mohd razif bin abd kadir : unlocking opportunities opening address by mr mohd razif bin abd kadir, deputy governor of the central bank of malaysia, at the 10th asean insurance regulators meeting and 33rd asean insurance council meeting, kuala lumpur, 15 november 2007. * * * it is my great pleasure to be here today at the 10th asean insurance regulators meeting and the 33rd asean insurance council meeting in kuala lumpur. let me first extend a warm welcome and " selamat datang " to all the delegates from abroad as well as to fellow malaysians here today. during this “ [UNK] malaysia year ” which is also the year of malaysia's 50th anniversary celebrations of our independence, i do hope that our foreign delegates will make time to enjoy malaysia's diverse culture and the many unique sights, sounds and flavours. i am indeed honoured to be officiating the opening of the 10th asean insurance regulators meeting and the 33rd asean insurance council meeting. i understand that several fruitful meetings and exchange of ideas have already taken place yesterday, and several meetings have been outlined over the next two days to discuss various matters, revolving around the theme towards moving the asean insurance industry forward. the asean region has recorded significant growth with member countries growing at an average rate of 6 % in 2006. asean countries have grown stronger and our trade and cooperation have expanded further. building on these existing strong linkages, asean is expected to further progress in deepening and broadening its economic pie within asean and in the region. the asean region as a group accounted for approximately 8. 3 % of asia's total gdp in recent years and generated around 22 % of asia's total export, placing the region second behind china, asia's largest exporter. in 2006, asean foreign direct investment rose by 27 % to reach usd52 billion and total exports increased by 16. 5 % to reach usd758. 04 billion. trade among asean countries has also increased tremendously. in fact for malaysia, our trade with the asean region comprised about 25 % of our total trade. as we move towards afta and the removal of tariffs, the economic integration between countries in the region will deepen further. the encouraging economic growth prospects of asean present tremendous growth potential and opportunities for the asean insurance market. this increases the need to accelerate the development of insurance markets in the region to support the explosive growth in trade within asean. over time, the aim should be to achieve a better balance between

##cutor between such external institutions as the ifc and miga, european investment bank, cdb and any other large funding agency and the currency union. at the domestic level to provide umbrella support for the micro financing agencies such as the sedus and national development foundations. this will constitute in its entirety a system of development financing throughout the currency union which is interlocking, has significant economies of scale in administration and technical capacity as well as having access to increased funding sources. in the same vein the regionalization of social security systems within the currency union would be a natural and evolutionary response to the free movement of labour and capital, particularly in light of the current reciprocity arrangements. it would also be a rational response to the current challenges of these systems so that they can bulk up and increase their size to achieve significant improvement in economies of scale and mitigation of risk. the underlying and obvious theme in this futuristic outlook is the need to increase the size and scale of institutions and markets to the minimum critical operational levels that facilitates and stimulates further growth and diversification. as the regional and international system opens up and the currency union and its institutions have to contend with increasingly open and highly competitive systems we will have no choice but to engage in lateral arrangements across the currency union to create institutions of sufficient size, heft and influence to preserve a local presence in our own market place. the way forward would therefore involve deep and objective reflection on the current situation and the options facing us in this new and very challenging environment. we need to identify the gaps in the current financial system which we need to fill, as well as the remaining impediments to the creation of a single financial space. we need to carefully examine the mix of public and private sector activities which are necessary to achieve our goals. we also need to identify the regional and international institutions in both the public and private sectors which can be of critical value to us in achieving these goals. we need to clearly identify the legislative arrangements which are critical to go forward. finally, we need to take into account the precise strategies and means by which the currency union can successfully integrate itself into the regional and international financial systems.