All paths lead to enhanced competitiveness

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The numerous initiatives going on under the Standards, Liberalisation of Services and Competition Law, one of the six Strategic Reform Initiatives will lead to a stronger and more competitive business sector that delivers better quality products and services to the market.

Recent media attention has been focused on the next revision of the National Automotive Policy (NAP) and it is clear why. Car prices affect consumers and so there is direct public impact. But automotive policies affect the entire industry value chain from manufacturing to the distribution outlets and thus the impact is wide ranging.

Infact the chief executive officer of the Malaysian Automotive Institute, Madani Sahari, in summing up the next revisions of the NAP, explains that it is expected to foster the creation of a robust ecosystem that propel our homegrown automotive vendors in various facets of the business. This ranges from the all important technological advances, their operational efficiencies and even recycling of components.

Interestingly he draws attention to the fact that the revision is in line with Malaysia’s goals of becoming a high income status nation by 2020. Indeed what is going on with the NAP actually falls under one area of the ongoing transformation of the economy ie the Strategic Reform Initiatives (SRI) and specifically the Competition, Standards and Liberalisation SRI.

 

Another is Malaysia’s Competition Law. Indeed, in her many public and media interactions, the CEO of the Malaysia Competition Commission, Shila Dorai Raj, makes note that the January 2012 gazetted Competitions Act 2010 is a critical component to help Malaysia get to developed nation status by 2020.

Infact it is no coincidence that all developed nations have in place strong competition laws which in essence are all about promoting a competitive business environment and giving foreign investors more confidence in the country’s business practices.

The importance of having a competition law was clearly illustrated a few months back when the Competitions Commission came under public pressure to investigate the then planned merger between Malaysia Airlines Bhd and Air Asia Bhd.

That corporate exercise, which ultimately did not happen, had the unintended benefit of making Malaysians aware of the importance of having a law and implementation body that promotes the efficient functioning of the markets which also benefits Malaysian consumers. It also safeguards against practices that could drive companies out of business, encourages the lowering of entry barriers to promote entrepreneurship and growth of SMEs.

Because of the direct link to enhancing the competitiveness of a nation, the National Economic Advisory Council (NEAC) had recommended policy measures that were grouped into the International Standards and Liberalisation lab that focused on three key areas: Standards, Liberalisation of Services and Competition Law.

The work that goes on in these areas may not be clearly seen nor understood by the layperson. For instance the Malaysian Competition Commission has released its Guidelines on Chapter 2 of the Competition Act 2010, following its public consultation on the draft Chapter 2 Guidelines between 15 May 2012 and 15 June 2012.

Specifically, this chapter of the Competition Act 2010 prohibits an enterprise from engaging, whether independently or collectively, with other enterprises, in any conduct which amounts to an abuse of a dominant position in any market for goods or services in Malaysia.

It has definitely got the legal industry excited, as it seeks to clearly understand the guidelines and then educate their clients on its impact to them.

And truly, the impact from the ongoing initiatives under Standards, Liberalisation of Services and Competition Law will be deep. This can be seen from the recent comment Madani of the Malaysian Automotive Institute made when noting that Malaysia’s automotive imports and much higher than its automotive exports: “Imports of motor vehicles are growing fast, whether we like it or not and export growth is less than encouraging. This is another reason why Malaysia needs to open its automotive market to global competition to bring it to another level to create value and jobs for the economy.”

In the following days, Business Circle will look at some of the efforts going on under this SRI to highlight some of the changes that are happening.

Photo courtesy of Flickr User getfrank.

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