I believed it so too......with the NEP, no foreign investors will come to Malaysia...they got better choices like Vietnam, India, Indonesia too.....GOD help Malaysia.
  To bad indeed this......THE ONLY ONE IN THE WORLD TO HAVE SUCH A POLICY.......THIS....
Cheers.

Interesting discussion on foreign investment. I think before we start discussing FDI and stuff, we need to understand the type of foreign funds inflows first,  there are the foreign direct investment i.e. FDI  and foreign portfolio investment. Both are totally different type of investment

The first type, the FDI is the long term investment that people make in our country. For example, if Intel decide to build another R&D facilities in Penang, then, this type is FDI. Meanwhile, foreign portfolio investment (FPI), is those money that come into our stock market. A lot of folks mixed up between the two. Even some local journalist think it is the same, which just shows how lousy the quality of our local journalist are. Chinese journalist are normally far better then those writing for our English press.

On the first type, NEP does raise a concern for this type of investment due to the equity ownership restiction. So, certain policy in NEP may actually deter investment. But, there are bigger thing that affect Malaysian FDI inflow than just NEP. NEP is just part of the equation. Malaysia is simply not that "sexy" anymore. People thought Dr. M is such a great PM with so much FDI inflow, but, we need to look at the context of world economic context during his helm and that of our current PM. During the 1980s-90s, developed market is still the place for you to make your money. There are almost zero differential in growth between emerging and developed market during that period. Consumer in the developed world still have a lot of consumption potential and capacity.So, MNCs have a different motive when they do FDI during Dr. M period. They basically looking for low cost production cost to produce stuff to import back to their own country. However, during the start of 2000, we are seeing a period of slowing consumption in the west. Now, FDI is not about finding cheap place to build factory, it is about finding growth to replace the slowing consumption in the west. So, a great way to replace that consumption is to find a country with a big enough market. That's the reason you see that China, India, Indonesia and Vietnam are such an attractive place for FDI, because they have huge population. Malaysia population is just too small. Take a look at the investment theme currently, it is BRIC and N-11, both themes are consist of countries with big population.

NEP to a certain extend do deter FDI. But, if you can provide those MNC with the huge potential market, they will still come in regardless of whether you have 30% ownership rule or not. Just look at China, a lot of sector, you can't enter as a Wholy Foreign Owned Enterprise (WFOE), you need to do it via JV. But, still western firms enter via JV and risk teaching all their secrets to the Chinese, because, China give them the market that they crave. Malaysia don't have that.

On the second type of foreign capital flow, which is the FPI, actually it does not matter that much on NEP. No foreign funds are going to take over our company in Bursa, they are mainly passive investors. So, NEP actually do not matter that much. In a sense, our local market, due to our higher market cap/gdp ratio then most of our peers are, we need FPI to actually move the market up because local capital is not sufficient. But, Dr.M have a point that this foreign funds can create a distablizing effect on the economy. We need to be careful and control these inflow. It is not just us, a lot of countries are pondering capital controls.

In addition, FPI is not the sort of funds we need. It did not create any positive impact on our GDP apart from the wealth effect. However, our very smart prime minister Najib seems to think otherwise. I don't understand why he go all the way to attract foreign funds to invest in Bursa. No PM in the world do that, at least the Thai PM, Singapore PM or Indonesian President don't do that. He should be going out, fixing our system so that it can be competitive and attract good FDI. All the FDI we have now is useless type of FDI that does not add value to our country.

So, when discussing foreign capital inflow we need to separate between the two.It is totally different type of foreign capital inflow. FDI is important to Malaysia, FPI not that important.

Hi David,

Thanks for the article. I have glanced through it. Yes, the points raise by the paper is valid with regards to the benefits of FPI.

However, let's me clarify some parts you may have misunderstood me. On the non-value adding useless FDI part, I think in the Malaysian context it is very true. We are in a period where we are talking about quantity rather than quality. Take, the example of a aluminium smelter in Malaysia. It is a multi-billion ringgit FDI, but, how many jobs it create? 600 jobs and those jobs do not involve significant technology transfer. But, our government still allow such FDI that have limited value add, in a field that we do not even have a proper upstream sector to come here. All because FDI figure is just a number game now between the opposition and the government. Just take a look at the sort of FDI that Singapore is attracting, those are the type that we need, not some Western company coming here to steal our cheap electricity to melt aluminium.

On the point that "FPI is not the sort of funds we need", I am speaking at what I feel is the normal developmental phase of the country. I generally think that FDI is the leading indicator, FPI is the lagging indicator. Ok, all this are unsupported, just something that I believe it is true after studying some emerging markets. The flow of capital is generally this way, Market reforms, create a lot of pro-investor system in place--> FDI inflow---> Country Growth---> Growth Attract FPI to invest in the capital market. We can see it in China where the first 5 years of the decade yielded a flat stock exchange despite the economic growth and fdi inflow. It is the same in Indonesia after SBY make some reforms. FPI only come in after some sustainable growth and turn skeptic into believers. So, in this sense, Najib got its causality wrong, he should not waste time attracting foreign investor by giving speech to fund managers. No PM did that. He should instead work on changing the system in a massive way to attract FDI. When FDI comes, growth will and FPI will eventually follow. So, we should not be trying very hard to attract FPI, it just would not come without economic growth and economic growth is cause by FDI which is cause by remaking the system.

panic sale, not lelong sales. 
The price need to drop back to my previous ABP before it can consider as yummy IMO.
Again, that's my personal judgement lar. Usually wrong.

The real sentiment is EVERYTHING will be on sale this Friday..'coz it is Black Friday! 
I want the market stock market to follow as well.. cheap cheap sale!