QUANTIFYING BARRIERS TO TRADE IN SERVICES THROUGH COMMERCIAL PRESENCE: SELECTED SERVICES IN MALAYSIA

Year 2012, Volume: 4 Issue: 1, 149 - 158, 01.06.2012

Nirwan Noh Tham Siew Yean

Abstract

The services sector in Malaysia is slowly liberalising in terms of equity
ownership. However, trade and investment barriers in the services sector are
difficult to measure since it is not easily quantifiable. Previous studies were
mainly macro-level, multi-country cross-sectional assessments while there are no
country level studies over time. This paper has two objectives. The first is to
measure barriers to trade in services carried out through commercial presence
(Mode 3) in Malaysia in several industries over time. The second objective is to
assess the policy implications of the measurement obtained. Based on available
data, the industries covered in this study include communications, construction,
distribution, higher education, financial, healthcare, tourism and transportation
and logistics services from 2001-2010. This assessment is important as Malaysia
hopes to attract more foreign direct investment (FDI) into its services sector.
Information is gathered through surveys, focus group discussions and content
analysis of secondary sources. Restrictive policies on FDI are transformed into an
index to measure the extent of liberalisation for each subsector. Based on the
index, it can be seen that the liberalisation process is still slow. To facilitate
further progress in liberalising the services sector, it is important to liberalise
barriers beyond mere equity ownership

Keywords

Trade in Services, Services Liberalisation, Foreign Direct Investment, Malaysia

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