industry, for example, our regional low cost carriers have significantly increased interconnectedness among asean countries. the economic spillovers from this increased connectivity cannot be ignored. by opening up access to lombok, for example, these low cost carriers have contributed to a surge in tourists, marking the fastest growth of tourist arrivals in indonesia. this has incentivised the indonesian government to provide more infrastructure development, including solar power plants, water treatment facilities and roads. this is only one of the many other success stories from our regional home - grown champions. it is my hope that we keep nurturing more, and that their footprints in asean bring even greater benefits to our people. ( b ) role of financial integration 1 / 3 bis central bankers'speeches the private sector ’ s role in enhancing shared prosperity in asean must be facilitated by an enabling environment for efficient cross - border business transactions. this has been achieved through greater financial integration in asean including deeper banking integration ; smoother capital mobility ; and efficient payment and settlement systems. asean central banks have made significant strides towards this end, but by no means will we coast on by. we will continue to champion financial integration that benefits all. an asian development bank study in 2013 has shown that banking integration mobilises savings towards more productive investment, thereby increasing productivity and accelerating growth. this study also showed that smoother capital mobility will facilitate more competitive and productive cross - border lending and borrowing, while promoting financial sector and capital market development. lastly, an efficient cross - border payment and settlement systems promotes cost - effective transactions by reducing the cost of doing business. hurdles faced by asean like it or not, the path to achieving the strategic objectives of the asean economic community ( aec ) 2025 will be filled with hurdles. the pace of convergence within asean would be shaped by members ’ different levels of development. it is harder for countries with resource constraints to shoulder the high costs involved in undertaking structural and institutional changes, which are required for effective integration. in overcoming such hurdles, i stand proud in acknowledging that asean adopts a gradual and phased - in approach that ensures a win - win situation for all. to illustrate this, let me share with you an anecdote from asean ’ s financial integration experience under the aec. the core principles of our framework are inclusiveness and readiness. for example, under the asean banking integration framework, two or more asean countries can liberalise their banking sectors if they are mutually ready. but what if a member is not ready

islamic subsidiaries may conduct investment banking activities. these capital market intermediaries are also reinforced by the strengthening of the institutional investors and the fund management industry. the growing sophistication of investors has resulted in increasing diversification of portfolios with growing interest in the bond market. foreign holdings of debt securities outstanding have also increased from less than 1 % in 2000 to 15 % in 2007. and finally, these developments have been continuously reinforced by the strengthening of the financial infrastructure, the settlement system, the legal and regulatory framework to ensure the robustness and vibrancy of the bond market. malaysia has benefited immensely from the development of the bond markets. as an important source of financing, it contributes to the economic growth process. it also allows for more efficient mobilization and allocation of financial resources. with greater efficiency in the intermediation process, it reduces the cost of financing. it also allows for the increased diversification of risks both for issuers and investors. in addition, it enhances financial stability through potential diversification, increased transparency and greater market discipline. the development of the bond market also enhances the transmission mechanism of monetary policy. finally, and most importantly, the more developed bond market has enhanced our resilience to the implications of increased volatility in the international financial markets. the malaysian bond market has several distinguishing features. firstly, it comprises both the conventional and islamic bond market. secondly, the secondary and repo market is now growing in significance. turnover volume in the secondary market has been steadily increasing over the years marking the active participation in the bond market by investors. in 2007, total annual turnover volume increased by 46 % to rm777 million. there is also an increased diversity of instruments being issued ranging from asset - backed bonds, bonds bearing features such as stepped - up coupons and " floaters " and pass - through abs. malaysia is also a leader in the development of sukuks and its pioneering efforts have seen the introduction of innovative structures such as the exchangeable sukuk musharakah, exchangeable sukuk as well as sukuk based on istisna'and ijarah. this is reinforced by the diversified tenures of the issues. malaysia's strong financial links to the traditional and nontraditional markets such as in the middle east also allows issuers to diversify their investor base. malaysia therefore continues to remain an important destination for international financial flows that are traded on the new silk road. in concluding my remarks,