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Sunday, 2 September 2007

Malaysia will not issue new Islamic bank licenses for foreign investors

MALAYSIA will not issue new Islamic bank licences for foreign investors as it wants them to partner locals to provide such services, Bank Negara governor Tan Sri Zeti Akhtar Aziz said. "At this stage, we are encouraging strategic alliances because we already have a number of foreign Islamic financial institutions, both in the banking and takaful (Islamic insurance)."And we have allowed foreign interests in such banks higher at 49 per cent. This is what we are encouraging," she said on the sidelines of an Islamic finance forum in Kuala Lumpur yesterday.Malaysia has so far issued licences to three Middle Eastern banks - Kuwait Finance House, Saudi Arabia's Al Rajhi Banking and Investment Corp and Asian Finance Bank.On another subject, Zeti said Bank Negara maintained its 2007 inflation forecast in the range of between 2 per cent and 2.5 per cent, despite the possibility of higher inflation in the second half of the year."Yes, it will be that range of forecast of between 2 per cent and 2.5 per cent," she said.Zeti also said any possible changes in Malaysia's economic policies will be determined by fundamentals rather than specific events."We don't look at events to determine our policies. We look at fundamentals and whether we have pre-conditions in place."So far, we have been very pleased, despite volatility which has not been disruptive to our financial systems."In fact, this liberalisation that we have done has brought greater benefits because new products and services offered by financial institutions have generated increase in activities and employment. So it is highly positive," she said when asked if the current market volatility would delay the possibility of further liberalisation of Malaysia's foreign exchange rules.

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