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RE-ENGINEERING THE PROFESSION

 

Datin Faizah Jamaludin highlights some key amendments to the laws that regulate the engineering profession in Malaysia

On 31 July 2015, the Registration of Engineers (Amendment) Act 2015 came into force, amending the Registration of Engineers Act 1967 (“Act”). On the same day, the Registration of Engineers Regulations 1990 (“Regulations”) were amended to supplement the amended Act. These amendments come in the wake of efforts to liberalize one of a myriad of service sectors in Malaysia. To truly appreciate the impact of the amendments to the Act and Regulations, one should first know the motivations behind it.

 

LAYING THE GROUNDWORK

The Trade, Commerce and Economic Ministers (“Economic Ministers”) of the Member States of the Association of Southeast Asian Nations (“ASEAN”) signed the ASEAN Framework Agreement (“AFAS”) on Services in Bangkok in 1995, in pursuit of the common goal of creating the ASEAN Economic Community (“AEC”). The objectives of AFAS are threefold:

(1)      to enhance cooperation in services amongst Member States in order to improve the efficiency and competitiveness, diversify production capacity and supply and distribution of services of their service suppliers within and outside ASEAN;

(2)      to eliminate substantially restrictions to trade in services amongst Member States; and

(3)      to liberalise trade in services by expanding the depth and scope of liberalisation beyond those undertaken by Member States under the General Agreement on Trade in Services (GATS), with the aim to realising a free trade area in services.

In furtherance of these objectives, further meetings were held between the Economic Ministers of ASEAN to monitor the progress of the Member States and continuously discuss strategies and commitments which the Member States would undertake to achieve the AFAS objectives. One of the more notable meetings was the 37th ASEAN Economic Ministers’ Meeting, which was held in Vientiane in 2005, ten years after AFAS was signed. It was at this meeting that the Economic Ministers collectively agreed that the deadline for the liberalisation of all services sectors (including the engineering sector) would be 2015.

 

We are now approaching the end of 2015, and the foundation laid at the signing of AFAS in 1995 is being built upon in various service sectors in Malaysia.

The amended Act and Regulations represent the beginning of these changes in the engineering services sector in Malaysia. The changes within the Act and the Regulations which are likely to have the most impact on the engineering profession in Malaysia can be divided into three broad categories, as detailed below.

REINVENTING THE ENGINEER

 

“New” engineers, new responsibilities

 

While the Act previously recognized and regulated only Professional Engineers, Graduate Engineers and Engineering Consultancy Practices (“ECP”), the amended Act adds three categories of engineers, namely Engineering Technologists, Accredited Checkers and Inspectors of Works, who may be registered with the Board of Engineers Malaysia (“BEM”) and whose services are regulated by the Act. Such persons are required to hold a “qualification recognized by BEM”, but neither the Act nor the Regulations clarify what these qualifications are.

The amended Act also divides the old “Professional Engineer” class into two categories: a Professional Engineer with Practising Certificate and a Professional Engineer (without a Practising Certificate). A Professional Engineer obtains his Practising Certificate by sitting for the examinations set by BEM. There is, however, a redeeming clause in the new Section 10D(2) which provides that all existing Professional Engineers may apply to become Professional Engineers with Practising Certificate without having to sit for the required examinations.

Directly related to the above is the amended Section 8 of the Act which now states that only a Professional Engineer with Practising Certificate or an ECP providing professional engineering services in Malaysia, shall be entitled to submit plans, engineering surveys, drawings, schemes, proposals, reports, designs or studies to any person or authority in Malaysia. Professional Engineers may no longer do so; they may only submit plans or drawings where such plans or drawings are in relation to an equipment, a plant or a specialised product invented or sold by him or his employer.

One immediate effect of this is that Professional Engineers (and engineers who are part of an ECP) must now obtain their Practising Certificates in order to do those things which they would previously simply have been able to do in their capacity as Professional Engineers. For instance, it would seem that in order to submit building plans to local authorities for the purposes of the Street, Drainage and Building Act 1974, one must be a Professional Engineer who has obtained his Practising Certificate from BEM. Similarly, the Certificate of Completion and Compliance required to certify the safety of new buildings may not be issued by an engineer unless he is a Professional Engineer with Practising Certificate.

 

The expatriate engineer

 

Arguably, the biggest change to the registration of engineers is the removal of the nationality requirement to be a Professional Engineer registered with BEM. Under the old Act, only citizens and permanent residents of Malaysia could be registered with BEM as Professional Engineers. The amended Act now allows a person of any nationality to be registered as a Professional Engineer with BEM provided that he meets all the relevant requirements stipulated in the Act and Regulations and has been residing in Malaysia for at least six months prior to his application for registration.

A new kind of ECP

 

A direct impact of the relaxation of the nationality requirement is that ECPs may now apparently be owned by foreign persons and/or foreign bodies corporate. However, this is not to say that any person may set up and run an ECP. The Act and Regulations provide that:

(1)      at least two-thirds of the directors of an ECP must be Professional Engineers with Practising Certificates; and

(2)      at least seventy per cent of the share equity of an ECP must be held by Professional Engineers with Practising Certificates; the remaining share equity may be held by any person or body corporate.

It is not clear as yet whether a body corporate consisting entirely of Professional Engineers with Practising Certificates may count towards the seventy per cent share equity requirement.

The amended Regulations also dictate that an ECP must have a minimum paid-up capital of RM50,000 whilst the amended Act requires the day-to-day affairs of an ECP to be under the control and management of a person who is:

(1)      a Professional Engineer with Practising Certificate; and

(2)      authorized under a resolution of the board directors to make all final engineering decisions on behalf of the ECP in respect of the requirements under the Act or any other law relating to the supply of professional engineering services by an ECP.

GAME CHANGER?

The liberalization of the engineering services sector is likely to be good for Malaysia’s economy in the long term, for two main reasons.

Raising the Game

 

Firstly, the relaxation of the nationality requirement removes a significant barrier to entry for talented foreign engineers to the Malaysian market for engineering services. This will increase competitiveness within the engineering services sector, while simultaneously exposing local engineers to the capabilities and standards of engineers outside of Malaysia, consequently raising the standards for Malaysian engineers.

Raising the Stakes

 

Secondly, the fact that foreign persons and foreign bodies corporate may now hold equity in an ECP is likely to encourage foreign investment in the Malaysian engineering scene. We may see state of the art technology being brought to Malaysian shores in future, which local engineers may learn from or capitalize on to speed up innovation in the domestic engineering scene.

CONCLUSION

It may be presumptuous at this early stage to assume that we will observe these benefits immediately, or even in the near future. However, given the nature of the professional engineering services sector, we are likely to see the beneficial effects of the amended Act and Regulations spill over to other economic sectors within the country.

As more and more ASEAN Member States liberalize their engineering services sector, we are more likely to see development and innovation in the engineering sector increase at a rapid rate over the next decade or so. Applied correctly, this opportunity for learning and foreign investment will push us closer towards achieving the AFAS objectives, the ASEAN goal of the AEC, and our own ideal of a truly modernized Malaysia.

The liberalisation of the engineering services sector in other ASEAN Member States will give Malaysian engineers the opportunity to export their services and bring economic benefits to the country through foreign exchange earnings.

 
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