WTO).

The services market liberalisation is an affirmative measure to do away with the racist 30 percent Bumiputra quota.

Under an on-going review of the New Economic Policy(NEP),it is imperative for Malaysia to move beyond rigid race-based economic policies favouring any single ethnic group.

Because of past policy implementation deviations,Malaysia has lost out to new emerging economies like Vietnam and Cambodia in the competition for FDIs.

The open services market move augurs well for "waves of new investments" in health tourism,international and regional shipping and logistics,financial and other services with Malaysia positioning herself as ASEAN regional hub.