Smart Investor Malaysia

4 Things We Learned During Day 3 of InvestSmart Fest 2020

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We have been privileged to learn so much from the past three days of panel sessions, fireside chats, and presentations from some of the best minds in Malaysia’s financial industry. As the annual InvestSmart Fest comes to an end, here are four interesting things we learned during the final day:

1. PRS is Gaining Momentum Among Malaysians

According to Husaini Hussin, CEO of the Private Pension Administrator Malaysia (PPA), as of September 2020, there are 470,000 members that have opened a Private Retirement Scheme (PRS) account. In addition, the total Assets Under Management (AUM) now stands at RM4.12 billion. Encouraging numbers for sure, but it remains to be seen if PRS can continue to grow its AUM, especially once the RM3,000 tax relief ends in 2021.

Another encouraging statistic was that only 5,000 members withdrew the RM1,500 allowed as part of the Prihatin Rakyat Economic Stimulus Package introduced as part of COVID-19 relief measures. This is available to PRS members under 55 years old that have opened an account for more than a year. However, the relatively low number of withdrawals suggest that the majority of account holders see the value of keeping their retirement funds untouched unless they absolutely have to.

2. PIDM is Currently Developing a Seamless Payout System

Seasoned investors will know that Perbadanan Insurans Deposit Malaysia (PIDM) protection is free and automatic if you have accounts with a member bank or hold policies with insurer members. The current system mandates repayment to individuals within three months in the event of an member institution failing.

What was interesting to learn was that they are currently in the midst of developing a seamless payout system to make reimbursements as quick as possible. There were no further details offered with regards to this new system during the presentation, but it is heartening to know that PIDM is taking an active approach to improving their services.

3. Digital Asset Exchanges in Malaysia Adhere To Stricter Regulations

Having been granted a license to operate in Malaysia, Luno, SINEGY and Tokenize are required by the Securities Commission Malaysia (SC) to keep a portion of their digital assets in cold storage. That means it is kept in a device that is not connected to the internet, keeping it safe from any potential hack or breach.

On the fiat currency side, a regulated trustee acts as an independent third-party to look after these assets. This makes it impossible for operators to co-mingle company funds and client funds, unlike other digital asset exchanges (DAX) around the world. So rest assured; even if these guys have millions of ringgit in the bank, they cannot run away with it.

It took Luno over six months to get approved by the SC, while it took SINEGY and Tokenize longer before securing approval to operate, and it is easy to see why. Those that invest or trade cryptocurrencies in Malaysia may already know this, but we believe this is great information to those that are not involved in this space. It should give newcomers to cryptocurrency some relief to know that the three licensed DAXs in Malaysia have to live up to more rigorous standards than many other operators around the world.

Which also brings us to our next point…

4. There’s a Limit to Your Cryptocurrency Losses

It was interesting to learn that there are currently circuit breakers built into digital asset exchanges (DAX) in Malaysia, unlike other operators around the world. During a significant market crash, bitcoin and other cryptocurrencies may plunge dramatically but the circuit breakers will ensure that there is a limit to the losses. Of course, this only applies to cryptocurrency that you hold with the regulated DAXs.

This should should offer some comfort to newer traders but with that being said, what is considered a market crash in more traditional asset classes is usually a slight dip in the world of cryptocurrencies. If your risk profile is conservative to begin with, it might not be the best idea to trade or invest in cryptocurrencies, so tread with caution!

All in all, it has been a great three days at InvestSmart Fest 2020 and we have learned a lot. The SC deserves great credit for putting together this event despite the challenges posed by the COVID-19 pandemic. Overall, we are certain this educational event has been very beneficial for those in attendance and we look forward to the next one!

If you missed any of the panel sessions or presentations, you can catch up by watching the recorded videos on their YouTube channel.

Here’s what we learnt on day 1 and day 2.

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