Business

Thursday November 5, 2009

China’s ICBC may get nod for M’sian ops soon

By YVONNE TAN


PETALING JAYA: The world’s most profitable bank, Industrial and Commercial Bank of China Ltd (ICBC), is expected to be issued a banking permit to operate in Malaysia soon.

The approval could be given as early as next Wednesday, coinciding with Chinese President Hu Jintao’s two-day visit to Kuala Lumpur, Singapore’s The Straits Times said yesterday.

Quoting unnamed government officials, the paper said ICBC would get an operating licence and be allowed to open four branches here.

A Bloomberg report said Bank Negara and the Government were completing the approval for ICBC to operate in the country. However, it also reported yesterday that ICBC spokesman Xie Taifeng was “unaware of any pending announcement.”

If and when it materialises, ICBC will be the second Chinese bank to set up operations in the country after Bank of China Ltd, which received its permit in 2000.

In April, Prime Minister Datuk Seri Najib Tun Razak said the Government would issue up to nine new bank and insurance licences between this year and 2011 as part of efforts to liberalise the sector and encourage foreign direct investment.

“The presence of ICBC will support the two-way trade between both countries, there’s a lot of money to be made in trade financing,” said Pong Teng Siew, head of research at Jupiter Securities.

Bilateral trade between Malaysia and China reached US$39.06bil in 2008, an increase of 10.3% compared with 2007.

“China is now Malaysia’s fourth-largest trading partner and fourth-largest export market. Most of Malaysia’s imports come from China. China is also a very important destination for Malaysian investments,” Najib said in June.

Malaysia’s exports to China were growing “rapidly”, Pong said, based on latest unofficial data, noting at the same time that, inadvertently, competition would heat up in the local banking scene with the Chinese bank onboard.

The establishment of ICBC in Malaysia was also a “good step towards” the Government’s intention to increase its revenue from the services sector.

This is in line with its projection of 60% contribution from the services sector to the overall gross domestic product from 55% last year.

ICBC overtook British banking giant HSBC to become the most profitable bank in the world last year after it reported a first-half 2008 net profit jump of 57% to a record 64.5 billion yuan.

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