Malaysia woos foreign investors

The Malaysian PM is liberalising the economy to try to increase investment

The Malaysian government has eased restrictions on foreign investors wanting to buy into the country's financial sector.

Limits on stakes foreign owners could take in Malaysian insurance and investment banks have been relaxed.

It means foreign investors can increase their holdings in these sectors from 49% to 70%.

Rules about ownership of other parts of the economy have already been liberalised to woo foreign investors.

However, limits on foreign ownerships of commercial banks are being kept at 30%.

The Malaysian Prime Minister Razak Najib said: "These liberalisation measures are in line with the government's initiatives to promote structural change within the economy and diversify sources of growth."

Investment destination

Last week, a requirement for Malays to own a 30% stake in some sectors of the country's service economy were scrapped.

The rules had meant any foreign investor had to find a Malaysian partner before going into businesses in sectors such as health, tourism and transport.

"The combination of the services sector changes and financial liberalisation will encourage potential investors to look more closely at Malaysia as an investment destination in time," said Robert Prior-Wandesforde, economist at HSBC in Singapore.

The Malaysian economy, which is heavily dependent on manufacturing, has been hit by the global downturn.

Last month, the government unveiled a 60bn ringgit ($16.27bn; £11.7bn) economic stimulus plan as it sought to stave off a deep recession. The sum was equivalent to 9% of the country's economic output.