KUALA LUMPUR, Feb 14 (Reuters) - Malaysia has given foreign-owned insurance companies until April to outline their plans to comply with local shareholding requirements, the central bank said on Thursday.
Bank Negara Malaysia, which regulates insurers, is pushing to enforce a 2009 rule that sets a 70 percent cap on foreign ownership of local insurance businesses. The central bank had issued a directive in 2017 urging insurers to comply.
The bank is expecting insurers to come up with “concrete plans” by early April on how they will comply - via divestments, listings or corporate social responsibility contributions, central bank governor Nur Shamsiah Mohd Yunus told media after announcing Malaysia’s fourth-quarter economic performance.
Cutting back shareholding to increase domestic participation could thrust total deals worth more than $2 billion on foreign players, such as UK-based Prudential, Japan’s Tokio Marine Holdings Inc and Zurich Insurance.
Singapore-based Great Eastern Holdings has opted to contribute 2 billion ringgit ($492 million) to a national health insurance scheme, which the finance minister said was an alternative to complying with the ownership cap.
Foreign insurers have been expanding in Southeast Asian countries, attracted by the strong economic growth, rising middle-class income and lower insurance penetration.
Malaysia’s economy expanded at a faster pace in the final quarter of 2018 at 4.7 percent, ending a year of weakening momentum as resilient exports helped to shore up growth amid a slowdown in global demand from the U.S.-China trade war. ($1 = 4.0670 ringgit) (Reporting by Liz Lee; Editing by Himani Sarkar)