redefine strategies geared towards building the capacity of domestic enterprises and thereby enhancing their contribution to growth of the domestic economy. in addition, efforts have also been made to develop new areas of growth to ensure a more diversified economy. countries have increasingly shifted to areas of their natural comparative advantages, whether in agriculture, ict, construction and infrastructure or services - related sectors in order to benefit from their inherent strengths. seven, a new wave of fdi in the region apart from intra - regional trade, intra - regional foreign direct investment ( fdi ) flows have increasingly operated as a strong force for growth in the east asian region. regional fdi has largely been traderelated. early fdi in east asia was mainly derived from western multinationals, particularly the us. the second wave of fdi after the late 1970s was predominantly japanese capital which flowed into east asia, in search of lower costs of production. today, the cumulative stock of japanese fdi has surpassed that of american investments. since the late 1980s, as taiwan, hong kong and singapore transformed into capital surplus economies that moved up the value chain, investments by these newly industrialised economies gained significance in asia. this has represented the “ third wave ” of fdi in the region. the east asian region is thus witnessing a steady inflow of fdis from the nies to asean and china. in the more recent period, this trend has been reinforced with increased overseas investments by korea and malaysia. eight, engaging the emergence of large new markets in the region. overall, as a high level of integration exists at the regional level in terms of trade and fdi, shifts in trading and investment patterns both from external sources into the region and within the region itself have been a dynamic process. hence, given the emergence of large new markets in the region, the opportunities present in these markets show complementarities in the region. countries in the region need to therefore focus on these complementarities in new potential areas of growth. in an increasingly competitive environment, economic progress in the region is benefiting from the strategic specialisations which are supported by the leverage on comparative advantages. nine, regional cooperation gathers momentum given the existing mutual interest amongst countries in the region, regional cooperation efforts are gathering momentum in east asia, notably in the context of asean + 3 and emeap. to - date, the focus of such cooperation by governments has been on regional surveillance, developing institutional arrangements and according high priority to co - operation in trade and investment. the drive

opted for mandatory retirement below the age of 55 are also eligible to purchase the bonds. the merdeka savings bond, which will be based on the islamic principle of bai'al - inah, has several new features. firstly, the bond will be issued on a regular basis over the next two years. following the first issuance on 4 february 2004, there will be three other issuances on 1st april, 1st july, and 1st october in 2004. this will be followed by similar quarterly issuances in 2005. it is hoped that this regular issuance would provide interested investors, who may have their savings locked in other assets with the flexibility in the future to purchase the merdeka savings bond. a total issuance of rm 2. 25 billion has been planned for 2004 and 2005, with the first issuance amounting to rm 500 million. secondly, in order to make it easier for investors to purchase the bonds, all commercial and islamic banks, as well as bank kerjasama rakyat, have been appointed as agent banks. the public may start applying for the bond beginning 5 january until 30 january 2004. thirdly, profits will be paid to investors on a quarterly basis. through the quarterly payment of profits, investors will receive a steady stream of income to support their expenditure needs. for the first issuance, the merdeka savings bond offers a profit margin of 5 % per annum. at 5 % per annum, the return is higher than interest rates paid for 12 - month fixed deposits by the commercial banks. the income earned from the bonds will also be exempted from tax. the merdeka savings bond also provides investors with the benefit of early redemption without any penalty in terms of forgone profits. investors can redeem the full amount of their initial investments at any time after the first profit payment. profit payments will then be based on the number of days the bond is held. this feature gives investors the option and flexibility to withdraw their savings at any time to meet unanticipated expenses. there will be a dedicated hotline and website to attend to public queries regarding the bonds. the launch of the merdeka savings bond marks a further step forward in creating new investment instruments for a specific target group of savers who have retired. moving forward, further savings products should be developed by the financial services industry. financial institutions, including insurance companies, unit trusts, and other non - bank financial institutions, need to continue to develop innovative