ANNOUNCEMENT 06 Jan 2010

In January 2010, the government of Malaysia announced changed rules for foreign investors.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE



European Commission, DG TRADE, Market Access Database: http://madb.europa.eu/madb/barriers_details.htm?barrier_id=105342&version=6
MDTCC, Guidelines on Foreign Participation in the Distributive Trade Services Malaysia: http://www.kpdnkk.gov.my/kpdnkk-theme/images/pdf/WRT_Guideline.pdf


Inception date: 06 Jan 2010 | Removal date: open ended
Still in force

FDI: Entry and ownership rule

The Malaysian ministry of Domestic Trade, Co-Operatives and Consumerism(MDTCC) has issued new guidelines, effective from January 6, 2010, that render all proposals for foreign involvement in distributive trade subject to MDTCC approval. Moreover, the guidelines contain numerous provisions that favour local shareholders, employees and competitors. For instance, distributive trade companies with foreign equity must:

  • appoint Bumiputera (i.e. ethnic Malay) directors,
  • hire personnel in a way that reflects the racial composition of the Malaysian population,
  • allocate at least 30% of shelf space for products manufactured by Bumiputera-owned SMEs,
  • use local companies for legal and other professional services insofar as they are available in Malaysia.

In addition, hypermarkets (defined as distribution stores with a sales floor area of 5,000 square meters or more) must be held by Bumiputera for at least 30% of equity. Plans for additional branches of hypermarkets must be submitted to MDTCC two years in advance, subject to approval based on an economic need test. Foreign companies are barred altogether from operating various kinds of small stores such as small supermarkets (smaller than 3,000 square meters), convenience stores, news kiosks and medical stores.

AFFECTED SECTORS

 
N/A

AFFECTED PRODUCTS

 
N/A