suhaimi ali : opening remarks - sandbox open day opening remarks by mr suhaimi ali, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the sandbox open day, kuala lumpur, 24 june 2024. * * * good morning. it is a pleasure to welcome everyone to our inaugural sandbox open day. emerging innovations, such as generative ai, quantum computing, blockchain, and the internet of things ( iot ) are poised to revolutionise the way we operate and deliver financial services. these technologies promise a new age of possibilities to enhance efficiency, security, and customer experience. up until now, bnm's regulatory sandbox has had a role in facilitating testing of innovative use cases and business models such as e - kyc, buy - now - paylater, digital insurance, and digital remittance. our event today is intended to bring together traditional players and disruptors within the financial ecosystem for meaningful discourses that will chart our journey ahead in fostering experimentation and driving responsible innovation. in line with our theme, " innovation reimagined ", i would like to take the opportunity to share some insights and suggestions on how we as key agents of the financial ecosystem can move forward in this area. first, bnm's role as the regulator is to ensure that avenues such as sandboxes continue to support responsible innovation and regulatory adaption. since its inception in 2016, the bank's regulatory sandbox has been key in providing a safe haven for experimentation and contributing to the bank's calibration of regulatory policies. as digital innovation constantly evolves, bnm is therefore committed to ensure that our regulatory framework continues to remain proportionate to risks and can better unlock the upsides of innovation. this means creating a conducive environment where responsible innovation and healthy competition are nurtured, agile players are given an opportunity to flourish, and associated risks are managed effectively – especially those that may threaten system - wide stability, consumer outcomes, and confidence in the financial sector. with this in mind, we have recently refreshed the sandbox framework with two key enhancements, guided by the principles of parity, proportionality and neutrality : 1. one, the eligibility assessment for admission to the standard sandbox has been simplified for all applicants, making it easier for innovative solutions to be tested. 2. two, a green lane is also introduced to enable financial institutions with proven risk management capabilities

banking, takaful and capital market in malaysia. as part of the initiatives, islamic financial products and services that are transacted in international currencies may now be conducted from anywhere in malaysia. malaysia has the physical infrastructure, international connectivity, the communication network, cultural offerings as well as the talents which is inherently advantageous to the mifc. in this first phase, the mifc initiative will introduce measures and incentives to promote the centre in the offering of islamic financial products and services by the diversified range of financial institutions in international currencies to the international and domestic financial community. the key measures and incentives include : i. firstly, the malaysian islamic banks and takaful operators that are offering islamic financial services in international currencies will be granted approval under the existing licence to set up an international currency business units within the institutions. these new divisions will have their own accounts separate from the ringgit transactions of the head offices, while at the same time sharing the same infrastructure with the head offices. this division may benefit from tax and other incentives that may be introduced. this measure will apply to the islamic banks and takaful operators licensed under the islamic banking act and takaful act respectively to operate in the islamic financial system as well as to the existing financial institutions which are eligible to participate in the islamic financial services. this is also expected to enhance the capability of the foreign players that have identified malaysia as their centre to serve the regional markets. international entities will also be able to participate via foreign interest of up to 49 percent in islamic banks and takaful companies. investment funds set up in malaysia will be able to enjoy the double tax agreements that malaysia has entered into with over 60 treaty partner countries. ii. second, bank negara malaysia will issue new conditional licences under the islamic banking act to qualified foreign and malaysian financial institutions to conduct the full range of islamic banking business in international currencies and enjoy the same tax incentives as those accorded to the international currency business units. the new entity will be termed licensed international islamic bank. the business that the licensed international islamic bank would be allowed to undertake includes the wide - ranging business of islamic commercial banking, islamic investment banking and islamic leasing in international currency. iii. third, bank negara malaysia will also issue new conditional registrations under the takaful act to qualified foreign and malaysian insurance companies to conduct the full range of takaful business in international currencies. similar tax treatment will be accorded to these entities