Malaysia to review guidelines for foreign investment
By PAULINE NG, Business Times (Singapore) IN KUALA LUMPUR
Aug 1, 2008
MALAYSIA'S foreign investment guidelines will be reviewed soon to make them more 'friendly', starting with a list of sectors deemed to be of 'national interest'.
Foreign corporate ownership has slumped from 62 per cent in the early 1970s to 30 per cent now - the target set under the New Economic Policy (NEP) to restructure ownership so that more of the country's wealth is owned by ethnic Malays.
But the time has come to reconsider whether more foreign corporate equity should be encouraged in light of intense regional competition for foreign direct investment (FDI), the co-chairman of business task force Pemudah said yesterday. 'We are approaching the guidelines in a holistic way,' said Yong Poh Kon.
Should foreign ownership be expanded, it would be based on an expanding cake, he explained. Specific equity targets would not be particularly important.
Pemudah will work on a 'negative list' that identifies national interest sectors, said Mr Yong, who is managing director of Royal Selangor Pewter. He declined to say which sectors may be on the negative list. Government officials said there would not be many, but they might include defence, telecommunications and banking.
An investment magnet for the greater part of the 1990s, Malaysia has since seen a significant reduction in FDI in recent years, as foreign investors focus on emerging economic powers China and India, as well as other regional markets such as Vietnam, Indonesia and Singapore.
In Malaysia's case, the fight for FDI dollars is complicated by the affirmative action NEP implemented in 1972, which favours the majority Malays in public offerings, housing, government scholarships, procurement and employment.
The NEP set a target of 30 per cent for Malay corporate equity, but after more than three decades there are disputes over the actual level of ownership, with the government maintaining it is only 20-21 per cent and others saying the 30 per cent target has already been reached, or even exceeded.
The Foreign Investment Committee (FIC) is responsible for major FDI matters and formulates policy guidelines for all sectors to ensure the NEP objectives are met. In the past, some businessmen have said FIC's discretion to approve deals is too wide and its decisions too conservative and not pro-business.
Another area of contention in business circles is government procurement. Local and foreign firms want transparent procurement policies so there is less scope for interpretation. Clear guidelines would also let companies to better decide their chances in government tenders.
Pemudah co-chairman Mohd Sidek Hassan said government procurement and foreign labour are two 'higher-hanging fruits' the task force intends to tackle over the coming year.
Pemudah, set up by the government to facilitate business and help reduce red tape, is made up of public and private sector representatives. But the task force is not mandated to change government policies - only to provide feedback on policies that affect investment.
Mr Sidek earlier launched Pemudah's guidebook on registering freehold property in Malaysia. He said registration will now take only 41 days from the signing of a sale-and- purchase agreement, down from 144 days.
FROM TODAY'S WALL STREET JOURNAL ASIA August 1, 2008
Malaysia's high-stakes political standoff just had the ante upped. With the resignation of his wife from Parliament yesterday, opposition leader Anwar Ibrahim declared he's running for office in the by-election to fill her seat. The question now is whether the government will allow him to do so.
The stakes are high for the ruling National Front. Mr. Anwar's three-party opposition coalition controls 82 of 222 parliamentary seats. If Mr. Anwar wins office -- which seems likely, given he's running for the seat he held for 17 years -- the opposition says 30 MPs would defect to their side, giving them a majority and likely felling the government. Mr. Anwar would be on his way to becoming Prime Minister.
One way to prevent this from happening would be if Mr. Anwar were convicted of a crime, thereby disqualifying him from office. Remember what happened in 1998, the last time Mr. Anwar was riding a wave of popular support across Malaysia's varied ethnic voting blocs. He was convicted of corruption and sodomy in 1999 and 2000, respectively; the sodomy conviction was overturned in 2004.
Home Minister Syed Hamid Albar told a press conference yesterday that the police have wrapped up their investigation into a new sodomy allegation against Mr. Anwar. But like the 1998 case, the circumstances are questionable. Mr. Anwar's accuser, a 23-year-old aide, is under police protection and the police report he filed remains under wraps. A medical report by a doctor who examined the aide surfaced on Monday that purportedly found no evidence of sodomy.
That puts the spotlight on the Attorney General's office, which will decide whether to charge Mr. Anwar. The AG, Abdul Gani Patail, was a lower-level official in 1998, and Mr. Anwar recently filed a police complaint accusing him of fabricating evidence in that case. A spokesman for the Prime Minister's office says the Attorney General has been recused from the current case. He says, too, that Prime Minister Abdullah Ahmad Badawi won't be involved in the decision.
In an interview with the Associated Press yesterday, Mr. Abdullah suggested that Mr. Anwar had been engaged in other questionable practices. The Prime Minister told the AP that had heard "stories" of Mr. Anwar "tempting" MPs "with monetary offers to cross over to the opposition." "If it were true that money were being offered, to me it would be the worst form of corruption," he said.
So much for reforming Malaysia's democracy, or giving Mr. Anwar a fair chance at the political game.
See all of today's editorials and op-eds, plus video commentary, onOpinion Journal1.
KUALA LUMPUR, July 27 - 'I was dumped into this high-security police lockup for, you see, these high-level criminals . . . On the cement floor, without any mattresses. That explains why I have to be back on this." Anwar Ibrahim gingerly peels up his shirt to reveal a corset-like back brace. And then he bursts into laughter.
For a man released from a night in jail only a few days earlier, Mr. Anwar is an awfully jolly man. Malaysia's opposition leader has been accused of sodomy by a former aide -- a criminal offence in this Muslim-majority country that could send him to jail for up to two decades. It's a bizarre deja vu for the bespectacled politician, who spent 1998-2004 behind bars on a trumped-up sodomy charge the last time he challenged for political power.
But he's pushing ahead: On Wednesday, Mr. Anwar vowed to run for parliament "imminently" in a by-election, with the aim of toppling the government by September. If he's successful, he could be the next prime minister of Malaysia.
None of this would matter much outside Southeast Asia were it not for the fact that Mr. Anwar's political coalition espouses something unusual in the Muslim world: the virtues of a secular, free-market democracy. More Muslims live in Asia -- Malaysia, Indonesia, India, Pakistan, Bangladesh -- than in the Middle East.
Mr. Anwar is unusually suited to bridge East-West divides. A Muslim, "though never typically very religious," he chuckles, he is a good friend of Saudi Arabia and the US alike -- a man who memorized "hundreds of Elvis Presley, Paul Anka and Ricky Nelson tunes" in his youth, but also attended weekend religious classes and, in his 20s, founded the Muslim Youth Movement of Malaysia. He has never been afraid to argue that democracy and Islam are compatible forces -- or to make that case to undemocratic Arab regimes.
In many ways, Malaysia -- though it sports big urban centres and modern wonders like the Petronas Towers -- seems stuck in a time warp. The media is largely state-controlled, and the executive branch still locks up political dissidents without trial under the British colonial-era Internal Security Act. Mahathir Mohamad's 22-year rule, which ended in 2003, did bring economic development to Malaysia. But Mr. Anwar says only a "fringe few" would ignore the widespread corruption that also occurred. Mr. Anwar, who was - Dr. Mahathir's deputy at the time, found himself accused of sodomy in 1998 when he started pushing for reform. His arrest and imprisonment brought thousands of people onto Kuala Lumpur's streets.
And the recent accusation against him? It is "unfortunate," Mr. Anwar said as we settled into conference room chairs at his People's Justice Party's new headquarters in a strip mall in a Kuala Lumpur suburb last week. But it's a sign that "the system is crumbling."
"Malaysia was resilient -- at least in the late '80s and '90s -- primarily because it was able to attract foreign investment," Mr. Anwar says. "It has lost that. So we have to see why? Well," he answers his own question, "economic policies considered obsolete -- particularly the New Economic Policy." He's referring to the pervasive pro-Malay affirmative-action program that reaches deeply into almost every corner of the economy and the university system. "There's no rule of law, endemic corruption and general incompetence" in Malaysia, he adds.
Malaysia's current government is trying harder than any other Asian regime -- save the little kingdom of Brunei -- to push closer to the Middle East, luring investment and Arab tourists to its shores. Women shrouded from head to toe are common sights in Kuala Lumpur's upscale shopping district. The country is an emerging center for Islamic finance, and Saudi-backed mosques are popping up everywhere.
Mr. Anwar thinks there's another way forward: by incorporating conservative Muslims into the democratic fold, and enforcing a secular rule of law without exception. He also made this point in a chat we had at his home in Kuala Lumpur last month. "You need a free media and free and fair elections. Moderate democracies and parties don't accept radicalism. You must give them space. Muslims can't be made to feel that democracy can only be applied to certain groups. That's not healthy."
Mr. Anwar's party is largely Malay, and secular. But his three-party coalition also includes a Chinese party and a conservative Muslim party that advocates Islamic law. The latter, the Parti Islam se-Malaysia, has supported measures such as segregated grocery store lines for men and women, bans on lipstick and anti-fornication laws. Why does Mr. Anwar's multiethnic coalition include a party that embraces such a platform?
"We took some years to cement this relationship because I don't want it to be seen purely as a politically expedient exercise," he says. "We base it on a clear reform agenda. So what we did instead of using labels -- Islam, secularism, liberal -- we spell out what we want. So in the agenda, for example, we believe in 'democracy and freedom.' By this we mean freedom of religion, or worship, freedom of expression, freedom of conscience. Which means all laws to the contrary will have to be rejected."
Mr. Anwar returned to Malaysia in 2006 -- after teaching stints at Georgetown University and the Johns Hopkins School of Advanced International Studies -- to launch a political comeback. He utilized every tool at his disposal outside the state-run media -- "SMSes, blogs, Web sites" -- to get out his message of anticorruption, freedom and religious tolerance.
His coalition romped home in March with more than one-third of the seats in the national Parliament, and the leadership of five of Malaysia's 13 states. The result stunned the ruling United Malays National Organization, which has dominated Malaysian politics since independence in 1957.
Mr. Anwar gets almost giddy when I query him about the result: "People onthe ground, they couldn't care two hoots about this scurrilous attack on my character," he exclaims, referring to the latest sodomy accusation.
"They want to hear me talk about change . . . I think the old system -- the centre cannot hold. Remember that brilliant piece by Yeats?" Mr. Anwar is referring, aptly, to the poem, 'The Second Coming.'
He thinks political change in Malaysia could reverberate outside the country's borders, setting a "crucial" example for the rest of the Muslim world. But is the rest of the Muslim world ready to hear his message? What about Iran?
"I respect Iran as a nation, with such a great civilization, with great potential," Mr. Anwar says, evading the question with a grin. But "they know my views on democracy. They know my engagement with the West and with the Americans."
Being pro-American isn't popular in Malaysia, and Mr. Anwar is careful to stress his distance from Washington. "For example, the occupation of American forces in Iraq. I disagree, I totally disagree. But I don't treat America as my enemy. And I believe that we would gain immensely by maintaining very good diplomatic and economic relations, trade relations, with America. But it doesn't mean we must agree with them on many issues, or most issues."
It also doesn't mean that Mr. Anwar agrees with other Islamic powers, either. On a recent trip to Saudi Arabia, he met government officials and heard them talk of their modern education system. "I said I was impressed," but "quality education" needs "a liberal democratic space" and "creativity."
Could Malaysia serve as an example for the rest of the Islamic world, as a tolerant, Muslim-majority and multiethnic democracy? "Right now, it's certainly a very poor example," he says, laughing out loud. "But it has this enormous potential in terms of gender equality. Although you know, my wife wouldn't agree with that term. She says it's not that equal for now. . . . You should say, moving toward gender equality." Mr. Anwar's wife and one of his daughters are members of Parliament.
The sodomy accusation is meant not just to discredit Mr. Anwar, but to rip apart his nascent coalition. It was levied a few days before Mr. Anwar was scheduled to announce his candidacy for parliament. Fearing the worst, he fled to the Turkish embassy -- another moderate Muslim democracy -- for refuge.
Since then, photos purportedly showing his accuser meeting with high-level government officials began to circulate. The government denies any involvement.
"To allow for some segment or sector, groups, within the system to resort to these dirty machinations is pathetic," he says, then pauses. "To them, it may be necessary to pre-empt our next move, my contesting the by-election."
Malaysia's most prominent mufti, or religious scholar, Perak Mufti Datuk Seri Harussani Zakaria, has backed Mr. Anwar's cause. Around 2,000 supporters flocked to the police station last week when word got out that Mr. Anwar was spending the night there. "I've advised my supporters to remain calm," he says. "Don't overreact, don't be provoked. Because that's exactly what they want. In any authoritarian system, what they want to present is a near chaos so they can declare a state of emergency."
Why not pack it all in and retire with his wife and six children? "You come in with a clear conviction, that you believe in freedom, you believe in democracy," Mr. Anwar replies. "And you have so much affection for the people. You love your country. You want the country to succeed. And this is one, unique, multiracial, multireligious country with a Muslim majority that should prove to the world that we can co-exist and succeed with a vibrant economy. Now, there's a lot of intimidation, a lot of efforts to derail this. If I choose to surrender, keep quiet, then it would adversely affect the process."
He asks a rhetorical question: "If I, in my position, with my experience, have no courage, just because I was beaten up before, humiliated, then what do you expect from the people? What sort of leadership do you provide?"
Mr. Anwar's aides are gesticulating to him at the window outside his office -- he's late for his next appointment. "It's going to be tough," he says. "But this time, I am certain -- as we say, inshallah, God willing, we are going to make it." He laughs, and walks away, still smiling.
In the long run, Abdullah failed to deliver. In dismal disappointment, voters decided to punish him, his party and the ruling coalition during the March 8 general elections.
TODAYonline
IT IS not uncommon for countries that appeared after the fall of colonialism, and which started out with democratic ideals embedded in their Constitutions, to nevertheless evolve successively towards an authoritarian style of government and nation-building.
In Malaysia's case, this process culminated in the 22-year-long period under Dr Mahathir Mohamad (picture). There was, therefore, great optimism and even greater relief in the air when this "strongman" figure, perhaps to his everlasting credit, actually retired in October 2003. Such politicians tend to stay in power until they expire.
It was thus at such a historical point in history that Mr Abdullah Badawi stepped onto centre stage, and became the country's fifth Prime Minister. The hopes of Malaysian society at that time were so high, and so desperate, that the only leader who could take full advantage of the social dynamics released by Dr Mahathir's retirement was one who promised far-reaching reforms.
There was no room for more "strongman politics", only room for the rectification of the damage done by the foregoing authoritarianism. Despite the same party and the same coalition remaining in power, Dr Mahathir's successor had to be one who was responsive to the citizens demands, and who realised that the alternative to Mahathirism was healthy institutions.
Mr Abdullah knew this well enough to make all the right moves in the first months of his mandate. Calling on Malaysians "to work with me", he stopped mega-projects, began cutting down on the budget deficit, started corruption proceedings against certain individuals and founded institutions to promote "integrity".
As a result, Mr Abdullah enjoyed the highest level of popularity in Malaysian history in 2004 and his critics kept silent, purportedly to give him a chance to show his worth. The only way for Dr Mahathir's successor to retain legitimacy was to live up to the expectations that Mr Abdullah himself had formulated.
But in the long run, he failed to deliver. In dismal disappointment, voters decided to punish him, his party and the ruling coalition during the March 8 general elections.
Cautious comparisons to the fate of other polities may be useful. Taiwan comes to mind. Mr Chiang Ching-kuo, who governed the island for over a decade after his father Chiang Kai-shek died in 1976, decided in 1987 to dismantle the tottering system that the Kuomintang had harshly put in place in 1949. The island left authoritarianism behind and became a democracy, leading subsequently to loss of power by the dominant party.
This is one success story where the successor to a strongman politician finally realises the historical limitations of the system and the party, and "executes a coup d'etat on himself", as it were, and allows a more dynamic system to take its place, even to the transitional detriment of the party itself.
A good example of a failed succession to a strongman politician is Yugoslavia, where Marshall Josip Broz Tito was in power from 1945 to 1980. After his death in 1980, increasing ethnic rivalry and struggles for power in the region led finally to genocide and to the bloody break-up of the republic into several smaller states.
In Malaysia's case, the historical role of Premier Abdullah was the difficult one of honestly realising the untenability of the system, and of healing the institutions whose integrity had been badly undermined during the Mahathir years. He had to execute a coup d'etat on himself, as it were.
This he failed to do, largely because that would have meant him allowing changes that would have been transitionally detrimental to the dominant party, the United Malays National Organisation (Umno).
Mr Abdullah had not been rebuilding institutions quickly enough or seriously enough and at the same time, he was certainly not a strongman either. Not knowing what to make of this lack of direction, voters overcame their normal fear of radical change and attempted to kick his administration out.
The situation after March 8 is a much more complicated one. What Mr Abdullah had failed to do, others will now try to do in their own way. And because Umno would not allow the required changes, it is now being forced to transform itself.
Mr Abdullah's second mandate is therefore essentially different from his first. Umno's dominance is basically broken; the coalition that had exhibited such hubris before the elections is now in disarray and riddled with distrust; and state level politics is now pluralistic and competitive in nature.
What the federal government failed to do, the state governments under opposition parties are now committed to doing. The political contentions from now on will be about what institutions should be built or rebuilt, and the order in which this should happen.
On that front, the weakness of the alternative coalition — the Pakatan Rakyat — lies in the potential conflict between the Parti Islam SeMalaysia (PAS) that wants a more Islamist society and the Democratic Action Party (DAP) that champions secularism. Mr Anwar Ibrahim's Parti Keadilan Rakyat risks being caught in the middle.
Mr Abdullah and Umno's weakness is basically their inability to change, especially while under challenge. The many years in dominance have stiffened them, there is too much face to be lost and new ways of thought have yet to permeate the party.
The wind is blowing against him and the party and the fear is that, whatever policies they may think up from here on are done for the sake of their staying in power and not for the sake of the future strength and stability of the country.
The attempt to smear and defame Anwar Ibrahim has been thoroughly rejected by the international community. Statements condemning the arrest of Anwar Ibrahim and stating concerns over the credible dispensation of justice have been made by groups which view they entire conduct of this case as suspiciously, similar to the fraudulent allegations made in 1998.
Open letter by prominent Muslim leaders in support of Anwar Ibrahim
We, the undersigned, believe the honorable brother Datuk Seri Dr. Anwar Ibrahim to be of the highest ethical and moral integrity, a devout Muslim and a devoted father and husband. He is universally recognized as an advocate for justice and fairness, and he has a long history of promoting Islam and championing Islamic ethical and charitable causes.
Signatories include: Prof. Dr. Akbar Ahmed, Amina Rasul, H.E. Shaykh Prof. Dr. Mustafa Ceri?, Prof. Dr. H.R.H. Prince Ghazi bin Muhammad bin Talal, Prof. Dr. Ingrid Mattson, Dr. Yusuf Islam.
International Crisis Group
The International Crisis Group condemns the arrest of our Board member, Anwar Ibrahim, former Deputy Prime Minister of Malaysia. Anwar Ibrahim was arrested outside his home in Kuala Lumpur on 16 July 2008 on charges that are obviously politically motivated, relating to his position as an opposition leader. Though released on bail the following day, the allegations against him remain and are clearly a deliberate attempt to smear him. We call on the Malaysian government to drop the charges against Anwar Ibrahim and for its leaders not to improperly use the police and judiciary for their partisan purposes.
Signatories include Gareth Evans, Ambassador Thomas R Pickering, and Lord Patten of Barnes
AccountAbility
AccountAbility’s Chief Executive, Simon Zadek: “We are seeing declines in almost every international indicator of good governance and citizens’ confidence in the democratic process. Malaysia has a unique opportunity to lead the way, in Asia and globally, in demonstrating how complex societies should manage their affairs???…
AccountAbility asks that the Malaysian Government provide exemplary global leadership at this pivotal moment in the nation’s history - by advancing the principles and practice of good governance and accountability advocated by our Honorary President, Anwar Ibrahim and so many other global leaders.
Senator Joe Biden, Chairman, US Senate Foreign Relations Committee
“A decade ago, the spectacle of Mr. Anwar’s mistreatment and imprisonment on transparently political grounds greatly discredited Malaysia in the eyes of the world community. The action tarnished the reputation of then-Prime Minister Mahathir Muhammad. I certainly hope that the current Prime Minister, Abdullah Badawi, does not repeat the mistakes of the past. I urge him to drop this political attack on a respected opposition figure, and commit himself to rule of law and good governance in Malaysia.???
National Democratic Institute and International Republication Institute
“The arrest of political leader Datuk Seri Anwar Ibrahim on July 16 is of great concern to us and the international community. A similar charge that was filed against him 10 years ago was ultimately overturned by the Supreme Court. The timing of the current charge is of particular concern given his re-emergence on the national political scene since the ban on his involvement in politics expired in April 2008. We hope that the investigation into the allegation is not used as a political tool to silence an outspoken government critic. It is essential that the investigation is conducted in a transparent and fair manner that upholds the rule of law, and affords Mr. Ibrahim full protection of his legal rights. We also urge the citizens of Malaysia to remain calm and pursue resolution of their concerns over his arrest in a peaceful manner.???
Malaysia's high-stakes political standoff just had the ante upped. With the resignation of his wife from Parliament yesterday, opposition leader Anwar Ibrahim declared he's running for office in the by-election to fill her seat. The question now is whether the government will allow him to do so.
Home Minister Syed Hamid Albar told a press conference yesterday that the police have wrapped up their investigation into a new sodomy allegation against Mr. Anwar. But like the 1998 case, the circumstances are questionable. Mr. Anwar's accuser, a 23-year-old aide, is under police protection and the police report he filed remains under wraps. A medical report by a doctor who examined the aide surfaced on Monday that purportedly found no evidence of sodomy.
In an interview with the Associated Press yesterday, Mr. Abdullah suggested that Mr. Anwar had been engaged in other questionable practices. The Prime Minister told the AP that had heard "stories" of Mr. Anwar "tempting" MPs "with monetary offers to cross over to the opposition." "If it were true that money were being offered, to me it would be the worst form of corruption," he said.