Malaysia has proposed new rules to strengthen its capital markets, including steps to facilitate the entrance of foreign firms to the local asset management industry.
Theses measures are aimed at boosting investments and promoting the country’s financial system, as the country aims to achieve developed nation status by 2020.
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Under the new measures, Malaysian prime minister Najib Razak said foreign corporations will now be allowed to own entire stakes in unit trust management companies and foreign fund managers will get broad access to retail investors.
The other measures include removal for corporate-bond ratings effective January 2017 and liberalization of equity holdings for credit rating agencies.
Additionally, international credit rating agencies with full foreign ownership will be allowed to operate in the Malaysian market from 1 January 2017.
"There will be no barrier to entry for new foreign unit-trust management companies coming into Malaysia," Najib added.
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By GlobalDataThese measures will further strengthen the Malaysian capital market so it may act as the catalyst for sustainable, long-term growth domestically and in the region.
Yeah Kim Leng, dean of the business school at Malaysia University of Science and Technology, said that the removal of the mandatory requirement for corporate bond credit ratings is expected to stimulate more issuance in the bond market.
"The move is a signal that the capital market in Malaysia has reached a maturity stage where bond investors are sophisticated enough to make their own investment assessment and decisions (rather) than relying on the corporate rating agencies," Leng added.
Najib said: "We believe this measure will make a wider range of competitive products available to investors, and increase competition in the sector."
