capital market. at 104. 5 % of gdp, our bond market is the largest in south east asia, and fourth in asia after japan, china and korea. more than rm150 billion is invested by the life insurance industry in the bond market which provides an important source of long term funding that is critical for the development needs of the economy, in particular in financing long term infrastructure project. during recent episodes of market volatility which saw substantial capital outflows by foreign portfolio investors, insurance companies were among the large domestic institutional investors that provided stability to the market. indeed, the insurance has become an important component in the malaysian market in contributing towards the growth of bond and sukuk markets. low penetration signals opportunities for insurers there is no doubt that the industry has come a long way. this journey has been made possible with the commitment of many in this room today who have led their various institutions to greater heights, and who understood and supported the reforms introduced in the industry over the last two and half decades were critical to take the industry to a new bis central bankers ’ speeches level of maturity. it was painful but necessary. the fruits of the various reforms we made are for all to see. the industry is now more resilient and robust. over the last 4 decades together, we had laid a strong foundation for the insurance industry to grow even larger. therefore, our aspirations for the industry ought to be more ambitious. under the government ’ s economic transformation programme ( etp ), a penetration level of 75 % by 2020 has been set as a goal for the industry. after two decades of steady growth, the current level of insurance and takaful penetration, at 54 %, still remains below targeted level. while this ratio is in no way flattering, it also reflects the enormous untapped potential in the malaysian insurance sector. but realising this potential would require an inspired leadership by the industry, to rise to challenge the status quo and raise the game in delivering value to stakeholders. after 40 years, i believe the industry is at another crossroad. a new and exciting wave of growth and development for the industries lies ahead of us, but it can only happens if we are prepared once again to embrace the change as we did before, and collectively rise to overcome the barriers that threaten to hold the industry back from achieving its full potential. reform via introduction of life framework the next phase of transformation is at our doorstep. as you are well aware, the blueprint

markets, selfcorrections and minimal interventions would deliver the best economic outcomes. however, recent experiences have shown that policy interventions to correct market misalignments after a crisis may prove too late as the aftermath could be extremely costly. this, therefore, call for policies to be pre - emptive rather than reactive. for policymakers, the aim is to preserve macroeconomic and financial stability, and build the country ’ s resilience to shocks. macroeconomics stability is a very important prerequisite for businesses and individuals to undertake economic activities. in strengthening the resilience of our economy and promoting the sustainability of growth, the role of policymakers go beyond managing short - term fluctuations in business and financial cycles. equally important are structural reforms and institutional building that would increase the capacity and flexibility of the economy to absorb shocks and to improve the competitiveness and inclusiveness of the economy. the resilient and ability of an economy to face a crisis depends as much on bis central bankers ’ speeches what has been done throughout the years to strengthen the economic fundamentals and the financial system. however, the implementation of structural reforms is not without risks. in this regard, reforms that are undertaken in an environment of growth and stability would have a higher chance of success, as it would cushion the potential disruptions to economic activity and dislocations to vulnerable segments of society. the formulation of appropriate and consistent short - term and long - term policies, in turn, requires policymakers to have a holistic understanding of the domestic economy and financial system. from experience, a broad macro - level understanding of issues alone may not be sufficient, as issues at the sectoral level may be obscured at the aggregate level. this highlights the importance of having a firm understanding of micro - level behaviour and reaction patterns of households and businesses, which would reinforce the design of macrobased policy strategies. in this regard, the world development report 2014 is useful in facilitating policymakers in making more informed policy decisions. the report provides a wide coverage of micro - level risk management practices by households, businesses and the wider community, and how they are linked to macro - level risk management policies by national and global institutions. essentially, with a better understanding of micro - level risk management, the implementation of macro - based policies can be more effective, not only at the national level but also at the organisational and household levels. the report further emphasis the need to manage risks in a pro - active, systemic and integrated way,