81pc of adults have bank­ing ac­counts in 2014, way above global level of 61pc, says World Bank

New Straits Times - - Business | News -

RUPA DAMODARAN KUALA LUMPUR bt@me­di­aprima.com.my

THE World Bank has given the thumbs-up for Malaysia’s fi­nan­cial in­clu­sion, say­ing it has achieved one of the high­est lev­els in South­east Asia and should be an ex­am­ple for other coun­tries to fol­low.

The Global Fin­dex Data­base of the World Bank, which col­lects data on fi­nan­cial in­clu­sion world­wide ev­ery three years, re­vealed that 81 per cent of Malaysia’s adults had an ac­count in 2014, way above the global level at 61 per cent.

Sec­ond Fi­nance Min­is­ter Datuk Seri Jo­hari Ab­dul Ghani said Malaysia was hon­oured with the find­ings of the re­port, which stated that the per­cent­age of bank­ing cus­tomers with ac­tive de­posit ac­counts had risen to 92 per cent from 87 per cent six years ago.

“This achieve­ment is due to strate­gic ini­tia­tives that we have en­gi­neered over the years. Among oth­ers, we have in place in­fra­struc­ture readi­ness, tar­geted mi­cro-fi­nanc­ing ini­tia­tives, fa­cil­i­ta­tive SME (small and medium en­ter­prises) fi­nanc­ing ecosys­tem, highly de­vel­oped Is­lamic fi­nan­cial ar­chi­tec­ture and the estab­lish­ment of agent banks,” he said in a key­note ad­dress at the launch of the World Bank’s re­port on “Malaysia Ex­pe­ri­ence in Fi­nan­cial In­clu­sion” yes­ter­day.

In the re­port, the World Bank said it was due in part to poli­cies by tak­ing ad­van­tage of mo­bile phones and bank­ing agents to ex­pand ac­cess.

The re­port was launched at the Global Sym­po­sium on Mi­cro­fi­nance.

Jo­hari said Malaysia had also done well in terms of fi­nan­cial ac­cess points at the district and sub-district lev­els with new record highs.

As it stands, all 144 dis­tricts and 97 per cent of the 886 sub­dis­tricts with a pop­u­la­tion of at least 2,000 now have ac­cess to es­sen­tial fi­nan­cial ser­vices.

“This ex­pan­sion in the num­ber of ac­cess points na­tion­wide pro­vides 99 per cent of Malaysians with con­ve­nient ac­cess to safe, re­li­able and af­ford­able fi­nan­cial ser­vices.”

On aver­age, for ev­ery 10,000 adults, there are 4.7 bank branches and agent banks, 4.7 au­to­mated teller ma­chines and 2.2 cash de­posit ma­chines na­tion­wide.

In terms of tar­geted mi­cro-fi­nanc­ing ini­tia­tive, var­i­ous schemes have been of­fered by fi­nan­cial in­sti­tu­tions and mi­cro­fi­nance in­sti­tu­tions such as Na­tional En­tre­pre­neur Group Eco­nomic Fund (Tekun).

“These schemes were de­signed to en­gen­der in­clu­sion by elim­i­nat­ing bar­ri­ers for the un­banked and un­der­banked seg­ments of the so­ci­ety such as the poor and women to have ac­cess to mi­cro­cre­dit as well as to pro­vide in­creased ac­cess to fi­nanc­ing for mi­cro en­ter­prises.”

Jo­hari added that the fi­nan­cial in­clu­sion agenda was also sup­ported by a fa­cil­i­ta­tive fi­nanc­ing ecosys­tem for SMEs, where var­i­ous fund­ing and schemes were of­fered by sev­eral en­ti­ties, in­clud­ing de­vel­op­ment fi­nan­cial in­sti­tu­tions (DFIs), Cor­po­rate Guar­an­tee Cor­po­ra­tion (CGC), Bank Ne­gara Malaysia and non-fi­nan­cial in­sti­tu­tion lenders.

As at 2015, SME fi­nanc­ing ap­proval rate ex­ceeded 80 per cent and had grown by 14 per cent over the last three years.

Cur­rently, 96 per cent of the fi­nanc­ing, or RM274.5 bil­lion, were from fi­nan­cial in­sti­tu­tions and 44 per cent of ap­provals were given to new cus­tomers.

Is­lamic fi­nance is no longer a niche seg­ment in the do­mes­tic fi­nan­cial sys­tem as it ac­counted for 28 per cent of to­tal bank­ing sys­tem as­sets last year and close to 60 per cent of to­tal size of the cap­i­tal mar­ket.

Agent banks also had an im­pact in in­creas­ing ac­cess to fi­nan­cial ser­vices, par­tic­u­larly in the ru­ral ar­eas.

At its core, agent bank­ing en­abled con­sumers to ob­tain bank­ing ser­vices by li­censed fi­nan­cial in­sti­tu­tions through third-party agents such as re­tail out­lets and post of­fices.

As of last year, 7,984 agent banks were es­tab­lished na­tion­wide, with over 25,700 new ac­counts. The vol­ume of fi­nan­cial trans­ac­tions con­ducted through agent banks also rose from three mil­lion trans­ac­tions as at end2012 to 100 mil­lion as of last year with US$1.9 bil­lion (RM8.18 bil­lion) in value.

Most of these trans­ac­tions in­volved bill pay­ments (60.8 per cent; US$1.2 bil­lion) and cash de­posits (26.0 per cent; US$0.5 bil­lion).

“The level of fi­nan­cial in­clu­sion in Malaysia in 2015 based on the Fi­nan­cial In­clu­sion In­dex is rel­a­tively high at 0.90 with 1.00 re­flect­ing full in­clu­sion.

“How­ever, there are ar­eas | that we have to fo­cus on and in­ten­sify our ef­forts ur­gently, namely fi­nan­cial lit­er­acy and fi­nan­cial health.

“Cur­rently, there are still eight per cent of un­banked pop­u­la­tion in Malaysia and we hope to re­duce this to five per cent by 2020.”

The gov­ern­ment re­mained com­mit­ted to ex­pand the level of fi­nan­cial in­clu­sion to a new height and would utilise In­ter­net and tech­nol­ogy as new en­ablers, in ad­di­tion to other ex­ist­ing tools.

Non-banks ser­vice providers such as e-money is­suers and money re­mit­tance ser­vices may also play a prom­i­nent role to sup­port the fi­nan­cial in­clu­sion agenda.

For en­ter­prises, the ad­vent of tech­nol­ogy and shar­ing econ­omy has a huge po­ten­tial in pro­vid­ing al­ter­na­tive source of fund­ing.

For in­stance, via the In­vest­ment Ac­count Plat­form (AIP), funds from in­vestors can be chan­nelled to fi­nance vi­able ven­tures, in­clud­ing SMEs.

“We have seen ma­jor im­prove­ment on the ex­pan­sion of In­ter­net bank­ing and mo­bile bank­ing. As at end of last year, the num­ber of In­ter­net bank­ing sub­scribers in­creased to 22.8 mil­lion rep­re­sent­ing 71.9 per cent of the to­tal pop­u­la­tion (2011: 11.9 mil­lion), while the num­ber of mo­bile bank­ing sub­scribers rose to 8.9 mil­lion (2011: 1.6 mil­lion).”

Mean­while, Bank Ne­gara gov­er­nor Datuk Seri Muham­mad Ibrahim said more than 75 per cent of busi­nesses in Malaysia are mi­cro en­ter­prises, and 40 per cent of house­holds earn in­comes be­low US$850 (RM3,650) a month.

In Malaysia’s ex­pe­ri­ence, sim­ple changes in ap­pli­ca­tion pro­ce­dures and faster pro­cess­ing times have en­cour­aged a higher take-up of mi­cro fi­nance.

Flex­i­ble re­pay­ment sched­ules also en­abled bor­row­ers to bet­ter man­age ir­reg­u­lar cash­flows, while con­tin­u­ing to meet their re­pay­ment com­mit­ments.

Muham­mad added that Bank Ne­gara was work­ing to ex­pand the of­fer­ing and take-up of mi­cro in­sur­ance so­lu­tions un­der a multi-pronged strat­egy that com­bines tai­lored prod­ucts of­fered by in­sur­ance com­pa­nies and de­vel­op­ment fi­nan­cial in­sti­tu­tions, and a uni­ver­sal prod­uct op­tion avail­able through low-cost mo­bile and other chan­nels.

This ex­pan­sion in the num­ber of ac­cess points na­tion­wide pro­vides 99 per cent of Malaysians with con­ve­nient ac­cess to safe, re­li­able and af­ford­able fi­nan­cial ser­vices. DATUK SERI JO­HARI AB­DUL GHANI

Sec­ond Fi­nance Min­is­ter


World Bank coun­try di­rec­tor for South­east Asia Ul­rich Zachau (sec­ond from left), Sec­ond Fi­nance Min­is­ter Datuk Seri Jo­hari Ab­dul Ghani (cen­tre), Bank Ne­gara Malaysia gov­er­nor Datuk Seri Muham­mad Ibrahim (sec­ond from right) and of­fi­cials at the launch of the World Bank’s ‘Malaysia Ex­pe­ri­ence in Fi­nan­cial In­clu­sion’ re­port in Kuala Lumpur yes­ter­day.

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