Monday, June 25, 2007

Thierry Rommel: EU Envoy Blasts Malaysia's NEP

EU Envoy Blasts Malaysia's NEP
By EILEEN NG Associated Press Writer © 2007 The Associated Press

KUALA LUMPUR, Malaysia — Europe's top envoy to Malaysia Thursday urged the government to roll back its affirmative action policy for majority Malays, saying it is discriminatory and amounts to protectionism against foreign companies.

In unusually frank comments that ignored diplomatic niceties, Thierry Rommel (pix left) openly criticized Malaysia's 37-year-old New Economic Policy, or NEP, that gives a host of privileges in jobs, education, business and other areas to ethnic Malays.

"In a dominant part of the domestic economy, there is no level playing field for foreign companies," Rommel, the ambassador and head of the European Commission Delegation to Malaysia, said in a speech to local and foreign businessmen.

Ethnic Malays and other indigenous groups, known as Bumiputras, comprise more than 60 percent of Malaysia's 26 million people. The government says they have a disproportionately low share of the corporate wealth compared to the minority Chinese, and need the NEP to increase their standard of living.

The government did not immediately respond to Rommel's comments.

Rommel said the government is using the NEP as an excuse to practice "significant protectionism of its own market," including the automotive sector, steel, consumer goods, agricultural products, services and government contracts.

Malaysia claims these are "infant" industries that need to be protected but "in reality .. it is the Malay-centered Bumiputra policy that drives protectionist policies," Rommel said.

As part of the NEP, all public-listed companies are required to allocate 30 percent of their shares to Malays. Companies without Malay directors or employees are excluded from lucrative government contracts. Employers have quotas for hiring Malays.

Eric Reuter, sales and marketing director of freight forwarder ABX Logistics, said the Belgium-based company has a 51 percent Bumiputra partner and is required to work with local companies on government-related projects.
The limitations have eroded his profit margin, he said.

"We cannot be as flexible as we want to be and chances that corruption comes into play is higher. It is an interruption to the free market," Reuter told The Associated Press.

Besides foreigners, minority ethnic Chinese and Indians also see the NEP as a discriminatory tool. Many Malays also have complained the policy has benefited only a few well-connected people.

NEP was started in 1970 when the Malays' corporate ownership was 2 percent. The aim was to raise it to 30 percent by 2010, from 19 percent now. Chinese, who form a quarter of the population, control 40 percent of corporate wealth.

Rommel stopped short of saying the NEP should be scrapped but told reporters separately: "We (in Europe) have bitten the bullet on a number of sensitive issues, why can't you?"

He warned the NEP could "lead to problems" in free trade negotiations between the EU and the 10-member Association of Southeast Asian Nations, of which Malaysia is a key member.

The two groups agreed last month to launch free trade talks, which could raise ASEAN's exports to the EU by up to 20 percent, Rommel said. Senior officials are expected to hold their first meeting in Vietnam next month, he added.

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1 comment:

shawnmorgan said...

Malaysia is practising HIDDEN APARTHEID SYSTEM

Definition of Apartheid System,

Apartheid was a system of legal racial separation which dominated the Republic of South Africa from 1948 until 1993.

Under apartheid, various races were separated into different regions, and discrimination against people was not only acceptable, but legally entrenched, with one race having priority housing, jobs, education, and political power.

The UN adopted in 1973 the International Convention on the Suppression and Punishment of the Crime of Apartheid, which 101 States have ratified. It characterizes apartheid as a crime for which individuals can be held accountable. The convention defines apartheid as a series of “inhuman acts committed for the purpose of establishing and maintaining domination by one racial group of persons over any other racial group of persons and systematically oppressing them.” These include denial of the right to life and liberty, imposition of living conditions designed to destroy the group, legislative measures to prevent the group’s participation in national life, division of the population along racial lines, and exploitation of the group’s labor force. It ... declares apartheid a crime against humanity.

After reading this article evaluate yourself , is this what you want for your future generation?????

Certain pro-bumiputra policies known as the Bumiputra Laws exist as a means of affirmative action for bumiputras. Such policies include quotas for the following: admission to government educational institutions, qualification for public scholarships, positions in government and ownership in business. Most of them were established in the Malaysian New Economic Policy (NEP). Many of them focus on establishing a Bumiputra share of corporate equity comprising at least 30% of the total. This target was originally proposed by Ismail Abdul Rahman, after the government was unable to agree on a suitable policy goal.

Examples of such policies include:

Companies listed on the Kuala Lumpur Stock Exchange (Bursa Saham Kuala Lumpur) must find Bumiputras to take up a minimum 30% of equity to satisfy listing requirements. MSC status companies listed on MESDAQ (Malaysia's latest stock exchange, modelled on the NASDAQ and other 'tech' stock exchanges) are not subject to this requirement.
A certain percentage of new housing in any development has to be sold to Bumiputra owners. Housing developers are required to provide a minimum 7% discount to Bumiputra buyers of these lots. There is no bumiputra discount on established housing.
A basket of government guaranteed and run mutual funds are available for purchase by Bumiputra buyers only.
Many government tendered projects require that companies submitting tenders be bumiputra owned. This requirement has led to non-Bumiputras teaming up with Bumiputra companies to obtain projects in a practice known as "Ali Baba" where Ali (the Bumiputra) exists solely to satisfy this requirement and Baba (the non Bumiputra) gives Ali a certain sum in exchange.
Projects were earmarked for Malay contractors to gain expertise in various fields. Often these projects would be sold as the bidders were not interested in the work, only in the gains that could be made from winning such a tender.
Approved Permits (APs) for automobiles preferentially allow Bumiputra to import vehicles. Automotive companies wishing to bring in cars need to have an AP to do so. APs were originally created to allow Bumiputra participation in the automotive industry since they were issued to companies with at least 70% Bumiputra ownership. In 2004, the Edge (a business newspaper) estimated that APs were worth approximately RM 35,000 a piece. They also estimated that Nasimuddin Amin, chairman of the Naza group received 6,387 for 2003, making him the largest recipient of APs. 12,234 APs were issued in 2003. In addition to APs, foreign car marquees are required to pay between 140% to 300% as an import duty.
Most of these advantages only exist in public policy. Private sector implementation is often to satisfy legal requirements and is considered by some to be mere tokenism.

In addition to the above economic advantages, Bumiputras previously received other privileges in public tertiary education, such as ethnic quotas. In 2004, Dr. Shafie Salleh, the newly appointed Higher Education Minister, stated that he "will ensure the quota of Malay students' entry into universities is always higher". This was demonstrated in 2004 when Non-Bumiputra students who scored 5As in the STPM (the highest possible grade) were denied admission to their first choice of study in public universities while Bumiputra students with lesser grades were nonetheless admitted.

Since 2000, the Government has discussed phasing out certain advantages, and reinstating a "meritocracy". The eventual result was the system of "Malaysian model meritocracy" begun in 2003. In the implementation, admission to public universities was not based upon a common examination like the SAT or A-Levels but rather upon two parallel systems of a one-year matriculation course and a two-year STPM (literally translated as "Malaysian Higher School Certificate") programme. Bumiputras compose an overwhelming majority of entrants to the matriculation programme, leading to some complaints from the public, as the public university entry requirements are suggested to be easier for matriculation students.

Quotas also exist for Public Services Department (JPA) scholarships, which are full scholarships offered to students to study in leading universities worldwide. These scholarships are given on the basis of SPM (translated as "Malaysian Education Certificate", the equivalent of O-Levels) results, race and certain quotas. The JPA scholars then are sent to selected pre-university programmes offered by the government — from there, they apply to universities.

The laws and rules favouring bumiputras are present in every level. For example, in the secondary school level English Language Debate, at least one of the three active speakers must be a bumiputra. Any team which does not follow this rule is disqualified.