needs of economic reconstruction and development. great value is also attached to the enhancement of economic co - operation in the southern african region. the southern african development community ( sadc ) now includes 12 countries with a total population of more than 130 million people, and with a great potential for economic development. plans are gradually being implemented for economic co - operation to include the harmonisation of policies on financial services, trade development, education and training, fisheries and agriculture, water resource and energy development and other areas of economic activity. these are some of the challenging economic opportunities presented by the new south africa. there are, however also constraints that must be removed and concerns that must be addressed to enable south africa to develop its economy to its full potential. 4. concerns in the south african economy economic developments over the past three years were encouraging and provided sufficient evidence to prove that, given a supportive environment, there is still enough vitality left in the economy after years of depression, mainly by non - economic factors. the movement through the upward phase of the business cycle, however, also exposed a number of inherent weaknesses in the economic structure. these include : * the insufficient level of saving in the domestic economy which last year was equal to only 16 per cent of gross domestic product. this makes south africa very dependent on foreign investment capital in support of a durable expansion of the existing production capacity ; * a high marginal propensity to import, particularly when substantial new investments in the manufacturing sector are made. the low level of the country ’ s official foreign exchange reserves makes the country vulnerable to current account deficits in an environment of volatile international capital movements ; * inflexible conditions in the labour market. despite unemployment of about 30 percent of the labour force, workers continue to demand wage increases in excess of the rate of inflation and of productivity gains ; * a lack of competitiveness which is exacerbated by inflation in excess of the average rate of inflation in the country ’ s major trading partners and international competitors. these deficiencies require incisive structural adjustments which will not be possible without some painful reforms, as provided for in the government ’ s gear programme. in the short - term, it is extremely difficult to find a workable compromise between the legitimate demands of the people for better living conditions, and the need for j - curve structural adjustments that will first inflict more pain before benefiting the total economy. in addition to these deficiencies in the macro - economic structure, a few noneconomic concerns

or to innovate existing processes, we also require that they understand and can manage the associated risks. it is this philosophy that underpins the mas to be among the first regulators in the world to adopt a regulatory sandbox regime. 12 mas regulatory sandbox provides a constrained but more flexible space for players seeking to test new technology or approaches before a full launch. such sandbox pilots are held within defined risk parameters and are time - bound. these restrictions help to limit the impact from unsuccessful applicants but equally important, they allow mas to also understand the new model up close – how it is run, how the technology or its application is used, how the risks are managed and the value proposition to clients before mainstream use and scalability. this will also allow the mas to calibrate our final rules that are appropriate to the new business model or start - up while addressing any level - playing field concerns. as another example, the mas recently issued a consultation paper on changes to our recognised market operator ( or “ rmo ” ) regime. under the current approach, singapore - based market operators must be approved exchanges if they are systemically important, or else regulated as rmos. but new forms of market places have emerged – such as trading facilities that make use of blockchain technology or peer - to - peer platforms without intermediaries. our regulatory framework will need to be flexible to accommodate innovative business models by market operators with rules that are commensurate with the risks including factors such as retail access and scale of business. 2 / 4 bis central bankers'speeches there have been some queries on our regulatory stance towards crypto - currencies, or more generally, digital tokens and icos ( initial coin offerings ). we have issued a public advisory to caution those who “ invest ” in crypto - tokens to do so with caution and to understand their characteristics including being volatile and non - legal tender. mas has also issued a guide on digital token offerings last year to explain that our regulatory treatment depends on the digital tokens ’ inherent characteristics. for utility tokens, which are for restricted usage within a defined set of products or services, these are not subject to mas regulations. on the other hand, for payment tokens which are designed to be an alternate form of a medium of exchange, the intermediaries processing these tokens will come into our regulatory ambit under the proposed payment services bill. this is to ensure that these providers adopt the necessary measures and controls