Consolidated TPP Text –Annex III – Schedule of Malaysia

Headnotes

1. Commitments under Chapter 11 (Financial Services) are undertaken subject to the limitations and conditions set forth in these headnotes and the Schedule below.

2. For greater certainty, all financial institutions offering Islamic financial products and services will be subject to the Shariah requirements as determined by financial services regulators in Malaysia.  Shariah requirements may be measures for the purposes of Article 11.11.1 (Exceptions).

3. To clarify Malaysia’s commitments with respect to Article 11.5 (Market Access for Financial Institutions), juridical persons supplying financial services and constituted under the laws, regulations and guidelines of Malaysia, are subject to non-discriminatory limitations on juridical form.Footnote 1

4. For entries in:

Annex III - Section A

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Measures:

Financial Services Act 2013

Islamic Financial Services Act 2013

Money Services Business Act 2011

Guidelines on International Islamic Bank

Guidelines on Establishment of International Takaful Operator

Guideline on Electronic Money

Guidelines on Application for Registration and Operation of Retakaful Operator

BNM Press Statement (Ref. 06/10/10) dated 25 June 2010

Requirements for Operating Remittance Service

Credit Card Guidelines

Capital Markets and Services Act 2007

Licensing Handbook

Description:

Financial institutions supplying financial services in the territory of Malaysia must be constituted as locally-incorporated companies under the laws of Malaysia.

This requirement is not applicable to persons solely carrying out:

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

Most-Favoured-Nation Treatment (Article 11.4)

Cross-Border Trade (Article 11.6)

Level of Government:

Central

Measures:

Financial Services Act 2013

Islamic Financial Services Act 2013

Guidelines on Outsourcing of Banking Operations

Guidelines on Outsourcing of Islamic Banking Operations

Guidelines on Outsourcing for Insurers

Guidelines on Outsourcing for Takaful Operators

Description:

Approval for licensed banking institutions and insurance companies or takaful operators in Malaysia to outsource any of their activities abroad is subject to reciprocal treatmentFootnote 2 by the applicant’s home country.

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

Senior Management and Boards of Directors (Article 11.9)

Level of Government:

Central

Measures:

Section 122 of the Companies Act 1965

Description:

At least two directors of a company incorporated in Malaysia must be ordinarily resident or have principal residence within Malaysia.

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Measures:

Financial Services Act 2013

Islamic Financial Services Act 2013

Description:

The carrying on of a licensed business or an approved business regulated by Bank Negara Malaysia (the Bank) requires a licence by the Minister of Finance or an approval by the Bank, respectively. A licence or an approval will not be granted unless the Minister of Finance or the Bank determines that the application for licence or approval will be in the best interest of Malaysia. In making a determination, the Minister and the Bank will have regard to:

In accordance with Article 11.13 (Transparency and Administration of Certain Measures):

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

National Treatment (Article 11.3)

Level of Government:

Central

Measures:

Financial Services Act 2013

Islamic Financial Services Act 2013

Description:

1. No natural person shall hold more than 10 per cent of shares or interest in shares of a licensed commercial bank, investment bank, Islamic bank, licensed insurance company or takaful operator (“maximum permissible holdings”).

2. The:

requires approval by the Minister of Finance or Bank Negara Malaysia (the Bank), as the case may be. Approval will not be granted unless the Minister of Finance or the Bank, as the case may be, determines that the application will be in the best interest of Malaysia. In making a determination, the Minister of Finance and the Bank will have regard to:

3. In accordance with Article 11.13 (Transparency and Administration of Certain Measures):

Sector:

Financial Services

Sub-Sector:

Banking and other financial services (excluding insurance)

Obligations Concerned:

National Treatment (Article 11.3)

Most-Favoured-Nation Treatment (Article 11.4)

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Measures:

Financial Services Act 2013

Islamic Financial Services Act 2013

Press statement Ref No: 08/11/06 dated 17 August 2011

Circular on Establishment of New Branches by Locally-Incorporated Foreign Banks

Description:

1. In relation to the establishment, closure and relocation of officesFootnote 8 by locally incorporated foreign banks in Malaysia, the following restrictions are applicable:

2. Notwithstanding paragraph 1, locally incorporated foreign banks from other Parties may establish:

3. In relation to the establishment and relocation of offices by locally incorporated foreign Islamic banks in Malaysia, the establishment of physical branches by locally incorporated foreign Islamic banks is subject to a distribution ratio of 1(market centre): 1(non-market centre).

Sector:

Financial Services

Sub-Sector:

Insurance and insurance-related services

Obligations Concerned:

Cross-Border Trade (Article 11.6)

Level of Government:

Central

Measures:

Financial Services Act 2013

Islamic Financial Services Act 2013

Description:

Approval for purchase of insurance or takaful cover for property and liability risks from insurance companies or takaful operators abroad is only granted if such insurance or takaful coverage is not available from licensed insurance companies or takaful operators.

For the purposes of this entry:

This limitation is not applicable for direct insurance of risks relating to:

Sector:

Financial Services

Sub-Sector:

Insurance and insurance-related services

Obligations Concerned:

Cross-Border Trade (Article 11.6)

Level of Government:

Central

Measures:

Financial Services Act 2013

Islamic Financial Services Act 2013

Guidelines on General Reinsurance Arrangements

Guidelines on Takaful Operational Framework

Description:

All licensed general insurance companies and takaful operators in Malaysia must first accord priority to insurance or reinsurance companies and takaful or retakaful operators licensed in Malaysia, followed by those in Labuan, before obtaining reinsurance or retakaful cover from insurance or reinsurance companies and takaful or retakaful operators abroad.

Sector:

Financial Services

Sub-Sector:

Insurance and insurance-related services

Obligations Concerned:

National Treatment (Article 11.3)

Cross-Border Trade (Article 11.6)

Level of Government:

Central

Measures:

Income Tax Act 1967

Description:

Annuity incomes received by policyholders of annuity policies underwritten by domestic-owned life insurers or family takaful operators operating in the territory of Malaysia are exempted from tax.

Sector:

Financial Services

Sub-Sector:

Insurance and insurance-related services

Obligations Concerned:

National Treatment (Article 11.3)

Level of Government:

Central

Measures:

Circular on Voluntary Cessions to Malaysian Reinsurance Berhad

Description:

All licensed general insurance companies operating in Malaysia are required to reinsure 2.5 per cent for all insurance classes with Malaysian Reinsurance Berhad.

In addition, if a licensed general insurance company reinsures a further portion of its underwritten business beyond the percentage specified above, 15 per cent of the remaining portion of business to be reinsured must be reinsured with Malaysian Reinsurance Berhad.

Sector:

Financial Services

Sub-Sector:

Insurance and insurance-related services

Obligations Concerned:

National Treatment (Article 11.3)

Level of Government:

Central

Measures:

-

Description:

Malaysia reserves the right to adopt or maintain any measures in relation to the development of the pension system in Malaysia. Such measures will cease to be applicable three years after the date of entry into force of this Agreement.

Sector:

Financial Services

Sub-Sector:

Banking and other financial services (excluding insurance)

Obligations Concerned:

National Treatment (Article 11.3)

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Measures:

Capital Markets and Services Act 2007

Licensing Handbook

Description:

Only Malaysian nationals are allowed to provide financial planning services through a sole-proprietorship or partnership. 

Sector:

Financial Services

Sub-Sector:

Banking and other financial services (excluding insurance)

Obligations Concerned:

National Treatment (Article 11.3)

Level of Government:

Central

Measures:

Capital Markets and Services Act 2007

Licensing Handbook

Description:

Limitation on foreign shareholding in the capital market

The permissible composition of foreign shareholding in a credit rating agency is limited to 49 per cent. However, this limitation will not be applicable after 31 December 2016.

Limitation on individual shareholding in a stockbroking company

Foreign investors are only allowed to own shares in a stockbroking company as corporations. In contrast, Malaysians are allowed to hold shares in a stockbroking company either as individuals or corporations. Malaysians wishing to own shares as individuals are only allowed to hold up to a maximum of 10 per cent of the total paid-up capital of a stockbroking company.

Sector:

Financial Services

Sub-Sector:

Banking and other financial services (excluding insurance)

Obligations Concerned:

National Treatment (Article 11.3)

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Measures:

Capital Markets and Services Act 2007

Licensing Handbook

Description:

A special scheme brokerFootnote 10 is only allowed to carry out the range of activities as stipulated in Appendix 1 of the Licensing Handbook. Branching is not allowed for a special scheme broker.

Sector:

Financial Services

Sub-Sector:

Banking and other financial services (excluding insurance)

Obligations Concerned:

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Measures:

Capital Markets and Services Act 2007

Licensing Handbook

Description:

Any person wishing to undertake capital market activitiesFootnote 11 requires authorisation by the Securities Commission Malaysia. AuthorisationFootnote 12 will not be granted unless the application is determined to be in the best interest of Malaysia. In making a determination, the Securities Commission Malaysia will give regard to any one or more of the following:

In accordance with Article 11.13 (Transparency and Administration of Certain Measures):

Annex III - Section B

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

Most-Favoured-Nation Treatment (Article 11.4)

Cross-Border Trade (Article 11.6)

Level of Government:

Central

Description:

Malaysia reserves the right to adopt or maintain any measures related to the non-internationalisation of ringgit which include:

Existing Measures:

Central Bank of Malaysia Act 2009

Financial Services Act 2013

Islamic Financial Services Act 2013

Notices on Foreign Exchange Administration Rules 

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

Cross-Border Trade (Article 11.6)

Level of Government:

Central

Description:

The purchase of a financial service by a resident from a financial service supplier abroad shall be subject to the requirements, restrictions and conditions imposed under the Notices on Foreign Exchange Administration Rules.

Existing Measures:

Central Bank of Malaysia Act 2009

Financial Services Act 2013

Islamic Financial Services Act 2013

Notices on Foreign Exchange Administration Rules

Sector:

Financial Services

Sub-Sector:

All

Obligations Concerned:

National Treatment (Article 11.3)

Level of Government:

Central

Description:

Malaysia may grant advantages to one or more development financial institutionsFootnote 15, including but not limited to:

Existing Measures:

-

Sector:

Financial Services

Sub-Sector:

Banking and other financial services (excluding insurance)

Obligations Concerned:

National Treatment (Article 11.3)

Most-Favoured-Nation Treatment (Article 11.4)

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Description:

The establishment or operation of the following:

is subject to the written approval, including the imposition of terms and conditions for approval, either from the Minister of Finance on the recommendation of the Securities Commission Malaysia, or from the Securities Commission Malaysia, where applicable. For greater certainty, this measure will not affect the participation of financial institutions in any such markets, clearing facility or central depository.

Written approval from the Minister of Finance is required before a person (alone or acting in concert with other persons) can acquire voting shares of an exchange holding company of five per cent or more of the aggregate of the nominal amount of all the voting shares in the exchange holding company.

Written approval from the Minister of Finance is required before an exchange holding company can reduce its shareholding in a stock exchange, a derivatives exchange, an approved clearing house or a central depository, to a level below 75 per cent, or such other percentage as may be specified from time to time by the Minister of Finance of the total issued and paid-up capital in the stock exchange, derivatives exchange, approved clearing house or central depository.

Existing Measures:

Capital Markets and Services Act 2007

Securities Industry (Central Depositories) Act 1991

Sector:

Financial Services

Sub-Sector:

Banking and other financial services (excluding insurance)

Obligations Concerned:

National Treatment (Article 11.3)

Market Access for Financial Institutions (Article 11.5)

Level of Government:

Central

Description:

Malaysia reserves the right to provide subsidies or grant advantages to financial institutions that are integral for the orderly functioning and development of the capital market. This includes subsidies and advantages granted in connection with:

Existing Measures:

-

Date Modified: