The land purchase draws public criticism over the need of the central bank to purchase such an expensive piece of land
By NG MIN SHEN / Pic By MUHD AMIN NAHARUL
The review of Bank Negara Malaysia’s (BNM) controversial RM2 billion land purchase will “definitely be completed this year”, said BNM governor Datuk Nor Shamsiah Mohd Yunus.
The land purchase drew public criticism over the need of the central bank to purchase such an expensive piece of land and claims that the proceeds were used to pay 1Malaysia Development Bhd’s (1MDB) debt.
Following the public outcry, the central bank initiated an independent review in August last year, one month after Nor Shamsiah was appointed as the central bank governor.
“It is still ongoing, and it’s undergoing the due process. I need to be fair to all parties involved to ensure that the due process we have in place is complied with,” she said at a media briefing on Malaysia’s fourth-quarter of 2018 (4Q18) GDP performance in Kuala Lumpur yesterday.
The central bank had commissioned a review by an independent party in relation to the purchase of the land contiguous to BNM’s Sasana Kijang complex, known as Lot 41.
It also said “relevant officers of BNM” had opted to take a leave of absence in order to facilitate the internal review.
News reports said a few BNM officials had gone on leave pending the probe. It is not known if the central bank would dispose of the land.
The central bank had purchased the 22.58ha plot from the Ministry of Finance for about RM2 billion, and had then said the land would be utilised for the relocation and development of education facilities.
Proceeds from the land sale were used to pay off part of the 1MDB’s
BNM’s previous governor Tan Sri Muhammad Ibrahim had defended the land deal, claiming that it was conducted as an “arms-length” transaction and that the fair value was determined by an independent private sector valuer. Muhammad resigned as BNM chief in June last year.
Meanwhile, foreign insurers with wholly owned units in Malaysia must submit their plans to comply with BNM’s rule on foreign ownership by early April this year.
Nor Shamsiah said the deadline for compliance will still be decided on a bilateral basis, depending on each company’s method of submitting to the foreign ownership ruling.
“The deadlines are on a bilateral basis, based on their plans as to how they intend to comply with the conditions that they had accepted when they entered into corporate exercises. They need to submit their concrete plan by early April,” she said.
Since June 2017, the central bank has been requesting foreign insurers with fully owned units in Malaysia to reduce their stakes in their subsidiaries, as per Malaysia’s rule capping foreign equity participation of up to 70% in insurance firms and takaful operators.
The previous deadline for the compliance was June 2018.
Nor Shamsiah also said in August last year that the divestment rule is only applicable to insurers that made the initial commitment upon entering the country.
Apart from stake sales to local buyers, another possible option is for insurers to list on the local bourse to dilute their interest.
In November 2018, Nor Shamsiah said the insurance companies could also choose to contribute to the Bottom 40% (B40) National Health Protection Fund — a national health insurance scheme that aims to provide free protection for the B40 group against the top four critical illnesses and up to 14 days of hospitalisation benefits beginning January 2019.
Singapore’s Great Eastern Holdings Ltd has agreed to contribute the initial seed funding of RM2 billion to the fund, which will be managed by BNM.
There are presently 11 locally incorporated conventional insurers and nine locally integrated life insurers operating in Malaysia that are fully owned by foreign firms, including Great Eastern, UK-based Prudential plc and Japan’s Tokio Marine Holdings Inc.
Currently, only Allianz SE’s Allianz Malaysia Bhd and the Manufacturing Life Insurance Co’s Manulife Holdings Bhd are traded on the local bourse.