Malaysia to liberalise foreign investment

KUALA LUMPUR, Feb 23 (Reuters) - Malaysia's government is to announce soon, probably at the same time as it sets out its mini-budget on March 10, an easing of restrictions on foreign investment, the country's trade minister said on Monday.

There are however no plans for a major overhaul of the country's rules that give Malays, the majority population preferences in areas of business, finance and education, which critics say has harmed the country's economic development.

"There are some areas that we could liberalise, for example the FIC (Foreign Investment Committee) it has been agreed upon by the cabinet and will be announced soon," International Trade Minister Muhyiddin Yassin said on Monday.

Muhyiddin, a contender to become deputy prime minister in elections in the main ruling party in March, did not specify what areas could be liberalised, but there has been pressure for Malaysia to free up its services and government procurement.

"In the FIC one of the important components is the Bumiputra equity (reservation of equity stakes for Malays) and that is also being looked at and there will be a slight change the cabinet discussed this last week," Muhyiddin told foreign journalists.

Malaysia's rules aimed at helping to lift the living standards of poor Malays, 60 percent of the population, have been criticised by the opposition and there have been hints that the government would water them down.

Muhyiddin said however that the main policies would remain.

"It is one of the best policies... It is a national programme, it is not a Malay agenda," said Muhyiddin, who is viewed as a pro-business and relatively liberal figure in the United Malays National Organisation, the main party in the ruling National Front coalition.

Muhyiddin said his ministry would push for cuts in corporate taxes in a new round of spending, due to be announced on March 10, and said that he had asked for 5 billion Malaysian ringgit ($1.37 billion) to be allocated to his ministry.