Malaysia still has rooms for foreign banks to invest

There are still rooms for foreign banks to invest in Malaysia, while the Malaysian government is looking at the matter in an open manner, said Malaysian Second Finance Minister Ahmad Husni Hanadzlah on Tuesday after opening the Seventh Kuala Lumpur Islamic Finance Forum.

According to Ahmad Husni, many foreign banks are interested in setting up branches in Malaysia.

"Everytime I go overseas, feedback from foreign banks have demonstrated their interests in establishing branches here," said Ahmad Husni.

It was reported in June that Bank Negara Malaysia, the country' s central bank, will issue five new commercial banking licences to foreign banks in line with the liberalization of the banking sector.

Ahmad Husni said the total number of licences to be issued would be determined by the bank after serious studies.

Meanwhile, Ahmad Husni said that the bank would closely monitor the market conditions in Malaysia to determine if the interest rates needed to be adjusted.

Declining to confirm the possibility of interest rate adjustments, Ahmad Husni said the bank would normalize the rates accordingly when necessary.

The central bank raised the Overnight Policy Rate three times this year by 25 basis points each time to 2.75 percent.

Given the possible slowdown in economic growth in the second half of 2010, as warned by the Malaysian Prime Minister Najib Razak, economists widely believe that the next OPR hike will only take place in 2011.

Source: Xinhua