Great Eastern Holdings (GEH) has announced that it had decided to make a contribution to the B40 Health Protection Fund as announced by the Minister of Finance of Malaysia in his Budget Speech on 2 November 2018.
In a statement lodged with the Singapore stock exchange on 9 November, the company said that the decision is part of its corporate social responsibility efforts and in line with the objectives of the Malaysian authorities.
This statement followed one on 5 November in which GEH said that it was in discussions with the relevant authorities in Malaysia on possible options relating to the satisfaction by its wholly owned Malaysian subsidiary, Great Eastern Life Assurance (Malaysia) [GELM] of the prevailing foreign ownership requirements applicable to insurance companies in Malaysia.
Such options include, inter alia, GELM making a certain contribution to the B40 Health Protection Fund, which would be for Malaysians in the low income category.
“Details are being finalised with the relevant parties in Malaysia,” said the GEH's statement yesterday, adding that the relevant disclosures would be made at the appropriate time.
Malaysia's Minister of Finance Lim Guan Eng in his Budget Speech announced that GELM will contribute initial seed funding of MYR2bn ($478m) to the health protection fund. The scheme would provide free protection against top four critical illnesses starting 1 January 2019.
The contribution is seen as an alternative solution to a requirement by Bank Negara Malaysia for foreign ownership of local insurers to be capped at 70%. Several foreign insurers still hold 100% of their local units and have been making efforts to try to resolve the issue. The 30 June deadline for compliance has lapsed. In June, Bank Negara said that it would “keep engaging insurers on their plans”.
Great Eastern’s decision is seen as setting a precedent for other foreign insurers that have yet to meet the 70% cap. Finance Minister Lim had also said that the Malaysian government is expecting the fund, which will be managed by Bank Negara, to grow, with further contributions from other insurance companies.