PETALING JAYA, 23 April 2009: The government must address issues affecting the domestic legal services market before allowing foreign law firms to practice in Malaysia on a standalone basis, the Bar Council said.
“There is no point making Malaysia welcoming to foreigners if we have not yet put our own house in order,” Bar Council president Ragunath Kesavan said in a press statement today.
The Bar Council expressed its worry over Prime Minister Datuk Seri Najib Razak’s decision to allow “up to five top international law firms with expertise in Islamic Finance” to practice in Malaysia, without the need for such firms to enter into any joint ventures with local firms.
“By permitting foreign law firms to set up on a standalone basis, there is no necessity for such foreign law firms to share or transfer any technology or knowledge to Malaysian practitioners,” Ragunath noted.
Ragunath He added that such a move would be counter-productive to the Malaysian legal services market in the long run.
Ragunath also stressed that this course of action would run counter to Malaysia’s commitments to the World Trade Organisation, as well as to various bilateral free trade agreement negotiations currently underway.
Ragunath said a level playing field was necessary for Malaysian law firms to remain competitive.
“Free trade cannot be said to exist in Malaysia if Malaysian practitioners are still required by the banking industry and government-linked companies to comply with bumiputera equity and staff quotas,” he noted, adding that such policies should be abolished if there is to be true liberalisation of the legal services market.
“The Bar Council’s position is that a managed system of liberalisation, in which foreign law firms are required to enter into joint ventures with Malaysian law firms, represents the best of both worlds,” Ragunath said. He stressed that there were sufficient Malaysian practitioners with expertise in Islamic Finance at an international level.
According to Ragunath, the Bar Council had made its preference known to the government since November 2004, and had even prepared the relevant amendments and rules and regulations.
He revealed that the Bar Council had met with Bank Negara Malaysia (BNM) since September 2006 to discuss the national bank’s wish to bring in five mainly London-based firms as part of the Malaysian International Islamic Finance Centre (MIFC) initiative.
“BNM is hopeful that that these five firms, once established here, will bring their foreign clients and their Islamic Finance business to Malaysia. We are not convinced this will be the case,” Ragunath said.
“We are therefore extremely disappointed that the views of BNM have prevailed,” he added.