PUTRAJAYA - MALAYSIA'S government said on Wednesday it will immediately remove a 30 per cent requirement for ethnic Malay ownership of investments in parts of the services sector as it tries to boost the country's flagging economy.
Prime Minister Najib Razak said the areas that will be freed up are in health, tourism, transport, business services and computer related businesses and cover 27 subsectors of the services economy.
In addition up to five foreign law firms will be allowed to enter if they work in Islamic finance, a sector Malaysia is keen to boost.
Other finance areas are not being opened up further under the plans announced on Wednesday and air travel, utilities, the distributive trades are among the areas that will not be opened up under the current round.
The services sector contributed 55 per cent of gross domestic product last year, and the government hopes to raise this to 60 per cent, Mr Najib told a news conference. Malaysia's exports have been hit by the meltdown in global demand and the government says the economy could shrink 1 per cent this year in its worst case scenario.
'Liberalisation of this sector will provide the impetus to enhance its contribution to economic growth,' Mr Najib said. 'It will boost investment and make the services sector more competitive.'
The prime minister said he will also announce details for the liberalisation of the financial sector next week.
The move on Wednesday is in line with Malaysia's commitment to open up the services sector under a regional agreement of the Association of Southeast Asian Nations, he said.
Mr Najib stressed that opening up the sector would not adversely affect the domestic services industry. The sector accounts for 57 per cent of total employment in Malaysia.
'With the liberalisation of the services sector, the government expects greater inflow of investments,' he said, adding that the government plans to progressively liberalise other sectors, without giving any details. -- AP, REUTERS