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.