Malaysian Prime Minister Najib Razak on Monday announced further liberalisation to promote investment in a broader spectrum of assets and capacity building.
Najib, who is also the Finance Minister, said the country aims to further strengthen the Malaysian capital market so it may act as the catalyst for sustainable, long-term growth domestically and in the region.
He announced the mandatory requirement for credit ratings would be removed effective January 1, 2017 to broaden the corporate bond market and enable investors to further diversify their portfolios.
“A gradual approach is being adopted to provide industry players sufficient time to further refine mechanisms necessary to operate under the new regime,” he said in his keynote address at the two-day Invest Malaysia 2014, which began on Monday.
Flexibilities would be accorded with regards to credit ratings and the tradability of unrated bonds and sukuk from Jan 1, 2015, said Najib.
The equity holdings for credit rating agencies will also be liberalised, and international credit rating agencies with full foreign ownership will be allowed in the Malaysian market from January 1, 2017.
“Ultimately, this liberalisation will enable the Malaysian bond market to become a more cost-effective and attractive long-term financing platform,” said Najib.
The equity shareholding for unit trust management companies will also be liberalised in the spirit of the Asean Economic Community (AEC), and to further encourage growth and competition within the unit trust industry, he added.
“With immediate effect, foreign corporations will be allowed to own 100 per cent of shares in unit trust management companies, and there will be no barrier to entry for new foreign unit trust management companies coming into Malaysia.
“We believe this measure will make a wider range of competitive products available to investors, and increase competition in the sector,” said Najib.
He noted that the Securities Commission, together with professional bodies and other stakeholders, is exploring avenues to enhance the quality of information available to the capital market.
“One of the options being considered is the eventual introduction of integrated reporting, an approach that has already been adopted by several jurisdictions and multinational corporations,” said Najib.
He added that Malaysia’s financial markets could and would help drive regional integration as the AEC approaches.
“In this context, we welcome collaborations – such as the new series of Asean Indices which are available today, and were drawn up by a group of seven regional exchanges – which will help us lay the foundations for greater regional growth,” he said.
Source : Channel News Asia | June 9, 2014