The Edge | 14 February 2007
Rafidah: Distributive trade guidelines an issue with the US
By Kevin Tan
Malaysia’s controversial guidelines on foreign participation in the distributive trade sector have become an outstanding issue in the ongoing free trade talks between the country and the United States.
Minister of International Trade and Industry Datuk Seri Rafidah Aziz said there were now 58 outstanding issues, one of which was the Domestic Trade and Consumer Affairs Ministry’s guidelines on distributive trade.
The guidelines, first proposed by the ministry to the Cabinet in December 2004, require companies with more than 15% foreign equity to have 30% bumiputera equity participation and a paid-up capital of RM1 million.
Such joint ventures must also have boards, management and staff that reflect the racial mix of Malaysia. Furthermore, each branch of such companies and businesses is to be considered separate legal entities, each with a paid-up capital of RM1 million, and with separate mandatory auditing.
Several quarters have called for the scrapping of the guidelines, saying that they would scare away foreign investors. Domestic Trade and Consumer Affairs Minister Datuk Mohd Shafie Apdal had said the set of guidelines was under review after local investors had expressed concerns on it.
Speaking at the Malaysian Industrial Development Authority’s (Mida) annual media conference on Feb 13 on the performance of the manufacturing and services sectors in 2006, Rafidah said 16 of the outstanding issues came under the purview of Domestic Trade and Consumer Affairs Ministry.
Rafidah said the free trade talks with the US were not in a “deadlock” even though an agreement may not be reached before the deadline stipulated by US negotiators.
“It’s not a deadlock. It’s ongoing. Whether it will meet the deadline depends on how fast we resolve the (outstanding) issues,” she said.
The outstanding issues include intellectual property rights, she added.
US negotiators want to conclude the negotiations before the White House’s Trade Promotion Authority, which allows them to fast-track a trade agreement, expires in July.
“Of course, we want to meet the deadline but we cannot do anything if we can’t meet it,” Rafidah said.
Malaysian and US negotiators recently concluded the fifth round of talks in Kota Kinabalu without reaching any agreement.
The minister said there would not be a negative impact on Malaysia’s foreign direct investments (FDIs) even if Malaysia could not reach an agreement with the US.
“The Americans were here long before the talks on the FTA (Free Trade Agreement),” she added.
Rafidah said Malaysian officials were also talking with their American counterparts at an informal level.