Malaysia said it will liberalise its financial sector to draw foreign investment as it rolled out its 10-year financial sector blueprint on Wednesday.

"Under our gradual liberalization and more openness in our financial sector... there will be a set of criteria they will fulfill, in terms of prudential aspect of the bank and what they can contribute to the Malaysian economy," Prime Minister Najib Razak said at the launch of the blueprint at the central bank complex, promising greater flexibility in the process.

"I want to see our financial sector playing a key role in the cross-border intermediation of Asia's financial funds, with Malaysia's financial institutions continuing to venture abroad and to replicate domestic success in these new markets," Najib added.

He said the government would allow foreign investors to hold stakes in local banks.

Currently, foreigners are allowed to hold a maximum of 30 percent shares in commercial banks and 70 percent in investment banks and conventional insurers.

The government would also consider granting license to foreign banks in specialized fields where they don't compete with local banks.

The financial sector reforms are outlined in the 10-year blueprint ahead of a national election that is widely speculated to come by mid-2012.

Najib maintains the economic growth forecast for this year and next at five percent, barring any global catastrophic downturn.

He said the country expects its financial sector to hit six times the Gross Domestic Product by 2020 from 4.3 times currently.

Meanwhile, he said the country will not internationalize the ringgit currency due to the instability of the foreign exchange market.

Xinhua