Foreign insurers, which have repatriated about MYR16.5 billion (US$4.25 billion) between 2008 to 2017 in the form of dividends, cannot choose alternative initiatives, given their promise to comply with minimum shareholding requirements, Bank Negara Malaysia (BNM) said yesterday. This was the second time in as many months the BNM has insisted that foreign insurers abide by their divestment pledges.
Despite a long presence in Malaysia, foreign insurers have not contributed as much as had been expected to the development of the domestic insurance industry, reports the Bernama news agency citing the central bank.
For example, there has been minimal improvement in insurance penetration, compounded by the lack of breadth in products (especially for lower income segments) and a concentration of high-cost distribution models, BNM says in a statement.
"The Bank welcomes any initiative by insurers that would benefit the Malaysian economy and the general public, as expected of any ordinary responsible corporate citizen that operates in the country," it said in reply to a report that foreign insurance companies could set up healthcare trusts as an alternative to executing their commitment to keep their shareholdings in local insurance ventures to a maximum of 70% by 30 June. BNM says though that it has not received such proposals.
The Bank stressed that the agreed maximum foreign shareholding level was a commitment that had been given by the foreign shareholders when they were granted a licence to operate in the country.
A licence would not have been granted if the commitments had not been given, BNM says.
In March, the central bank had issued a terse statement which insisted that foreign insurers honour their commitment. The statement also said, “Foreign shareholders of insurers were allowed to operate in Malaysia based on their promise and commitment including maintaining specified levels of domestic shareholding within agreed timelines.”