Malaysia's Foreign Investment Guidelines

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 establishe

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lementation of government policy. The Guidelines "themselves have not the force of law and the need to obtain FIC approval for the acquisition of assets is not a statutory requirement." The Guidelines did not represent public policy either. The court cited five grounds upon which public policy may invalidate contracts: 1) where the provisions are illegal under common or statutory law; 2) where the provisions are injurious to good government; 3) where the provisions interfere with the proper working of the machinery of justice; 4) where the provisions are injurious to marriage and morality; and 5) where the provisions are economically against the public interest. The court said that provisions violating the Guidelines would have to come under either the second or fifth categories. According to the court, the defendants did not show (or even argue) that the provisions in the contract fell into either of these two categories. The court then said that in order to do this the defendants would have to show that the NEP has become accepted as public policy, and not merely as political policy. Since the defendants apparently did not try to do this, the court accepted the argument that the Guidelines were only government political

Category: Foreign - M