THE government further liberalised the country’s financial sector yesterday by removing barriers faced by foreign-owned fund managers and easing ratings requirements for the corporate bond market.
Prime Minister Datuk Seri Najib Razak, speaking at the Invest Malaysia 2014 conference, here, said the moves were aimed at boosting investment and encouraging a “stable and inclusive” financial system as the country aims to reach developed nation status by 2020.
Effective immediately, foreign firms will be allowed to fully own unit-trust management companies in Malaysia – a move market players said would give foreign fund managers broader access to the country’s retail investors.
“There will be no barrier for entry of new foreign unit-trust management companies into Malaysia,” said Najib.
The prime minister also announced that beginning 2017, it will no longer be mandatory for Malaysian companies to get credit ratings on the corporate bonds that they issue.
“This will broaden the corporate bond market and enable investors to further diversify their portfolios,” he said.
In addition, international credit rating agencies with full foreign ownership would be allowed to operate in the Malaysian market from January 2017.
Najib said the new steps were integral to Malaysia’s goal of achieving developed-world status by 2020, with a projected income per head of US$15,000 (RM48,000).
“I want to see Malaysia emerge not just as a high-income economy, but a high-quality economy as well,” he said. “And that means building a stable and inclusive financial system, encouraging innovation and tackling corruption. To that end, we have introduced policies and reforms to ensure that our growth is not just strong but sustainable.”
The two-day investment conference, co-organised by Bursa Malaysia and CIMB Group, attracted 58 participating companies this year.
Najib, who is also the Finance Minister, said industry players will be given sufficient time to be able to operate under the new regime.
From next year, flexibilities will be extended to credit ratings and the trading of unrated bonds and sukuk.
The capital market’s breadth and depth have allowed corporate financing to raise RM240 billion through initial public offerings (IPOs), bonds and sukuk over the last two years.
International credit-rating agencies will introduce a more competitive fee structure and widen the range of services.
“Ultimately, this liberalisation will enable the Malaysian bond market to become a more cost-effective and attractive long-term financing platform.”
In the case of the unit-trust industry, he said it has enjoyed a double-digit growth over the past decade to RM344 billion in net asset value by taking advantage of domestic savings.
Najib also emphasised Malaysia’s impressive economic progress, outlining strong gross domestic product growth statistics, Gross National Income per capita increases and an overall poverty rate drop.
He highlighted measures taken to make it easier to live, invest and do business in Malaysia: “Malaysia was ranked 6th in the latest ‘Ease of Doing Business’ report by the World Bank, up 15 places from 2009. We are now 12th out of 60 countries in the International Institute for Management Development’s World Competitiveness Yearbook – ahead of the United Kingdom, Australia, Japan and South Korea; and third in Bloomberg’s list of 22 best emerging markets.”
Najib said Malaysia is also a safe haven for investment, as according to the World Bank, Malaysia’s investor protection regime is now ranked fourth in the world.
-NST
