Malaysia targets more foreign investments in banking

Malaysia would open up its banking sector to more foreign investment to put the economy back on investors' radar ahead of general elections expected in 2012.

Prime Minister Najib Razak said more licenses would be handed out to foreign financial institutions with specialised skills. In a 10-year blueprint, he promised greater flexibility in letting foreigners hold stakes in lending institutions.

Najib also announced moves to toughen supervision of financial holding companies and create a deeper Islamic finance market in a broad roadmap which largely echoed earlier proposals and contained few details on implementation.

Revitalising the economy is the cornerstone of Najib's transformation plan as he heads into what is expected to be an election year in 2012 although analysts say an illiquid stock market and resistance to reforms highlight the uphill task he faces.

"The financial sector blueprint for the next 10 years reinforces the government's initiatives to drive Malaysia to become a fully developed nation," Najib wrote in the foreword to the plan.

"The financial system will have a key role in spurring new areas of growth, and facilitating our economic transformation."

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