Malaysia is Dying For Foreign Investment?

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Mar 22 2007
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The fund managers who were attending the “Invest Malaysia 2007” conference, which opened in Kuala Lumpur yesterday, hope to see more transparency and consistency in results, especially from the blue-chip companies.

Simon Chan, investment director of the Hong Kong- based BNP Paribas Asset Management Asia, which manages 210 billion euros (RM974 billion) worldwide, said there was now renewed interest from Hong Kong. “We’re likely to increase our investment. We’re investing quite a bit in the Asian region, including Malaysia … If they (Malaysia) are able to deliver what they promise, and they keep on doing that, not only will it attract us back to the market but we’ll also keep increasing our investment in Malaysia” Chan said.

Chan also hopes to see more efforts to protect minority shareholder interests, such as by paying dividends, more transparency and better corporate governance. He noted a strong message emanating from Malaysia that it wants investors to return.

Tiana Erajuuri of Finland’s FIM Asset Management said the fund had invested some €50 million (RM232 million) in Malaysian big-cap stocks. Erajuuri further commented – “We’re looking for a little more openness. Maybe the accounting could still improve, that is, more explanation and disclosures in accounts … Malaysia have improved a lot from five years ago, but there’s still room to grow”.

Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz also announced the liberalisation in foreign exchange (forex) policy to enhance Malaysia’s competitiveness. To attract more foreign capital, more flexibility was announced for foreign stockbrokers and custodian banks to get overdraft facilities from local banks to avoid settlement failures by removing the previous overdraft limit of RM200 million.

Almost at the same time, Deputy Prime Minister Datuk Seri Najib Tun Razak tried to woo investors with the same old stories of Malaysia’s edge of having the presence of natural resources, raw materials, low-cost and high-skilled labour, designated economic zones, conducive tax structures and business-friendly regulatory policies etc etc.

Strangely, Bursa Malaysia chief executive officer Datuk Yusli Mohamed Yusoff recently blamed local investors for not having faith in Malaysian listed companies when the foreign fund managers are bullish with the Kuala Lumpur Stock Exchange. He noted that foreign institutional investors were the net buyers on Bursa, accounting for 35% of last year’s (2006) daily volume.

It seems the foreign investment has reach an alarming low rate which prompted the Malaysian government to take these steps and to do with more marketing talk to attract further foreign investors. Everyone must have ask where is the International Trade Minister, Rafidah, who used to boast that if the foreign investors are not happy with the Malaysian policy which is bias towards the ethnic-Malay (Malaysia has a policy that makes it compulsory for companies to allocate 30% equity for ethnic-Malay), they can pack and go elsewhere.

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