jessica chew cheng lian : financial inclusion strategies in asean economies speech by ms jessica chew cheng lian, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the asean financial inclusion forum, kuala lumpur, 25 april 2017. * * * it is a great honour for bank negara malaysia to host the first asean financial inclusion forum. we warmly welcome you to kuala lumpur. let me also especially thank the distinguished speakers from indonesia, philippines, singapore and thailand ; and experts from afi, uncdf and the world bank for graciously taking the time to share your invaluable experience in pursuing financial inclusion strategies with participants of this forum. asean today is one of the fastest - growing and most dynamic regions in the world. we are home to 630 million people and a burgeoning middle class, with individual economies that are diverse in terms of demography, income level, resource endowment, financial sector development ; and economic size, structure and systems. a vibrant sme sector contributes 50 to 80 percent of asean ’ s workforce and accounts for 96 percent of enterprises in the region, linked by more extensive cross - border production networks and the intensification of intra - regional trade and investment activities. growth for the region is still expected to outperform average global growth in 2017 and 2018, and this is expected to be sustained going forward. asean ’ s growth story has been supported by greater traction in recent years in regional financial integration which will expand sources of financing and investments for economic activities, deepen the region ’ s financial markets, and enhance the competitiveness of asean businesses through efficiency gains ( for example through lower costs of payments and settlements ). growth and development across the region however does not guarantee equal opportunities for all to lift their social and economic circumstances. nor can it therefore be assumed that income and wealth divides will narrow. history bears this out, as despite advances in financial globalisation over several decades, income inequality has actually worsened in many parts of the world – including both developing and developed countries. for asean, a key priority has therefore been to ensure that greater economic and financial integration progresses in lockstep with greater financial inclusion. for many policymakers in this room, the challenges are pressing with 265 million or 44 % of adults in asean who are still unbanked. this represents nearly half of the adult population in the region who do not have access to safe and reliable basic banking services, with broader implications for health, economic and social outcomes. asean

. 9 percent in 2002, even as the population grew substantially. 2001 and early 2002 was $ 27, 000. refinancing activity surged further in the second half of 2002 : according to one set of federal reserve staff estimates, mortgage refinancings totaled $ 400 billion in the third quarter of 2002 and more than $ 550 billion in the fourth quarter of 2002, after averaging $ 325 billion ( quarterly rate ) over the preceding six quarters. from a macroeconomic point of view the refinancing phenomenon has very likely been a supportive factor. the precise effect is difficult to identify, since we cannot know for sure how much of the spending financed by equity cash - outs might have taken place anyway. fairly generous assumptions about the propensity of households to devote equity cash - outs to new spending suggest that refinancings may have boosted annualized real consumption growth between ¼ and ½ percentage point in the second half of 2002, the period of maximum impact. a fairly substantial gap still remains between the current level of mortgage interest rates and the average level of interest on the outstanding stock of mortgages, suggesting that refinancings should continue at a brisk pace in the early part of this year. as refinancings slow later this year, however, they will create a slight drag on consumption growth relative to 2002. an important aspect of the surge in mortgage refinancings is that, on the whole, they have probably improved rather than worsened the average financial condition of the household sector. notably, a substantial portion of equity extraction, probably about 25 percent, has been used to pay down more expensive, nondeductible consumer credit ( such as credit card debt or auto loans ), with additional funds used to make purchases ( such as cars or tuition ) that would otherwise have been financed by more expensive and less tax - favored credit. in short, the consumer has taken advantage of an unusual opportunity to do some balance sheet restructuring. this restructuring has not come at the cost of a dangerous increase in leverage. as already noted, loan - to - value ratios for home mortgages have barely changed in recent years. moreover, analysis by members of the federal reserve staff suggests that the great bulk of cashed - out equity has been taken out by older, long - tenure homeowners who have gone into the transaction with high levels of home equity ( often 100 percent equity ) and have retained substantial equity after the transaction. in summary, a deeper analysis shows that much of the