Malaysian Govt To Provide Greater Flexibility Including Foreign Ownership In Banks

KUALA LUMPUR, Dec 22 (Bernama) -- The Malaysian government will provide greater flexibility in the financial sector including foreign ownership as part of its liberalisation efforts in the banking and financial sector, Prime Minister Najib Razak said Wednesday. Commenting on whether the government will decide on a 30 per cent foreign ownership of commercial banks, he said there would be more openness and flexibility in the financial sector. "There will be elements of flexibility in our decision and at the same time for foreign banks in special niche areas. "There are certain banks that are not really competing with local banks and they have certain functions to perform in niche areas, in which case, special consideration can be made for that," he told reporters after launching the Financial Sector Blueprint and Malaysia’s New Currency Series here Wednesday. Najib, who is also the Finance Minister said the government would also consider on the basis of merit of each case. He said the two major criteria looked at would be the prudential aspect of the banks and what these foreign financial players could contribute to the Malaysian economy. On the internationalisation of ringgit, Najib said Malaysia was not ready to do that and that it was comfortable with its current position especially with the current instability of the international foreign exchange market. "We have to develop our foreign exchange market first in a very comprehensive manner. We also realise that this is probably not the best time to do it," he said. On whether there had been recommendations on the consolidation of local banks, the prime minister said there was no specific consideration under the financial blueprint. "No specific consideration but the market is flexible. In other words, the dynamism of the market must be taken into account. Sometimes, there will be a proposal for amalgamation and so forth," he added. Najib said although there were 69 recommendations under the blueprint, which would take a certain period of time before they are all fully implemented, the government was determined to implement it based on the success of the earlier financial masterplan. When asked on the progress of the first mega Islamic bank, he said the announcement would be made at the appropriate time. "I don't know yet. We will see. We are putting everything together now. When they meet all the conditions, especially on the shareholders fund and all that," he said. -- BERNAMA