While the Asian regional economies have common threads that prevail across the region, the economies are generally diverse in their economic activities. While there are areas of competition, there are trends towards increasing specialisation and complementarities. These structural shifts arose from new technologies, new demand patterns and new production organisation structures. In essence, there is a movement from bilateral inter-regional trade flows to a more fully developed intraregional division of labour incorporating all phases of production and markets. This has led to greater optimising of the comparative advantage of the region. Finally, there has been an intensification of regional co-operation in the aftermath of the Asian financial crisis. There has been a high level of financial co-operation among the Asian economies. Co-operation has been in the area of enhanced regional surveillance, standardisation of systems and documentation, regional capacity building programmes and regional swap facilities. This strengthened co-operation enhances the foundations for realising the potential that the region possesses. Ladies and gentlemen, In a world where uncertainty has become a permanent feature of the environment, the challenge before us is to be able to increase our tolerance level to the shocks and changes that may occur. Building tolerance levels involves enhancing our capacity, strength and resilience to cope with the changed environment. Precautionary measures can be taken to reduce the risks and vulnerabilities. Despite uncertainties and unstable conditions, initiatives can be taken to achieve sustainable performance.

Strategies therefore focused on introducing reform measures to strengthen the banking sector and develop and enhance alternative sources of financing. The objective is to develop an intermediation structure that will facilitate an economic transformation toward a more diversified economy, namely: ·  Develop the domestic bond market;  ·  Develop venture capital industry to support new growth areas such as the ICT and bio-technology sectors;  ·  Enhance the framework for financing the small and medium-sized enterprises or SMEs;  ·  Develop micro finance services especially micro credit for micro enterprises; and  ·  Strengthen the development financial institutions to ensure more effective use of public sector resources in achieving socio-economic objectives and greater complementaries with the banking sector. Following the successful financial restructuring and consolidation of the banking sector, efforts have shifted to building the domestic financial infrastructure. The industry-wide consolidation exercise for the domestic banking institutions after the crisis saw the 71 banking institutions pre-crisis being consolidated into 10 domestic banking groups. The consolidation exercise was a major structural enhancement of the financial system. Banking institutions have now attained a minimum capital size that is able to benefit from economies of scale and undertake the necessary investment in technology important to the industry. A major transformation of the structure of financial intermediation can be seen in terms of the deepening and broadening of the private debt securities market.