Speaking at a forum on the 2016 Economic Freedom of the World Report (EFW), Wan Saiful highlighted the increasing number of non-tariff barriers (NTB) and non-tariff measures (NTM).
The EFW ranks a country’s economic freedom score according to five main factors, namely size of government, legal system and property rights, sound money, freedom to trade internationally and regulations.
For 2016, Malaysia’s overall score improved slightly from last year, with improvements in three areas, but declined in the areas of freedom to trade internationally and regulations.
Aside from increasing NTBs and NTMs, other trade barriers cited were Putrajaya’s import licensing system, halal requirements for imported food products, differing opportunities for local and foreign companies to compete as well as high excise duties.
Elaborating on the issue of NTBs and NTMs, Wan Saiful said a recent example of an NTB would be the “hot dog” issue, in which international pretzel chain Aunty Anne’s faced difficulty in getting its halal certification due in part to the name of one of its products that did not comply with the requirements of the religious authorities.
Other examples are appointing Bernas as the sole importer of rice, and giving Pharmaniaga the sole concession to purchase and distribute approved drugs and medical products to government hospitals and clinics in Malaysia.
“This (NTB) is the most difficult to get rid off because of political interests,” he said, adding it was important for the various NTBs to be removed to help open up the economy.
Wan Saiful also voiced concern over the lack of information on the government’s involvement in businesses via government-linked companies.
“The government should not be in business and this makes decisions made by government-owned companies questionable. That is why we see anomalies.”
He said many companies would get into serious trouble if they did not file their audited reports and cited the example of 1MDB, which in the past had failed to meet deadlines for submitting audited reports and was looking for an auditor for some time.
“That is one company that we know of, we don’t know how many other companies face weaknesses in corporate governance.”
On the challenges Malaysia faced in liberalising the economy, Wan Saiful said there was a need to relook at the Bumiputera policies of the country as it affected the openness of the economy, but he did not see any political will to address this on both sides of the divide.
He noted that in a regional context, other countries, such as Vietnam and Myanmar, were opening up their economies and removing special privileges.
Other challenges, he said, included threats to trademark rights such as plain packaging for cigarettes, and regulatory inconsistencies such as not approving dengue vaccines when neighbouring countries and international organisations had already given approval for such vaccines.