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FINANCIAL
SERVICES
As one of the most developed
financial services industries
in the region, I believe our
industry is well-placed to
continue contributing to the
development of our country
66
Q&A
67
FINANCIAL
SERVICES
Malaysia, being
a medium-sized
and an open
economy, naturally
has a financial
sector which is
highly attuned
to global trends.
Within that context,
the Malaysian
financial industry
has prudential
regulation which is
designed to ensure
broad financial and
macroeconomic
stability.
68
2015 Outlook
The financial industry is projected to
register growth in 2015, driven by general
economic growth and demand for asset
accumulation. Greater integration in
ASEAN is expected to create new market
Notwithstanding a backdrop of
uncertainty in financial markets due
to expectations of changes in the US
Quantitative Easing regime, in tandem
with an increase in the overnight policy
rate to 3.25 per cent for the first time in
three years in July 2014, the Financial
Services NKEA surpassed its KPI
targets.
69
KPI (Quantitative)
Achievement
No.
KPI
Target
(FY)
Actual
(YTD)
Method 1
%
Method 2
%
80%
80
18
17.33
96
120
EPP #5
100%
80%
80
EPP #6
100%
250.7%
251
100
1.0
EPP #9
& 10
100%
100%
100
100
1.0
121%
Exhibit 3.1
Method 1 Scoring is calculated by a simple comparison against set 2014 targets. The overall NKEA composite
scoring is the average of all scores
Method 2 Scoring is calculated by dividing actual results against set 2014 targets with an added rule:
If the scoring is less than 100%, score #2 is taken as the actual percentage
If the scoring is equal or more than 100%, score #2 is taken as 100%. The overall NKEA composite
scoring is the average of all scores
Method 3
70
Scoring is calculated by dividing actual results against set 2014 targets with an added rule:
If the scoring is equal and less than 50%, score #3 is indicated as 0
If the scoring is more than 50% and less than 100%, score #3 is indicated as 0.5
If the scoring is equal or more than 100%, score #3 is indicated as 1
96
100
80
93%
0.5
100%
EPP #1
80
Method 3
0.5
1.0
0.5
75%
Revitalising Malaysias
Equity Markets
Invest Malaysia was held in New York on 24 September 2014, to promote the Malaysian market to US-based fund managers and capital market players
71
Bursa Bull Charge: Another effort by Bursa Malaysia to drive capital market collaboration to raise the
bar on sustainability, inclusiveness and level of entrepreneurship in our community
72
KEY TAKEAWAYS
EPP
KEY TAKEAWAYS
While Malaysias bond market has
emerged as among the most well
developed and liquid in Asia and
remains a leader in the global Sukuk
market, measures to attract retail
investment in bonds must continue to
increase the breadth and depth of the
market.
EPP
Transforming Development
Financial Institutions (DFIs)
The DFIs play an important role in
ensuring continued support to the key
strategic economic sectors. In order to
provide a comprehensive regulatory and
supervisory framework to ensure safe
and sound management of the DFIs,
the Development Financial Institutions
Act 2002 (DFIA) was enacted.
73
KEY TAKEAWAYS
EPP
Creating an Integrated
Payment Ecosystem
Recognising the potential cost savings
and enhancement in economic
efficiency that would enhance the
countrys competitiveness, BNM has
embarked on an e-payment strategy by
leveraging on the Interbank GIRO (IBG)
to replace cheques and debit cards to
replace the usage of cash.
In 2014, BNM has introduced a number
of measures to promote the adoption
of IBG.
A tiered pricing structure was
implemented to provide further
incentives for customers to use more
cost-effective payment channels,
whereby fees are imposed on online
channels, transactions made at
Automated Teller Machines (ATMs)
and transactions done over-the counter
74
KEY TAKEAWAYS
Over the past years, the financial
industry has made various
improvements on e-payment services
to accelerate the countrys migration to
e-payment. These improvements seek
to encourage customers to adopt more
cost efficient payment methods to bring
about cost savings and efficiency.
EPP
KEY TAKEAWAYS
Given the backdrop of rising incomes
and varying consumer needs, the
insurance and takaful sector will
continue to evolve and provide a strong
value proposition to meet the needs of
the consumers.
As the insurance and family takaful
penetration is reported at 54 per cent,
there remain untapped potential and
opportunities to be reaped within
Malaysias domestic market.
75
EPP
AGE
6%
> 60
Conventional
Islamic
8%
55 to < 60
13%
50 to < 55
28%
40 to < 50
25%
30 to < 40
450
20%
< 30
400
%
0
350
10
15
20
25
30
300
250
200
401
150
100
172.1
50
0
Conventional
Islamic
76
KEY TAKEAWAYS
Notwithstanding the encouraging
take-up of PRS since its launch, it
is still important for all concerned
stakeholders to widen the reach of
PRS to ensure the rakyat secures a
comfortable retirement and to lighten
the Governments burden of financially
supporting retirees.
EPP
KEY TAKEAWAYS
In order to further attract the funds of
Malaysias HNWIs as well as to better
EPP
KEY TAKEAWAYS
Growing regional inter-linkages will
require asset managers to seek more
innovative ways to confront stiffer
competition and margin compression.
In addition to enhancing the skills of
asset managers, efforts in investor
education must also continue to support
the growth of asset management in
Malaysia.
77
EPP
Developing Regional
Banking Champions
The ASEAN Banking Integration
Framework which has been approved by
all ASEAN Central Bank Governors, will
pave the way towards greater regional
banking expansion and integration,
including for Malaysian banks. The
Framework also aims to achieve the
following objectives:
Ensure more efficient and
effective intermediation of
regional funds to re-channel
surplus savings to productive
investments at lower costs with
improved risk diversification and
enhancing access to financing;
Facilitate greater collaborative
efforts on safeguarding financial
stability to better manage and
respond to risks; and
78
KEY TAKEAWAYS
While the Malaysian Government
continues to support an environment
that is conducive for the foreign
expansion of Malaysian banks, it
recognises that these activities will be
market-led and depend on the business
needs of the respective banks as well
as the regulatory environment of host
countries.
EPP
10
KEY TAKEAWAYS
With Malaysias growing international
dimensions, Islamic finance plays an
important role in facilitating regional
and cross-border international trade
and investment flows. Increased
collaboration amongst various
stakeholders to internationalise Islamic
finance is paramount.
The Islamic Finance Development Indicator 2013 by the Islamic Corporation for the Development of the
Private Sector, and Thomson Reuters.
79
BUSINESS OPPORTUNITIES
80
Commercial Banking
Growing Viability of
Micro-insurance Asset and
Wealth Management
Increasing regional capital market
integration: ASEAN Capital Markets
Forum (ACMF) announced the
operation of ASEAN Framework for
cross-border offering of collective
investment schemes (CIS) in Malaysia,
Singapore and Thailand. This
Framework allows fund managers
operating in a member jurisdiction
to offer CIS, such as unit trust funds,
constituted and authorised in that
jurisdiction to retail investors in
other member jurisdictions under a
streamlined authorisation process. This
Islamic Banking
RM121.5 billion
Additional Jobs
275,400
81