Law and advice Although Malaysian regulations are generally ade- quate, in terms of market activity the capital markets are a bit underdeveloped. While the debt capital mar- kets – especially in relation to Islamic finance – are fine, the equity capital markets lack foreign capital aside from certain highlight initial public offerings (IPOs) such as Felda and IHH. It can be hard to raise money from the equity side, and difficult for foreign players to access the markets. There is also a lack of direction and focus in relation to the venture capital and private equity sectors. Only Malaysian lawyers can officially be admit-
ted to the Bar. The government recently announced initiatives to allow certain categories of foreign counsel to practise in Malaysia, especially in the Islamic finance arena. These initiatives have been effected through recent amendments to the Legal Profession Act 1976 which allows Qualified Foreign Law Firms and foreign lawyers to practise in certain permitted practice areas in Malaysia. New laws that may affect foreign investment
include the new Competition Act 2010. Although the Act was recently passed, it may drastically affect the way business is done once it is fully implement- ed in the next few years. The Malaysia Competition Commission
(known as MyCC) has been established under the new Competition Commission Act 2010. The Act empowers MyCC to carry out functions such as implementing and enforcing its provisions, issuing guidelines in relation to the implementation and enforcement of competition laws, acting as advo- cate for competition matters, carrying out general studies in relation to issues connected with compe-
tition in the Malaysian economy or particular sec- tors of the Malaysian economy, and informing and educating the public on the ways in which competition may benefit consumers in, and the economy of, Malaysia. Another new law, which was passed by the
Malaysian Parliament in May 2010 and received Royal Assent on June 2, is the Personal Data Protection Act 2010 (PDPA). This law will come into operation on a date to be appointed by the Minister of Information Communications and Culture by notification in the Gazette. It aims to safeguard personal data by requiring the data user to comply with certain obligations and seeks to reg- ulate the processing of personal data of individuals involved in commercial transactions by data users. The PDPA only applies to the processing of
personal data in respect of “commercial transac- tions”. A commercial transaction is widely defined as any transaction of a commercial nature, whether contractual or not, which includes any matters relating to the supply or exchange of goods or serv- ices, agency, investments, financing, banking and insurance but does not include a credit reporting business carried out by a credit reporting agency under the Credit Reporting Agencies Act 2010. Data which is processed only for the purpose of the individual’s personal, household affairs and for recreational purposes is totally exempted. In terms of compliance, in-house counsel
should be aware of local equity requirements and the need to obtain approvals from government departments for transactions related to the acquisi- tion of stakes in specific industries and large-scale property transactions. Bank Negara must also
approve certain financing transactions.
Banking and finance Malaysia’s banking industry is stable and well-regu- lated and has a recent trend towards consolidation with an aim to build market share. RHB Investment Bank recently acquired a mid-tier investment bank, OSK Investment Bank, and there have been announcements relating to the establish- ment of two mega Islamic banks in the pipeline. Because Malaysia is a relatively small market,
however, some of the larger banks such as Maybank and CIMB have gone regional and are looking abroad for acquisitions. A key development in this area is Malaysia’s sta-
tus as a hub for Islamic finance: Islamic finance and structures have become a Malaysian speciality. Aside from the fact that Malaysia is an Islamic country, it has a well-developed financial system that attracts funds from the Middle East. Middle Eastern banks have been setting up hubs or at least looking for a foothold in the country. In the oil and gas sector, Petronas has recently been making efforts to exploit marginal oilfields and enhance the discovery of new oil and gas reserves. Ultimately doing business in Malaysia is no dif-
ferent from doing business in the rest of the Asean region. Those doing business in Singapore, Indonesia and Thailand would feel at home here. It is a generally Asian culture with a bit of Western flavour. Many say it falls somewhere between Singapore and Indonesia: not as cosmopolitan or high-tech as Singapore, but retaining its own brand of culture while maintaining strong legal institu- tions compared with Indonesia.
About the author Tan Hon Yik is a founding partner of Naqiz & Partners. He previously practiced with Wong & Partners (a member firm of Baker & McKenzie International) in Kuala Lumpur, Malaysia as a member of the banking & finance and corporate & commercial practice groups. Tan has acted for clients across a diversified range of industries and has
advised clients on issues relating to corporate and commercial law, cross border and foreign acquisitions, plantations, coal mining, oil & gas, large scale property transactions, infrastructure projects as well as capital markets fund raising exercises. He also has extensive experience in conducting due diligence exercises in connection with the above practice areas.
Contact information
Tan Hong Yik Naqiz & Partners
42A, Lorong Dungun Damansara Heights 50490 Kuala Lumpur Malaysia
T: +603 2081 7888 F: +603 2081 7886 W:
www.naqiz.com
About the author Khairul Idham Ismail was called to the Malaysian Bar in September 2000. He previously worked at Messrs David Chong & Co and as a senior executive
in the Corporate Secretarial and Legal Department of MMC Corporation Berhad. His stint in Messrs David Chong & Co and MMC exposed him to matters relating to banking, construction and real estate transactions infrastructure and projects, joint ventures, restructuring, privatisation contracts, intellectual property and industrial relation matters. He has also been nominated as one of the leading Islamic Finance Lawyers in 2010 as voted by the readers of Islamic Finance News.
Contact information
Khairul Idham Ismail Naqiz & Partners
42A, Lorong Dungun Damansara Heights 50490 Kuala Lumpur Malaysia
T: +603 2081 7888 F: +603 2081 7886 W:
www.naqiz.com
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