Malaysia introduces capital-mart boosters

Malaysia introduces capital-mart boosters

KUALA LUMPUR (AFP): Malaysia's capital-market boosting measures unveiled yesterday will make it more competitive but foreign fund managers said they may not be attractive enough to turn Kuala Lumpur into the region's top financial center.

"We are only halfway down the road to get foreign stockbrokers to move here instead of Singapore. It's a shame they are not going the extra mile," Martin French, managing director of Credit Lyonnais Securities (Malaysia), told AFP.

French said foreign brokers still had to go through a local brokerage and pay them a commission "for doing nothing."

"Malaysia needs to be more aggressive (in its liberalization)," he said.

But most other fund managers and bankers hailed the long- awaited measures announced by Deputy Prime Minister Anwar Ibrahim, who is also finance minister.

"The announcements today have been long overdue for Kuala Lumpur," said Rashid Hussain, head of the country's leading stock brokerage, Rashid Hussain Bhd.

Commission

Anwar's new measures were aimed at deepening the country's capital pool, and allowed increased stock-market investments by the Employees Provident Fund (EPF) as well as the setting up of a major new unit trust fund for all Malaysians.

Although the new rules included a cut in commission rates for brokerages, analysts said profits would only be squeezed temporarily.

The lower rates would eventually make brokerages here more competitive regionally, said Benny Ng, chief executive officer of local brokerage Sarawak Securities Sdn. Bhd., adding: "More fund managers will be coming into the region to buy more stocks."

Analysts said the regressive nature of the new commission charges on transactions would encourage bulk-buying.

Under the new graduated system, brokers will charge a one percent commission on transactions under 500,000 ringgit (US$200,000), 0.75 percent on deals of between 500,001 ringgit and two million ringgit, and 0.5 percent on transactions over two million ringgit.

Loosened restrictions on fund management companies would also boost the local capital market, analysts said.

Anwar had said the government would allow the setting up of 100-percent foreign-owned fund management companies conducting non-Malaysian business here.

However, if these companies decided to source for funds locally, they would be required to reduce foreign equity to 70 percent. Funds from the EPF would then also be available to these funds.

"All these measures will give Singapore a run for its money," said a senior analyst at a foreign brokerage.