By Danial Dzulkifly
SHAH ALAM, May 2 — Selangor’s plan to acquire a stake in a local bank has been hailed as part of a broader policy shift aimed at building a more sustainable and resilient financial foundation for the state’s development.
Experts say the move, which aligns with the state’s wider economic diversification agenda under Menteri Besar Dato’ Seri Amirudin Shari, signals an effort to reduce reliance on land-related income and strengthen Selangor’s ability to fund long-term socio-economic reforms.
The broader ambition is to create new revenue streams via high-value investments, foster innovation, and promote inclusive development, ensuring Selangor’s growth remains dynamic even as available land further dwindles.
Economist Geoffrey Williams said the plan fits into the wider series of economic and financial reforms introduced under Amirudin’s leadership, suggesting Selangor could even consider establishing a sovereign wealth fund, similar to Sarawak.
“These are significant socio-economic and development reforms spearheaded by the state government, which will greatly improve life for Selangoreans,” he told Media Selangor when contacted.
Under Amirudin’s policy direction, detailed in the First Selangor Plan, the state government outlined a framework to drive sustainable growth over five years to position Selangor as a leading regional economy.
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An exhibit on the First Selangor Plan at the Selangor State Secretariat Building, Shah Alam, on August 2, 2022. — Picture by FIKRI YUSOF/SELANGORKINI[/caption]
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said if executed through state-linked entities such as Menteri Besar Selangor (Incorporated), or MBI, the move could give Selangor an important new source of revenue.
“The way I see it, it is a commercial decision as the state government has its own investment arms like MBI to crystallise such plans,” he said.
“A strategic stake would mean Selangor will be able to enjoy dividends, and, at the same time, offer an opportunity for such banks to be part of the state’s development programmes. It’s a win-win situation for both Selangor and the banks.”
Williams said the acquisition could benefit local businesses, depending on how the bank is managed.
“Taking over a commercial bank in Selangor could help local businesses if the management of the bank offers more favourable terms and better products than competitors to Selangor businesses.”
However, he cautioned the bank against dependence on the state, and emphasised the need for a broader market reach.
“If the bank is purely local to Selangor, it may become over-reliant on state government support. However, if it operates as a Malaysia-wide or regional bank, it could tap into a wider market for long-term growth as a financial institution,” he said.
Similarly, the move could offer an opportunity to revitalise underperforming financial institutions, said Williams.
“The possible acquisition of a small bank could save an underperforming bank and help its investors monetise their investment... A government-linked investment company, for example, might be happy to divest an underperforming asset to the Selangor government,” he said.
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Menteri Besar Dato' Seri Amirudin Shari (fifth from right) looking at the scale model of a project, during the launch of the First Selangor Plan Mid-Term Review, at the State Secretariat Building, Shah Alam, on July 4, 2024. — Picture by REMY ARIFIN/SELANGORKINI[/caption]
Last week, The Edge reported that Selangor is in talks to invest in either MBSB Bank Bhd, Alliance Bank Malaysia Bhd, or AMMB Holdings Bhd (AmBank Group), as part of its strategy to diversify its income base beyond land premiums.
Amirudin was quoted as saying that the move would align with Bank Negara Malaysia’s strict guidelines, and that discussions were underway for the state to explore a stake either directly or through a state-owned entity.
“I believe this is vital to Selangor’s sustainability in the medium- to long-term, especially as land becomes more finite.
“This approach will allow the state to reduce reliance on land premiums through strategic investments, which will provide sustainable revenue, allowing us to channel these returns through longer-term economic policies while reaffirming our commitment to improving Selangorians’ quality of life.”
According to the report, Selangor is eyeing at least a 5 per cent stake in a bank, with discussions already ongoing with MBSB since late last year. MBSB is the only bank headquartered in Selangor.
The move comes as Selangor sharpens its financial ambitions, setting a revenue target of RM2.5 billion for 2025 after collecting RM2.8 billion in 2024.
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Menteri Besar Dato’ Seri Amirudin Shari witnesses the exchange of a collaboration memorandum between Tourism Selangor and GL Play by Gamuda Land, during the Visit Selangor Year 2025 exhibition at the Sultan Salahuddin Abdul Aziz Shah Building, Shah Alam, on February 19, 2025. — Picture by NUR ADIBAH AHMAD IZAM/MEDIA SELANGOR[/caption]
Similarly, MBI aims to achieve RM8 billion in revenue by 2028 under a transformative plan centred on strategic investments, capacity building, and a strong focus on environmental, social, and governance standards.
State subsidiaries contributed RM54 million last year, and Selangor expects future revenue growth to be supported by strategic investments, including a 20 per cent stake in the third port development project in Pulau Carey, which is expected to generate regular dividends.
If realised, Selangor’s banking sector entry would mirror Sarawak’s move last November, when it became the largest shareholder of Affin Bank, with a 31.25 per cent stake, to create stronger financial synergies for its economy.
In addition to its banking ambitions, Selangor is also planning to launch a “super app” this year that will consolidate various state services, including the healthcare platform SELangkah and the digital payment service Wavpay, reflecting a broader drive towards digital and economic modernisation.
