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  • Aug 22, 2014
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Malaysia's Strategic Reform Initiatives

Boosting economy through competition, standards and liberalisation

Discovery Reports - Malaysia's Strategic Reform Initiatives

PUBLISHED : Monday, 24 September, 2012, 5:03pm
UPDATED : Monday, 27 May, 2013, 12:28pm

Compete or be prepared to be irrelevant. Among the six SRIs, the plan on competition, standards and liberalisation leads Malaysia's bid in becoming a competitive global player.

"Competition, standards and liberalisation were one of the first things that we introduced inside the discussion groups for the SRIs," says Idris Jala, CEO of PEMANDU and minister in the prime minister's department.

Formerly known as international standards and liberalisation, this SRI has been renamed as competition, standards and liberalisation to better reflect competition as its major component.

The SRI has three major areas: the swift implementation of the Competition Act 2010, adoption of international standards and best practices, and liberalisation of the services sector. From plan to practice, the first half of the year saw the smooth implementation of these initiatives.

Competition Act 2010

The Competition Act seeks to prevent anticompetitive agreements such as price fixing, market sharing, bid rigging and limiting or controlling production. It also deters abuse of a dominant position or monopoly such as unfair and predatory pricing, bundling and refusal to deal. After the act took effect in January this year, the government followed up with the necessary structures to implement it.

The Malaysian Competition Commission (MyCC), which is tasked to enforce the provisions of the new law, released for public consultation in May the draft guidelines on abuse of dominant position. This release follows the publication of three guidelines on market definition, anti-competitive agreements and complaints procedures which all underwent public consultations. The commission is also undertaking advocacy programmes to promote a competition culture among industries.

The government has also established the Competition Appeal Tribunal, which will have exclusive jurisdiction to hear appeals with respect to the commission's decisions on interim measures, infringements and non-infringements.

The prime minister has appointed seven members and High Court judge Mohd Zawawi bin Salleh as the tribunal president. Zawawi's appointment was based on the recommendation of the minister of domestic trade, cooperatives and consumerism upon nomination by the Federal Court chief justice.

Standards

Malaysia has 6,385 product standards but only about 5 per cent of these have been made compulsory. Taking its cue from developed nations that have a high level of standards usage and good enforcement, the ETP aims to upgrade the country's standards.

"Benchmarking against international best practices and adopting international standards will ease our efforts to make inroads into new global markets," says

Dr Maximus Ongkili, Minister of Science, Technology and Innovation. "We are looking at strategic sectors where international standards need to be adopted."

Six industry subsectors were identified for standards development based on competitive advantage and export potential. These are medical devices, pineapple, production of carrageenan from seaweed, halal pharmaceuticals, green technology and cyber security.

The government has amended the Standards of Malaysia Act 1996 to accelerate the standards development process. These changes include the appointment of multiple standard development agencies compared to

only one agency before. The government will shorten the process of adopting international standards to nine months from more than one year previously and the development of indigenous standards to one and a half years from three years. The government will also enhance competitiveness by looking into other industry and services standards covering sectors such as health care, green products and electronics and electrical.

Services sector liberalisation

Given that the services sector is an important growth engine, the government aims to raise the sector's contribution from 59 per cent of the gross domestic product last year to 65 per cent in 2020. This strategy reflects the profile in developed economies where the services sector accounts for 70 to 80 per cent of their domestic output.

"In this competitive and challenging economic environment, we see the need for the services sector to remain strong and resilient in order to drive overall economic expansion," says Mustapa Mohamad, Minister of International Trade and Industry. "The progressive liberalisation of the sector is expected to give it an even greater role in generating growth, broadening the economic base and increasing contribution to services exports."

Of the 18 subsectors slated for liberalisation this year, nine sub-sectors are at the implementation stage with foreign ownership of up to 100 per cent allowed in these nine sub-sectors. These include accounting and taxation services, department and speciality stores, private hospitals, vocational schools and telecommunications involving applications service providers.

Malaysia is being recognised for its efforts to raise its competitiveness. The 2012 Global Competitiveness Report by the World Economic Forum ranks Malaysia as the 21st most competitive among 142 countries worldwide. This is an improvement of five notches from the country's 26th ranking last year.

The ETP is on its second year, while the SRI on competition, standards and liberalisation is on its first year of implementation. Considering the significant improvement in Malaysia's global competitiveness early into these programmes, imagine where the country will be after eight years in 2020.

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