YBhg Datuk Ali Abdul Kadir
Chairman, Securities Commission
in conjunction with the
Securities Commission – Industry Dinner
22 October 2003
Sheraton Imperial Hotel
YB Dato’ Dr Jamaluddin Jarjis, Minister of Finance II,
Ladies and gentlemen,
First, I would like to extend my warmest gratitude to YB Dato’ Dr Jamaluddin Jarjis, Minister of Finance II for gracing this Securities Commission – Industry Dinner that is held in conjunction with the Securities Commission’s (SC) 10th Anniversary. This dinner is also the closing dinner for our Capital Market Masterplan (CMP) Dialogue, which began this Monday. Second, I would like to record my appreciation to the industry participants here tonight for their support and cooperation extended to the commission since its establishment 10 years ago.
I never tire of emphasising that the successes achieved in the Malaysian capital market would not have been possible without the excellent collaborative partnership between the regulators and industry. This partnership is manifested through the active industry participation and feedback garnered from the frequent bilateral meetings, industry brainstorming workshops and SC Dialogues. And certainly the industry has also had a substantial role in the formulation of the CMP. We are also appreciative of the time spent by many prominent industry leaders who participated in the Capital Market Advisory Council (CMAC) and its committees on investments, market intermediaries, the Islamic capital market and market institutions and providing their candid opinions and ideas on strategies, policies and regulations. On behalf of the Commission and staff, I thank you all very much.
Over the past three days, some of you have participated in the Dialogue as part of our consultative process to realign our CMP and its implementation. We have organised this Dialogue differently to more closely reflect our philosophy of working together with industry to formulate capital market policies and as our partner in building an internationally competitive capital market. The feedback has been that these “brainstorming” sessions have been very productive and enjoyable, and indeed even have generated much lively discussion and many useful ideas.
The discussions that took place over the past three days were based on the theme “Enhancing Competitiveness and Value Creation.” We are pleased to note that these discussions have validated and re-affirmed the vision and strategies in the CMP and have further built upon the groundwork mapped out earlier. Let me briefly summarise the key themes arising from the Dialogue.
One issue discussed was the challenges of intermediary evolution given changes in the financial landscape. On this score, it was noted that there was a need to further reduce segmentation barriers in the financial markets and to pursue greater de-regulation to facilitate the re-engineering of existing business models to enhance industry competitiveness and value creation. There were also calls from industry for definitive implementation of programs on the consolidation of the stockbroking industry.
Another major theme centred on enhancing the value proposition of the Malaysian capital market by further enhancing the standards of governance and professionalism. It was recognised that the regulators as well as industry, over the past few years, have launched many initiatives to help enhance standards.
However, given the critical importance of investor confidence and trust to the development of the capital market, further areas for progress were identified and there were industry requests for more regulation!! Nevertheless as the CMP has already stated that there shall be “no more regulation than necessary”, industry was encouraged to address this through greater self-regulation with the SC regulating only where necessary so as not to burden industry with compliance costs. Industry also discussed challenges and approaches to strengthening skill sets so that it would enable them to support innovation on the capital market and to deliver greater value to customers.
The final theme that emerged from the SC dialogues related to the need to further strengthen domestic core competences and on how best to leverage on these comparative advantages in the global marketplace. Domestic intermediaries felt that there were still factors that constrained their growth and also their ability to tap the potentially exciting growth prospects offered by a thriving Islamic capital market. These were issues that would need to be addressed during CMP Phase 2. We will provide you with more details from our deliberations over the course of the next few months.
Ladies and Gentlemen,
BUILDING A PREMIER MARKET BASED ON INTEGRITY:
Tonight, I would now like to take this opportunity to share with you some further thoughts on capital market development. The capital market often appears complex and sophisticated. But when we distil the complexity of the market into its essence, it comes down to one simple relationship. When an investor places his savings in the market, he is simply placing his faith and trust in the market – in the companies that he buys, in the products that he invests.
If we succeed in building a relationship of trust, we will be able to build a market that will be internationally competitive. This is why I always emphasise that the way forward is focus on building a premier market. A premier market is a market built on integrity, confidence and quality.
It is about the quality of investible products, about companies that are extremely mindful of the interest of minority investors and that seek to grow in a manner that benefits shareholders. It is about intermediaries and professionals that ensure that they offer the best advice and sell products suitable to the needs of their clients.
The value proposition of the Malaysian capital market must therefore be built on the premier qualities of integrity, confidence and quality. More than anything else, these values will ensure that the customers will have a good experience and that they will return again and again and again. And they will pass the word around that Malaysia is a good place to invest in.
It is confidence, and not quick gains, that will sustain our market from strength to strength. Markets should never be allowed to deteriorate to a situation of “buyer beware”. All of us, whether regulator, intermediary, professional or issuer, must work very hard at this and guard our reputation jealously.
Building a reputation for integrity is about building an ingrained belief by the issuers, management of listed companies and intermediaries that they serve a higher cause – the betterment of the welfare of the community and to repay those that have faith in them.
It is all too easy to get carried away in the chase for profits and to forget our responsibilities to those who have confidence in us. This is where the creed that maximization of share price or profits is the same as the maximization of shareholder value flounders. As recent experiences in the US involving what was considered world-class companies such as Enron and Arthur Anderson illustrate, value is not sustainable if it is not built on integrity and trust.
To be fair, we, on the regulatory side, are fortunate in that we do not have your burden of having to deliver on the bottom-line to justify our existence. When I was in the private sector, I too was subject to the all too familiar conflicting pressures between meeting ever-expanding profit targets and maintaining high standards of integrity. So I am only too aware of how easy it is to forget the basic values and that is why you will hear me constantly remind you, lest you forget.
Ladies and gentlemen,
Finally, let me take this opportunity to thank the management and staff of the SC for all their hard work and contributions over the last 10 years, that has helped to build the SC and the capital market to where it is today, and to the Ministry of Finance, Bank Negara Malaysia and fellow regulators for their kind assistance, cooperation and understanding.
Over the past three days, I have been constantly reminding speakers not to exceed the five minutes allotted to them for speaking but I am afraid that I may have probably exceeded the time that has been allotted to me tonight. As I have mentioned earlier, the SC is very honoured that YB Dato’ Dr Jamaluddin Jarjis is here with us tonight and without further ado, I would like to invite the Minister of Finance II to deliver his keynote address as our guest of honour.