Malaysian officials say foreign investors remain keen on the country's long-term prospects, despite the dubious capital controls that have trapped foreign funds in Malaysia. Speaking at the Malaysian Institute of Economic Research conference in Kuala Lumpur on December 1, Second Finance Minister Mustapa Mohamed suggests there may be no capital outflows when the 12-month moratorium that bars foreigners from repatriating portfolio investments expires. Malaysia's controls were badly designed. Once bitten, twice shy.
Unstable rules destroy business and investor confidence.
Specifically, the Institute requests that the 12-month holding period contemplated by ECM 12 be waived for registered investment companies. The Institute requests that permission to make such conversions and repatriations be given to registered investment companies on a blanket basis or, if this is not possible, that Bank Negara Malaysia confirm that the required repatriation approvals will be given to registered investment companies in the ordinary course. We believe that the requested relief should be granted for the reasons discussed in detail below. In short, the Exchange Control Rules discourage registered investment companies from investing in Malaysian securities because among other things, they raise issues of compliance with regulatory requirements and fiduciary obligations under US law. The Institute is the national association of the US investment company industry.