Malaysia'a Liberalisation Plan May Boost Exports By 10%

By Rupa DamodaranPublished: 2009/04/24

MALAYSIA'S services based exports could potentially increase by 10 per cent with the liberalisation of sub-sectors like health, tourism and transport, said International Trade and Industry Ministry (Miti) secretary-general Tan Sri Abdul Rahman Mamat.

He said any impact from the move will likely kick in at the earliest by the third quarter of this year when economic conditions are expected to improve.

Last year, the services sector contributed RM102.1 billion to exports, while imports of the sector amounted to RM99.8 billion.

Abdul Rahman was commenting on the government's decision to liberalise 27 services sub-sectors by removing the 30 per cent Bumiputera quota on equity ownership in health and social services, tourism services, transport, business and computer industry and related services.

"They form part of the 160 sub-sectors for trade liberalisation under the World Trade Organisation (WTO) which enables Malaysia, through its trade policy, to enjoy market access.

"We expect the move to benefit our talks in drawing up regional and bilateral trading arrangements," he said at a media briefing in Kuala Lumpur yesterday.

Abdul Rahman also pointed out that the move will give Malaysia a "first mover advantage" versus its neighbours in the region in attracting investments that will complement the manufacturing sector.

The services sector, which contributes about 47.6 per cent of the economy, attracted RM47.8 billion investments last year, down from RM66.4 billion in 2007.

Most of the approvals were in real estate (RM25.9 billion), financial services (RM4.8 billion), energy (RM4.4 billion), telecommunications (RM2.8 billion) and support services (RM2.2 billion).

The government has also indicated that it will announce further liberalisation measures, this time affecting the financial sector sometime next week.

Malaysia ranks among the 30 leading global exporters of services, according to the WTO.

Abdul Rahman said small- and medium-sized enterprises will benefit from the liberalisation as they can leverage on international companies in their areas of strength such as ICT, logistics, and tourism.

He also assured Bumiputera entrepreneurs that opportunities for doing business will increase as more international management companies enter the local market to offer their services.

"In the era of globalisation, there is no choice but to open up. Equity concerns have to be addressed through other means. For the Bumiputera entrepreneurs, there are increased job opportunities, capacity building and integrating with international companies," Abdul Rahman said.

He also expects the participation of Bumiputera entrepreneurs in the various services sub-sectors to be more evenly distributed now.

"It's been lopsided in food processing, textiles, pharmaceuticals and automotive, which is mostly due to the APs (approved permits) and NAP (national automotive policy)."

In the meantime, the ministry is also preparing an action plan under the Third Industrial Masterplan to increase the participation of Bumiputera entrepreneurs in both manufacturing and services sectors.