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Malaysia regulator lets private retirement schemes invest in foreign markets, gold ETFs

By Asia Asset Management  
February 27, 2020

Malaysia’s securities regulator has relaxed investment rules for private retirement schemes (PRS), including allowing conservative funds to invest in foreign markets and in gold-backed exchange-traded funds (ETFs).

Securities Commission Malaysia (SC) says the measures will help PRS members grow their savings and bolster the industry’s competitiveness.

The PRS is a voluntary long-term savings and retirement scheme set up by the SC in 2012.

“These liberalisation measures were adopted after a robust review process undertaken by the SC to encourage PRS members to grow their investments," SC Chairman Syed Zaid Albar says in a statement on February 24.

He says the PRS offers Malaysians “an alternative channel to supplement their retirement savings” and that the liberalised investment rules are to “enhance the competitiveness of the industry”.

The move will benefit PRS contributors because they will no longer be confined to mainstream stocks and bonds, according to Chong Lee Choo, director of innovation lab and alternative investment at Kuala Lumpur-based Affin Hwang Asset Management.

“Gold has long been referred to as a storage of value, and the liberalisation of the guidelines couldn’t have come at a more apt time given the uncertainties that global financial markets are faced with,” Ms. Chong tells Asia Asset Management.

“The liberalisation of the guidelines not only provides investors with broader opportunities, but also helps shine the light on the domestic ETF market,” she adds.

There are currently eight PRS providers and more than 455,000 members nationwide. The PRS industry had 3.5 billion ringgit (US$825.16 million) of assets as of end-2019.

Meanwhile, the SC says PRS providers will now be required to gradually move members into a less risky fund as they grow older, and in line with their risk tolerance.

"This will help to reduce the market risk exposure for members who opt for default funds that are matched against their age," the regulator says.