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31 st Oct 2012 would be a historic day for Malaysia financial planning industry with the launching of newly formed Association of Financial Advisers (AFA) at Lanai Kijang, Bank Negara Malaysia. From now onwards, AFA will effectively represent all the Licensed Financial Advisers and Corporate Unit Trust Advisers (CUTA) Firms. The association is approved by Registrar of Societies on the 16 th August 2012 with the support from Bank Negara Malaysia. In conjunction with its launching, AFA also held its inaugural financial advisers conference titled “ Charting New Frontier – FA the Future ”. During the conference, audiences were empowered with up to date practices by Bank Negara and Securities Commission. Then, an interesting forum on the Future of Malaysia Financial Advisers Industry was discussed with everyone attentions. How we benchmark ourselves with other countries? We heard some success stories from Singapore and Hong Kong. It was a successful milestone event for financial planners...

The global economy grew at a more moderate pace in 2011 after the strong rebound in 2010. The growth momentum was weighed down by continued structural weaknesses and fiscal issues in the advanced economies, geopolitical developments in the Middle East and North Africa region and the disruptive impact of natural disasters on global manufacturing production. These developments reverberated onto international financial markets and contributed to heightened market volatility throughout the year. Despite the less favourable external environment, emerging economies continued to record firm domestic-driven economic growth. At the same time, emerging economies faced increasing challenges from volatile capital flows and rising inflationary pressures. Amidst this environment, the Malaysian economy continued to grow steadily underpinned by the expansion in domestic activity and firm regional demand. The Malaysian Economy in 2011 The Malaysian economy recorded a steady pace of growth of 5.1% in ...

As part of continuous efforts by Bank Negara Malaysia to enhance competitiveness in the economy and to develop the domestic financial markets, Bank Negara Malaysia wishes to announce the following liberalisation measures, with effect from 31 January 2012: To further spur the domestic foreign exchange market through greater product innovation, licensed onshore banks are permitted to trade foreign currency against another foreign currency with a resident. To further deepen the domestic interest rate derivatives market, a licensed onshore bank is allowed to offer ringgit-denominated interest rate derivatives to a non-bank non-resident. Towards enhancing the asset liability management of residents, flexibility is permitted for a resident to convert their existing ringgit or foreign currency debt obligation into a debt obligation of another foreign currency. The above measures which are in line with the broad thrust of the Financial Sector Blueprint will contribute towards increasing the...

Bank Negara Malaysia today released the new Financial Sector Blueprint. Themed " Strengthening Our Future ", the Blueprint charts the future direction of the financial system over the next ten years. The growth of the financial system should be ultimately anchored to the growth in the real sector. Based on the rate of growth of the economy projected for the next decade, the financial sector is envisaged to expand to six times of GDP in 2020 from 4.3 times of GDP currently. Meanwhile, the contribution of the financial services sector to nominal GDP is expected to grow from 8.6% of nominal GDP to between 10 and 12% by 2020.  Recognising the increasingly complex linkages, both between the various components of the financial system and the greater international connectivity and regional financial integration, the Blueprint moves away from the sector-based approach of the previous Financial Sector Masterplan (FSMP). There are 9 focus areas under the Blueprint to further advance f...

Like it or not, Bank Negara Malaysia announced that effective 1 Jan 2012, financial institutions must make appropriate enquiries into a prospective borrower's income after statutory eductions for tax and EPF, and consider all debt obligations , in assessing affordability. Aimed at promoting prudent, responsible and transparent retail financing practices, the new guidelines require financial institutions to make assessments of a borrower's ability to afford financing facilities based on a prudent debt service ratio as inputs to their credit decisions. On top of that, a new guideline was stipulated that the maximum tenure for vehicle financing should not exceed 9 years , with immediate effect (18 November 2011). Right now, there are only 2 banks which offers vehicle financing up to 11 years, and less than 2% of car buyers now opted for tenures beyond 9 years. The changes was neglect-able. Are you an Informed Borrower? The guidelines additionally hope to ensure that consumers are...

Titled as " ECONOMIC AND FINANCIAL DEVELOPMENTS IN MALAYSIA IN THE THIRD QUARTER OF 2011 ", Bank Negara Malaysia (BNM) review some interesting facts on the status of our economy and the market outlook going forward. The announcement was chaired by Central Bank's governor to address the media after the closing of Bursa Malaysia. Growth improved in the third quarter Despite the challenging environment, Malaysian economy registered a higher growth of 5.8% (2Q11: 4.3%), due to stronger domestic demand. The robust  domestic demand was driven by an  expansion in both household and business spending as well as higher public  sector expenditure.  Manufacturing sector  recording a significantly better performance supported by firm regional  demand for resource-based products, coupled with the normalisation in supply chain disruptions arising from the Japan natural disaster. The headline inflation rate , as measured by the change in the Consumer Price...

Bank Negara Malaysia (BNM) hiked the OPR by 25bps to 3% on 5 May as what some analysts said " Surprising ". The OPR hike was a pre-emptive strike on inflation pressures as the output gap closes. Many analysts are expecting hikes to resume only in July as inflation remains largely supply side driven. However, BNM seems to act before demand pull pressures dominate and before the output gap turns positive. In our view, the OPR and SRR hike is indicating two things here. Hints #1 Inflation is going to threaten the Malaysian economy in the near-term (at least). Recent increase in prices of petrol and sugar will further accelerate the numbers. With ongoing efforts by Government to reduce the subsidies, inflation numbers for sure will gone up. Citi Research: Regional Policy Rates as at 10th May 2011 Hints #2 Related to inflation also, BNM is trying to reduce the increasing food and resources prices. If we can reduce the import price, by having a stronger currency, this would be a wi...

New Measures on Credit Cards had been announced by Bank Negara Malaysia (BNM) to promote prudent financial management and responsible business practices. Summary on the announcement made: For new credit card holders , minimum income eligibility is set at RM24,000 p.a For cardholders earning RM36,000 p.a and less , the following would be applicable: Cardholders can only hold credit cards from a maximum of 2 issuers Affected existing cardholders are given up to the end of 2011 to select their preferred issuers. Cardholders will also be given at least 2 years to service their outstanding credit card debt for the credit cards that have been canceled for the purpose of meeting this requirement. The maximum credit limit extended to a cardholder shall not exceed 2x their monthly income per issuer. For affected existing cardholders, a grace period of 2 years will be given to them to meet with the new requirement. Example of Credit Cards How about credit card issuers? Credit card issuers are ...

Everyone is buzzing about SRR lately, since Bank Negara Malaysia's statement which stated its intention to raise SRR in the near future. Actually, what is SRR? And, what is the effect of higher SRR imposed? Why BNM using SRR right now? Finance Malaysia hopes to clear everyone's doubt and would appreciate if you can share this out. What is SRR? Statury Reserve Requirement is a monetary policy instrument available to Bank Negara Malaysia (BNM) for the purposes of liquidity management. Effectively, banking institutions namely commercial banks, merchant/investment banks and Islamic banks are required to maintain balances in their Statutory Reserve Accounts (SRA) equivalent to a certain proportion of their eligible liabilities (EL), this proportion being the SRR rate. Why BNM uses the SRR as its "tool"? Since SRR is available to BNM to manage liquidity and hence credit creation in the banking system, it was used to withdraw or inject liquidity when the excess or lack of...

Last year, Malaysia Automobile Association (MAA) reported a record number of cars sold. Are you one of them? If you're not in that statistic yet and planning to own a new car now, please read this post which could scare you away. In fact, petrol prices are heading up again since 2008 with prices of RON97 reviewing monthly. Without failed, the price of RON97 is going up consecutively for the past few months. Anyway, are you driving fuel-efficiency car like me? Despite that I am pumping RON95 petrol and driving the so called "fuel-efficiency" car, I still feel the pain of pumping money. Source: Malaysia Automobile Association What to do? If you don't eat, your car still have to " drink " ma. Uncertainties in Middle East is already spiking up oil prices globally. You think this is the worst for motorists like us? By "pouring oil on fire" (to make things even worse), government plans to gradually increase motor insurance premiums from 2012 onwards unde...

As expected, Bank Negara Malaysia (BNM) decided to maintain the Overnight Policy Rate (OPR) at 2.75% yesterday. This was the 3rd time in a row that BNM left it unchanged. Are there any hints by BNM on Malaysia's economy this year? We can explore the "hidden messages" from the monetary policy statement as below: Regional Front: While advanced economies continue to register modest growth, most emerging economies have experienced strong growth. For Asian region, domestic economic activity continues to support the growth momentum amid weaker external demand. Shifts in global liquidity have resulted in significant capital flows into the emerging economies , in particular, Asian region, and have brought with it risks to macroeconomic and financial stability. The region is also being affected by global inflationary pressure arising from the higher commodity and food prices. On Malaysia: Recent indicators point towards a sustained expansion in private sector activity. External...

By Finance Malaysia, Driven by better economy prospects, Malaysia successfully escape recession two years ago, particularly March 2009. Strong GDP growth and numerous government's initiatives is the main reason why local market experiencing a spectacular run-up since then. Today, our KLCI break another record high , by closing at 1551.89 points. So, what is the outlook for Malaysia in 2011? Maybank expects KLCI will hit 1,700 mark in 201 1 KLCI The Malaysia Index will continue to perform in line with the overall economy. More IPO will be issue. More merger & acquisitions activities will be seen. KLCI will be driven by the following factors:- Improving sentiment Follow through momentum from all time high Hot capital inflows Improving liquidity Boost by plantation and oil & gas heavyweights, such as IOI, Sime and PetroChem Preferred sector(s)... Finance sector will continue to do well in line with the economy 2011 will be a "Grammy Awards" show for construction ...

On 3rd November 2010, Bank Negara Malaysia wishes to announce with immediate effect the implementation of a maximum loan-to-value (LTV) ratio of 70% , which will be applicable to the 3rd house financing facility onwards taken out by a borrower. Financing facilities for purchase of the 1st and 2nd homes are not affected and borrowers will continue to be able to obtain financing for these purchases at the present prevailing LTV level applied by individual banks based on their internal credit policies. Why? The measure aims to support a stable and sustainable property market, and promote the continued affordability of homes for the general public.  At the national level, residential property prices have increased steadily in tandem with economic development and the rise in income levels.  This aggregate growth trend remains largely manageable and has not deviated from the long term trend in residential property prices.  In the more recent period, ...

Referring to previous article "Issuance of New Family Takaful Licenses" on 1st September 2010, many people are skeptical about Great Eastern's (GE) partner -- Koperasi Angkatan Tentera Malaysia (KATM). Given the other 3 new consortium which partner with banks, I am not surprise by those reactions. To recap, the 4 new family takaful licenses: AIA with Alliance Bank Ambank with Friends Provident Fund (UK) ING with Public Bank and Public Islamic Bank GE with KATM KATM , the country's Armed Forces multi-purpose cooperative, is however, no stranger to the insurance industry and it is a substantial shareholder of PacificMas with 16.4% stake. Meanwhile, Pacific Insurance Bhd is a wholly-owed subsidiary of PacificMas. (See picture below to see the GE-KTAM relationship) Why with KATM? KATM has 140,000 members which could be a huge market for GE to tap into. Another reason is that GE has to look into it's agents rice-bowl as well, if GE was to tied up with a local bank. I...