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Categories
| Mixed reaction on FIC deregulation |
| Business & Market 2009 | |||
| Written by Siow Chen Ming | |||
| Wednesday, 01 July 2009 11:11 | |||
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AirAsia Bhd chief executive officer Datuk Seri Tony Fernandes best summed up the general feeling: “I had a big smile on my face when hearing the PM’s speech. Only with a level playing field can you have innovation and the drive for entrepreneurship,” he said in a plenary session at the conference. He was responding to Prime Minister Datuk Seri Najib Razak’s announcement yesterday on the deregulation of FIC guidelines which, among others, repealed the requirement for listed companies to have 30% bumiputera equity. Instead, there is a new guideline governed by the Securities Commission requiring companies seeking a listing to offer half of their required minimum 25% public shareholding spread to bumiputera investors. “Clearly, the PM is well advised. As I have always said, Malaysia’s assets are the diversity of its people, a large English-speaking community, law and order, good infrastructure, and its plentiful land and resources. “But despite all that, there is a myriad of protectionisms or blunt instruments that are no longer relevant. But while this (the deregulation) is a significant step forward for the country, it only brings Malaysia to where the rest of the world is today. Hence, a lot more work needs to be done,” said Stephen Hagger, managing director of Credit Suisse Malaysia, who was one of the panellists at the conference. AirAsia’s Fernandes hoped that apart from the deregulation of FIC guidelines, there would be less government intervention in business, hence creating an improved playing field in the industries. While thanking the government for helping AirAsia grow to where it is today, Fernandes also pointed out the fact that AirAsia took six years to get the Singapore-Kuala Lumpur route. According to him, had the budget airline secured the route earlier, the company would have grown much bigger. “If you look at our flights from London, 80% of the passengers are non-Malaysian. They are using us to fly to Singapore, Langkawi, Bangkok, Bali, etc. We also see a lot of Singaporeans coming to KL, using us to fly to London, Hangzhou, Tianjin, etc. The amount of tourism and economic development that AirAsia brings is immense. I hope all the shackles that hold us back are finally removed. “It is a great test for the Malaysian government to really open up the economy and benefit the people. People have always wanted to perform, it’s just that there were held back,” said Fernandes. However, a fund manager who attended the conference, though delighted with the deregulation of the FIC rules, remained sceptical. He described the policy change as “half-hearted” and “not sending the message strong enough”. With the major announcement by the PM failing to excite the local bourse yesterday, his scepticism was perhaps shared by other investors. “While the 30% bumiputera equity rule is dismantled, there is another rule requiring companies to offer 50% of their minimum required public shareholding spread to bumiputera investors. While the new rules are less demanding, this has nevertheless weakened the message. Also, there are other issues such as the award of contracts that should be dealt with,” the fund manager said. CIMB group CEO Datuk Seri Nazir Razak said the recent reform in the capital markets was “certainly favourable” in creating a conducive investing environment. “It has the impact of making Malaysia more attractive to investors, but you have to go (look) into those announcements in more detail to understand some of the very fundamental changes to be made. CIMB is a capital market participant and these announcements are good for the economy, investment environment and business in general. We welcome these changes,” he said. Institute of Strategic and International Studies director-general Mahani Zainal Abidin commented on the establishment of Ekuiti Nasional Bhd (Ekuinas), the private equity fund set up to invest in unlisted bumiputra firms. “With the reforms (in the capital markets), there will be new investments and Ekuinas can go (and invest) in these businesses. Ekuinas can even go into some of the (business) divestments of the GLCs,” she said. This article appeared in The Edge Financial Daily, July 1, 2009.
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