Fund flow will be hampered

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KUALA LUMPUR: The lack of track record in selected industries, coupled with minimal risk appetite of foreign fund managers, will hamper funds flowing into the country, said Asian Institute of Chartered Bankers (AICB) chief executive officer Tay Kay Luan.

“Under the Economic Transformation Programme (ETP), only selected industries have a competitive edge [over others to attract foreign funds] and it is not easy to attract [foreign funds] to the country,” Tay told The Edge Financial Daily in an interview.

The selected industries include animation, green technology, research and development, rubber gloves, palm oil, and oil and gas. Tay noted that other Asean countries can offer what Malaysia possesses, such as political stability and access to cheap raw materials, leading to even stiffer competition to attract foreign funds.

“We are not at the top of our foreign direct investment (FDI) now as compared [with] in the 1980s,” he said.

Tay  said Malaysia continues to lag behind neighbouring countries in terms of total FDI inflows. The country’s net FDI inflows rose 22.2% to US$12.3 billion last year from US$10.1 billion in 2012, according to the World Investment Report 2014 published by the United Nations Conference on Trade and Development. Tay is of the view that the flow of funds into the country must be able to appreciate the country’s high-income concept and able to add to the value chain.

On its part, AICB is undergoing a transformation,  including the establishment of   the Asia Banking School next year. Tay said it will cost about RM20 million to RM25 million to set up the school.

“We found ourselves in need of change because the facilities and infrastructure that we have inherited over the past years are no longer adequate to serve the [current] banking industry,” he said.

AICB provides training for chartered bankers and certifications such as professional credit certification, certificate in internal auditing for financial institutions and so on. Over 1,000 people have enroled for the chartered bankers certification and 3,000 for professional credit.

AICB is organising a risk management conference themed “Bolstering Risk Management Amidst Challenging Landscape” on Wednesday, with The Edge Communications Sdn Bhd as the media partner. The agenda includes discussions on risk rating systems and regulators’ perspective and challenges. Invited speakers include RAM Rating Services Sdn Bhd chief executive officer Foo Sun Yin and BDO regional head of risk advisory services Lim Huck Hai.

The supporting sponsor of the event is Moody’s Analytics and the supporting partners are Islamic Banking and Finance Institute Malaysia, The Malaysian Insurance Institute and The Securities Industry Development Corp.


This article first appeared in The Edge Financial Daily, on November 24, 2014.