* Foreign fund managers get broad access to retail investors
* Requirement for corporate-bond ratings to end in 2017
* Foreign rating agencies to be allowed to operate
* Najib says liberalization steps in line with development
(Recasts, adds details, fund manager quote)
By Yantoultra Ngui and Stuart Grudgings
KUALA LUMPUR, June 9 Malaysia's Prime Minister
Najib Razak announced steps to liberalize the country's
financial sector on Monday, removing barriers faced by
foreign-owned fund managers and easing ratings requirements for
the corporate bond market.
Najib, speaking at an investment conference in Kuala Lumpur,
said the moves were aimed at boosting investment and encouraging
a "stable and inclusive" financial system as the country aims to
reach developed nation status by 2020.
He said foreign firms will be allowed, effective
immediately, to fully own unit-trust management companies in
Malaysia - a move market players said would give foreign fund
managers much broader access to the country's retail investors.
"There will be no barrier to entry for new foreign
unit-trust management companies coming into Malaysia," Najib
He also announced that beginning in 2017, it will no longer
be mandatory for Malaysian companies to get credit ratings on
corporate bonds they issue.
"This will broaden the corporate bond market, and enable
investors to further diversify their portfolios," Najib said.
In addition, Najib said that international credit rating
agencies with full foreign ownership would be allowed to operate
in the Malaysian market from January 2017.
Removal of the mandatory requirement for corporate bond
credit ratings is expected to stimulate more issuance in the
bond market, said Yeah Kim Leng, dean of the business school at
Malaysia University of Science and Technology.
"The move is a signal that the capital market in Malaysia
has reached a maturity stage where bond investors are
sophisticated enough to make their own investment assessment and
decisions (rather) than relying on the corporate rating
agencies," he said.
'A MASSIVE STEP'
The removal of restrictions on foreign-owned fund managers
means they will now be able to market funds to retail investors
in the Southeast Asian nation of 29 million people, said Gerald
Ambrose, a fund manager at Aberdeen Asset Management in
Until now, they have only been able to sell wholesale funds
to Malaysians with a net worth of more than 3 million ringgit
"Foreign fund managers can manage conventional unit trusts
now, which is a massive step. We've been pushing for that for a
long time," Ambrose said.
Najib said the new steps were integral to Malaysia's goal of
developing its economy to achieve developed-world status by
2020, with a projected income per head of $15,000.
"I want to see Malaysia emerge not just with a high-income
economy, but a high-quality economy," he said.
"That means building a stable and inclusive financial
system, encouraging innovation, and tackling corruption. To that
end, we have introduced policies and reforms to ensure our
growth is not just strong, but sustainable."
(Editing by Richard Borsuk)