Friday, April 24, 2009

Liberalisation of 27 Services Sub-Sectors - Hardly Anything Impressive

I was interviewed by Astro Awani yesterday on the government's decision to liberalise 27 sub-sectors in the services sector. These sub-sectors covered health and social services, tourism services, transport services, business services and computer and related services. For full details of the sub-sectors, visit here.

On the same panel were Pasir Mas MP Ibrahim Ali and Syed Akhbar Ali. Ibrahim was sceptical about the move claiming that previous equity requirement did not deter the flow of foreign investment into the country. He said the government/UMNO did not consult its members before announcing the move. He claimed that the Bumiputera companies cannot compete with foreign competitors in the sub-sectors.

Syed Ali was cautious and claimed that some of the sub-sectors are ready for opening up but not others. He identified 4-5 star hotels as ready to compete with other foreign entries.

I said that some of the initial reactions are too emotional and knee-jerk. Some of these sectors are already quite open even before the liberalisation. Take computer and related services as an example, this sub-sector is already quite liberalised since the implementation of MSC status. A number of local and foreign companies providing computer and related services are MSC status companies.

Health and social services liberalisation is quite limited and does not include wholesale liberalisation of all health related services including private hospitals. Here, again the Bumi interest is still intact and protected. Health services is a sensitive area. Many activists have spoken against the full privatisation of this sub-sector arguing that the access to an affordable and good medical care is a fundamental human right.

The liberalisation of tourism services does not appear to have positive impact on the local companies - mostly not 4 to 5 star rated. Most of the 4 to 5 star operators are controlled by big local and foreign conglomerates. Liberalisation of this sub-sector especially those F&B outlets with working capital lower than RM1 million is very crucial to ensure that we encourage more Malaysians to help promote local restaurants and franchises.

Moreover, the liberalisation of inbound travel is quite meaningless. Syed gave a weak argument that the liberalisation of this sector will open up the market to serious competition from outside e.g. Japan. In actual fact, foreign travel agencies have been working with our local partners for ages. We know our market better. Again, there is very little upside here since not many local travel agencies are focusing on inbound travel.

The liberalisation of transport sub-sector is similarly limited and narrow. Hence, the logistics sub-sector is still not opening up to the equity restriction.

On business services, this helps foreign investors more than our local companies. Originally, those foreign investors were given exemptions as regional distribution centres and international procurement centres by MIDA. Consulting business had opened up more than 5 years back as our compliant to the WTO requirements.

But predictably, politicians such as Ibrahim Ali is blaming the government for not protecting the socio-economic interest of the Malay community. I rebutted him by asking the community to focus on output and innovation instead of equity shareholding. If the community can create better output and be creative, it is not difficult for them to do better than now.

Ibrahim's analogy of the past 30 years is dated and unprogressive. It is time to look at improving the capacity of the Malay-Bumi community than to insist on quota and protection. Ibrahim said other countries are moving towards protectionism including the US. This is a false statement. Obama's administration has abandoned its "Buy American" products and services call fearing trade wars with China, Europe, Canada and South America.

Again, Najib has merely announced a liberation of the Bumi equity requirement without mentioning a coordinated liberalisation of government's procurement policy which favours Bumi companies. So, Ibrahim is clearly jumping the gun. Without the real liberalisation of the government's procurement policy there is little benefit to be gained for other non-Bumi local companies.

The devil is in the details. I hope more Malaysians can help to scrutinize any policy announcement more intimately.

Above are reasons of not being overly enthusiastic of the liberalisation announcement. I hope the PM's backroom boys do not commit the same mistake like Abdullah's. Give us real reforms and not sugar-coated rhetoric.

But as usual, a number of parties, analysts and stakeholders are trumpeting compliments of the PM's move.

Malaysians must really change our mindset. We need to be more sophisticated and demand the best from our policy makers. Do not just blame the politicians. We get what we deserved.

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Anonymous said...

Dear Mr. Khoo,
I have high regards for your blog as it is always professionally manned and utilized. However it is peppered with grammatical errors. I think it should be improved and so will your blog.

As for having that frog MP in the panel, to be honest, there must be a thousand other people that Astro Awani could have invited to discuss the topic. I have seen that guy in action in some seminars and he is nothing but a loud mouth and racist to the core. For him the Malays will always be a bullied race and will always need crutches. For him the whole world owes the Malays a living....mind you he is assuming all Malays agree with him.

I said earlier in your blog that UMNO's (yes, UMNO and NOT the Government of Malaysia) words have no credibility with many non-bumis. They know how to mouth cliches and slogans but know nothing of how to make them happen. Need I say more when a few days after Najib said in a press conference that the media should report truthfully, boldly and be transparent, that a few opposition news tabloids got seized or banned?

As I also said in your blog earlier there is no follow through in what the top leaders say and the little napoleans that fill and man every possible post in the civil service continue with their discriminatory practices.

I say again, don't hold your breath....nothing is going to ever come out of this liberalization move. As it is most, if not all, of those sectors involved...the non-bumis, especially the Chinese entrepreneurs have found ways to circumvent and even capitalize on it. One has to just admire how the ordinary non-bumi Malaysia businessman has been able to survive during the last 50 years of discrimination by the Government.

The day UMNO changes pigs will fly.

Jayenjr said...

Dear Khoo

We all know where Ibrahim Ali is coming from. I don't think general public opinion about him really differs from one person to another, and that is he is simply using the race platform to buy additional time on his political shelf life. Personally, I don't think this guy will survive the next tsunami...

What you remarked about the "community to focus on output and innovation"...create better output and be creative..."

THAT, should be the emphasis.

Sadly though, through the racial divide and rule style of UMNO, the country, IMHO, has lost competitive contributions from at least 2 generation of Malays. It is due to UMNO rule, for decades, that we now have local grads who can't even write a decent cover letter to support a resume, even if their life depended on it.

I also feel, that it will take them at least another generation to free their mind set from the "crutch mentality".

But the day UMNO starts to get serious and sincere, I am pretty sure it will find that the various races in this country would genuinely also offer the mentorship and leadership that Malays badly need for skills and technology transfer, to bring forth that "output" and "innovation".

Vincent said...

Dear Kay Peng,

I saw you talking live at Astro Awani yesterday night. Very impressive your analysis. As corretly pointed out by you, those are only "sugar-coated rhetoric policy".

BTW i have just read MStar Online just now that Tan Keng Liang (i.e. the Gerakan Kedah Youth chief) scolded YB Lim Kit Siang badly in response of his "silly remarks" of their 100k penalty proposal to SPR recently.

I think that's a total disrespect to a senior MP.
I suggest you should highlight to the public how rude this person is and disrespectful of senior MP.
Gerakan has no respect to senior MP!
What are your views on this?

Richard from Perak said...


i think it is highly unfair to comment on something which you have not read.

I think u exagerated the response by Tan Keng Liang. I actually went to his blog ( saw that his response was not as bad as described by Vincent. He didn't sound at any part to be scolding LKS and was merely making some clarification. I manage to see the proposal at his blog which he sent to SPR.

In fact, I was agreeable to one of his proposal to amend Article 48(6) of the Federal Constitution to exempt the 5 years ban for wakil rakyat wanting to get approval from rakyat to party hop. If this proposal get thru, at least the 3 assemblyperson in Perak can hold a by-election to party hop (if they resign now, they will be ban for 5 years - I read this in the chinese daily this morning).

However, I did not agree to his penalty proposal of 50k/100k concept as i don't think it will prevent resignation by wakit rakyat without valid reason. I think there should be something heavier!

Perhaps, Kay Peng,
I would appreciate if you could provide detail analysis of his proposal, like the one u made at Astro Awani yesterday night. I think you should also give some talkshows at the TV as i think a lot of people would appreciate it.

Thanks bro.

Anonymous said...

LKS is eaually rude as well naming people lack of grey matter.

Zachery said...

Kay Peng,

This is an extract of a report by an independent journalist which shows that the Election Commission is just PRO BN!

"The same views have been echoed by no less than the Election Commission (EC). Plus, the EC has openly supported proposals by some BN leaders such as Datuk Seri Nazri Aziz, Datuk Mukhriz Mahathir and Tan Keng Liang to prevent "unnecessary" elections. These include suggestions for stricter laws, and penalties for elected reps or their parties should an elected representative resign for reasons other than what's stated in Article 48(1) of the Federal Constitution."

Derrick said...

I also read in YB Lim Kit Siang's blog where he called Tan Keng Liang and Mukhriz lack of grey matter.

Perhaps, he meant "grey hair" like him. Old and nyayuk already. And talk stupid things in his blog.

LKS should retire and let new people in DAP to come up!!!!

jonathan lee said...

Something interesting found at Lim Kit Siang's blog just now. It shows the hypocrisy of this country's Election Commission!

Dear YB LKS,

I support you to continue to show how BN is so hypocrite.

For example, when Tan Keng Liang (Kedah gerakan youth head) suggested to impose a penalty for unreasonable resignation and to amend the Federal Consitution (for the 5 years ban) to make it possible for assemblyman to call for by-election to get people approval (to solve the crisis in Perak), the Election Commission only supported his penalty proposal (just because it makes PKR look bad at Penanti under the Fairuz scandal).

So, what about the amendment to the Federal Constitution????

I manage to search google and found his proposal to SPR at his blog. -

SPR dare not even talk about his proposal for amendment of the 5 years ban to allow by-election at Perak.!!!!

If SPR want to accept Tan’s proposal for the penalty, they must also adopt his idea for amendment to the Federal Constitution (to make exemption of the 5 years ban). Otherwise, it is just selecting proposal for their BN benefit.

If possible YB LKS,
please highlight this hypocrisy of BN and SPR!!!

Anonymous said...

>I hope the PM's backroom boys do not commit the same mistake like Abdullah's. Give us real reforms and not sugar-coated rhetoric

what when the pm's backroom boys are umno boys since mamak's time? bright, original and dynamic ideas, not consonant to the umno policy are deleted, watered down before they reach the pm table.