It is indeed good news and quite a surprise that the government has decided to liberalise the financial sector further, this time allowing up to 70% equity of foreign interest in our local financial institutions, save for commercial banks. This is a huge step and I think one that will help to boost the banking sector.
Specifically, the financial institutions which will see an increased foreign equity are investment banks, Islamic banks, insurance companies and takaful operators.
With this liberalisation in place, it is hoped that the foreign players who come in to the local banking scene can help to provide more innovative banking and investment products to the market. As it is, we are very much regulated and structured (albeit safe) in the kind of banking products available in the market.
What I foresee this liberalisation to do is to make the banks more competitive in their product offerings as foreign partners bring in better financial solutions to the market. Some of our local banks are also kind of laid back and often rest on their laurels, so it is also hoped that they will boost not only their product offerings but also their customer and other related banking service to customers.
Further to this step to increase foreign equity in financial institutions, the government will also be issuing more banking licenses, including offering more Islamic banking licenses up to year 2011. I see this as a good move. With more competition in the banking industry, the people who stand to benefit are you and me.
You can read the news about this financial sector liberalisation here at The Star.
