More clar­ity needed

The Star Malaysia - StarBiz - - Short Position -

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.

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