Finance Ministry postpones enforcement of 51% Bumi ownership requirement for freight forwarders to December 2022.
According to an official letter from the Government, the finance ministry has agreed to postpone the enforcement of a 51% Bumiputra ownership requirement for freight forwarding companies to 31 December 2022.
This move came after an association of freight forwarders urged the government to clarify its position on Bumiputra equity in logistics companies, with only months left before an end-of-year deadline on 31 December this year.
The 51% Bumiputra ownership states that a 51% stake in all freight forwarding and logistics companies (which a majority of the time deal in shipping containers) must be held by a Bumiputra representative, requiring non-Bumiputra companies in the industry to sell majority shares in their business to Bumiputra from the industry. Companies that fail to do so, will have their Customs brokerage licenses terminated which result in these freight forwarding companies unable to carry out transactions with the Customs department for the clearance of goods. Under a 2018 review, companies whose licences registered before 1976 did not have a Bumiputra equity requirement, while a 30% quota was imposed on those registered between 1976 and 1990.
Alvin Chua, President of the Federation of Malaysian Freight Forwarders (FMFF) mentioned that they would have difficulty in meeting a 51% requirement in such a short time, and questioned whether there would be investors willing to take up the equity.
“Selling 51% of the business also means that the present owner can no longer control and run his business. If we can’t find Bumiputeras to actually invest in the companies before the 31 December deadline, it means that all the logistics companies with Customs brokerage licenses would close down,” Chua said.
Datuk Seri Salahuddin Ayub, Member of Parliament for Pulai also addressed the industry’s concerns by saying that Bumiputra ownership requirements for freight forwarding companies may create domination and cronyism within the freight industry.
“Following what FMFF said, freight companies will find it difficult to comply if the government requires them to have 51% Bumiputra ownership. This policy also opens possibilities to domination and cronyism within the freight industry,” he said.