Mohammad bin Ibrahim: The development of the Malaysian financial markets Opening remarks by Mr Mohammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Persatuan Pasaran Kewangan Malaysia (PPKM) Gala Dinner, Kuala Lumpur, 12 November 2010. *  *  *  Allow me to express my thank you to the organizer, Persatuan Pasaran Kewangan Malaysia, in short PPKM, for inviting me to tonight’s 2010 PPKM Gala Dinner. It gives me great pleasure to deliver the opening remarks. My address will specifically focus on the development of the Malaysian financial markets. The future of the financial markets is of interest to us all here today. I am pleased to note the significant progress that the Persatuan has achieved since its establishment in 1973. It has contributed significantly in representing the interest of the dealer community and in providing feedback and developmental ideas on issues relating to the development of the Malaysian financial markets. PPKM also plays an important role as a bridge to the relevant regulatory authorities. The relationship had been productive to the overall development of our financial market. Indeed, through this cooperation, the Malaysian financial markets have come a long way and have grown steadily in size, breadth and depth over the years. This has received acknowledgement in the recent World Economic Forum’s overall Financial Development Index (the Index refers to three broad areas: Factors, policies and institutions, Financial intermediation and Financial access), where Malaysia is now ranked 17th, up 5 notches from 22nd place previously.

In line with Malaysia’s aspiration to be a leading international Islamic financial hub, flexibility is granted for nonresidents to raise ringgit through issuance of sukuk in Malaysia as part efforts to attract higher level of foreign participation and promote diversity of market players and products in the Malaysian Islamic financial markets. The sukuk market now accounts for more than fifty percent of our bond market and has drawn participation from a wide range of international corporations and multilateral agencies in raising funds and investing in sukuk issuances out of Malaysia. BIS Review 151/2010  3  Myth 5: FEA rules are restrictive on accessibility to ringgit offshore by foreign investors for settlement of their investments in Malaysia Many may not have realised that since 2007, non-residents have been allowed to access ringgit offshore through any appointed overseas branches within the same banking group of the onshore banks to purchase or sell ringgit on a spot or forward basis based on firm underlying commitment for investments in ringgit assets. This was to maximise the potential and seamless opportunities through the widening of international investors’ participation into the Malaysian capital market. As onshore banks, you should capitalise on these opportunities to reap the benefits and at the same time, contribute to the enhancement in the development of the domestic financial market. These FEA rules were also designed to facilitate investment by foreign companies into the real sector. It is our intention that the FEA rules will facilitate and ease foreign investment into the country.