Affirmative action uncertainty affecting FDI, says Nazir

Wrangling over affirmative action in the proposed New Economic Model (NEM) is causing uncertainty among investors, said top banker Datuk Seri Nazir Razak.

The CIMB Bank chief executive officer said that there was a lot of debate over what sort of affirmative action should be in the NEM, notably involving vocal Malay rights group Perkasa, and the government needed to decide quickly for the sake of giving investors a sense of direction.

“Dealing with the new version of NEP is sensitive and there is all sorts of speculation but this period needs to be cut short,” Nazir told a law conference here today, referring to the New Economic Policy (NEP).

“My worry is that it is taking too long. Let’s just decide what affirmative action will remain.”

Nazir, whose brother is Prime Minister Datuk Seri Najib Razak, added that Malaysia could be losing out in terms of foreign direct investment (FDI) due to the uncertainty.

“If I come this year I may need a Bumi partner but next year I may not, so wait lah,” he said by way of illustration.

The Najib administration has been trying to lift Malaysia’s profile as a destination for foreign investment to help the country achieve an average GDP growth of at least 6 per cent per annum over the next five years in an effort to become a high income nation.

The country’s FDI rates have fallen faster than other regional players like Singapore and China, and at the same time capital outflows have dampened private domestic investments. Net portfolio and direct investment outflows had reached US$61 billion (RM197 billion) in 2008 and 2009 according to official data.

More recently the UNCTAD World Investment Report 2010 said that FDI inflows to Malaysia dropped 81 per cent to RM4.4 billion last year from RM23 billion in 2008.

Nazir was guest speaker at the 15th Malaysia Law Conference organised by the Bar Council.

Nazir last month repeated his call for a review of the NEP adding that the policy has been unfair to the majority of Malays. He said the time has come for the government to protect the interest of the majority of the Malays and not just selected few.

“I have met a Malay professional overseas who refused to return to Malaysia because he is of the view that successful Malays are not welcomed in the country. This is because the Malays’ success is always linked to NEP,” said Nazir in an interview with Mingguan Malaysia published on June 20.

“In fact some of them refused to return thinking that the NEP is not for them but only to selected Malay groups, so they are better off working overseas,” he said when asked if the new generation of Malays are more open to reviewing the policy.

However, Nazir said certain aspect of the NEP such as scholarships allocation should be retained.

“Those who have been trying to stop efforts to review the NEP are those who are benefiting from the NEP. That was why some contractors were not happy with open tender but they never ask if they get the job, what would happen to other Malay contractors. Why refuse to compete?” said Nazir to a question on the opposition to a review of the NEP.

He said that the policy, introduced during the premiership of his father Tun Abdul Razak Hussein in 1971 has deviated from its original objective

courtesy of Malaysian Insider