zeti akhtar aziz : potential for new linkages and opportunities between japan and malaysia speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the malaysia - japan business forum " enhancing new linkages and opportunities ", kuala lumpur, 24 august 2007. * * * it is my honour and great pleasure to be here to speak at this important forum which brings together government leaders and the business community from our two countries. i would like to take the opportunity to thank the japan external trade organisation ( jetro ) for inviting me to speak at this forum. jetro has played an important role in fostering the economic relations between malaysia and japan. while japan and malaysia has established strong economic ties, the environment in which we are operating has experienced pronounced changes. these changes present the potential for new linkages and opportunities between japan and malaysia. enhancing interlinkages and integration in asia asia today is increasingly recognised as a dynamic growth region in the global economy. asia's previous success was accomplished in part by strengthening its global interlinkages by exports to the rest of the world. today, new regional interlinkages are emerging as asia expands further its trade and investment within the region, a trend that has generated mutually reinforcing regional growth. the asian economic integration is now already well advanced through the intensification of intra - regional trade and investment. trade within asia now accounts for more than half of the total trade of the region. this change is partly the result of the rapidly growing economies in asia, which has created a large and expanding cumulative export market. this economic integration is also the result of asia's participation in the globalization of production. these trends have led to greater diversification of economic activity in the region and a reduction in the over - concentration in the traditional export markets. in the area of investment, japan has for several decades been a major foreign direct investor in the asian region. a more recent phenomenon is the more widespread cross - border investment undertaken in the region to capitalise on the growing opportunities arising from the diversity of economic strengths in the region. these developments have increased the potential for asia to be an important engine of growth in the global economy. the advancement that has been achieved in the increased economic integration needs to be reinforced by greater financial integration. accelerating the regional financial integration process would serve as a powerful impetus, not only for reinforcing the trade and investment inter linkages, but more importantly to facilitate a more efficient international allocation of

recrimination. this failure to change our accounting approach – which the bank of mauritius act allows – left me with a feeling of deep regret because i sincerely believe that the bank missed a golden opportunity to break new ground. our balance sheet would have been in much healthier shape today. i intend to pursue consultations with the treasury this year as i firmly believe that dynamic provisioning would allow us to provide for “ rainy days ” in times of plenty. instead of dipping into our reserves, i feel that we should adopt a more conservative approach to keeping the books instead of slavishly adhering to standards which are anyway more applicable to commercial banks than to a central bank with a very different balance sheet structure. regional and international presence the year 2009 saw the bank playing a very active role at the regional and international level. we participated in various regional and international fora, namely the sadc committee of central bank governors, the meeting of governors of the association of african central banks as well as its eastern african sub - regional chapter and the commonwealth central bank governors meeting which i had the honour to chair, and whose report i presented to the commonwealth ministers of finance meeting in cyprus. we were also closely involved in discussions at various fora convened to consider the african response to the crisis. we made our contribution to de - stigmatising access to fund resources for countries like ours with an appropriate underlying policy framework in the event of crisis - induced balance of payments difficulties – a scenario that was very much on the cards in the first semester of the year. the situation improved rapidly thereafter and we could discard preliminary plans to draw on the imf ’ s flexible line of credit which, coming as it did without any ex - ante conditionality, was tailor - made to meet our kind of requirement. a lot has been said in some quarters about the travels of senior management including myself, to international meetings and conferences. globalisation and the internationalisation of our banking sector require the central bank to enhance its role in professional, regional and international conclaves – just as we have sought to lend additional credibility to our monetary policy committee by resorting at considerable cost to the services of two international professionals of repute as its members. at a time when there is re - thinking and re - modeling of the global financial architecture, i believe that participation of our central bank in such fora is a matter of strategic importance to ensure that mauritius is on the world map. now, more than ever, the “