Malaysia open to foreign banks

The Malaysian government is still open to allowing major foreign banks to set up operations in Malaysia despite concerns that there are already too many banks in the country.

“There are still many foreign banks interested to operate here,” said Deputy Finance Minister Datuk Dr Awang Adek Hussin, adding that the government would give consideration to banks from countries that had not set up any branch in Malaysia.

“We are open to major players who can contribute to the country's economy and the relations between both countries,” he said, adding that the Government would be selective on the approvals. “We are mindful that we already have enough banks, but we are not rigidly closed to the approval of new banks,” Awang Adek said after launching the “Bulan Perkhidmatan Pembayar Cukai” campaign by Inland Revenue Board here yesterday

He said to be approved as new players in the financial system, the foreign banks would have to be “fit and proper”.

“The banks will have to submit their value propositions and we will evaluate them to see if they are suitable to the country's objectives,” he added.

Former Finance Minister Tun Daim Zainuddin yesterday warned that there were “way too many banks” in the country now.

Daim cautioned that only big banks with huge capital could sustain if there were another economic crisis while the small ones would perish.

Awang Adek said in a bid to reduce the number of banks in the country, the Government had been encouraging local banks to consolidate over the past 10 years.

“We are still encouraging consolidation. If there are any financial institutions interested, then go ahead by all means,” he said.

Awang Adek said the government was confident of achieving its targeted RM91bil tax collection this year.

“It is important to meet this target to assist the Government in funding mega projects planned under the National Key Result Areas,” he said.

On another matter, he said the Government was still studying the implementation of goods and services tax (GST).

“We are in the process of educating the people and traders about the GST,” he said, adding that special teams had been assigned to speak about it to various groups nationwide.

“If the people do not understand it, the reaction will be negative,” he said.

Awang Adek said no time frame had been set for the introduction of the GST.

He added that the Price Control and Anti-Profiteering Act 2010, which came into force yesterday, would be conducive for the implementation of the tax.