Private education, healthcare stand out

KUALA LUMPUR: Analysts say private education and healthcare will likely be the most immediate areas to attract foreign interest following the government's move to further liberalise the services sector.

In his 2012 Budget speech here yesterday, Prime Minister Datuk Seri Najib Razak said foreign investors would be able to take up to a 100 per cent stake in companies in "selected" services sub-sectors. He, however, did not identify them.

This means that foreign firms can either set up their company here or acquire Malaysian ones, giving way to potential mergers and acquisitions.

"I think the activity will most likely be in areas like private education and healthcare, where it is easy to set up or acquire, and not so much in professional business services like architecture, engineering and legal," said Suhaimi Ilias, an economist at Maybank Investment Bank.

In professional business services, there may be a relaxation of certain operating and employment conditions that currently make it hard for foreigners to participate, he said.

Analysts were not surprised by the move to further liberalise the services sector, seeing it as a key area of focus for the country and the largest contributor to the economy.

"This has long been on the cards," said Pong Teng Siew, head of research at Jupiter Securities.

The sector is expected to account for 60 per cent of gross domestic product by 2015 from 58 per cent now.

Najib said he would liberalise 17 services sub-sectors in phases, and these would include private hospital, medical and dental specialist, architectural, engineering, accounting and taxation, legal, courier, education, training and telecommunications services.

"We will likely see a mix of merger and acquisition activities as well as new greenfield ventures," Pong said of the move to allow 100 per cent foreign equity participation in certain areas.