. on 25 september 2006, an “ economic and trade cooperation plan ” was passed in a ministerial level meeting of the economic and commercial cooperation forum of china and portuguese speaking countries held in macao. the delegates were ministers responsible for economic and commercial affairs of 7 portuguese speaking countries and china. the ministers reviewed the development since the inception of the forum. they actively appraised the economic and commercial results achieved under the framework of the action plan. at the same time new economic and commercial activities beneficial to implementation of new development within the realm of cooperation were incorporated in the newly formulated action plan. the delegates agreed to promote the endeavour of financial institutions of the member states with a view to locating source of fund for items of common interest within the framework. the feasibility of establishing a financial cooperation mechanism under the forum was mulled. financial cooperation and economic and commercial communication between china and portuguese speaking countries has a long cordial relationship, which is of much importance in the co - coordinated development. based on existing foundation, we can expect a sustainable relationship in cooperation. at this particular juncture, when global economy is sinking into recession or stagnation, the impetus to jump start economy appears the more precious. china and brazil are renowned to be members of the bric. they have delegates present in this conference. together with representatives of other portuguese speaking countries which have tremendous economic development potential, the delegates will exchange candid dialogues with a view to enhancing financial cooperation to promote economic and commercial flow. we believe, we can reinforce our cooperation through all these beneficial and constructive communications. taking into account its constraint of natural resources and its geographical location, the msar has been assiduously developing tertiary industry, particularly tourism and services industry. simultaneously, the government has put forward a policy measure to build up macao to become a regional service platform, which includes the function of service platform for economic and commercial cooperation between china and portuguese speaking countries. in fulfilling its duties, amcm proactively encourages the financial sector to explore the market, make acquaintance with counterparts, seek commercial opportunity and strive to score a reasonable return on capital. therefore it has organized many times representatives of the financial sector for overseas visits, which cover markets with development potential. the visits have enabled the delegates to understand the development of financial markets overseas, befriend with merchants and counterparts, establish cordial linkage. i think many delegates here have had the experience of receiving your macao counterparts. i am sure such mutual visits and communications have forged a long

. i think it would be fair to say that there has been, as i said, a revolution led by innovation in the risk management field. not only have we identified, quantified and developed various models in risk management but we have also nurtured the aspect of risk management in a number of institutions all over the world. so i don ’ t see it as being an impossible task for economies. there are complications in its implementation where there are inherent weaknesses of different types. we all know that the world has suffered repeatedly from the accumulated huge portfolio of non - performing loans. and the non - performing loans would be a reality even if we were to absolutely eliminate the vested interests from the banking system which encourages willful default, a factor quite familiar to us. defaults are inevitable because of the conventional corporate risks as well as the business cycles that industries face. what is important in going forward is to be able to define and capture these risks effectively, and to appropriately weigh these risks and make effective provisions. it is really in this context that basel ii defines and lays the ground rules for risk management. banks all over the world have been more cautious in their credit appraisal and monitoring system and in assessing the gaps in their risk management systems. i think the most important factor in positioning ourselves effectively is education, which alone will help us to understand what the risk management architecture is all about. let me now talk briefly about the second item. the success of basel ii depends exclusively on the accuracy and reliability of good quality data. we need adoption of the international financial accounting and reporting systems. we need to assess the risks accurately. and there has to be intellectual honesty in reporting all this. besides the internal assessment of the reliability of information from a regulator ’ s point of view, the requisite comfort will be achieved only if an independent agency is able to do a due diligence of the company and its inherent risks. within pakistan there are only two credit rating agencies and i am not sure that with the universe that they capture, whether we are well positioned to go forward in even adopting the standardized approach effectively. in addition to the credit rating institutions, we need to exploit more effectively the role of the auditors of the borrowing entity. it has to be acknowledged that the data stream currently available is not fully comprehensive to serve our requirements. so it is not just about developing information flows ; it ’ s about changing the quality and the timely reporting of this data. another important aspect of reliability is