Fauwaz Abdul Aziz
Jun 22, 07 11:35am
Malaysia needs to re-look its pro-Bumiputera policies if it is to
attract European investors or make headway into the European Single
Market, said European Commission (EC) ambassador Thierry Rommel.
He said the "moment of truth" is all the more compelling because it
is the National Economic Policy (NEP) that drives Malaysia's
protectionist policies and causes many of the inefficiencies that
dissuade foreign investors from the country.
Speaking at a luncheon talk in Kuala Lumpur organised by the EU-
Malaysia Chamber of Commerce and Industry yesterday, Rommel said
among the reasons for Malaysia's poor standing as a destination for
Foreign Direct Investment (FDI) is the lack of a level playing field
for foreign companies "even when they are in a partnership with Bumis."
Foreign players and investors, likewise, cannot take for granted the
predictable and non-discriminatory application of the rule of law as
such, he added.
The public education system also has not served the need for skilled
human capital, which Rommel said is "the single biggest challenge yet
and one that brings us right back to the Bumiputera policy."
While the public service delivery system lacks efficiency,
responsiveness, transparency and accountability, corruption as well
as the questionable and unchecked practices of Malay preferential
treatment also plague the business environment and economy of the
country, he added.
Timely reflection
Aside from all these reasons, Rommel said, a re-look at the NEP is
all the more timely now as Malaysia is at a crossroads in its
economic future and relations with the EU as several international
agreements and negotiations command Malaysia's attention.
Among them, the World Trade Organisation (WTO) negotiations to
promote free trade and lower trade barriers requires Malaysia, as a
key player among emerging economies, to be more "pro-active and
result-oriented" in order to help resolve the impasse at the Doha
Development Round.
To address those issues not covered by the WTO such as investment,
public procurement, competition, trade in certain services, and the
removal of non-tariff barriers, EU and Asean had in May agreed to
negotiate for a bilateral Free Trade Agreement (FTA).
At the same time parallel negotiations with other Asean countries
(except Burma) are in the final stages of signing their respective
Partnership and Cooperation Agreements (PCA) which would ink the
framework and content of political dialogue and cooperation with the EU.
Only Malaysia has not made any indications, since its Foreign
Minister Syed Hamid Albar met EU Commissioner B Ferrero-Waldner last
October, of its commitment to begin negotiations on a PCA with the EU.
The PCA, Rommel noted, encompasses issues such as human rights and
fundamental freedoms, migration and human trafficking, legal affairs
and cooperation, the fight against corruption, non-proliferation,
terrorism, transnational crime and the role of civil society.
Short-term political risks
Linking these to FDI, he said the situation around the world
demonstrates that failing to achieve these "people-centred goals"
would render vulnerable economic activity and wealth.
Rommel said FDI is vulnerable to political and social tensions before
bringing back the discussion to the issue of Malaysia's weak "offer"
to foreign investors, the decline in both domestic and foreign direct
investment, and the pervasive impact of "the Malay Agenda".
To a question from the floor, Rommel said there are short-term
political risks to the government in opening up an honest and public
debate on the NEP. However, the history of Europe's reforms in the
textiles, steel and agricultural sectors demonstrate that the EU has
made those sacrifices for the better.
He also said the 2006 Approved Permit saga showed that such a debate
on the NEP was possible and had proved to have positive results.
"If we all were to continually submit to internal pressure groups and
vested economic interests, who indeed are often the same, we, as
policy-makers in a democracy, would fail our nation.
"Political leaders are elected to act responsibly and be far-sighted
for the benefit of the nation they have been elected to lead, even if
this implies taking political risks with regard to a part of the
electorate which can, in any case, be managed by transparency,
dialogue and education," he said.
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