##akaful constitutes a significant feature of malaysia's financial landscape, and continues to develop rapidly in terms of market reach and operational sophistication. the recent passage of the insurance ( amendment ) bill on financial advisers marks yet another important milestone in ongoing efforts to achieve a more diversified market structure. with the legislative framework now in place, i am pleased to announce that bank negara malaysia will soon be issuing licences for financial advisers. the introduction of financial advisers in the malaysian insurance industry will further diversify the distribution system for life insurance. corporate bodies with a minimum paid - up capital of rm100, 000 will be eligible to apply for a financial adviser's licence. similar amendments to the takaful act 1984 will be undertaken in the near future within the context of more substantive and wide - ranging changes to the current legislation. our foundations for financial stability will also continue to be strengthened with the ongoing evolution of a more diversified and balanced financial structure. today, malaysia stands at the forefront in the provision of comprehensive islamic financial services covering banking, takaful, and the capital and money markets. in the area of takaful, bank negara malaysia continues to undertake initiatives aimed at developing significant market players that are able to compete effectively and efficiently. although the organic growth of the existing takaful operators may meet the current demand for takaful products and services, it is envisaged that players with strong capabilities in operational and risk management, and product development would hasten the further expansion of the takaful industry. in may this year, the bank announced the issuance of up to four new licences for takaful operators. the additional takaful licences are offered to sound financial institutions, with priority accorded to those with experience in islamic banking, takaful or insurance business. it could also include joint ventures or consortiums of financial institutions, which includes at least a banking group. such joint ventures or consortiums would enable the new takaful operators to leverage on the expertise, experience and infrastructure of their partner financial institutions. in line with the liberalisation in the islamic banking industry, foreign equity interest of up to 49 % will be allowed in the takaful entity to secure strong shareholders, and foster meaningful strategic alliances. for insurers, the potential to participate with strong local and foreign partners in the new takaful operators will open up significant opportunities to expand their product offerings to include a comprehensive range of insurance and takaful products. existing

that the demand for computers is quite sensitive to movements in the cost of capital. the combination of an apparently high price elasticity and a rapid decline in relative computer prices – 20 percent per year over the past decade – likely led to the boom in high - tech investment. a third characteristic of some high - tech investment is the magnitude of external or spillover effects that it generates. some high - tech equipment generates benefits not only to the owner of the machine but to other agents in the economy as well. i am thinking in particular about so - called network effects - the observation that four computers networked together are more than twice as valuable as two. supporting structural changes the technological changes inspired by investments in computers have enhanced the ability of businesses to reduce their operating expenses. in many industries, investments in information technologies have helped firms to cut back on the volume of inventories that they hold as a precaution against glitches in their supply chain or as a hedge against unexpected increases in aggregate demand. product development costs have probably also been reduced through the use of better computer hardware and software, and new communications technologies have increased the speed with which firms can share information – both internally and with their customers and suppliers. moreover, given intense competition and the resulting lack of pricing leverage, ongoing programs to reduce costs have become a key part of corporate strategies to maintain or improve profit margins. the focus on cost reduction has worked to head off the development of inflationary pressures in this expansion. productivity and the current macroeconomic setting as you are aware, the united states is experiencing a period of subpar growth. for the last three quarters, the annualized growth rate has been 1¾ percent, which is well below the trend rate of growth that many think our economy can sustain. during this period, productivity grew at an annual rate of about 2½ percent during the second half of 2000 and declined at an annual rate of 1¼ percent during the first quarter of this year. this slowing in productivity growth has led a number of observers to ask whether the acceleration of productivity of the latter part of the 1990s was a cyclical phenomenon, which was bound to come to an end when the economy slowed, or a structural one. cyclical forces, such as the inability of businesses to add to their payrolls as rapidly as they would have liked in response to the rise in demand, probably played some role in these productivity gains. in addition, some enthusiasts made overly optimistic statements about the benefits of these newer technologies. however,