Malaysia To Have Mega Islamic Financial Institution

PUTRAJAYA, April 27 (Bernama) -- Malaysia will be the first country to have a mega Islamic financial institution with a paid up capital of at least US$1 billion.
"In the present economic environment, there is no such Islamic financial institution.
In fact, we don't have it in any part of the world," Bank Negara Malaysia (BNM)Governor, Tan Sri Dr Zeti Akhtar Aziz told reporters here on April 27.
Prime Minister Datuk Seri Mohd Najib Tun Razak announced today a significant package of measures to liberalise the financial sector.
It includes two new Islamic banking licenses to be issued to foreign players this year, with a paid-up capital of at least US$1 billion.
According to Zeti, the banks would be for international business.
"The criteria is for a paid up capital of US$1 billion. Therefore, the business has to be international and from any part of the world to justify the level of capitalisation," she said.
Najib, also the Finance Minister, announced too that two new commercial banking licenses would be given to foreign participants who are able to infuse professionalism in specific areas and significantly contribute to the development of the country.
On the kind of specialisation expected, Zeti noted that the services and products to be offered would not as yet be significant in Malaysia, such as in infrastructure, agriculture and technology.
For all licenses given out in 2009 the application should be before Oct 31 and if successful, commercial operations can begin in 2010.
Meanwhile, BNM, in a statement said the two new licensees for Islamic Banks must be locally incorporated and be regulated by it. The banks will also be licensed under the Islamic Banking Act 1985.
The banks may have a foreign equity interest of up to 100 percent.
As for the two new family takaful operators, BNM said that they would be registered under the Takaful Act 1984. The minimum issued and paid up capital is to remain at RM100 million.
BNM also said that, in assessing the merits of the applications, the following criteria would be adopted:
The applicant must be a reputable regulated institution or a shareholder of one
The applicant must demonstrate, through a comprehensive business plan, that the proposed new licensed institution to be established in Malaysia or the foreign partner intending to acquire equity interest in an existing domestic Islamic bank, had the necessary expertise and resources to tap the global Islamic financial market and contribute to reinforcing Malaysia's position as an International Islamic financial hub.
The business plan should include a strong value proposition which, among others should cover :
Areas of specialised expertise with details on how the products and services offered would enhance the depth and breadth of the market.
A commitment to develop human capital and infrastructural requirements for a robust Malaysian operation and
Concrete plans as to how the operations would be extended for regional and international expansion.
-- BERNAMA