zeti akhtar aziz : malaysiaa€™s fast - changing financial landscape speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 26th annual dinner 2005 of the association of merchant banks, kuala lumpur, 3 december 2005. * * * i am pleased to be here tonight on this special occasion of the 26th annual dinner of the association of merchant banks in malaysia. the year 2005 is a particularly significant year for the merchant banking industry in particular and for the financial sector more generally. while this decade has seen significant changes taking place in our financial landscape that followed from the restructuring, consolidation, greater investment in technology, deregulation, liberalisation and changes in the regulatory environment, the year 2005 has seen an intensification of the pace of change in the financial sector. let me take this opportunity to discuss the macroeconomic environment which these changes are occurring, and discuss further some of the more recent changes that are taking place in the financial system. our economy has been able to continue to benefit from the favourable external environment as the global economy demonstrates its robustness in an environment of high oil prices and rising global interest rates. on the domestic front, our overall performance was further reinforced with the expanding domestic demand. latest indicators suggest that the growth momentum remains firmly on track, with an improved growth of 5. 3 % in the third quarter. the outturn for the year as a whole is now expected to be in the range of 5 - 6 %. there is also greater optimism now that the prospects for this growth momentum will be sustained in 2006. of significance is the continued strength of private sector activity. household consumption increased by 10. 4 %, while real gross fixed capital formation increased by 9. 6 % in the third quarter. reflecting malaysia's structural transformation toward a skilled - and knowledge - based economy, the services sector has become increasingly important, now accounting for 58 % of gdp, compared to only 47 % in 1990. indeed, more than 50 % of the growth in the third quarter emanated from the services sector. growth has remained strong in both the traditional services sub - sectors as well as in new growth areas such as shared services and the information and communication technology industry. this structural transformation of the economy has also been reflected in the pattern and the quality of foreign direct investment, with a shift away from capital - and labour - intensive projects towards the higher value added, skills and knowledge - intensive services industries. in the manufacturing sector,

the security of electronic payments • difficulty to perform payment reconciliation • low limit of electronic payment transaction • lack of familiarity with electronic payments in terms of security measures, banks have continued to invest significantly to ensure the safety of electronic payment transactions. examples of security enhancements that have been undertaken include the migration to secure chip - based payment cards to address card counterfeiting fraud, the introduction of a second factor authentication to strengthen authorization of online banking transactions and the implementation of sms alert to mitigate credit card fraud. to provide ease of reconciliation, banks will facilitate payment references to be keyed in by the sender for ibg payments by april 2014 to enable reconciliation of payments by the beneficiary. in addition, banks have also committed to increase the daily limit for ibg and instant bank fund transfer ( ibft ) transactions to rm10, 000 with the necessary security and safety features. in addition, ongoing initiatives to build awareness, educate and instill confidence in electronic payments are also carried out nationwide through a series of roadshows and media appearances. timely for businesses to migrate to electronic payments our country is at a turning point in the migration to electronic payments. under the 2014 budget, rm1. 8 billion has been allocated for the implementation of the second phase highspeed broadband ( hsbb ) project. this initiative will provide additional internet coverage which will benefit 2. 8 million households nationwide. with this initiative, the household broadband penetration rate is expected to increase to its optimum level6. in addition, bank negara malaysia has also called on the banks to widen the access points for the public to conduct electronic payments, including via the atm network. while malaysia ’ s population stands at 29. 7 million, there are 41 million atm cards which have a debit application that can be used to make purchases at merchant outlets. this provides an opportunity for banks and businesses to leverage on, to improve the coverage of point - of - sale terminals to facilitate the use of the debit card as means to reduce the need for cash, as well as, to increase tourist spending at more merchant outlets. with higher broadband and debit card penetration rate, coupled with increased payment innovation and strengthened security measures, businesses should consult their banks and take advantage of the various electronic payment solutions to reap the benefits of cost savings and productivity gains. as at end - sept 2013 – total broadband subscriptions = 4. 5 mil. with the additional 2. 8 million household, total broadband subscriptions will increase to 7.