technology to widen technical capacities. these measures would essentially reduce operational costs and improve the nation's competitiveness. in this more uncertain environment a stable exchange rate is a major competitive advantage. for an open trade - dependent economy, stability in the exchange rates accords significant advantage in enhancing trade and investment opportunities. by eliminating wide swings in the exchange rates, the pegged exchange rate regime has provided a stable environment for businesses to plan their investments and to undertake their operations. at the same time, stability of the exchange rate also provides an environment that facilitates continuous structural reform to improve malaysia's competitive position. it is through long - term structural adjustments rather than frequent adjustments in the exchange rate that a country can build a strong business foundation, improve efficiency and create the enabling environment that encourage competition and innovation. as a small open economy, malaysia does not have influence over the external factors that affect the economy. however, by working on strengthening domestic economic fundamentals, malaysia will be in a stronger position to manage and mitigate the impact of the volatility in the external sector. three elements are important in ensuring that an exchange rate regime continues to operate effectively. first, it needs to be well supported by the domestic fundamentals. second, there must be flexibility in domestic markets to enable the economy to adjust and absorb the impact from external volatility. third, increased competitiveness is achieved through efficiency and productivity gains rather than relying on currency depreciation. in respect to the conditions prevailing in malaysia, malaysia's strong economic fundamentals, with low rate of inflation, strong external balance, low level of foreign debt, strong reserves levels and strengthened banking sector have provided strong support for the pegged exchange rate regime. malaysia also has sufficient flexibility to undertake adjustments on all sectors of the economy to remain competitive. the diversified economic structure, the enhanced mobility of capital and labour has also provided malaysia with increased resilience to weather external shocks. malaysia also had the flexibility of policy to respond to the circumstances. in all cases, when an exchange rate regime has failed, it was not due to the regime itself, but due to the weaknesses in the economy and the financial system. having undergone significant transformation and emerging with a much strengthened set of fundamentals, the malaysian and regional economies are better able to absorb the volatility in the exchange rates. countries are also more cognizant of the costs of currency depreciation, particularly on confidence. as an example, comparing the response of regional currencies

rules and practices governing bank supervision, financial accounting principles, payment systems and policies and standards on statistics. a number of national laws are also being harmonised. however, there have been delays in realising targets set out in the eamu road map and that there are several challenges that could further impede the full implementation of eamu protocol. it is therefore imperative that we assess the realism in the timelines embedded in the eamu road map and do things right. going forward, i want to re - iterate bou ’ s full support to the eamu process. i fully believe that there are huge pay - offs for our economies if we harmonise and integrate our monetary, financial and payments systems, even before we actualize a single currency system for the community. may we work steadily towards the realization of the eamu. thank you for your attention. page 2 of 3