Unhelpful regulations and capital market limitations are forcing Malaysia’s wealthy to seek financial services in more favorable environments like Singapore, according to CIMB Group Bhd’s head of private banking.

According to Carolyn Leng, a recent surge of investor interest in emerging market may not help Malaysia’s ambition to become a regional financial center, thanks to its regulatory structure and lack of access to certain offshore products. Compared to Singapore, Malaysia’s private banking industry catering to high net worth individuals is still in its infancy: CIMB became Malaysia’s first ‘full service’ private bank nine years ago, and has recently seen an increase in business despite a slow start. It currently manages RM8 billion (US$2.6 billion) in client assets.

Leng says the financial crisis caused many wealthy people to reconsider the role and loyalties of banks, becoming more interested in personal advisory rather than product-oriented services. To develop the local sector, Malaysian regulators must become “more proactive” in promoting the country’s financial services to prevent millions of dollars leaving the country.

source & article: Reuters