KUALA LUMPUR: Capital Market Masterplan Two (CMP2), the successor of CMP1 that was launched a decade ago, aims to further unlock the potential of the capital market estimated to reach RM5.8 trillion in value over the next 10 years from the current RM2 trillion.
“Current forecast is that the capital market size will more than double to RM4.5 trillion by 2020, and with greater internationalisation, this figure could increase to as much as RM5.8 trillion over the same period,” Prime Minister Datuk Seri Najib Tun Razak said at the opening ceremony of Invest Malaysia 2011 yesterday that also saw the launch of CMP2.
Internationalisation was one of the key priorities of CMP2, which sets to shift focus on Islamic finance from serving domestic needs towards tapping growth opportunities from intermediating international investments and corporate transactions.
“The internationalisation of the capital market is a necessary pre-requisite to strengthening Malaysia's Islamic capital hub which is set to increase almost threefold to RM2.9 trillion in 2020.
“CMP2 outlines strategies to enhance the distinctive value proposition offered by Malaysia for a broad range of Islamic intermediation activities, including increasing our capacity to structure cross-border transactions to make further inroads into the international sukuk market.
“Additionally, the Securities Commission (SC) will collaborate with key industry players to expand the range of syariah-compliant stockbroking products, services and build greater critical mass for the development of onshore portfolio management,” he said.
The other key priorities of CMP2 are the promotion of capital formation as well as enhanced intermediation efficiency and liquidity.
He said CMP2 would strengthen the role of capital markets in promoting capital formation from the start-up stage to the financing of innovative ventures, big new projects and cutting-edge green technology.
“To achieve this, we will allocate more funds to the venture capital and private equity industries through formalising regulatory oversight as well as targeted incentives and support,” he said.
On intermediation efficiency and liquidity, Najib said Malaysia was fortunate to finance its investment needs via its large pool of accumulated domestic savings and efforts would be made to enhance the intermediation efficiency in recycling domestic savings to finance the development of the economy.
“The country's high savings are expected to drive the rapid growth of the investment management industry with asset under management projected to rise to RM1.6 trillion in 2020 from RM377.4bil in 2010.
“There will also be a review of the system-wide effects of institutional investment strategies, particularly to ensure the optimal deployment of government-linked investment companies (GLICs) funds.
“A new private pension fund framework enabling the setting up of private retirement schemes approved by the SC will also be in place by year-end,” he said.
Najib said increasing the products on the derivatives market was another development that would be crucial to deepening market liquidity, improving the ability to trade across markets and to hedge risks.
“The re-positioning of our derivatives market is already under way with the strategic alliance between Bursa Derivatives and US-based CME group forged last year.
“Annual notional trading value on the derivatives market is expected to grow to RM4.2 trillion in 2020 from RM512bil in 2010,” he said adding that the theme for CMP2 was “Growth with Governance” that ensured growth with minimal risks in a well-regulated environment.
In terms of implementation, Najib reiterated that these were not just mere plans to languish unread on a dusty shelf where it would be operationalised under SC's annual business plan.
“There will be changes to the regulatory framework for fund raising and product regulation to slash unnecessary red tape.
“Next is the introduction of a dual licensing scheme that will make it easier for dealers in the equity market to also be licensed to trade in the derivatives market.
“There are also plans to increase the number of proprietary day traders by almost threefold. These three CMP2 programmes will be effective from the third quarter this year no distractions and delays, just swift, effective action,” he said.
Maybank Investment Bank chief executive officer Tengku Datuk Zafrul Aziz said the Government was mindful on what needed to be done for the capital market to grow further.
Najib also confirmed the listing of Felda Global Ventures sugar business in July.
“It's the first ever listing within the Felda group and it will enhance Felda's leading position in the sugar industry,” he said.
Bursa Malaysia chief executive officer Datuk Tajuddin Atan said the listing exercise was a positive demonstration of the Government's call to sell down its assets to allow for greater liquidity.
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