The issues raised by both writers has merit. It also raised the issue of governance and transparency practised by the finance ministry and Bank Negara Malaysia (BNM).
To recap, BNM’s policy limits foreign shareholding of foreign insurance companies and they are required to dispose of 30% of their shareholding to domestic players by 2017. This affects not only Great Eastern (GE) but also several other insurance companies. BNM has been weak in its approach and has failed to get the companies to comply.
As for GE Malaysia, they struck a deal with BNM where they were allowed to retain the 100% in exchange for paying BNM RM2 billion, which is derived from the value of profit forecast for the next 10 years.
As a nation, the people have been shortchanged in this deal. There has been no money transfer outright but about RM400 million is allocated annually by GE to support the critical illness insurance scheme for the B40 where they also earn administrative fees. It is not clear whether there is any sharing of the surplus from the technical results between GE and the trust fund.
BNM’s failure to get GE and other foreign companies to share their shareholding means that it reduces the economic multiplier potential for the nation. Many governments in the region actually insist that foreign companies list their shareholding on their domestic bourses.
This should be the route that BNM should have taken instead of making a deal with GE that benefits GE largely. Until today, BNM has not provided a clear explanation why GE has the exclusive right to the MySalam programme and why there were no tenders called from the industry players.
In reality, the RM2 billion deal is a lousy deal for Malaysian taxpayers. It does not create wealth among Malaysian. It has zero economic multiplier value. This is a question that BNM and the finance ministry must answer the Malaysian public.
Had the RM2 billion been allocated as seed funding for the National Healthcare Financing Scheme, it would have benefitted millions and would have put the health ministry on a startup footing to develop the National Health Insurance programme.
Before the money runs out, I urge the finance ministry, BNM and various stakeholders to review what has been done and to do the right thing for the people and the national economy.
Dr Mohamed Rafick Khan is an FMT reader.
The views expressed are those of the author and do not necessarily reflect those of FMT.