MPs urge Malaysia to establish a single regulator for non-bank financial institutions to strengthen oversight, governance and financial stability
KUALA LUMPUR: Member of Parliament Aminolhuda Hassan (PH-Sri Gading) has called on the government to establish a single regulator and place the largest non-bank financial institutions (NBFIs) in Malaysia under its oversight.
He said the major NBFIs include the Employees Provident Fund (EPF), Permodalan Nasional Bhd (PNB), the Retirement Funds Incorporated (KWAP), the Armed Forces Fund Board (LTAT), and Tabung Haji (TH).
He noted that at present, the country does not have a single authority responsible for prudent supervision, systemic risk assessment, and governance oversight of the non-bank financial sector.
“The establishment of this (single regulator) is important because these institutions play a vital role in the country’s financial system, as their investments have implications for the capital market, government financing, retirement security, and the national economy’s resilience.
“Unlike the banking sector, where supervision is centralised under Bank Negara Malaysia (BNM), the non-bank financial sector remains subject to varying supervisory frameworks,” he told the Dewan Rakyat during the debate on the Royal Commission of Inquiry’s (RCI) report on TH during a special Parliamentary sitting today.
Meanwhile, Datuk Dr Radzi Jidin (PN-Putrajaya) also proposed that the government formulate a clear and comprehensive regulatory framework for NBFIs, including their own acts and regulations, as well as supervision by relevant ministries and institutions.
“Currently, we do not have a single clear and comprehensive regulatory framework for NBFIs. Instead, each institution has its own act and falls under the supervision of different agencies and ministries.
“For example, the Prime Minister’s Department supervises TH, the Ministry of Defence supervises LTAT, the Ministry of Finance supervises EPF and KWAP, the Ministry of Higher Education supervises PTPTN, and PNB is placed under the Yayasan Pelaburan Bumiputra chaired by the Prime Minister,” he added.
Thirty-nine Members of Parliament participated in the debate during today’s special sitting.
On July 29, the 211-page RCI report was made public, containing various findings about weaknesses in the management and operations of the institutions concerned for the period 2014 to 2020.
The RCI report proposed 25 recommendations for improvements, 75 per cent of which had been implemented by TH as of July 30.
The government announced the establishment of the RCI in 2021, followed by the appointment of RCI members on Jan 20, 2022. The commission’s report was subsequently submitted to the Yang di-Pertuan Agong on Aug 30, 2022.
