Identifier
Created
Classification
Origin
07KUALALUMPUR1474
2007-10-01 08:49:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kuala Lumpur
Cable title:  

DOMESTIC TRADE MINISTRY: NEW SECRETARY GENERAL ROCKING THE

Tags:  ETRD EINV KIPR MY 
pdf how-to read a cable
VZCZCXRO2999
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #1474/01 2740849
ZNR UUUUU ZZH
R 010849Z OCT 07
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 0039
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
UNCLAS SECTION 01 OF 03 KUALA LUMPUR 001474 

SIPDIS

SENSITIVE

SIPDIS

STATE FOR EB/TPP/MTA/IPC AND EAP/MTS
STATE PASS USTR FOR B. WEISEL, D. BELL, J. GROVES
USDOC FOR JENNIFER BAKER
COMMERCE PASS USPTO FOR P. FOWLER

E.O. 12958: N/A
TAGS: ETRD EINV KIPR MY
SUBJECT: DOMESTIC TRADE MINISTRY: NEW SECRETARY GENERAL ROCKING THE
BOAT

UNCLAS SECTION 01 OF 03 KUALA LUMPUR 001474

SIPDIS

SENSITIVE

SIPDIS

STATE FOR EB/TPP/MTA/IPC AND EAP/MTS
STATE PASS USTR FOR B. WEISEL, D. BELL, J. GROVES
USDOC FOR JENNIFER BAKER
COMMERCE PASS USPTO FOR P. FOWLER

E.O. 12958: N/A
TAGS: ETRD EINV KIPR MY
SUBJECT: DOMESTIC TRADE MINISTRY: NEW SECRETARY GENERAL ROCKING THE
BOAT


1. (SBU) Summary: Mohd Zain bin Mohd Dom, Secretary General of the
Ministry of Domestic Trade and Consumer Affairs (MDTCA),is
spearheading efforts to create a more business-friendly ministry.
Zain's appointment to the Ministry's third ranking position in early
2007 has brought welcome access for a range of non-government actors
with an interest in the ministry's policy-making process. Given the
MDTCA's key role in such areas as intellectual property protection,
competition, and domestic retail trade, significant positive change
based on private sector input could improve Malaysia's business
climate substantially. Zain is seeking such input as the government
continues to finalize a draft competition law, despite being legally
constrained from sharing draft text. He is also seeking more
commercial sector input for the MDTCA's changes to distributive
trade guidelines and to its nascent efforts to formulate a broad
intellectual property policy. In a recent courtesy call by Econ
Counselor and econoff, as well as a candid talk to Amcham members,
Zain outlined his vision for the ministry. He also commented to
Econ Counselor and econoff on several FTA-related issues, including
his guarded optimism that progress could be made in the talks on
IPR, competition, and even government procurement, provided the U.S.
shows some additional flexibility. End summary.


2. (SBU) In a speech to the American Malaysian Chamber of Commerce
on September 4, Zain outlined a vision of an MDTCA as attuned to the
needs of commercial interests as it is to consumer interests. He
noted that upon his arrival in the ministry there was a general lack
of interest among staff in seeking out viewpoints from relevant
non-government actors, for example from the business industry with
regards to development of a competition law, or amendments to the
distributive retail trade policy. Likewise it was difficult for
such interested parties to obtain meetings with MDTCA official to
express their views.


3. (SBU) Zain said he is determined that the MDTCA obtain a wide
range of views on policy matters, as the ministry must know the real

world experience of non-government actors in order to implement
effective policy. As an example, he noted the MDTCA's distributive
retail trade policy, which was revamped in late 2004 without the
participation of many affected commercial interests, and with little
regard to its investment implications. Thus the 2004 guidelines
have had to undergo several subsequent revisions to account for the
complaints of commercial interests. Zain said he even heard
accounts from domestic industry representatives that indicated they
were considering moving their future investments overseas because of
the increased restrictions caused by the distributive retail trade
policy amendments.


4. (SBU) Although Zain mentions the strong political support he has
received from the Prime Minister and MDTCA Minister Shafie Apdal, he
told Amcham that he is realistic about the continued strong
opposition in some quarters of the government, which will continue
to inhibit the MDTCA from moving forward as fast as Zain would
prefer. Zain also is pushing for more autonomy among lower-level
bureaucrats to limit the number of decisions that are bumped to
senior ministry officials (and inevitably delaying decisions). As
he told Amcham, he foresees MDTCA as a "thinking ministry" that will
seek solutions to problems rather than narrowly interpret laws and
regulations.

Pending Competition Law - The Legal Limits of
--------------
Transparency
--------------


5. (SBU) Zain has promised greater industry and NGO involvement in
the government's longstanding efforts to finalize a draft
competition law. He is constrained by the Official Secrets Act from
sharing the actual text of the draft bill outside the government,
however. To compensate, Zain is providing industry and consumer
groups with summaries of the concepts and goals of each article in
the draft legislation in the hope that the groups would then be able
to provide more useful input. Many of those groups have already
complained that without the actual draft text and its myriad
details, it will be difficult to make truly useful comments. Thus
Zain expects a difficult discussion, especially given the disparate
interests of the three groups (government, industry, and NGOs). He
has pushed for this novel approach towards greater transparency,
which he says has the backing of the PM and the Minister of Domestic
Trade. At the end of the day, Zain said, he would only recommend
moving forward on the draft after these interest groups have
expressed general consensus with MDTCA's approach. He added that the
eventual competition law would not be set in stone, but was a first
step to creating a flexible government approach to enforcing

KUALA LUMP 00001474 002 OF 003


competition.


6. (SBU) Of U.S. efforts to negotiate a competition chapter in the
U.S.-Malaysia FTA, Zain noted that Malaysian negotiators continued
to be constrained by the Cabinet's decision earlier this year to not
negotiate a competition chapter. He added that the ministry would
not likely seek a revised decision by the Cabinet unless the U.S.
was to indicate some new flexibility in this area.

Distributive Retail Trade - Yet Another Look
--------------


7. (SBU) Zain noted both to econoffs and to Amcham that the GOM
should be willing to examine the current preference programs for the
bumiputera (ethnic Malays),including the 30 percent equity
requirement for direct selling operations. Changes were needed to
limit the ability of a small group Malays to benefit financially
from the preference policy by selling access to non-Malays (the
so-called "ali baba" syndrome). However, he also admitted that it
is politically difficult to have an open discussion of preference
policies in Malaysia. In addition, existing foreign operators in
Malaysia had already accepted the equity restrictions, making it
difficult to convince politicians to relax current policy to allow
future entrants more relaxed terms.

IPR - Government Pledges Funds, Seeks Ideas
--------------


8. (SBU) Zain told the Amcham that formulating and implementing
Malaysia's national IP policy (announced by the Prime Minister
earlier this year) was an MDTCA priority. The ministry needs to
report to a task force chaired by the PM by the end of the year on
how to use the targeted funding of RM 5 billion (USD 1.4 billion),
and welcomed private sector suggestions. Zain extolled the
potential from the recent advent of a separate intellectual property
court in Malaysia, but said work continues on expanding the court to
locations other than Kuala Lumpur.


9. (SBU) As with competition, Zain told econoffs that some degree of
flexibility from the U.S. side on some key remaining sticking points
in the IPR discussions would give the Malaysian negotiating team
greater ability to convince senior officials to agree to more
flexible negotiating terms. On the up side, when asked how much
negotiating space the GOM had on IPR, Zain said that the GOM had a
general commitment to meet international standards on IPR in order
to ensure Malaysia was well positioned to move up the value chain.
Therefore, there was room to push the GOM to sign on to existing
multilateral treaties.

Other FTA Issues
--------------


10. (SBU) Government procurement: Zain told econoffs that he did not
foresee much chance for movement on negotiating a government
procurement chapter, as Cabinet ministers looked at the issue from
the UMNO political perspective first. From that perspective, heading
into the next elections, there was not a single item that was hotter
and more sensitive in the FTA talks. He did say, however, that if
USTR laid out some flexible options, perhaps GOM negotiators could
take them back to Cabinet in hopes of creating a bit of negotiating
room.


11. (SBU) Financial Services: Zain was less pessimistic about
financial services, however, saying Malaysia was moving in a good
direction on liberalization and that the political sensitivities for
UMNO were narrower in scope - focused as they were on elite special
interests in the financial sector that objected generally to
liberalization. Since ongoing banking sector consolidation would
probably result in three large, internationally competitive domestic
institutions, there should be room for specific commitments for
gradual easing of restrictions on foreign institutions. Such
commitments could include new licenses and/or more branching.


12. (SBU) Labor and Environment: Zain believes the GOM could reach
accommodation on these chapters. The PM, he noted by way of
explanation, was more forward leaning on environment issues than
others, including Rafidah - a point which came out in their comments
at the APEC Leaders meeting, where Rafidah objected to its inclusion
on the agenda but the PM saw no difficulty in addressing it.

Comment
--------------


KUALA LUMP 00001474 003 OF 003



13. (SBU) Given Zain's long previous tenure at the Ministry of
International Trade and Industry (MITI),where he most recently led
Malaysia's Multilateral Trade Office, it's not surprising that he is
more attuned to the concerns of commercial interests. Over the
years MITI has steadily implemented policies designed to attract
foreign investment into Malaysia, and Zain appears determined that
MDTCA policies not adversely impact Malaysia's ability to continue
to attract such investment. Zain's appointment to the top civil
servant job at the MDTCA broke with the tradition of having a career
ministry official move up to the top job through the ranks, and
reflected the PM's genuine interest in creating a more
business-friendly government. We understand that Zain's appointment
was engineered by Tan Sri Sidek Hassan, the PM's Chief Secretary
(the government's most senior civil servant),who formerly was
Zain's boss as MITI Secretary General; Sidek also co-chairs Pemudah,
the PM's public-private sector initiative which aims to simplify
business operations in Malaysia by improving government services.
Despite having these heavy-hitters on his side, Zain will continue
to be challenged by MDTCA staffers who are just gradually learning
how to formulate policy in a more transparent manner.

KEITH