THE financial services sector must serve the needs of businesses and consumers in a high-income economy in addition to expanding its regional and global marketreach.
The sector’s share in the country’s gross domestic product (GDP) has been increasing from an average of 9.9% between 2000 and 2005 to 10.9% from 2006 to 2009.
It targets to raise total gross national income (GNI) to RM180.2bil and create 275,400 new jobs by 2020. The financial services’ National Key Economic Area (NKEA) has four key thrusts: strengthening the core; serving the needs of a high-income population; developing new sectors; and going on the offensive.
This entry point projects (EPP) targets to expand Bursa Malaysia’s market capitalisation to RM3.9 trillion by 2020. Liquidity is targeted to improve from 31% of total market capitalisation to 60%. This EPP is expected to create incremental GNI of RM2.2bil and 9,000 additional jobs by 2020.
Another key initiative would be the listing of key privately-held government-linked companies (GLCs) to further boost stockmarket liquidity and the number of large cap stocks.
Bursa was upgraded to Advanced Emerging within the FTSE’s Global Equity Index. The country’s weightage in the MSCI Emerging Markets Index increased from 2.9% to 3.2%.
Bursa has partnered with Chicago Mercantile Exchange to allow global traders to access Bursa’s derivative products electronically.
As at the third quarter of 2011, the Securities Commission (SC) approved 12 applications for initial public offering (IPO) on the Main Market. It also approved seven applications for IPOs on the ACE Market.
Initiatives would be implemented to improve liquidity and scale the market with greater focus on retail and institutional investor segments. To do this, Bursa would continue to diversify its Islamic and conventional product offering and also address structural issues that would help to spur investor participation in the market.
Another EPP is to develop regional bank champions.
The Government and Bank Negara would be assisting banks to establish meaningful presence in priority markets and expand beyond Asean through the acquisition of banking assets.
Malaysian banks would increase the proportion of overseas income over total profits to 27% by 2020. The EPP targets incremental GNI of RM5.6bil in the financial services sector by 2020.
Bank Negara has entered into memorandum of understandings with China Banking Regulatory Commission, Bank Indonesia, State Bank of Vietnam and National Bank of Cambodia. Continuous Trans-Pacific Partnership (TPP) discussions were held as well. Moving forward, discussions and negotiations for Free Trade Agreements are expected to continue in the coming years.
Greater collaborations and best practices among Asean regulators and financial institutions would remain a key agenda. Becoming the indisputable global hub for Islamic finance is another EPP. The nation aspires to become the intellectual and capital centre for Islamic finance with global share of Islamic banking assets targeted to increase from 8% in 2009 to 13% in 2020.
This EPP is expected to create incremental GNI of RM7.2bil and 12,000 jobs mainly in Islamic banking activities and takaful by 2020.
In the sukuk market, Malaysia accounts for 64% of global sukuk as at end-2010 and Bursa is also the leading exchange for listed sukuk.
In the fund management industry, Malaysia has the largest number of Islamic funds, with 163 Islamic unit trusts.
Bloomberg has also launched a non-ringgit denominated sukuk index which was developed in conjunction with Bank Negara.
The Government’s commitment to further encourage sukuk issuances is evident from the wide range of tax incentives provided to issuers.
In 2011, Bursa Suq Al-Sila’, a commodity trading platform dedicated to facilitate Islamic liquidity management and financing by Islamic banks was introduced.