Speaking at an investment conference in Kuala Lumpur, Malaysian prime minister Najib Razak said foreign corporations would be allowed to own entire stakes in unit trust management companies and that there will be no barriers to entry for new foreign unit trust companies.
The move is likely to make a wider range of competitive products available to investors and also enhance the competition in the sector.
In an earlier step to increase competition, the Securities Commission of Malaysia last year entered into an agreement with the Singapore and Thailand regulatory authorities to enable funds to be sold to retail clients across the three countries.
“In the spirit of the ASEAN economic community, and to further encourage growth and competition within the unit trust industry, I am pleased to announce today that the equity shareholding for unit trust management companies will also be liberalized,” Razak said, while announcing the measures.
Other measures which are specifically expected to broaden the country’s corporate bond market include the removal of the mandatory credit rating on corporate bonds and allowing foreign-owned credit rating agencies in the local market. These would be effective from 1 January 2017.
“Through these measures, we aim to further strengthen the Malaysian capital market, so it may act as the catalyst for sustainable, long-term growth – not just domestically, but also within our region,” the prime minister said.
The Malaysian capital market grew by 10.5% to MYR2.7trn ($8bn, £5bn) in 2013, as per the data published by Securities Commission Malaysia in March.
The fund management industry witnessed a 16.5% growth to MYR588bn. Unit trust funds continued to be the largest contributor to the growth in asset, with net asset value increasing to RM336bn, equivalent to one-fifth of stock market capitalization.
