KUALA LUMPUR (Mar 26): Bank Negara Malaysia (BNM) has not issued any direct instruction to the takaful industry to repatriate its overseas investment income in order to help strengthen the ringgit, according to the Malaysian Takaful Association (MTA).

MTA chief executive officer Mohd Radzuan Mohamed said this may be because takaful operators generally do not have a significant overseas exposure in their investment portfolio.

"So far from the association’s point of view, we have not received any direct instruction from BNM for us to repatriate [overseas investment income]," he said at a media briefing on Tuesday.

"Most of our assets are placed locally in Malaysia. Typically, we use overseas funds to spread our risk so that in the long run our asset and liability is much more balanced. It's just a matter of diversification rather than really looking for profit making," Mohd Radzuan added.

On March 20, BNM said it found rising foreign currency holdings among Malaysian corporates, exporters and importers, resulting in an imbalance that weakened the ringgit in the short run.

On top of the call to state-owned companies, the central bank “strongly urged” Malaysian businesses from all sectors to repatriate their overseas investment income and convert export proceeds back to the ringgit to support efforts to manage short-term pressure on the local currency.

Then on Monday, the Federation of Malaysian Manufacturers revealed that BNM also held an engagement session with chambers of commerce, business councils, trade associations and chief executives of Malaysian companies to tell them to defer new investments and hedge investments abroad as part of a “whole-of-nation approach” to help prop up the ringgit.

Takaful fund assets grew 11.6% in 2023

Earlier, MTA chairman Elmie Aman Najas said takaful fund assets expanded 11.6% year-on-year to RM55.7 billion in 2023, outpacing that of the overall insurance sector.

Meanwhile, a total of RM8.74 billion in benefits and claims was distributed by takaful operators in 2023, representing a 24.4% increase compared to 2022, Elmie said.

Family takaful accounted for 77.69% of that, or RM6.79 billion, while general takaful paid out RM1.95 billion.

"The importance and benefits of takaful are gaining greater traction, as evidenced by the consistent inforce certificates following a strong year in new certificates in the previous year.

"This signifies that participants continue to fulfil their contribution obligations, indicating a sustained awareness of financial planning and retention among participants. The industry-wide awareness initiatives are translating to tangible outcomes, with takaful products continuing to be a preferred option,” Elmie said.

Looking ahead, he said MTA expects the takaful industry to maintain steady momentum in 2024, reflecting the forecast for Malaysia’s overall economic expansion.

In line with this, MTA announced its four-year strategic transformation plan to further elevate the takaful industry, named Hijrah27.

While Hijrah27 is still undergoing finalisation, MTA envisions that it will provide impetus to and subsequently maintain the growth momentum of the takaful industry.

Under the strategic transformation plan, Elmie said there will be continued emphasis on collaborations, comprehensive awareness, products and services innovation and expansion of takaful’s role in the whole ecosystem to widen protection to the unserved and underserved, to ensure every Malaysian has a safety net.