MCA blasts Distributive Trade guidelines

MCA blasts Distributive Trade guidelines
Doreen Leong
KUALA LUMPUR: The MCA Youth Economic Bureau has hit out against the Domestic Trade and Consumer Affairs Ministry's proposed trade guidelines that will affect some 400 types of retail businesses.

Describing some of the requirements of the guidelines as "ludicrous", the bureau's chief, Datuk Henry Wong, said the matter should be viewed seriously as it would have far reaching implications.

He objected to the ministry's proposed Guidelines to Foreign Participation in the Distributive Trades as it was contrary to the spirit of the World Trade Organisation (WTO) and appeared restrictive, especially to young entrepreneurs.

The guidelines aim to regulate the businesses that have at least a 15% foreign equity.

According to Wong, the guidelines states that all retailers, wholesalers, and specialty stores would be asked to restructure to meet a minimum 30% bumiputra requirement, to raise its paid-up capital to at least RM1 million and to ensure the composition of the directors and employees reflect the racial composition of the country.

"This will also put a heavy burden on the retailers and wholesalers, which are by and large small family-owned businesses.

"The requirement that the composition of the directors, managers and employee structure reflect the racial composition is also ludicrous," he said in a statement today July 24, 2006).

He was responding to The Edge Financial Daily's report yesterday on Cheras MCA Cheras service centre director Jeffrey Goh's statement, urging the ministry to clarify its position on the controversial trade guidelines.

Goh claimed that despite not having Cabinet approval for the proposals, the ministry was "testing the waters" at the ground level with the guidelines, which was mooted about two years ago.

Wong said the guidelines was contrary to the spirit of the World Trade Organisation (WTO), to which Malaysia was a signatory.

"It is understood that to be part of the global trade nowadays, we can't shift policies from liberal to non-liberal - this is literally reversing the traffic," Wong said, adding that the bureau would take up the issue when it meets on Wednesday (July 26, 2006).

He said when the Industrial Coordination Act 1975 was introduced, it was targeted at larger manufacturers where only those with a minimum paid up capital of RM2.5 million would be required to comply with the Foreign Investment Committee (FIC) rules where a 30% Bumiputra equity had to be met.

Wong added that there had never been a requirement of employee racial composition in the manufacturing sector.

He said Malaysia's services sector had always maintained a very liberal stand. He said even though the Act was still in place, the Ministry of International Trade and Industry and its agencies had applied a very liberal approach to the FIC guidelines.

"We need a clear stand on this because among the Barisan Nasional component parties, we have already agreed that there should not be enforced micro-restructuring.

"We are here to grow new businesses together," said Wong