The Malaysian Insider

KUALA LUMPUR, July 11 — Datuk Seri Najib Tun Razak’s first 100 days as Prime Minister is unprecedented for introducing bold economic reforms that will create new sources of competitiveness for Malaysia such as in financial services while strengthening the economy against the downturn.

Najib, who was sworn in on April 3 this year as Malaysia’s sixth Prime Minister, has moved quickly to liberalise 27 services sub-sectors and raise the nation’s competitiveness for which he has received widespread applause from local businesses and the foreign investing community.

With the economy set to contract by between -4.0 per cent and -5.0 per cent this year, Najib, who is also Finance Minister, unveiled a slew of economic and financial measures and two stimulus packages worth RM67 billion.

They also lauded his foresight in balancing the need to counter the economic crisis and introducing measures within a short time to beef up the economy so that it competes in what is surely a fiercely competitive global marketplace.

Renowned regional economist Manu Bhaskaran said the crisis makes reforms even more important by demonstrating the risks of strong exposure to a few niches such as electronics exports to the big economies.

“The crisis has showed the vital necessity for Malaysia to diversify and strengthen its competitiveness, none of which is possible without such reforms,” he said.

Malaysia’s target is for the services sector to contribute 70 per cent to the nation’s gross domestic product from 54 per cent currently.

“Prime Minister Najib has made an impressive start and all of us outside Malaysia who wish the country well look forward to the momentum of reforms being maintained,” Bhaskaran told Bernama when asked to comment on Najib’s performance in his first 100 days as premier.

His move to liberalise computer and related services, health and social, tourism, transport, sport and recreational and business services in efforts to lure more investments, professionals and technology also won praises from business circles.

Other reforms included easing listing and fund raising rules, relaxation in acquisition of properties, a website where the public can monitor the implementation of projects under the stimulus packages, disbursement of licenses by local authorities to small and medium scale enterprises, setting up the National Economic Council to formulate a new economic model, launching Felda Global Ventures Holdings to turn the entity into a multinational and urging banks to facilitate lending to stimulate business activity during the downturn.

To Najib’s announcement last week relaxing listing guidelines and doing away with the 30 per cent Bumiputera equity ruling and raising foreign shareholding in stockbroking to 70 per cent from 49 per cent before, Bhaskaran who is an adjunct research fellow at Singapore’s Institute of Policy Studies, said: “It sends the right signals about the government’s willingness and ability to push through reforms and it is positive in that sense.”

However, “portfolio investors (in stocks and bonds) are interested in returns that commensurate with the risks they face (and) so, Malaysia has to deliver returns that are attractive when compared to the risks adjusted returns available elsewhere,” he said.

Deloitte Malaysia managing partner Tan Theng Hooi was pleased with what Najib has done so far as some of it were in his wish list including the dismantling of the Foreign Investment Committee (FIC), a move which “opens up many transactions for foreign investors.”

As for the 30 per cent Bumiputera equity ruling, he said it was a challenge for local companies when the market was down as very few people come forward to take the Bumi shares for which the firms have to do it in advance.

He said the government could still maintain the Bumi corporate equity and equitable distribution of wealth through other means like what Permodalan Nasional Bhd was doing with unit trusts.

“Not many countries do that but we have done very well with that.”

“The ultimate is to have a free enterprise system (but) are we ready for it... maybe not to the full extent,” said Tan, expressing the hope that more industries would be liberalised eventually.

However, to compete with Hong Kong and Singapore, the region’s financial services centres, he said Malaysia must liberalise the financial services and related sectors and in the process “attract the best talents.”

KPMG Malaysia’s Corporate Finance executive director Emily Choo said Malaysia has taken a very big step to be competitive by relaxing listing guidelines to be on par with other equity markets in the region.

From the government’s point of view, they have already provided a good platform and it is now up to the practioners to list good companies and attract more investors, she said.

“Everyone has to play their role as potential firms will be looking at markets which generate the most money for them,” she said.

Malkit Singh, Bank Islam chief financial officer, said that liberalisation was already spelt out in the Financial Sector Masterplan “but Najib accelerated it (and) foreign investors were surprised as they expected it to happen a lot later.”

“He seems to be a man with a good foresight of things and although there were deadlines set for things to happen down the road, he did not wait for them,” he said.

However, he said that Najib was not impatient but rather pragmatic in doing what really needs to be done. “Rather than sitting and waiting, he has got a plan.”

There is a lot of liberalisation to support Islamic finance and banking in Malaysia and regionally and “allowing us certain tax breaks in products such as Ijarah (leasing) will help us further,” he said.

Datuk Abdul Halim Harun, UMW Holdings Bhd chief executive officer, expressed gratitude to Najib as the stimulus packages have impacted the company’s motor and equipment businesses positively.

“The motor sector is picking up. We are very happy and we see some improvement in the equipment business as well,” he said.

Halal Development Corporation chief executive officer Datuk Seri Jamil Bidin said the reforms were focused on creating value as “investors are very selective as to where they want to invest given the current slowdown.”

He also said the key performance indicators from the top to the bottom would give focus to the government’s adminstrative machinery in that “everybody will be very clear what they are supposed to do and deliver.”

Perbadanan Usahawan Nasional (PUNB) Bhd chief executive officer Datuk Mohd Nasir Ahmad, while commending the substantive economic liberalisation measures initiated by Najib, however said some of the reforms needed to be explained in more detail to the people.

There was some apprehension as some of the announcements such as the abolition of the FIC and the setting up of the Equiti Nasional Bhd with a capital of RM500 million to invest in high growth stocks did not provide explanatory details.

Detailed and more widespread explanations to the people could allay some of their concerns, he said.

“Nevertheless, we must give credit for Najib’s efforts to advance the country’s economy as it will take time to know its full impact but until then we must be fair in our judgement,” he said.

The Nippon Foundation chairman Yohei Sasakawa who was here recently, said Najib’s leadership would not only benefit Malaysia but also other countries in Asia, including Japan.

“Prime Minister Najib has a lot of friends in Japan. We would like to see his leadership continue as Malaysia is among the top countries in Southeast Asia,” he said.

Besides the economic development in Malaysia, he said the safety and well guarded environment in the country has created interest among Japanese, especially retired people, to spend their retirement in Malaysia.

Senegal Ambassador to Malaysia Abdel Kader Pierre Fall said Najib has shown genuine honesty to achieving the 1 Malaysia concept by showing respect for everybody and concern for all communities in Malaysia.

“I do admire his approach with the liberalisation measures which was a bold move. When bold decisions needed to be taken, he has shown he can step in and take them,” the envoy said.

He said most Africans have showed warm response to the way Najib has been conducting business in the first 100 days as Prime Minister. Being Prime Minister is not an easy job, but from what he has done so far and under the current difficult economic conditions, Najib has proven he is the right man for the job. – Bernama

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