Thus, the ability to compete is no longer based on access to raw materials of land, capital and labour. It will demand much more. It will depend on how these resources are exploited. The new environment thus calls for greater focus on building capabilities. The new environment also presents increased uncertainty affecting the level of preparedness. In addition, under an increasingly more uncertain environment, the traditional approach can no longer be applied. Making sound strategic decisions under uncertainty requires a different approach. In this case, understanding the range of possibilities and the ability to perform under different circumstances becomes important. Knowledge and speed becomes the essence in this new environment. The speed of access to knowledge therefore needs to be continuously enhanced. Smart partnerships becomes highly relevant in this new economic order. Tremendous benefit can be gained from collaboration and partnerships. Such collaborations in this new economy needs to extend across borders. Distinct efforts need to be made to prepare for this new economic age. The strategies have to be developmental. High fliers that do not develop capabilities will not be equipped for the long-term. Investment, therefore, has to be made for the future. Among the key strategies will be the continuous investment in building the capabilities and capacity, setting the performance standards and promoting strategic alliances. This has to be achieved with a clarity of the goals. This is particularly important in an environment of intense short-term pressures.

This has been achieved in an orderly manner. Of importance was that the preconditions had been put in place to ensure this orderly transition. The banking sector had been strengthened, the bond market had been developed, and the capital account had been sequentially liberalised. These developments were reinforced by the further deregulation and liberalization of the domestic financial system, thus creating a more competitive financial environment. The successful transition to the new regime following these developments has seen a two-way movement in the exchange rate that reflects the underlying economy and the market conditions. Monetary policy in this environment will continue to be conducted in a manner that will ensure that the long-term growth prospects of the economy is achieved with price stability. As a small, open economy, Malaysia is not insulated from the inflationary forces being felt globally. In this regard, decisions on monetary policy will be determined by the Bank's assessment of a broad range of indicators of the domestic economy. The Overnight Policy Rate (OPR) remains the signalling mechanism to achieve the policy objectives. Interest rates, therefore, is not an instrument to influence capital flows or the exchange rate. The Bank continues to undertake initiatives to enhance communication to promote greater understanding of the objectives, processes and conduct of monetary policy. Extensive deliberations in  BIS Review 55/2006  1  assessing the latest domestic and global economic, monetary and financial developments are conducted at the Monetary Policy Committee (MPC) meetings, which are held eight times a year.