Why a coconut boom is bad for Malaysia’s approved permit system

The country’s Approved Permit system governing cross-border traders was set up in the 1970s to encourage the Malay majority to participate in industries dominated by ethnic Chinese

But the scheme is riddled with secrecy and cronyism, critics say, argue, and must face up to reform as Malaysia opens further to international trade

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Workers unload coconuts from a trailer in Nibong Tebal, Malaysia. A glut of imports last year left some local farmers unable to sell their stock. Photo: Reuters

Published: 10:15am, 27 Oct 2019Updated: 11:01am, 27 Oct 2019

A licensing regime for Malaysia’s import and export firms governing everything from coconuts to cars is threatening to become an Achilles’ heel as the country looks to seal the deal on two regional trade pacts before the end of the year.

Critics are taking aim at what they see as a lack of transparency and objectivity in the system and have described it as a gravy train for a select few businesses.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is awaiting parliamentary approval, while the China-led Regional Comprehensive Economic Partnership (RCEP) could be finalised before the new year.

But the Approved Permit (AP) system that governs Malaysia’s cross-border trading firms could prevent international partners putting pen to paper.

The AP system was set up in the 1970s as a means to encourage the country’s Malay (Bumiputera) majority to participate in business – a field traditionally dominated by ethnic Chinese. Permit holders now deal in a total of more than 5,000 products, ranging from fruit to waste plastic.

Ministers from 16 Asia-Pacific countries begin talks in Beijing in August aimed at concluding the Regional Comprehensive Economic Partnership. Photo: Kyodo

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