zeti akhtar aziz : the malaysian bond market speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of ambank's malaysia corporate bond handbook commodity murabahah house, kuala lumpur, 18 august 2009. * * * it is my pleasure to be here today on this occasion of the launch of the malaysia corporate bond handbook. the handbook, which is the first comprehensive guidebook for bond investors, is an initiative that will contribute towards improving the visibility and the development of the malaysian bond market. our bond market continues to be dynamic, with continued new developments that enhance malaysia's position as a centre of origination for securities. in addition, a deeper and more liquid domestic bond market is also important for the development of a vibrant regional bond market which would in turn allow for a part of the savings in the region to be recycled and re - invested in the region. growth and development of the malaysian bond market the malaysian bond market has experienced significant transformation over the recent decade and is now well positioned to have a more significant role to support the changing requirements of the economy in our next stage of development. initiatives introduced by bank negara malaysia to spur the development of the domestic bond market started as far back as 1986. the establishment of cagamas berhad, the national mortgage corporation was the first institution that the bank established as part of the efforts to develop the domestic bond market. this was followed with the establishment of other institutions, which included the securities commission and the domestic rating agencies. the bank also put in place a comprehensive and modern depository, delivery and settlement system to facilitate the issuance, trading and settlement of debt securities in the market. mechanisms to increase liquidity in the market to enhance the overall price discovery process were also introduced through the provision of updated market information. in addition, measures were also introduced to release the captive holdings and to facilitate the efficient borrowing and lending of securities. more flexible foreign exchange policies was also implemented to facilitate capital raising and investment by non - residents to further accelerate the development of our domestic bond market. today, the malaysian bond market is the largest in the asean region, accounting for nearly 90 percent of our gross domestic product. corporations now have access to more innovative and sophisticated financing solutions through the bond market to meet their diverse funding requirements. financing through the bond market by the corporate sector now accounts for 58 percent of their total financing compared to 33 percent prior to the asian financial crisis, when there

group in asia is estimated to be increasing at 7 % per year, second only to those in the middle east, numbering 300, 000 and growing at 9 % per year. traditionally, investors in asia and the middle east have looked to the developed western markets to meet their investment needs, in view of the more developed financial markets and the range of asset classes. increasingly however, there is growing interest and search for improved returns on investment in other parts of the world. this has been a global phenomenon for some years now, characterised by excess liquidity and low yields in the traditional markets. the new silk road creates linkages that build on the comparative advantages between asia and the middle east ladies and gentlemen, historically, trade and investment in asia and the middle east has been linked to the developed economies. however, it is now increasingly recognised that there are significant complementarities between our two dynamic regions. these complementarities provide a platform for two - way flows that enhances income and wealth creation. the different demand patterns of each respective region reinforces the significance of the complementarities. the middle east investors have a greater need for diversification, both in terms of geographical allocation and asset classes, beyond the traditional investments in the us and europe. asia in turn, the home to some of the fastest growing economies in the world, offers highly diverse investment opportunities, ranging from in vietnam to japan, and in a broad scope of industries, ranging from natural resource producers to established high - tech brands. such investment opportunities continue to support the growth momentum in the region. at the same time, middle east domestic infrastructure requirements are estimated to total usd500 billion for the next five years, and asian companies have demonstrated the capacity to provide the technology, expertise and human capital to meet these infrastructure demands. asia's relentless march towards development offers new opportunities for the middle east. asia's continued need for productive capital and uninterrupted energy supply to sustain its high growth matches the middle east's resource endowments. it is estimated that asia needs usd 1 trillion worth of infrastructure investment over the next five years, and is in search of new partnerships and strategic investors to co - invest in these undertakings. in focussing on the respective comparative advantages and connecting via the new silk road, it contributes to expanding the opportunities in both the regions. essentially, this extends the production possibility frontiers to create new areas of growth. the participation of a wider pool of investors also enables better risk sharing and consequently, increases