THE government must explain its plan to impose a 51% Bumiputera equity requirement for freight forwarders to obtain customs licenses, P. Ramasamy said today.

The Penang deputy chief minister said that such a policy, if implemented by the end of year as planned, would leave thousands of players in the freight forwarding business in uncertainty.

The policy is also unfair to local players as such requirements are not needed for foreign companies, added the DAP leader.

“The local players are in a quandary as to whether the government or the Finance Ministry is going ahead with the plan to impose a 51% requirement for freight forwarders to obtain customs licenses,” he said.

The new policy was first announced in 2018, stating that the approval for customs licenses were subject to the following renewal requirements.

- Customs licenses registered before 1976 were not subject to Bumiputera equity

- Customs licenses registered after 1976 and before 1990 were subject to 30% Bumiputera equity

- Customs licenses registered after 1990 had to give 51% Bumiputera equity.

However, in January 2021, the ministry announced that all applications for customs licenses must meet the requirement of Bumiputra equity although the actual percentage was not stated.

The companies were also informed that non-compliance with the Bumiputera equity requirement by December 31 would result in the cancellation of their custom licenses.

“Freight forwarders are now not sure whether the (ministry) is sticking to the announcement made in 2018 or whether all local freight forwarders have to comply with the 51% Bumiputera ruling.

“Since there are no specific details from the (ministry), the freight forwarders are worried about their future.

“The deadline for the freight forwarders is fast approaching, that is, the end of this year,” said Ramasamy.

He added that the freight forwarders were hard hit by the Covid-19 pandemic, and would find it difficult to maintain a new 51% Bumiputera equity.

Ramasamy also said that what was more puzzling was the government’s decision to exempt foreign companies from the Bumiputera equity requirement.

“I am not sure why foreign companies are so special compared to the local ones.

“No government in its right mind would want to promote foreign companies at the expense of the local ones.

“It is indeed shameful that the government would want to go to the extent of killing local companies by imposing a 51% Bumiputera equity.”

He added that these local companies that have been built up over the years through hard work and sweat were now suddenly being told to give up their majority share to local Bumiputera companies or to sell their companies outright.

Last week, the Federation of Malaysian Freight Forwarders – representing more than 1,500 logistics companies, sent a letter to International Trade and Industry Minister Mohamed Azmin Ali asking for clarification on the Bumiputera equity requirement.

The federation said in its letter – which was sighted by The Malaysian Insight – that companies would be compelled to sell 51% equity to Bumiputera investors.

“The question is: within this short time frame and difficult prevailing economic conditions, would there be Bumiputera investors wanting to buy over 51% equity? Or would the Bumiputera investors prefer much safer investments?

“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 Bumiputeras or close down our business.

“Selling 51% of the business also means that the present owner can no longer control and run his business,” the letter stated.

FMFF also said that Bumiputeras were already in the logistics business and many logistics companies were 100% Bumiputera-owned, with the government already giving them special incentives to be involved in turnkey logistics services to the government. – September 23, 2021.