Cultivate a strong culture of innovation within to increase value-add and catalyse private investment Development institutions should be leading innovators in providing solutions to stimulate investment and entrepreneurship especially in uncharted sectors. In my view, a key part of their contribution to development has to be in evolving non-traditional approaches to encourage investments in targeted sectors, precisely because conventional approaches have not responded adequately. Indeed, they should be providing the richest environment for adaptive learning, creativity and innovation to effectively serve their mandates. Innovation is also being supported through a “test and learn” approach which allows for experimentation by financial institutions in close coordination with regulators. This approach promotes a deeper understanding of risks inherent in new solutions and products, and the appropriate ways to control them. The introduction of the regulatory sandbox in several countries, including Malaysia, to support regulatory flexibilities for the deployment of FinTech reflects such a “test and learn” approach. Development financial institutions should use technology to advance the cause of their mandate. To be innovative, development financial institutions must be able to attract and retain good leadership and talent. KfW in Germany and Business Development Bank of Canada (BDC), two global development financial institutions, were recognised as being among the top 100 employers in their respective countries in 2017. Well-designed talent strategies, and an environment that nurtures experimentation and adaptive learning with appropriate oversight and controls are key. These require bold and visionary leadership.

Expectations and directions for Malaysian Development Financial Institutions I would also like to share some reflections on expectations and directions for development financial institutions in Malaysia I am well aware that development financial institutions around the world, including in Malaysia, face unique challenges. In many ways, they have to manage and balance responsibilities that are substantially more complex than institutions with narrower profit-making mandates. In Malaysia, these institutions have embarked on initiatives over the last decade and a half to build greater financial resilience and stronger foundations for sound management. This has enabled them to pay an important counter-cyclical role during downturns, and to support economic activity in targeted segments. However, more effort is required on critical appraisal of their development impact. It is much needed to sharpen the development focus, redirect and amplify the impact of financing activities. It will also provide the impetus for them to focus on other interventions that can increase their impact. We intend to work with their leadership and other stakeholders in Government in the coming months to address a more focused delivery of mandates. In this respect, improving performance measurement frameworks and increasing transparency in the operations will be important areas of focus. We need to measure the right things, measure outcomes that matter and measure mandates that are relevant. This needs to be driven by a clear vision and strong leadership, and uncompromising governance. We expect our development financial institutions to operate with the highest level of professionalism and integrity at all levels of the organisation.