quantifying barriers to trade in services throughcommercial presence: selected services in malaysia

The services sector in Malaysia is slowlyliberalising in terms of equityownership. However, trade and investment barriers in the services sector aredifficult to measure since it is not easily quantifiable. Previous studies weremainly macro-level, multi-country cross-sectional assessments while there are nocountry level studies over time. This paper has two objectives. The first is tomeasure barriers to trade in services carried out through commercial presence(Mode 3) in Malaysia in several industries over time. The second objective is toassess the policy implications of the measurement obtained.Based on availabledata, the industries covered in this study include communications, construction,distribution, higher education, financial, healthcare, tourism and transportationand logistics services from 2001-2010.This assessment is important asMalaysiahopes to attract more foreign direct investment (FDI) intoitsservices sector.Information is gathered throughsurveys, focus group discussions andcontentanalysis ofsecondary sources.Restrictive policies on FDI aretransformed intoanindex to measure the extent of liberalisation for each subsector.Based on theindex, it can be seen that theliberalisationprocessis still slow. To facilitatefurther progress inliberalising the services sector, it is important toliberalisebarriersbeyond mere equityownership.