Stumbling Blocks To FDIs Into Malaysia
Foreign investors said their main issues with Malaysia are bureaucracy and limits on foreign ownership, according to Chew Seng Kok, the managing partner of law firm Zaid Ibrahim & Co. There are numerous other issues which cloud FDIs interest in Malaysia. Certain issues are largely immovable and is part of the system, such as the 30% bumiputra partner. That to most FDIs is a turnoff, but its part of the system.
When we talk of bureaucracy, we are also talking of some arbitrary interpretations by the Foreign Investment Committee (FIC) which sometimes create ambiguity and uncertainty when apllying for approvals. Which is why so many potential investors would ask if there were any contacts who know people at FIC well - there should never be a need to know anyone well at anyplace ... it is not a neighbourhood operation. Whether there is a need to know "someone" well or not should not even be discussed, if there is a perception problem, highlight it and the FIC should come out and proclaim its integrity and professionalism.
Take property transactions, it would be at least 9-12 months to obtain FIC and Land Office approvals when the same process takes only 1-2 weeks in other countries!!?? Why?? We cannot afford computers? If we follow that, imagine how long it would take for property transfers, usually a few months if you are lucky, but it is not uncommon for the process to be 1-3 years. On property again, we should get rid of real property gains tax. Already the commercial side is so poor. If we want to be a smallish financial centre like HK and Singapore, we must encourage property investments. Work permits for IT professionals take too long and we don't treat them with enough respect. That has stifled "better value" outsourcing investments into Malaysia. We take a few months to approve qualified IT professionals, and meantime thousands of illegals are swarming onto our shores - get a perspective, man!
Bureaucracy within Malaysia is still too involved. When it comes to buying companies or assets, there is just too many different departments involved. In a survey by the World Bank on EASE OF DOING BUSINESS, Malaysia is ranked number 21. The survey if for the 150 odd countries in the world. Not bad at #21, but we have to compare with our neighbours and other Asian Tigers and improve, if not we are the toothless one. The variables surveyed include (bracketed is Malaysia's position):
a. starting a business (57)
b. dealing with licensing (101)
c. Hiring & firing (34)
d. registering property (53)
e. getting credit facilities (6)
f. protection for investors (5)
g. paying taxes (19)
h. cross border trading (36)
i. enforcement of contracts (61)
j. closing a business (43)
We all will nod our heads knowingly at specific items mentioned where we could really improve. We must let business proceed as free as possible and have strong investor protection and law enforcement as the "whip". We cannot and should put barriers at every level of starting a business, or even in the process of business. Draw the boundaries and leth them mingle within the boundaries, punish only if they over-stepped the boundary. Do not have additional hoops and hurdles within the boundary for them to jump and roll over.
Back to the rankings, the notable countries with the best overall scores:
1) New Zealand
7) Hong Kong