Bahrain tycoon says Bumi policy can scare away investors

By Yow Hong Chieh

KUALA LUMPUR, Sept 28 — Malaysia risks scaring away foreign investors if it insists on pursuing Bumiputera affirmative action policies, a top official of a major Bahrain conglomerate said today.

“There is one thing Malaysia has to be careful of. You have a ‘delightful’ law here... where you give the local population certain seats or certain preference or certain licences,” Kanoo Group deputy chairman Mishal Hamed Kanoo told reporters at the “Dawn of the New Decade: Alternative Investments in Asia” forum here today.

“If you do that and foreign investors want to come in — they’re not used to this idea — you might scare them.”

Kanoo Group is one of the biggest independent companies in the Gulf region of the Middle East. It is also a partner with Malaysia’s CIMB in the CIMB-Kanoo Islamic Investment Company.

Likening the government’s pro-Bumiputera policies to covering one perceived “sin” with another, Kanoo later told The Malaysia Insider that only competition could ensure that the country developed the best products and achieved the best results.

“I don’t mean competition as in nasty, killing each other but competition [in the sense] that I want to be there or I am there because I deserve to be there, rather than because somebody has taken my hand or I was born under a certain star,” he said.

 

“These things should be taken away so that the best and the brightest become the best and the brightest... not because they know there’s no competition [but] because they know there is competition and that they are better than the competition. That’s what drives things.”

 

Drawing parallels between Bumiputera equity quotas and Saudi Arabia’s policy of “Saudisation”, Kanoo said such requirements were an unnecessary “extra hassle” that only burdened potential foreign investors wanting to do business in Malaysia.

 

“For a foreign entity coming into this market not knowing these things and then discovering these things, they’re not going to be too happy,” he said.

 

However, he pointed out that Malaysia was still regarded highly by the Islamic world, and remained well-positioned to leverage its competitive advantages as the premier Islamic financial centre outside of Bahrain and potential international hub for Islamic food marketing.

 

Kanoo nonetheless cautioned that Malaysia first needed to address its “internal issues” before it could begin to move forward in the right direction.

 

“I find it strange. Malaysia is seriously a success story, and I think Malaysia’s worst enemies are the Malaysians themselves,” he observed.