18-03-2002:

Unit trusts want Bank Negara to relax rule on overseas investment
By Sidek Kamiso, 4.32pm

The unit trust industry's current fund size of RM18 billion can grow significantly if Bank Negara allows it to be invested overseas.

Federation of Malaysia Unit Trust Managers President Datuk Abdul Azim Mohd Zabidi said this would enable unit trust fund to diversify their earning base and allow them to expand their portfolios.

"Under the present ruling our growth is limited to the size of the local market," Azim told reporters after the federation's AGM on March 18. He added the size of Malaysia's unit trust industry could grow if they set up dedicated funds for Malaysians to invest overseas.

Azim said FMUTM was still waiting for the central bank's approval on its overseas investment despite having submitted its appeal last year.

Currently, unit trust companies invest only in the local equity and bond markets. Although they are allowed by the Securities Commission to invest a maximum of 10 per cent of their portfolios in the overseas financial market, many did not do so because of Bank Negara's restriction on fund repatriation under the capital control guidelines.

He said Bank Negara could relax the rules and "institutionalise" the expatriation of local trust funds, thus giving the central bank the option to recall the funds if necessary.