Finance in Malaysia

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All of the finance management and policies tasks in Malaysia are formulated and managed by Malaysia Ministry of Finance. Malaysia Ministry of Finance has ensured to sustain and continue the economic growth; effective and prudent financial management and prosperity for the people and the nation Malaysia. Besides, Malaysia enactment of Finance Act 2017 has reduced the corporate tax for the year of assessment 2017 and 2018. As per the Finance Act 2017, the reduce of tax rate would be between 1 and 4 percentage points for companies with significant increase in taxable income for the year of assessment 2017 and 2018. SMEs tax rate is reduced from 19% to 18% which applicable with taxable income up to the first RM500,000. The Act also amended the expansion of withholding tax on service fees and royalties. Malaysian withholding tax laws have to apply a 10% withholding tax to all amounts paid or credited to non-residents in consideration for services, regardless of where services are performed while 10% domestic royalty withholding tax which may be reduced under tax treaties. The Malaysian Finance Association (MFA) was formed through the initiative of a group of finance academicians from various public higher learning institutions in the Kuala Lumpur who feels the need to consolidate effort in promoting awareness and interest in the field of finance. MFA plays an important role in promoting Kuala Lumpur as the regional financial centre. MFA also stimulates public interest in finance related studies; encourages and promotes research and discussion of finance related issues with special reference to Malaysia.

What is Fintech?

Fintech (Financial Technology) is a financial service sector in the 21st century. Any technological innovation in the financial sector includes innovation in financial literacy and education, retail banking, investment and even crypto-currencies like bitcoin (digital currency).

Examples of Fintech are stock trading apps and website, peer to peer lending site like Prosper and Lending Club, promise to reduce rates by opening up competition for loans, global advisory services that provide online portfolio management, all-in-one online personal finance management and budgeting tool such as Mint and Level.  It is  a good opportunity for financial innovation.

There are 4 categories of users:

  1. Business to business for banks
  2. Business to business for bank clients
  3. Business to clients for small businesses
  4. Business to clients for consumers.

Dato’ Muhammad Bin Ibrahim at GIFF 5.0 said “Fintech is challenging the status quo of the financial industry. New business models will emerge. Delivery channels will challenge existing norms. Transaction costs will be reduced. Rather than looking at the Fintech revolution as unwelcoming, financial institutions ought to embrace it as an opportunity”. In that very same speech he also mentioned that 10% to 40% of overall banking revenues could be at risk by 2025 due to the financial technology or Fintech innovations. Having recognized the potential and risks of the sector, Dato’ Muhammad Bin Ibrahim is quick to act and in less than a month of being appointed as the Governor he announced that a regulatory framework for Fintech will be ready by July 2016.

Maybank the largest bank in Malaysia is one of the first to implement online banking. In 2015 Maybank organised the Maybank Fintech 2015 in partnership. Maybank has seen Maybank Fintech as a tremendous opportunity for them to harness the start-ups ecosystem regionally to acquire the best innovative ideas in financial technology. The areas that Maybank focus in 2016:

  • Mobile Banking
  • Payments
  • Lending
  • Distributed Database (Blockchain)
  • Asset Management
  • Humanising Financial Services (Financial Inclusion)
  • Security
  • IOT
  • Islamic Finance
  • Big Data