The Malaysian Government yesterday gave its strongest indication yet that it was willing to modify controversial capital controls on foreign portfolio investment.
Following a meeting with 28 international fund managers and bond investors, Prime Minister Mahathir Mohamad said he and his cabinet were considering an exit tax on investments to replace the 12-month waiting period for repatriation of funds as a means of improving the investment environment.
A statement from the National Economic Action Council said Dr Mahathir would make an announcement on changes to foreign investment regulations 'in due course'.
Market sources said an announcement was expected later this week after talks with visiting fund managers have been concluded.
A representative from the government's financial adviser, Salomon Smith Barney, said the fund managers better understood the need for the controls after their closed-door meetings.
'The question is now whether [capital controls] are going to be removed or whether they are going to be refined,' she said.
