More clarity needed
FINANCE Minister Lim Guan Eng reportedly said this week that Singaporean insurance giant Great Eastern Holdings Ltd has been exempted from a foreign ownership ruling after it pledged a minimum RM2bil contribution to a health protection fund for the Bottom 40 (B40) or low-income segment in Malaysia.
Recall, StarBiz reported in November that the group said that it had decided on the option of making the contribution instead of paring down its stake to comply with the ownership rules.
Great Eastern issued a statement to the Singapore Stock Exchange then, saying “as part of its corporate social responsibility efforts and in line with the objectives of the Malaysian authorities, it has decided on the option to make a contribution to the B40 Health Protection Fund, as announced by the Minister of Finance of Malaysia in his Budget Speech on Nov 2.”
Great Eastern’s move is widely seen as setting a precedent for other foreign players to adopt as an alternative plan to comply with Bank Negara’s ruling of limiting foreign ownership of local insurers to 70%.
Lim, in his Budget 2019 speech, had said that the government is expecting the fund, which will be managed by Bank Negara, to grow moving forward, with further contributions from other insurance companies.
That said, there are a couple of questions - first, do the insurance companies just make monetary contributions or will it be done via the offering of free insurance products?
Secondly, how does the government ensure that the entire B40 and only the B40 benefit?
These are valid questions to which the answers are, presumably, still being worked on.
Whatever said and done, a fund like this should be well-managed and ultimately benefit the intended parties only.