zeti akhtar aziz : strengthening the financial infrastructure for smes in malaysia keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of strategic partnership between credit guarantee corporation berhad and the islamic financial institutions, kuala lumpur, 6 february 2007. * * * it is my great pleasure to be here this morning to witness the launch of the strategic partnership between the credit guarantee corporation ( cgc ) and islamic financial institutions. this strategic partnership will provide an important platform to the islamic financial institutions to expand lending activities to the small and medium scale enterprises ( smes ). it therefore, marks an important initiative in the efforts to provide an increased range of financing products to smes in addition to enhancing the access to financing. a key national agenda of the government is to promote a strong and dynamic sme sector which would contribute to ensuring sustainable and balanced economic development. the development of diverse and competitive smes will also promote greater resilience of the economy. the smes also represent important " incubators " of entrepreneurial talents that will provide for the potential for the development of larger malaysian corporations. the smes can expect to represent an increasingly important source of endogenous growth and employment. the importance of the sme sector to the national economy is evidenced by the fact that it constitutes 99. 2 % of the total business establishments, employs about 5. 6 million people, and contributes about 32 % of gross domestic product. in view of the potential of smes in the economy, significant emphasis has been accorded by the government in developing and strengthening the capacity of the smes to contribute to the economy. twelve government ministries and 38 agencies are involved in supporting the development of smes. to ensure the effectiveness of the strategies to support smes, the government established the national sme development council in june 2004. the council, chaired by the prime minister, provides the policy direction of the programmes to support the smes, and to ensure that these programmes are implemented effectively. bank negara malaysia is the secretariat to the council. the government's commitment to promoting the role of the sme sector in the economy has been to provide an enabling environment for their development. a comprehensive approach has therefore been adopted. in 2007, a total of 190 key programmes, involving a financial commitment of rm3. 7 billion, is being implemented by the government, to strengthen the enabling infrastructure, to build the capacity and capability of the smes, and

by the same token, norwegian companies can choose their debt and equity structure independently of the government's financial investments. both mainland private saving and business fixed investment have been high in recent years. thus a possible weak capital market has not been reflected in a low level of investment and saving. as a result of developments in the late 1990s, equities and funds make up an increasing share of households ’ total assets. the equity ratio of enterprises strengthened in the 1990s, with a rise in new equity capital from the markets in particular. norwegian limited companies excluding petroleum companies, financial undertakings and government activities, and groups and holding companies. the norwegian loan and capital market probably has weaknesses nevertheless, with thin securities markets and little breadth in investor and owner environments compared with some other countries. the reasons, and hence the solutions, can probably be found in the structure of the taxation of dwellings, property and financial assets, in a high level of government ownership of enterprises and in the organisation of pension saving in norway. investing even more government capital in norway would reduce the return on investments in the norwegian business sector and prompt other investors to invest elsewhere. using even more capital in the norwegian economy would probably also lead to a rapid relocation of jobs to other countries, as the krone would tend to appreciate.