KEYNOTE ADDRESS BY 16th RAM LEAGUE AWARDS
YBhg Tan Sri Datuk Yong Poh Kon, Independent Non-Executive Director of RAM Holdings Berhad, |
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| 1. | I would like to express my gratitude to RAM Holdings Berhad for inviting me to be their guest of honour here today at the RAM League Awards 2019. The event has grown from strength to strength from its humble beginnings 16 years ago. This is a testament to the depth of our domestic bond market, and the many issuers and intermediaries who have collectively contributed to its development. |
| 2. | These awards serve to recognise your hard work and innovative ideas. As we pay tribute to this year’s recipients, let us also not forget to give a round of applause to the RAM team, led by Datuk Seri Dr Govindan, for their tireless efforts and dedication. Certainly the collective endeavour of industry and all stakeholders is essential for us to “shape a sustainable future together”. |
| MALAYSIA: A WELL-DEVELOPED BOND AND SUKUK MARKET | |
| Ladies and Gentlemen, | |
| 3. | The importance of the bond market cannot be overstated as its development is integral to the continued and sustainable growth of the domestic economy. When Malaysia first set out to diversify its financial system in the late 1990s, the main objective was to reduce inherent risks that had built up within the system. A clear and long-term strategic approach enabled us to put in place a facilitative regulatory framework as well as enhance the bond market ecosystem. |
| 4. | Today, Malaysia’s RM1.4 trillion1 bond market is acknowledged regionally as a market that is well developed and broad. It has become an important funding avenue for local businesses and large-scale infrastructure projects. In fact, corporate bonds and sukuk issuances constitute more than 90% of the RM110 billion in primary funds raised annually over the last ten years. |
| 5. | Sukuk itself has gained popularity amongst corporate issuers as the debt instrument of choice. It now makes up more than three quarters of corporate bonds and sukuk outstanding, compared to a 22% share almost 20 years ago. This has enabled Malaysia to retain its position as a leading global Islamic capital market (ICM) hub. |
| IMPROVING MARKET ACCESS FOR ALL | |
| Ladies and Gentlemen, | |
| 6. | In the bond market, triple A (AAA) signifies exceptional standards and high quality. Like market participants, the SC also aspires for a triple A (AAA) market; one which is Accessible, Agile and Accountable. |
| 7. | Accessibility means all investors, including retail investors, are able to participate in the bond and sukuk market. The introduction of the retail bonds and sukuk framework in 2012 was the first step towards opening up a market that is predominately institutional. So far, two institutions have issued retail bonds under this framework – DanaInfra Nasional Berhad and Khazanah Nasional Berhad2. This was followed by the establishment of the Bond and Sukuk Information Exchange (BIX) in 2017 to increase accessibility and enhance transparency of bond prices. |
| 8. | Last year saw additional measures to facilitate greater retail access, which included refining the issuance process and disclosure requirements and widening the type of corporate bonds available. A “seasoned bond and sukuk framework” allowed for existing corporate bonds and sukuk, that have been issued and offered for at least 12 months, to be re-dominated and offered to retail investors without the need for a prospectus. Therefore, it is heartening to note that an investment platform operator has seized this opportunity to offer such products to the retail public. |
| 9. | Separately, we would also encourage our intermediaries to widen the spectrum of issuers. Over the years, the financial services sector alone represented close to half of all corporate bond and sukuk issuances. Assisting more non-financial companies to access our market will certainly enhance the diversity and attractiveness of Malaysia’s bonds and sukuk. |
OPPORTUNITIES IN GREEN FINANCE AND SRI |
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| Ladies and Gentlemen, | |
| 10. | The SC is cognisant that business models need to be agile to adapt to the rigours of a constantly evolving marketplace. We are prepared to work with licensed intermediaries on how best to accommodate innovative practices within the existing market framework. |
| 11. | Agility also means having the ability to seek out new opportunities and pathways. In this regard, the trend towards green and sustainable and responsible investing (SRI) is an area where I believe our market possesses an advantage. |
| 12. | There has been eight bond issuances under the ASEAN Green Bond Standards (GBS) by issuers from Malaysia, Singapore, Thailand and the Philippines as well as one issuance under the ASEAN Sustainability Bond Standards. This demonstrates an increasing appetite amongst investors for such products. |
| 13. | Islamic financial products, such as sukuk, have similar values and aspirations to the principles embodied by SRI. As our domestic players already possess a wealth of experience and expertise in origination and distribution of bonds and sukuk, this emerging segment is an opportunity to grow, not only your businesses, but our bond market as well. I am confident that our intermediaries and ratings agencies, including RAM, are well-placed to take up this challenge; having been involved in the issuance and rating of the world’s first SRI sukuk and green sukuk. |
ACCOUNTABILITY IMPORTANT FOR TRUST AND CONFIDENCE |
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| Ladies and Gentlemen, | |
| 14. | Being accountable means holding ourselves up to a high bar and always acting in the best interests of our clients. Maintaining trust and confidence in the Malaysian capital market entails not only having a strong regulatory framework and a fair and orderly market, it is about the quality, high standards and level of service offered by our market participants. |
| 15. | We have heard and read about cases where fund raising proceeds have been misused. Mis-selling of retail investment products, including retail bonds, have also arisen in other jurisdictions. For retail products, the SC will place greater emphasis on sales practices and investor education in order to ensure that retail investors are not disadvantaged or misled. Intermediaries have the responsibility to make sure that products offered are suitable and that retail investors are fully informed of the risks. |
| 16. | Therefore, it is vitally important that good professional standards and fiduciary obligations are maintained. Only by doing so, can we bring the bond market to greater heights. |
CONCLUSION |
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| Ladies and Gentlemen, | |
| 17. | Efforts to broaden and deepen the Malaysian bond market over the years has certainly borne fruit. And, it would not have been possible without the hard work and determination of all stakeholders, in particular our intermediaries and issuers. Therefore, I call for your continued support and close cooperation towards developing a market that we can be proud of. |
| 18. | Allow me to congratulate the twenty-five recipients of today’s awards for their contributions towards the bond market. I hope that your exemplary work and high levels of excellence will be an inspiration for others to emulate. |
| 19. | I would also like to thank RAM for their continuous support and contributions to the Malaysian bond market and for inviting me here today to speak as the guest of honour. |
| 20. | Thank you. |
