Malaysia’s banking plans set to ignite interest in GCC countries

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KUALA LUMPUR: Malaysia’s plans to liberalise its banking system will boost interest from Middle Eastern financial institutions looking to invest in overseas markets, according to Inside Investor’s Kamran Saddique.

Saddique, CEO of the Kuala Lumpur-based media and business consultancy, said banks and financial houses in the Gulf Cooperation Council (GCC) countries have been keeping a close eye on Malaysia because of its highly developed Islamic finance system.

“There could be an interest for banks from the GCC as Malaysia is willing to grant more licences and this can be a stepping board for the rest of Asia for GCC banks,” said Saddique. “There is a huge interest in the GCC for markets in Asia as the growth and opportunities are abundant and the local GCC markets are still weathering the storm of the 2008 fall out.”

Malaysian Prime Minister Najib Tun Razak, also the Finance Minister, this week announced plans to allow greater flexibility in foreigners holding stakes in banks. The country is also willing to issue banking licences to foreign companies.

“The opening of the finance sector in Malaysia allows the market to be more competitive,” said Saddique. “The local banks are in a strong position as consolidation continues in the local Malaysian banking sector. Banks such as CIMB already are the front book runners in sukuks (Islamic financial instruments similar to bonds) in Asia Pacific.”

Inside Investor, which produces investment reports on Southeast Asian countries targeting GCC countries, is keen to organise a forum in the United Arab Emirates in 2012 for regional companies looking to invest in Malaysia.

“It will be a great way to bring the parties together and start increasing the dialogue for the two to work together,” said Saddique.

Malaysia currently caps foreign ownership of commercial banks at 30 per cent. However, foreigners are allowed to own up to 70 per cent of Islamic and investment banks.

With Malaysia targeting developed status by 2020, the government is of the view that opening up the banking sector is a crucial step in achieving that goal.

“The financial sector blueprint for the next 10 years reinforces the government’s initiatives to drive Malaysia to become a fully developed nation,” Najib was quoted as saying in the media.

“The financial system will have a key role in spurring new areas of growth, and facilitating our economic transformation.”

Currently, several GCC banks have a presence in Malaysia such as Saudi Arabia’s Al Rajhi and Kuwait Finance House. Malaysia’s Central Bank, the Bank Negara, said the extent of ownership for foreign banks will depend on its global profile.

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Reading Time: 2 minutes

KUALA LUMPUR: Malaysia’s plans to liberalise its banking system will boost interest from Middle Eastern financial institutions looking to invest in overseas markets, according to Inside Investor’s Kamran Saddique.

Reading Time: 2 minutes

KUALA LUMPUR: Malaysia’s plans to liberalise its banking system will boost interest from Middle Eastern financial institutions looking to invest in overseas markets, according to Inside Investor’s Kamran Saddique.

Saddique, CEO of the Kuala Lumpur-based media and business consultancy, said banks and financial houses in the Gulf Cooperation Council (GCC) countries have been keeping a close eye on Malaysia because of its highly developed Islamic finance system.

“There could be an interest for banks from the GCC as Malaysia is willing to grant more licences and this can be a stepping board for the rest of Asia for GCC banks,” said Saddique. “There is a huge interest in the GCC for markets in Asia as the growth and opportunities are abundant and the local GCC markets are still weathering the storm of the 2008 fall out.”

Malaysian Prime Minister Najib Tun Razak, also the Finance Minister, this week announced plans to allow greater flexibility in foreigners holding stakes in banks. The country is also willing to issue banking licences to foreign companies.

“The opening of the finance sector in Malaysia allows the market to be more competitive,” said Saddique. “The local banks are in a strong position as consolidation continues in the local Malaysian banking sector. Banks such as CIMB already are the front book runners in sukuks (Islamic financial instruments similar to bonds) in Asia Pacific.”

Inside Investor, which produces investment reports on Southeast Asian countries targeting GCC countries, is keen to organise a forum in the United Arab Emirates in 2012 for regional companies looking to invest in Malaysia.

“It will be a great way to bring the parties together and start increasing the dialogue for the two to work together,” said Saddique.

Malaysia currently caps foreign ownership of commercial banks at 30 per cent. However, foreigners are allowed to own up to 70 per cent of Islamic and investment banks.

With Malaysia targeting developed status by 2020, the government is of the view that opening up the banking sector is a crucial step in achieving that goal.

“The financial sector blueprint for the next 10 years reinforces the government’s initiatives to drive Malaysia to become a fully developed nation,” Najib was quoted as saying in the media.

“The financial system will have a key role in spurring new areas of growth, and facilitating our economic transformation.”

Currently, several GCC banks have a presence in Malaysia such as Saudi Arabia’s Al Rajhi and Kuwait Finance House. Malaysia’s Central Bank, the Bank Negara, said the extent of ownership for foreign banks will depend on its global profile.

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