Foreign brokers in Malaysia have just been let off a huge problem. The Securities Commission in that country dictated that the 63 registered brokerages must merge into 15 groups. Jardine Fleming, Merrill Lynch, WI Carr and Deutsche Bank were the foreigners affected, given that they have local joint ventures.
I have calculated that it would cost around $100 million for each of the four to stay independent, because each would have to buy four other brokerages. The deadline for doing so was to be the end of the year.
Not any more. The Securities Commission has now backtracked on its plan, which it only launched in April. Malaysia's brokerages are now being given more time to consolidate and everything has become tremendously vague again.
There may be some sense in going slow - quite a lot of sense, in fact - but the decision to scrap the deadline only serves to reinforce the perception that the Malaysian authorities are quick to map out grand plans, and just as quick to scuttle them.
Only six banks?
Last year, you will recall, Bank Negara came out with its grand vision for six banking groups. There was no shortage of politics in this decision with the likes of Tan Sri Rashid Hussain one of several figures set to be marginalized. More politics intervened - there was an election - andáother interests came to the fore. The plan was torpedoed by the prime minister, who memorably asked why should there be just six banks, and why should Rashid not have a bank. More Malaysian-Chinese banks were included.
Bank Negara (and Finance Minister Tun Daim) then had to reform their grand vision, and a fast foxtrot followed. What the outside world had assumed was a done deal had simply unravelled.
Spot the similarity? Again, a seemingly done deal has been unwound. Can anyone take these plans seriously any more in the future? Has the boy cried wolf once too often?
As a final point, it is interesting that the Securities Commission has backtracked on one of the central planks of its policy. The watchdog had said that individuals who control banks (such as Rashid, Azman Hashim of Arab Malaysian, and Quek Leng Chan of Hong Leong) could not own more than one-fifth of a stock brokerage. This policy has now been cancelled, which means that Rashid, Azman and Quek will not have to make any difficult choices as to whether or not they sell their bank or their brokerage.
This, yet again, is an uncanny repeat of last year's bank fiasco, where these three men were initially going to be excluded from the big six and then, finally, made it into the new, revised big 10.
The most annoyed person in both cases is Daim, who had been the architect of financial sector reform. This reversal of policy is yet another signal that PM Mahathir is using a divide and conquer approach to check Daim's power - a power which has grown exponentially since the financial crisis, but may now be tapering off.
