By Neville Spykerman and Lee Wei Lian
KUALA LUMPUR : Malaysia today made sweeping changes to its capital markets to boost foreign investments, cutting Bumiputera equity quotas for share offerings and in fund management firms while trimming the role of a powerful but conservative panel overseeing such investments.

Datuk Seri Najib Tun Razak dropped the 30 per cent Bumiputera equity requirement for Malaysian firms seeking public listing, the cornerstone of the New Economic Policy (NEP), but they will now have to offer 50 per cent of the public shareholding spread to Bumiputera investors.

“The 30 per cent requirement remains but it is a macro objective,” the prime minister told reporters after announcing the changes while launching the InvestMalaysia week and meeting with senior fund managers.

He said the Bumiputera equity condition within the public spread will reinforce the competitiveness of Bursa Malaysia.

Najib also cut the powers of the Foreign Investments Committee (FIC), immediately repealing its guidelines covering the acquisition of equity stakes, mergers and takeovers.

The FIC will no longer process any share transactions nor impose equity conditions on such transactions — which has been its mainstay up to yesterday.

Najib also said FIC approval for property transactions will now only be required when it involves a dilution of Bumiputera or goverment interest for properties valued at RM20 million and above, while other transactions, including between foreigners and non-Bumiputeras, will not require approval.

“In addition, to further ease raising funds from the capital markets, post listing fund raising exercises will no longer be subject to any equity condition,” Najib said in his speech, adding this deregulation will immediately support existing listed companies seeking to raise funds and reduce the friction cost of compliance.

Najib, who is also Finance Minister, also liberalised ownership in the wholesale segment of the fund management industry, allowing total ownership for qualified and leading fund management companies seeking to be in Malaysia.

He also raised the limit for foreign shareholding in unit trust management firms to 70 per cent, from 49 per cent previously.

To boost the local markets, Najib has set up a private equity fund, called Ekuiti Nasional Berhad (Ekuinas), with an initial capital of RM500 million to invest in private sector funds, to promote genuine partnerships and a fully commercial approach.

He disclosed that Bumiputera participation through Ekuinas will be based on merit. The fund will eventually grow to RM10 billion.

Courtesy : Themalaysianinsider