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Malaysia highlights digitalization in financial sector blueprint
Five-year plan outlines priorities for financial inclusion, digital finance and sustainability
Patricia Chiu 27 Jan 2022
Finance minister Zafrul Abdul Aziz and Bank Negara Malaysia governor Nor Shamsiah Mohd Yunus
Finance minister Zafrul Abdul Aziz and Bank Negara Malaysia governor Nor Shamsiah Mohd Yunus

Bank Negara Malaysia (BNM) has launched its five-year Financial Sector Blueprint to guide the country in its journey towards financial inclusion, digital finance and sustainability. 

The strategic plan outlines five priorities for 2022 to 2026. These are funding Malaysia’s economic transformation; elevating the financial well-being of households and businesses; advancing digitalization of the financial sector; positioning the financial system to facilitate an orderly transition to a greener economy; and advancing value-based finance through Islamic finance leadership.

Launching the blueprint at the MyFintech Week 2022, finance minister Zafrul Abdul Aziz says he believes 2022 is a “pivotal recovery year” for the country. “The road ahead will require nothing less than a whole-of-nation approach involving the government, regulators, the private sector, civil society organizations and the financial community," he says. 

Accelerating e-payments

Under the blueprint, the central bank aims to increase e-payment per capita at a compound annual growth rate of higher than 15%, raise insurance and takaful penetration rates to 4.8-5.0% of GDP, and double the number of subscriptions to microinsurance and microtakaful plans. 

On the regulatory side, the BNM says it will enact a consumer credit law and oversight body in the next five years. The regulator will enforce a single licensing regime for financial advisers and financial planners, and explore faster, cheaper and more accessible cross-border payments.

Sustainability-wise, the central bank pledges that more than 50% of new financing will be set aside for green and transitioning activities. It will also work towards the steady growth of alternative finance, which can be channeled to innovative enterprises, and growing VBI-aligned assets. Value-based intermediation (VBI) is a set of guidelines formulated by BNM for the domestic Islamic banking industry.

Market dynamism

During the launch, BNM governor Nor Shamsiah Mohd Yunus says the blueprint is the product of the central bank’s desire to foster greater market dynamism, as a response to the changing needs of the market, as well as the Malaysian people. 

“To this end, the blueprint seeks to align the financial sector with the national aspiration to not only become a high-value-added and high-income economy, but also lay a solid foundation for a more dynamic, inclusive and sustainable development path," Shamsiah says. 

Meanwhile, in a separate panel, Datuk Abdul Rasheed Ghaffour, BNM deputy governor, says the next five years is a time for pushing boundaries.

“It’s a time to truly push the boundaries of finance. This is articulated in the strategies to fund the economic transformation of the country using more non-debt instruments, complementing conventional debt products,” he says. 

Rasheed also highlights that the regulator remains committed to supporting digital players as new players can potentially address gaps in the financial sector.

“Our strategies in the digital space aim to enhance existing pathways such as regulatory sandbox for digital innovation to test, scale and also exit,” Rasheed says, adding that some key focus areas in the coming years will be licensing digital insurers and digital takaful operators.

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