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Published: Monday April 27, 2009 MYT 1:14:00 PM
Updated: Monday April 27, 2009 MYT 4:06:07 PM

Financial sector liberalisation (Update 3, full statement)

PUTRAJAYA: Foreigners will now be allowed to own up to 70% equity in all financial institutions here except commercial banks, up from the current 49%, as the Government announced a list of initiatives to liberalise the financial sector (full statement in Bahasa Malaysia below).

Prime Minister Datuk Seri Najib Tun Razak said the liberalisation package, which comprised six thrusts, was aimed at enhancing Malaysia’s linkages with international economies, bring about greater confidence in the economy, and promote greater economic regional integration.

“Over the past three years, the finance and insurance sector has expanded by 8.8% per annum, outpacing the growth in real gross domestic product(GDP) by about 6%.

“The liberalisation measures announced today will also provide greater access to consumers to a wider ranger of world-class financial products and services and further strengthen our position in Islamc finance to become an international Islamic financial hub,” he told a press conference at his office Monday.

The country’s banking institutions and insurance companies employ about 140,000 workers.

The meat of the liberalisation package is the issuance of new licences for seven banks and two family takaful (Islamic insurance) players from this year until 2011.

Under this, up to two new Islamic banking licences will be issued to foreign players to establish new Islamic banks with a paid up capital of at least US$1bil, and two new commercial banking licences for foreign players that will bring in specialised expertise.

These four licences will be issued this year, together with two new family takaful licences.

In 2011, up to three new commercial banking licences will be issued to “world-class banks that can offer significant value propositions to Malaysi,” he said.

Najib, who is also Finance Minister, said flexibility would be accorded for an increase in foreign equity limits from 49% to 70% of investment banks, Islamic banks, insurance companies and takaful operators.

“Such alliances will strengthen the business potential and enhance the growth prospects of financial institutions through the international expertise and the global networks of foreign shareholders.

“The foreign equity limit for commercial banks will remain at the current 30%,” he added.

Najib said the Goverment would also offer “operational flexibilities” to foreign institutions to improve the outreach of financial products and services by increasing branches, while locally incorporated foreign commercial banks would be allowed to establish four new full-fledged branches with effect in 2010, and 10 microfinance branches starting this year.

Effective June 1, Labuan Holding Companies incorporated under the Offshore Companies Act 1990 will be given the flexibility to establish an operational and management office in Kuala Lumpur to enhance efficiency.

Najib added that offshore banking institutions and insurance companies licensed by Labuan Offshore Financial Services Authority that meet the predetermined criteria would be allowed to have a physical presence onshore from 2010 and 2011 respectively.

“Greater flexibility will also be accorded for employment of expatriates in specialist areas that can contribute to the development of the financial sector,” he said.

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FULL STATEMENT (APRIL 27, 2009)
PRIME MINISTER DATUK SERI NAJIB TUN RAZAK

LIBERALISATION OF THE FINANCIAL SECTOR

1. Further to the announcement I made last week on the liberalisation of the services sector, I am pleased to announce today the liberalisation plan for the financial services sector. The financial services sector is an integral component of the economy, and has increased its share in GDP from 9.2% in 2000 to 11% in 2008. Over the recent three years, the finance and insurance sector has expanded by 8.8% per annum, outpacing the growth in real GDP of about 6%. More than 140,000 workers are employed by banking institutions and insurance companies in Malaysia.

2. Moving forward, the financial sector is expected to have a greater role in facilitating and catalyzing economic growth as Malaysia transitions towards achieving a developed economy status by year 2020. The financial sector is expected to support the demands of a growing economy and drive the transformation of the economy into the next phase of development; provide world-class, high value-added financial products and services at competitive prices; and accelerate the growth of new economic sectors including other activities in the services sectors.

3. In positioning the financial sector to meet these objectives, the liberalisation measures announced today aims to:

• Enhance Malaysia’s linkages with international economies and promote greater economic regional integration;

• Provide greater access to consumers to a wider range of world class financial products and services;

• Further strengthen Malaysia’s competitive position in Islamic finance to become an international Islamic financial hub; and

• Promote Malaysia as a leading global shared services and outsourcing centre.

4. These liberalisation measures which will be implemented over the period 2009 to 2012 are in line with the Government’s initiative to promote structural change within the economy and diversify sources of growth to further drive economic expansion.

5. The thrust of the liberalisation package for the financial sector encompasses the following:

• Issuance of new licences to strong and world-class players in the following categories:- o In 2009, up to two new Islamic banking licences to foreign players to establish new Islamic banks with paid-up capital of at least USD1 billion; o In 2009, up to two new commercial banking licences to foreign players that will bring in specialized expertise; o In 2011, up to three new commercial banking licences to world class banks that can offer significant value propositions to Malaysia; and o In 2009, up to two new family takaful licences.

Priority will be accorded to players who have the capacity to contribute in areas where there are gaps in our financial system and in which there are new areas of growth in the financial system, as well as that which will reinforce Malaysia’s position as an international Islamic financial hub;

• Flexibility will be accorded for an increase in the foreign equity limits from 49% to 70% of investment banks, Islamic banks, insurance companies and takaful operators. Such alliances will strengthen business potential and enhance growth prospects of financial institutions through the international expertise and global networks of foreign shareholders. The foreign equity limit for domestic commercial banks will remain at the current 30%;

• Enhance operational flexibilities to foreign institutions that operate in Malaysia to improve outreach of financial products and services, with greater flexibility to increase branches so as to achieve greater financial inclusion and insurance penetration in the country. Locally incorporated foreign commercial banks will be allowed to establish 4 new full-fledged branches with effect in 2010 and 10 microfinance branches with effect from this year;

• Greater flexibility will be accorded to Labuan offshore players. With effect from 1 June 2009, Labuan Holding Companies incorporated under the Offshore Companies Act 1990 will be given flexibility to establish an operational and management office in Kuala Lumpur to enhance their operating and business efficiency. This initiative will allow Labuan Holding Companies to conduct their business more effectively and efficiently;

• To provide a more flexible operating business environment, offshore banking institutions licensed by the Labuan Offshore Financial Services Authority (LOFSA) that meet the predetermined criteria will be accorded flexibility to have a physical presence onshore from 2010. Similarly, offshore insurance companies licensed by the Labuan Offshore Financial Services Authority (LOFSA) that meet the predetermined criteria will be accorded flexibility to have a physical presence onshore from 2011. This flexibility will be complemented by a strengthened regulatory and supervisory framework that govern these players.

• Greater flexibility will also be accorded for employment of expatriates in specialist areas that can contribute to the development of the financial sector.

6. The liberalisation of the financial services sector aims to ensure that maximum benefits will accrue to Malaysia. In enhancing our international linkages and in taking the financial sector to a new level of performance, it will contribute to our overall economy. 7. Further details on these measures will be provided by Bank Negara Malaysia.

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LIBERALISASI SEKTOR KEWANGAN

1. Berikutan pengumuman minggu lepas mengenai liberalisasi sektor perkhidmatan, pada hari ini, saya ingin pula mengumumkan langkah liberalisasi untuk sektor perkhidmatan kewangan. Sektor perkhidmatan kewangan merupakan komponen penting dalam ekonomi dan sumbangannya telah meningkat daripada 9.2% pada tahun 2000 kepada 11% pada tahun 2008. Dalam tempoh tiga tahun yang lalu, sektor kewangan dan insurans telah berkembang sebanyak 8.8% setahun, mengatasi pertumbuhan Keluaran Dalam Negeri Kasar (KDNK) benar sebanyak 6%. Terdapat lebih daripada 140,000 pekerja dalam sektor perbankan dan insurans di Malaysia.

2. Melangkah ke hadapan, sektor kewangan dijangka menjadi pendorong dan pemangkin pertumbuhan ekonomi yang lebih penting dalam peralihan Malaysia ke arah mencapai status ekonomi maju pada tahun 2020. Sektor kewangan dijangka memenuhi tuntutan ekonomi yang semakin bertambah dan memacu perubahan ekonomi ke fasa pembangunan seterusnya; menyediakan produk dan perkhidmatan kewangan bertaraf dunia, yang mempunyai nilai ditambah yang tinggi pada harga yang kompetitif; dan mempercepat pertumbuhan sektor ekonomi baharu termasuk aktiviti-aktiviti lain dalam sektor perkhidmatan.

3. Dalam menyediakan sektor kewangan untuk memenuhi kesemua matlamat ini, langkah-langkah liberalisasi yang diumumkan hari ini bertujuan untuk:

· Meningkatkan lagi hubungan Malaysia dengan ekonomi antarabangsa dan menggalakkan peningkatan integrasi ekonomi serantau;

· Menyediakan akses kepada lebih banyak produk dan perkhidmatan kewangan bertaraf dunia untuk para peniaga dan pengguna;

· Memperkukuh daya saing Malaysia dalam bidang kewangan Islam untuk menjadi hab kewangan Islam antarabangsa; dan

· Mempromosikan Malaysia sebagai peneraju pusat perkhidmatan perkongsian dan penyumberan luar (shared services and outsourcing, SSO) global.

4. Langkah-langkah liberalisasi ini, yang akan dilaksanakan dari tahun 2009 hingga tahun 2012, adalah sejajar dengan inisiatif Kerajaan untuk menggalakkan perubahan struktur dalam ekonomi dan mempelbagaikan sumber pertumbuhan untuk terus memacu pertumbuhan ekonomi negara.

5. Teras pakej liberalisasi bagi sektor kewangan merangkumi:

· Pengeluaran lesen baharu kepada peserta industri kewangan yang kukuh dan bertaraf dunia dalam kategori seperti berikut:- o Dalam tahun 2009, sehingga dua lesen perbankan Islam baharu kepada peserta asing untuk menubuhan bank-bank Islam baharu dengan modal berbayar sekurang-kurangnya USD1 bilion; o Dalam tahun 2009, dua lesen perbankan perdagangan baharu akan ditawarkan kepada peserta asing yang akan membawa kepakaran khusus; o Dalam tahun 2011, sehingga tiga lesen perbankan perdagangan baharu akan ditawarkan kepada bank-bank bertaraf dunia yang dapat memberikan manfaat besar kepada Malaysia; o Dalam tahun 2009, dua lesen takaful keluarga baharu akan diberikan.

Keutamaan akan diberikan kepada peserta yang mempunyai keupayaan untuk menyumbang dalam bidang-bidang yang memerlukan peningkatan, dan bidang pertumbuhan baharu dalam sistem kewangan negara. Ini juga akan memperkukuh kedudukan Malaysia sebagai hab kewangan Islam antarabangsa;

· Kelonggaran akan diberikan bagi meningkatkan had ekuiti asing bank pelaburan, bank Islam, syarikat insurans dan pengendali takaful daripada 49% kepada 70%. Hubungan ini akan memperkukuh potensi perniagaan dan meningkatkan prospek pertumbuhan institusi kewangan melalui kepakaran antarabangsa dan rangkaian hubungan global pemilik asing. Had pegangan ekuiti asing bagi bank perdagangan domestik tetap kekal pada tahap 30%;

· Memberi lebih fleksibiliti kepada institusi kewangan asing yang beroperasi di Malaysia untuk memperluas jangkauan produk dan perkhidmatan kewangan, terutamanya melalui pembukaan cawangan baharu. Ini adalah bagi mencapai akses yang lebih meluas dalam memberikan perkhidmatan kewangan (financial inclusion) dan meningkatkan penembusan insurans di dalam negeri. Bank–bank perdagangan asing yang diperbadankan di Malaysia akan dibenarkan untuk membuka empat cawangan baharu dalam tahun 2010 dan sepuluh cawangan pembiayaan mikro pada tahun ini.

· Lebih fleksibiliti akan diberikan kepada peserta luar pesisir Labuan. Berkuat kuasa pada 1 Jun 2009, Syarikat Induk Labuan yang diperbadankan di bawah Akta Syarikat Luar Pesisir 1990 akan diberikan fleksibiliti untuk menubuhkan pejabat operasi dan pengurusan di Kuala Lumpur bagi meningkatkan kecekapan operasi dan perniagaan mereka. Inisiatif ini akan membolehkan Syarikat Induk Labuan menjalankan perniagaan mereka dengan lebih berkesan dan cekap; · Bagi menyediakan persekitaran perniagaan yang lebih fleksibel dari segi pengendalian, institusi perbankan luar pesisir yang dilesenkan oleh Lembaga Perkhidmatan Kewangan Luar Pesisir Labuan (LOFSA) yang memenuhi kriteria yang telah ditetapkan akan diberikan fleksibiliti untuk beroperasi di dalam negeri (onshore) mulai tahun 2010. Syarikat insurans luar pesisir yang dilesenkan oleh LOFSA dan memenuhi kriteria yang telah ditetapkan juga akan diberikan fleksibiliti untuk beroperasi di dalam negeri (onshore) mulai tahun 2011. Fleksibiliti ini akan disokong oleh pengukuhan rangka kerja pengawalan dan penyeliaan yang mengawal selia peserta-peserta ini; dan

· Lebih fleksibiliti juga akan diberikan untuk mengambil pekerja ekspatriat dalam bidang-bidang kepakaran yang akan menyumbang kepada pembangunan sektor kewangan.

6. Liberalisasi sektor perkhidmatan kewangan bertujuan memastikan negara kita Malaysia akan mendapat manfaat yang maksimum. Pengukuhan hubungan antarabangsa dan peningkatan prestasi sektor kewangan kepada tahap yang lebih tinggi akan menyumbang kepada pertumbuhan ekonomi negara keseluruhannya.

7. Butiran lanjut mengenai langkah-langkah ini akan diumumkan oleh Bank Negara Malaysia.

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