'Unfair to enforce 51pct bumi equity on freight forwarders retrospectively'
It would not be fair for freight forwarding firms that have already been running for years to now sell off part of their company in order to comply with a proposed 51 percent bumiputera equity rule, said former finance minister Lim Guan Eng.
He was responding to the Federation of Malaysian Freight Forwarders (FMFF) which urged Putrajaya to clarify the policy, which the government has yet to detail, even though the deadline is at the end of this year.
Lim (above) said the proposal had come up to him when he was...
It would not be fair for freight forwarding firms that have already been running for years to now sell off part of their company in order to comply with a proposed 51 percent bumiputera equity rule, said former finance minister Lim Guan Eng.
He was responding to the Federation of Malaysian Freight Forwarders (FMFF) which urged Putrajaya to clarify the policy, which the government has yet to detail, even though the deadline is at the end of this year.
Lim (above) said the proposal had come up to him when he was the finance minister but he had rejected it.
"That is unconstitutional and unfair to the companies."
He also said in the event the freight forwarding company owners suffered losses in complying with the 51 percent ownership rule, the government would be liable to compensate them.
"It is unfair to those who have built and invested in the companies based on existing conditions only for them to be abruptly changed without due recourse," he added.
Under existing rules, freight forwarders with custom licences registered before 1976 are exempted from any bumiputera equity requirement.
For those registered between 1976 and 1990. It must have 30 percent bumiputera equity and those registered after 1990 must have 51 percent bumiputera equity.
Those with International Integrated Logistic Services (IILS) customs licences, however, do not have any bumiputera requirement.
However, the Finance Ministry this year said the bumiputera equity requirement will now be applied to all licence holders, including those in IILS. It gave no percentage even though they are required to comply by Dec 31.
Furthermore, the FMFF had complained that the bumiputera equity requirement for IILS custom licence holders won't apply to foreign companies, giving them an unfair advantage.
The FMFF, in a letter, has appealed to the government to provide more clarity.
"Logistics companies have slowly built up their businesses over a long period as compared to other industries as the industry is fragmented and highly competitive.
"The sudden decision by Finance Ministry in 2021 for all custom licences to comply with bumiputera equity requirement (ostensibly 51 percent) would pose immense difficulties to the logistics companies.
"The question is; within this short timeframe frame and difficult prevailing economic conditions, would there be bumiputera investors wanting to buy over 51 percent equity?
"And, if present logistics companies are compelled to sell a majority share to bumiputera investors, it would mean that the government is telling us to sell our business to bumiputera or close down our business," it said in the letter.
Speaking to Malaysiakini, FMFF president Alvin Chua voiced concern on how such a requirement would impact the future of the companies.
Lim, who is the DAP secretary-general, also urged the government to provide more clarity.
He stressed that investors want policy certainty, consistency and clarity.
"A failure to ensure this will discourage investors and Malaysia will lose out in competitiveness to other countries," he said.
Lim said Finance Minister Tengku Zafrul Abdul Aziz should ensure that the new rule should not be applied retrospectively.
