Enforcement of Malaysia's Foreign Investment Guidelines
This paper will discuss Malaysia's Guidelines for the Regulation of Acquisition of Assets, Mergers and Takeovers. The paper will specifically examine the Guidelines themselves and the New Economic Policy (NEP) and the National Development Policy (NDP), under which the Guidelines were established. Included within this examination will be a discussion of Malaysia's official policy towards ethnic groups within the country and how this policy has been implemented by the NEP and NDP. The main focus of the paper will be upon the enforcement of the Guidelines, especially in view of their legal status. Finally, the paper will briefly compare Malaysia's Guidelines with Australia's Foreign Investment Policy, specifically focusing upon the enforcement of Australia's Policy.
The New Economic Policy was established in 1969, under the First Outline Perspective Plan (OPP1), in response to growing ethnic tensions concerning the economic disparity between different ethnic groups. Specifically, native Bumiputras resented the fact that most of the financial capital in Malaysia was owned by foreigners, especially Chinese. The NEP, therefore, sought to increase Bumiputra participation in the economy through a virtual redistribution of wealth. Such a program had been recognized as necessary since the founding of the Federation, when the Constitution provided preferential treatment for the Malays. The drafters of the NEP established a target of 30% Bumiputra participation in all economic activities and corporate ownership and 70% Malaysian (including 30% Bumiputra) by 1990. Between 1970 and 1990, the Bumiputra share of corporate wealth grew from 2.4% to 20.3%. During the 1980s, the government had to relax the NEP measures concerning foreign ownership in response to a recession and a resulting drop in oil and commodity prices.
As had been planned, the OPP1 and NEP expired in 1990. The...