Australian financial services heavyweights such as IAG, Macquarie Bank and ANZ banking group are poised to enter the Malaysian market following the free trade agreement just signed between the two countries.
Australian Services Roundtable’s executive director Andrew McCredie said investment banks and direct insurance companies could now own 70 per cent of Malaysian companies, a “significant build” on the previous 30 per cent limit.
The agreement, Malaysia-Australia Free Trade Agreement (MAFTA), gives Australian financial services a much greater opportunity than the wider AANSFTA (ASEAN Australia New Zealand Free Trade Agreement) under which the 30 per cent limit was negotiated.
McCredie said MAFTA was a big step forward for Australian companies because “Malaysia had been a closed shop. Now we can offer financial services there”.
“It’s not only good for financial services,” he said.
“It’s good for other people as well. For example, an SME [small and medium enterprise] owner will be able to do their banking easily in Malaysia now.”
IAG managing director Mike Wilkins said IAG had just signed a conditional agreement to buy Kurnia Insurans (Malaysia) Berhad (Kurnia) through IAG’s Malaysian joint venture business, AmG Insurance Berhad (AmG).
Most trade in services, McCredie said, took place through investment – although international tourism and education were exceptions.
“This is because, for legal or practical reasons, a commercial presence is commonly required to deliver services overseas,” he said.
“For this reason, investment barriers are therefore key barriers to the services trade, with all the implications for growth via overseas markets and achieving economies of scale that implies.”
In addition to financial services, Malaysia has lowered the hurdles for Australian professional services wanting to expand into this market of 28 million people.
Through MAFTA, in accounting, auditing and bookkeeping services, Malaysia would now allow 100 per cent ownership by an Australian entity. This would exceed the 49 per cent to which Malaysia had previously committed in AANZFTA.
In management consulting services, Malaysia through MAFTA would allow 100 per cent ownership by an Australian entity in management consulting services (excluding financial management consulting), and majority foreign ownership for other management consulting services.
This level of commitment was higher than the 70 per cent to which Malaysia had previously committed in AANZFTA.
In taxation services, Malaysia would allow 51 per cent ownership by an Australian entity (40 per cent previously under AANZFTA).
