Friday, August 10, 2007

Foreign Shareholdings in Malaysian Companies

Yet again, another issue about the foreign shareholdings in Malaysian companies. Bureaucracy not related to business, in certain extent, did slow down foreign direct investment in Malaysia.

In certain cases where foreigners wanted to increase their shareholdings in Malaysian companies beyond 49%, such approvals could be only be solved when a ruling states that a company established prior to 21 May 2003 could not have this liberty, is removed.

Different government agencies have different agendas, namely the Foreign Investment Committee and Ministry of International Trade and Industry. How in the world are the foreigners going to set up a business within a short period and thus bringing in foreign investment with the provision of employment opportunities for Malaysians. Malaysia is just not investment friendly compared with Hong Kong and Singapore.

The British Malaysian Chamber of Commerce has to step in in requesting that all Malaysian companies could have a 70% equities held by foreigners while observing a minimum 30% bumiputera equity (another NEP ruling?).

I have a previous contact from France that wanted to set up a food business in Kuala Lumpur. His business was doing well in France and thought of extending his ideas here. After going through so many process which were going at snail's pace and unreasonable requirements, he gave up. He said that although the government promoted foreign direct investment but respective government agencies do not reflect the same ideology at all.

He did say "Why must I give away 30% of my business to someone I do not know?"
This scenario is similar to the ones in the Maybank and freight forwarders cases.
Tags: Business, Politics, Bumiputera Equity, Foreign Equity, Foreign Investment Committee, Ministry of International Trade and Industry, British Malaysian Chamber of Commerce, New Economic Policy, NEP

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