The Economic Transformation Programme (ETP) launched in late 2010 is no doubt a key strategic determinant of economic transformation. Since then, and more so in recent months, we have seen and felt the realisation and actualisation of some of these strategic reform initiatives. Broadly, these initiatives are designed to create an eco-system of good governance.
The introduction of a new financial regime, the New Omnibus Financial Legislation, comprises both the Financial Services Act 2013 (FSA) and the Islamic Financial Services Act 2013 (IFSA). These two laws came into effect on June 30, 2013 and replace existing legislation. This marks a new regime of financial governance. A major reform initiative is to limit the ownership of financial institutions. This is capped at a maximum of 10%, which is intended to regulate the ownership structure of financial institutions. Nevertheless, there have been notable exceptions, such as in the cases of some individuals who retain major stakes in financial institutions. These exceptions may have been allowed because these persons acquired their stakes in banks prior to the introduction of the Banking and Financial Institutions Act 1989, the FSA’s predecessor.
Both the FSA and the IFSA are more consumer-protection intensive. An example is the pre-contractual duty of disclosure for consumer and non-consumer contracts. Under the new regime, the Financial Ombudsman Scheme is established under the FSA and the IFSA. The purpose of this scheme is to promote the effective and fair handling of complaints. Another new amendment is that minimum requirements are laid down for persons holding managerial positions, such as chief risk officer, chief financial officer and chief operations officer. Appointees must have the necessary qualifications and must be clean of any criminal records. This step is seen as a big leap in enhancing market confidence and consumer protection. Bank Negara Malaysia (BNM) also has the power to take action against any bank that appoints individuals who are deemed not fit and proper. If necessary, BNM may exercise power granted to it under section 162 of the FSA to remove the appointed person if he or she is of inadequate qualifications. An improved regulatory framework will help foster financial stability of the financial institutions leading to greater public confidence.
Other significant improvements in the law are the Personal Data Protection Act 2010, the Construction Industry Payment and Adjudication Act 2012, and the amendment to employment legislation, which increased the minimum retirement age for private employees from 55 to 60, having been introduced under the Minimum Retirement Age Act 2012, and which came into force on July 1, 2013. This is a step forward being made by the Malaysian government especially in light of the rising cost of living. By increasing the minimum retirement age, this is expected to improve the working industry as experienced employees can be of further service and the length of time for the transfer of expertise to the younger generation is prolonged.
Efforts are being taken to curb corruption, a thorny issue, which at its worst would negate and nullify every attempt at economic transformation. The Whistleblower Protection Act 2010 came into force on December 15, 2010 and was enacted to protect and support those who expose corrupt practices by conferring them immunity from civil and criminal actions. While sectoral-specific legislations already exist in Malaysia, this act is an overarching attempt to provide protection for employees in both public and private sectors. For the first time, additional regulations make employers criminally liable for any retaliatory action found at the work place. The act’s broad application irrespective of industry or sector has obvious implications for all employers.
With the new Special Corruption Courts at the Sessions Court and High Court levels, trials of corruption cases have been expedited. Anti-corruption provisions are contained in the Malaysia Anti-Corruption Commission Act 2009. Whether there is the political will to curb corrupt practices will be seen. The legislative framework and infrastructure are, however, in place.
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