Launch of "The Evolving Business of Asset Management" A Report by The Institute of Capital Market Research Malaysia and Nomura Institute of Capital Market Research

20 June 2019 | By : Datuk Syed Zaid Albar, Chairman, Securities Commission Malaysia

Keynote Address by Datuk Syed Zaid Albar
Chairman of Securities Commission Malaysia

at the Launch of "The Evolving Business of Asset Management"
A Report by The Institute of Capital Markets Research Malaysia
and Nomura Institute of Capital Market Research
in Kuala Lumpur on Thursday, 20 June 2019

Professor Mohamed Ariff Syed Mohamed, Member of the Board of the Institute for Capital Market Research Malaysia; Mr Toshiyasu Iiyama, Senior Managing Director, Head of China Committee, Nomura Holdings; Distinguished guests, ladies and gentlemen. A very good morning to everyone.
1.	It is a pleasure for me to be here for the launch of "The Evolving Business of Asset Management". This report arose from a collaboration between the Institute for Capital Market Research Malaysia and the Nomura Institute for Capital Market Research, and I thank both organisations for their kind invitation.
2.	In February 2018, Securities Commission Malaysia announced the establishment of an independent think-tank to focus on issues relating to capital market development. This initiative was borne out of an initial concept presented to the Board of the Capital Market Development Fund, and their subsequent support has paved the way for the incorporation of ICMR.
3.	At first glance, developmental research may not appear to be an intuitive endeavour for a securities regulator. However, we must remember that public institutions can play a key role not only in maintaining order and preventing crises, but also in charting a holistic and sustainable development path. This is particularly relevant in the context of Malaysia's status as an emerging market economy.
4.	Indeed, the philosophy of "growth with governance" – which, incidentally, is also the theme of the second Capital Market Masterplan – is embodied in the laws from which the SC draws its powers, giving rise to our statutory mandate to regulate and develop the Malaysian capital market.
Ladies and gentlemen, The need for a shared developmental prerogative
5.	In line with this mandate, the SC has pursued a broad spectrum of initiatives to drive the development of the Malaysian capital market. These initiatives aimed to diversify our range of intermediaries, asset classes as well as investment products and services, while also deepening existing segments of the market.
6.	At the same time, SC's concurrent efforts on the regulatory front drove home the importance of transparency, governance and good conduct among market participants. This resulted in a fair, orderly and trusted market which provides a conducive environment for the earlier-mentioned initiatives to flourish.
7.	These efforts have helped to drive the expansion of the Malaysian capital market, which was valued at RM3.19 trillion as at end-April 2019. Businesses' ability to obtain long-dated financing through the equity, bond and sukuk markets has promoted capital formation, and Malaysia also emerged as a global leader in the Islamic capital market while continuing to push for greater innovation in this area.
8.	However, for Malaysia to defy structural challenges and emerge as an Accessible, Agile and Accountable capital market, it is clear that development must become a shared prerogative between SC and the private sector. The SC's developmental role should therefore evolve from a deeply-involved architect to a vigilant but innovation-friendly facilitator.
9.	If that sounded trite, I can assure you that it was not a recent realisation on the SC's part. As someone who came from the private sector, over the last few years I could discern the gradual yet deliberate progress that the SC has made in this direction, and I appreciate the challenges involved in striking the delicate balance between promoting growth and safeguarding market integrity.
10.	Nevertheless, to cultivate a more vibrant and responsive market, it is crucial for policies to be thoughtful, evidence-based, and informed by the widest possible range of stakeholders. Cultivating such diversity of insights requires an objective platform where stakeholders can explore ideas and collaborate in advancing the development agenda. Such a platform will enable Malaysia to reap the benefits of a network economy, where knowledge-sharing and effective partnerships can transcend traditional organisational boundaries, thus generating synergies.
Ladies and gentlemen, Synthesising perspectives, informing policies
11.	The ICMR was borne out of this vision. As an independent entity, ICMR was set up to be a catalyst for information sharing and dialogue. With a structure aligned with the Triple Helix innovation model, ICMR not only establishes a tripartite relationship among policymakers, the industry and academia, but also serves as a clearing house for perspectives from these groups of stakeholders.
12.	In conducting its research, ICMR leverages on a huge trove of data and past academic literature, thus adopting the academic world's ethos of "standing on the shoulders of giants." This knowledge is further enriched by incorporating practical insights and lessons learned from the experience of local industry players.
13	Collaboration is another important tenet, and ICMR's independence enables it to benefit from a network of existing local and global partner institutions. Today, we would like to express our deepest appreciation to the Nomura Institute for Capital Market Research (NICMR), a key knowledge partner, as well as their academic advisor, Professor Dr Catherine Ho from Universiti Teknologi Mara (UiTM), whose contributions have been instrumental in the preparation of this report.
14.	Much like ICMR, NICMR was set up to provide neutral and independent research on structural issues relating to the capital market, with particular emphasis in Japan but also other key markets like the US and Singapore. NICMR is renowned globally for its deep and comprehensive expertise in key areas of the pensions industry, asset management as well as asset formation. Their perspectives and recommendations therefore have been invaluable in shaping the insights and analyses contained in today's report.
15.	To build on this successful collaboration, ICMR will further augment its collaboration capabilities by attracting prominent international and domestic experts – be it from the industry, public sector or academia – through the establishment of a distinguished research and visiting fellows programme.
Ladies and gentlemen, Shining a light on the asset management industry
16	The value of ICMR's collaborative research model is exemplified by the depth and rigor of this report. In addition to key lessons from Japan provided by NICMR, the proprietary survey conducted by ICMR provides a comprehensive assessment of major issues faced by asset managers in Malaysia, and their level of preparedness in facing these challenges.
17.	The focus on the asset management industry is timely. Over the last 20 years, the industry has recorded strong growth with a compound annual growth rate of 16%. However, data from the last five years suggest that it might have reached an inflection point with signs pointing to slowing future growth. Concerns over the growth trajectory were also given impetus as industry shortcomings were increasingly raised by investors and industry players themselves.
18.	From a business environment lens, this report also recognises that the industry must contend with structural shifts which are reshaping the very nature of asset management. Such shifts include changing demographic trends and investor preferences; digitalisation; the availability of appropriately-skilled talent, as well as market structure and regulations.
19.	By bringing these issues and challenges to the fore, today's report has helped to shine a light on areas that must be addressed as a matter of priority – both by policymakers as well as the private sector. On our part, the SC is committed to review the recommendations provided in its report and effect the necessary improvements. At the same time, I hope that the private sector will also proactively seek to enrich their respective strategies with the insights contained in this report, so we may advance the industry together in a cohesive endeavour.
20.	Moving forward, the SC aspires for independent research to play a much greater role in shaping the development of the capital market, and we will continue to provide the necessary support for ICMR in its mission to build a robust body of high-quality, independent research.
21.	On that note, I wish to congratulate ICMR for their hard work and effort in preparing this report and I look forward to the subsequent discussions.

	THANK YOU.