Malaysia aspires to become the next yuan debt hub in the Asean (Association of Southeast Asian Nations) region as the country's trade ties with China continue to strengthen. Malaysia's Second Minister of Finance, Ahmad Husni Hanadzlah, said yesterday that the country was promoting the use of yuan and that its well-developed debt market offered a solid platform for yuan-denominated bonds. "Last year we issued bonds in yuan," Husni said, adding that Malaysia is looking at better ways to use its yuan swap line with China. Malaysia's goal to play a bigger role in the internationalisation of China's currency is part of growing interest among major economies and cities in the yuan business. Taiwan is soon expected to set up its own clearing bank, following in Hong Kong and Macau's footsteps. Singapore and London are vying to be next. The British government has been working with the Hong Kong Monetary Authority to prepare the country as an offshore yuan market. One of Malaysia's largest mobile phone operators, Axiata, last month issued 1 billion yuan (HK$1.22 billion) of yuan-denominated bonds at a coupon rate of 3.75 per cent. This followed state investor Khazanah Nasional's offering of 500 million yuan of Islamic bonds last year. China has become Malaysia's biggest trading partner in recent years, importing products ranging from palm oil to rubber tyres. Malaysia's trade volume with China has increased at an annual pace of 20 per cent in the past two decades, but only about 1 per cent of the total trade is settled in yuan. "We are trying to encourage the use of local currency [and yuan] to protect currency-exchange risks. We feel that it is more stable and will be better for importers and exporters," Husni said. He also said direct investment between the two countries remained strong, adding that infrastructure has been one of the main focuses of Chinese investment in Malaysia.