Malaysia’s central bank, Bank Negara Malaysia, will open the country’s legal market to foreign law firms as early as next year.
The move, which will see Malaysia permit firms to offer legal advice on matters in the Islamic banking arena only, comes as the country’s government continues its push for the nation to become a global Islamic finance hub.
“Bank Negara is looking at inviting three to five foreign firms to apply for licences to operate here,” said Ahmad Lutfi Abdull Mutalip, a partner at Malaysian-based Azmi & Associates.
“There may be more firms as we’ve already had some foreign firms expressing interest,” he added.
The central bank, which is currently preparing draft legislation on the back of the proposal, is proposing to amend Malaysia’s Legal Profession Act to permit the entry of foreign firms. The bank will also set up a committee to review all applications made.
Lutfi said: “The sevenmember committee is to consist of representatives from the attorney general’s office, Bank Negara and the local Bar Council.”
Azmi & Associates senior partner and member of the legislative review committee for Islamic banking in Malaysia, Azmi Mohd Ali, said that there were three key conditions that will be imposed on foreign firms seeking to set up in Malaysia.
“Licensed firms will be able to offer legal advice on Islamic bond issues only,” he said. “And these have to be non-ringgit-denominated bonds.
“The firms will also need to open an office in Kuala Lumpur.”
Firms that are active in the Malaysian Islamic finance scene include Norton Rose, which has one of the largest Islamic banking practices, and Clifford Chance, which last year advised on a pioneering $8.7bn (£4.22bn) exchangeable sukuk for the Malaysian government.
The news comes on the back of escalating pressure from the US in its Free Trade Agreement negotiations with the Malaysian government to fully liberalise the legal sector.