Malaysia may allow full foreign ownership of Islamic insurance firms

Malaysia may allow full foreign ownership of Islamic insurance firms - minister

	Published : Fri, 19 Oct 2007 08:00 By : Agencies Print this Story

KUALA LUMPUR (Thomson Financial) - Malaysia may allow foreign players to set up wholly owned Islamic insurance companies or takaful

in a bid to cement its position as the region's leading Islamic financial hub, Deputy Finance Minister Awang Adek Hussin said Friday.

Awang Adek said as part of the government's efforts to boost growth in the Islamic financial markets, it may consider granting licenses to takaful operators, that are 100 percent foreign owned, to set up operations in Malaysia.

'We are willing to give licenses as we did for Islamic banks...the government will also consider Islamic insurance companies,' Awang Adek told reporters at a news conference.

Three foreign Islamic banks, including Gulf-based Kuwait Finance House and Saudi Arabia's Al Rajhi Bank, were granted licenses to operate 100 percent foreign-owned standalone Islamic banks in Malaysia since 2004.

Last year, the Malaysian central bank granted licenses to four foreign-local consortia to establish takaful services in Malaysia. But foreign shareholdings in these joint ventures are capped at 49 percent.

Awang Adek said as the global takaful industry is relatively small in comparison to the conventional insurance market, it may be more viable for foreign investors to participate in the local market through ventures with Malaysian partners.

'The more possible way is perhaps through joint ventures. I think this will be the future direction, where investors bring in capital and form tie-up with the Malaysian parties which have the expertise, to do takaful business here in Malaysia as well as overseas,' he said.

Syarikat Takaful Malaysia Bhd, the country's oldest takaful operator, said this month it has obtained the central bank's approval to start negotiations with Abu Dhabi-Kuwait-Malaysia Strategic Investment Corporation.

Takaful Malaysia managing director Hassan Kamil has said the company may partner with

investors from the Middle East and may sell a stake to potential investors.

The total assets of the takaful industry stood at 7.6 billion ringgit as of end-June, representing 6.3 percent of the asset size of the larger insurance industry.

(1 US dollar = 3.36 ringgit)

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Malaysia may allow full foreign ownership of Islamic insurance firms - minister