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Web-only Exclusives November 30, 2000 From Our Correspondent: Hirohito and the War A conversation with biographer Herbert Bix From Our Correspondent: A Rough Road Ahead Bad news for the Philippines - and some others From Our Correspondent: Making Enemies Indonesia needs friends. So why is it picking fights? |
THE LURE OF KUALA LUMPUR
WHO CAN RESIST GOING FOR A $300-BILLION PRIZE? Not Singapore or Australia -- and lately Malaysia. Hong Kong is home to a huge fund management industry. Singapore has been trying to woo away part of the business ahead of the territory's return to Chinese sovereignty in 1997. More fund managers have been setting up shop in the Lion City since last year, when it liberalized the management of the state Central Provident Fund and the country's currency reserves. Australia, however, has yet to attract many companies to Sydney.
Malaysia is the latest suitor. Like Singapore, it is using its national pension scheme, the Employees Provident Fund (EPF), to lure fund managers to its shores. Deputy Prime Minister Anwar Ibrahim, who is also finance minister, told some 400 investment managers and advisers in Hong Kong last week that the government will work to make "foreign institutions choose Malaysia as their regional base." Foreigners who manage their global or regional portfolios out of Kuala Lumpur will be given priority in managing EPF money. The pension fund can now put up to 15% of its $32-billion investment kitty in equity markets.
Another initiative: certain infrastructure projects can now be listed in the stock exchange without the required three to five years of profitability. "This means that builders of power plants, highways and telecommunications infrastructure can raise funds straight away," says Francis Yeoh, CEO of Malaysian contractor YTL. "There will be a flood of new listings that will suck in billions of dollars of foreign funds."
Will the Malaysian bid work? Many fund managers in Hong Kong were lukewarm. The consensus was that Kuala Lumpur must make more concessions. The question of a level playing field was highlighted June 30 when the Kuala Lumpur Stock Exchange issued guidelines giving Malaysian stockbrokers a bigger share of commissions than their foreign counterparts. Anwar later overruled the exchange. He has promised new incentives, which are likely to be announced when he presents the budget in October. Singapore and Australia, not to say Hong Kong, will be listening.
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