of comparative advantage, to new areas of growth, with the private sector being the main driver of growth. resources have continued to shift towards the services sector, towards strengthening linkages in the manufacturing sector, and to the resource - based industries and the agricultural sector. this has contributed to a well - diversified economic structure and has increased the resilience of the economy to external developments. the financial sector has also seen significant transformation. the restructuring, consolidation, and internal rationalisation of the banking sector is now virtually completed. governance and risk management practices have also been improved while structural enhancements have been made in the capital market, significantly enhancing its role in the financial system. a comprehensive and robust islamic financial system now also operates in parallel with the domestic, conventional financial system. against the background of strengthened economic fundamentals and financial system, malaysia has taken the opportunity to sequentially deregulate and liberalise the financial system. this includes the introduction of a new interest rate framework that is market - driven, 1 / 2 the liberalisation of foreign exchange administration rules to promote greater efficiency and enhance risk management in foreign exchange transactions, and the introduction of new foreign players into our financial system. in july this year, malaysia adopted a managed float for the ringgit exchange rate to better position malaysia to respond to structural changes in the global and regional environment. under this arrangement, the ringgit is monitored against a basket of currencies of malaysia's major trading partners. in this world of greater uncertainty, there has been significant focus on the issue of surveillance and risks and vulnerabilities. experience has shown that surveillance has improved policy performance as well as the ability to take pre - emptive action to contain the impact of disruptive and destabilising developments. these efforts, however, need to be balanced by efforts to enhance the capacity of countries not only to manage the risks and vulnerabilities, but also to sustain their own capacity to support growth and development. capacity building involves helping countries to help themselves. it requires enhancing the institutional capacity of the country. support in putting in place the necessary institutional structures, arrangements and systems would increase the potential for the sustainability of the development process. strengthening these foundations are vital to the deregulation and liberalisation process. they represent the pre - conditions to any reform agenda. in this regard, capital account liberalisation needs to be managed in accordance with the country's own institutional capabilities and implementation capacity. supporting financial infrastructures, sound and strong financial institutions,

abu hassan alshari yahaya : smes and financial inclusion speech by mr abu hassan alshari yahaya, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the credit guarantee corporation malaysia berhad ( cgc ) sme awards 2018, kuala lumpur, 27 june 2018. * * * it is my pleasure to address you this evening at the sme awards hosted by credit guarantee corporation malaysia berhad ( cgc ). i would like to commend cgc for the continuous effort in championing the sme cause, and in recognising the banking and financial industry players that have made meaningful contribution in supporting the smes. as mentioned by dato ’ agil, ‘ digital disruption ’ has become the new normal not only for the banking and financial industry, but also for other sectors and industries. we have seen the fortunes of traditional businesses changing overnight with technological disruption. in fact, the financial industry may at times need to play catch up to ensure products and services are relevant in a new digital economy. we believe cgc will continue in its efforts to be agile and dynamic in embracing the higher expectations of meeting the financing needs of smes moving into the future. smes and financial inclusion in broad terms, financial inclusion means access to affordable financial products and services that meet the needs of individuals and businesses and that are delivered in a responsible and sustainable manner. at bank negara malaysia, we recognise the impact of financial inclusion on the broader economic performance of our country. financial inclusion facilitates productive financing and investments which generates income for the underserved, improves equality and contributes to sustainable growth. having an inclusive financial system is also important to ensure economic and social progress on the development agenda is achieved. therefore, cgc ’ s goal of ensuring access to financial services for smes via a fair and transparent marketplace for financial products and services, including extending credit that provides a pathway towards balanced economic growth and prosperity for all malaysians should be lauded. based on the economic census 2016 : profile of small and medium enterprises by the department of statistics, malaysia ( dosm ), smes in malaysia constituted 98. 5 % of the total business establishments. majority of the businesses were in services sector, mainly in wholesale & retail trade, followed by manufacturing, construction, agriculture and mining & quarrying. financial institutions are the major source of financing for smes. as at end - 2017, growth in financing to smes continues to be sustained above 5 %,