Closing Remarks


YBhg Tan Sri Zarinah Anwar
Chairman, Securities Commission Malaysia

at the

World Capital Markets Symposium 2009
11 August 2009
Mandarin Oriental Kuala Lumpur

Ladies and gentlemen,


Thank you very much for staying these two days with us. I do hope that this inaugural World Capital Markets Symposium has lived up to its expectations. Over the past two days, there has been intensive dialogue on the global financial crisis, as deep as it has been wide ranging, amongst the speakers and the audience.


If you will allow me a few minutes, I would like to review quickly the highlights of what has been a broad and insightful series of conversations. The Honourable Prime Minister had set the tone for the discussion at the beginning of the symposium by outlining a need for a clear and shared vision for global regulation. He had highlighted the importance of pursuing financially stable, equitable and socially inclusive growth strategies, and he also emphasised the need to position Asia as an engine of growth through leveraging on Asia’s savings.


There is broad consensus that through fast action by governments to take up the slack from private spending, the world has avoided falling into the so called “Great Depression 2.0”. Nevertheless, significant policy challenges remain. There is a pressing need to fix financial systems and get back on the growth track in the short term. Regulatory reforms and new growth strategies need to be pursued over the medium term and global imbalances, as well as investments for environmental sustainability is a critical issue for the longer term. These challenges immediately speak to two broad themes: the first concerns macroeconomic policy; and the second, regulatory reform.


On the macroeconomy, speakers acknowledged that governments will need to continue playing a more interventionist role with regard to fiscal stimulus, reinforcing social safety nets and spending on future growth until private spending recovers. However, there is a need to address market concerns over the ability of governments to sustain spending, as we heard from the ministerial session yesterday, to avoid the consequent risks of premature withdrawal of government support, as well as to manage political resistance to much needed microeconomic structural reforms.


In the discussion on global imbalances involving surplus and deficit economies, it is anticipated that global demand will increasingly come from emerging countries. Economic transformation by these countries will generate even more opportunities but will require deepening of domestic financial systems to support growth. There are strong views that the integration of regional markets will complement and facilitate this process. A greater role for developing countries will also create exciting opportunities for the private sector and for international investors. Even now, we have heard that confidence in emerging markets is high, debt is relatively lower, the cost of borrowings is lower, foreign reserves are high and inflationary pressures remain subdued. On the demand side, the good news is that the market panic is over as we heard just now. Investors are moving back into stocks, driven by global monetary easing. The outlook for initial public offerings appears favourable and there is strong demand for superior investment opportunities by long term high quality investors. But in the search for yield, investors are more sensitive to risks and a greater affinity for strong corporate governance prevails.


Speakers therefore argued that developing countries will also need to have a stronger capacity for national macroeconomic management and human capital development, if they are to fully exploit their potential for growth. At the same time, as many speakers have suggested, Asia in particular needs to make its voice heard. It needs to be more proactive in the search for global solutions and more visibly engaged with the world community on these issues. Indeed, given its potential role in driving world growth, it has been widely suggested that Asia needs to be more assertive in contributing to the agenda for global reform.


The role of regulators in the crisis and priorities for regulatory reform has clearly received considerable attention over the past two days. Many have described the crisis as a near-death experience and this has prompted a greater willingness to re-examine current regulatory approaches with the caveat that we should be mindful not to swing the regulatory pendulum too far so as to constrain the economic role of financial markets. Regulatory attitudes are also changing. Regulators are re-examining what should and should not be regulated, as well as their approach to market intervention.


There are convergent views on the need to bring previously unregulated markets and players under direct supervision, especially those that are systemically significant. Entities and products performing the same economic function should fall under the same regulatory regime. There is also a need for more concerted efforts to adopt common standards to minimise regulatory arbitrage. Overall, there seems to be a need for regulatory reform to move forward rather than to try to turn back the clock. But also there were reminders that there needs to be a will to implement all these changes.


Finally, HRH Raja Dr Nazrin Shah reminded us that the issue lies not so much with innovation but with the loss of the finance industry’s moral compass. There is therefore a need to bring back faith into finance. Islamic finance, through its set of principles for good governance and responsibility, can help curtail excesses and promote higher levels of honesty, fairness and integrity. It is heartening to see so much worldwide interests in this area.

Ladies and gentlemen


The speakers and moderators, whose skill in prompting purposeful debate, have sustained such high levels of energy throughout this symposium. Your active participation has added to the free flow of insightful and informed discussion. It is therefore with some reluctance that I bring this symposium to a close. Truly, this event has been made possible only with the strong support of so many people. I want to thank once again all the speakers, the moderators, our partners, the media and all of you, the participants, who have engaged so actively throughout the last two days. My final word of thanks goes to the dedicated and hardworking staff of the Securities Commission. Thank you everyone. A good evening to all and to our foreign guests, a safe journey home.

Thank you.