governor ’ s keynote address at the international conference on financial crime and terrorism financing ( ifctf ) 2022 speaker : tan sri nor shamsiah mohd yunus / venue : kuala lumpur / language : english / speech / interview date : 26 jul 2022 / it is a pleasure to be able to speak again at this conference after a two - year hiatus. a lot has changed in these two years as we adjust to living with covid - 19. like every other country, we anticipate with hope and perseverance, that the pandemic is well and truly behind us. but this exceptional and extraordinary period in our history will serve to remind us, that vigilance in the fight against financial crime can never be relaxed. during this period, reported financial crimes in many countries increased significantly, as criminals exploited conditions created by the pandemic, to commit financial crimes – making an already difficult time that much worse, for many who became victims of such crimes. occasions like the ifctf provide an opportunity to renew our determination to prevent the financial system from being abused for criminal purposes, or to inflict terror on our communities. financial crimes have a direct and important effect on our economic prospects. so let me preface my remarks today with some observations on our economy. malaysia is firmly on a recovery path. supported by solid domestic activity and positive external demand, the economy is expected to grow steadily in 2022 and 2023, despite continuing challenges from rising cost pressures, the military conflict in ukraine and strict containment measures in china. we are benefitting from strong demand for our exports – especially e & e and commodity - based products. our diversified export products and markets will continue to support our export growth. importantly, we are seeing increasing strength in domestic demand. domestic spending, especially consumer expenditure is on the rise. in fact, retail sales, debit card transactions and consumer goods imports have exceeded their pre - pandemic levels. the economy is also benefiting from a strengthening job market. while unemployment was at its peak of 5. 3 % in may 2020, it is now at 3. 9 %. almost 26, 000 new jobs were created in the first three months of this year, similar to pre - pandemic levels. job vacancies and wages are also rising. this will further reinforce the recovery in domestic demand going forward. that said, there is some unevenness in the economic recovery. certain segments continue to experience hardship and remain vulnerable. these

increases in the interest rates. any further changes in the policy rate would be determined by our assessment on the balance of risks between growth and inflation, going forward. let me now turn to the financial sector. the financial sector in general, and the banking industry in particular, have an important role to play to ensure that our economy continues to have this flexibility by providing the enabling environment and facilitating the process. this requires a financial sector that has its own dynamism and agility to proactively respond to the changing requirements of the economy. the malaysian financial sector continues to evolve progressively in response to developments in both the domestic and external environment. as we transition from the first phase of the financial sector masterplan into the second phase of the plan, significant developments have already taken place. in this year in particular, we are seeing a strengthening of the international dimension of our financial sector. this essentially serves to strengthen our economic and financial inter - linkages with the global economy. some notable developments in this direction include the liberalisation of the foreign exchange administration rules earlier this year to allow for greater flexibility and efficiency in foreign exchange transactions as well as to increase foreign participation in issuing ringgit papers in our bond market and thus contribute to contribute toward enhancing the depth of the market. another major development this year was the move to a managed float exchange rate regime for the ringgit. this is essentially to better position the nation to respond and benefit from the structural changes occurring in the region and the global economy. other further developments to strengthen our international integration include the increase in foreign participation in our domestic financial system. this includes the issuance of new licences for foreign islamic banks to operate in malaysia, the issuance of new stock - broking licences to foreign players as well as increases in the permitted foreign interest in our islamic subsidiaries and investment banks. all this will serve to enhance the international integration of the domestic financial system. the launch of the abf malaysian bond index fund is also aimed at promoting greater integration among the regional bond markets. on the domestic front, the year 2005 marks a significant milestone for the merchant banking industry. in march this year, the new framework for investment banking was unveiled, paving the way for the further rationalisation of domestic capital market intermediaries. as you may recall, the objectives of the framework are twofold : to facilitate internal rationalisation of the merchant bank, stockbroking company and discount house within the same financial group ; and to promote the rationalisation of the discount