Exorcise the NEP ghost which haunts forwarding companies

 

A ghost from the past was released recently, whether accidentally or otherwise. Unless the haunting issues are resolved, the poor in Malaysia will be made poorer and the rich, far richer.

The ghost is a concept called affirmative action, a term for a policy to increase workplace and educational opportunities for under-represented communities in society.

President Kennedy was among the first statesmen credited with using the term in an Executive Order in 1961 calling for “… affirmative action to ensure that applicants are employed, and employees are treated during employment, without regard to their race, creed, colour, or national origin.”

It was in that spirit that Malaysia launched the 20-year New Economic Policy (NEP) in 1970.

The problem now is that the NEP has ended, but only in name. After 1990, affirmative action was continued, but with asset redistribution more for political parties and elites rather than raising the poor from poverty.

The new ruling requiring forwarding companies to sell 51% of their equity to Bumiputeras by next year is coming back to test the ethics of policymakers.

“Looks like nobody is spared from the Customs brokerage licence issue except foreigners,” says an industry observer. He believes that most companies, even listed ones, would have their licence held by a subsidiary company and would not be spared.

Most of the multimillion ringgit Malaysian freight forwarders were already exempted from this ruling a decade ago, when the then Malaysian Industrial Development Authority promoted foreign direct investment into logistics.

Malaysian logistics companies with 60% Malaysian equity and 40% held by a foreign investor were not required to meet the 51% Bumiputera equity ruling, and Mida has since liberalised the rule to allow 100% foreign ownership.

The NEP’s goal was to provide the poorer classes of Malaysians with equal access to opportunities, including education, within 20 years. The aspiration was to increase wealth and reduce income inequality.

The current fiasco over the Customs brokerage licence is small potatoes, compared to the opportunity that it offers for Malaysian lawmakers to provide Bumiputera companies the freedom to sell equity to anyone who offers the best opportunities, including multinational freight forwarders. Don’t hamper Bumiputera companies in their choice of buyer.

Malaysia’s logistics sector was once ranked No 2 in Asean, behind Singapore, and 24th best in the world in 2014 – but has slipped to 32nd place in 2016 and to 41st out of 160 countries in the World Bank’s logistics performance index. From No 2 in Asean, Malaysia is now ranked 4th, behind Singapore, Thailand and Vietnam.

This is the time for the government to make Malaysia a logistics hub in Asean. A strong LPI ranking will mean strong foreign investment.

Terminate the new Customs licensing requirement and its retroactive aspects. Set new rules that encourage 60:40 joint ventures between foreigners and Malaysian companies.

Now is the time to soothe rattled nerves and re-assure the business community that ghosts from the past will be exorcised to ensure policy stability.

Malaysia’s leaders need to quickly catch up on the objective of growing wealth and reducing income inequality - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

✍ Credit given to the original owner of this post : ☕ Malaysians Must Know the TRUTH

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