: DATUK SERI ABDULLAH BIN HAJI AHMAD BADAWI

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1 Penyampai Tajuk Lokasi Tarikh : : DATUK SERI ABDULLAH BIN HAJI AHMAD BADAWI : THE INVEST MALAYSIA 2005 CONFERENCE : MANDARIN ORIENTAL, KUALA LUMPUR SPEECH BY YAB DATO SERI ABDULLAH AHMAD BADAWI PRIME MINISTER AND MINISTER OF FINANCE AT THE INVEST MALAYSIA 2005 CONFERENCE 22ND MARCH 2005 AT 9.00 A.M MANDARIN ORIENTAL, KUALA LUMPUR ASSALAMUALAIKUM WARAHMATULLAHI WABARAKATUH AND GOOD MORNING YB TAN SRI NOR MOHAMED YAKCOP SECOND MINISTER OF FINANCE YABHG. TUN MOHAMED DZAIDDIN HAJI ABDULLAH CHAIRMAN, BURSA MALAYSIA YBHG. TAN SRI ZETI AKHTAR AZIZ GOVERNOR, BANK NEGARA MALAYSIA YBHG. DATO MD. NOR YUSOFF CHAIRMAN, SECURITIES COMMISSION

2 DISTINGUISHED GUESTS 1. IT IS ALWAYS AN HONOUR AND A PRIVILEGE TO SPEAK BEFORE SUCH AN IMPORTANT AUDIENCE AS GATHERED HERE TODAY. AS INVESTORS, FUND MANAGERS AND MARKET ANALYSTS, YOU ARE ALL THOUGHT LEADERS AND OPINION SHAPERS WHO GREATLY INFLUENCE INVESTMENT DECISIONS AS WELL AS FUND INFLOWS INTO MALAYSIA. LET ME ALSO SAY THAT IT IS GOOD TO SEE SO MANY FAMILIAR FACES FROM THE DOMESTIC INDUSTRY. TO THE MANY GUESTS FROM OVERSEAS, ALLOW ME TO WELCOME YOU TO MALAYSIA AND TO THANK YOU FOR YOUR INTEREST IN THE COUNTRY S ECONOMIC AND FINANCIAL DEVELOPMENT. 2. LET ME ALSO APPLAUD HERE THE EFFORTS OF THE ORGANISERS BURSA MALAYSIA, C.I.M.B. AND C.S.F.B. FOR BRINGING TOGETHER SEVERAL HUNDRED PROFESSIONALS FROM THE LOCAL AND INTERNATIONAL INVESTMENT COMMUNITY. I BELIEVE THIS EVENT TO BE AN OPPORTUNE PLATFORM TO DISCUSS THE LATEST DEVELOPMENTS IN THE COUNTRY, AS WELL AS TO SHOWCASE SOME OF THE ATTRACTIVE INVESTMENT OPPORTUNITIES AVAILABLE IN THE MARKET. I BELIEVE THE ORGANISERS HAVE DONE WELL TO PUT TOGETHER A VERITABLE LIST OF SPEAKERS AND INVITEES, AND I HOPE YOU WILL DERIVE TREMENDOUS BENEFITS FROM ATTENDING THIS CONFERENCE. 3. LET ME BEGIN BY SAYING THAT I STRONGLY BELIEVE THAT MALAYSIA CONTINUES TO BE AN ATTRACTIVE GROWTH PROPOSITION FOR INVESTORS. THE DOMESTIC ECONOMY REGISTERED A STRONG GROWTH OF 7.1 PERCENT IN MORE IMPORTANTLY, SUCH GROWTH CONTINUES TO BE BROAD-BASED. SECTORS THAT REPORTED HEALTHY EXPANSION LAST YEAR INCLUDE MANUFACTURING AT 9.8 PERCENT, SERVICES AT 6.7 PERCENT, AGRICULTURE AT 5 PERCENT AND MINING AT 4.1 PERCENT. ADDITIONALLY, OUR EXPORTS GREW SIGNIFICANTLY IN 2004 AND CONTINUE TO EXPAND UP TO JANUARY 2005, WE HAVE RECORDED MORE THAN 87 MONTHS OF TRADE SURPLUS. OUR FOREIGN RESERVES ARE AT THEIR HIGHEST EVER LEVELS, AMOUNTING TO BILLION RINGGIT (OR 71.8 BILLION U.S. DOLLARS) AS AT END-FEBRUARY THIS YEAR SUFFICIENT TO FINANCE 8.6 MONTHS OF RETAINED IMPORTS AS WELL AS TO COVER 6.1 TIMES OF OUR SHORT-TERM EXTERNAL DEBT POSITION.

3 4. FOLLOWING SUCH BUOYANT ECONOMIC CONDITIONS, PRIVATE INVESTMENT ACTIVITY REMAINED RELATIVELY ROBUST, PARTICULARLY IN THE MANUFACTURING SECTOR AS WELL AS IN SELECTED SERVICES INDUSTRIES. WITH RISING DISPOSABLE INCOMES, LOW INFLATION AND LOW INTEREST RATES, PRIVATE CONSUMPTION REGISTERED A HEALTHY GROWTH OF 10.1 PERCENT IN 2004, AS CONSUMERS CONTINUED TO PURCHASE, AMONG OTHER THINGS, PROPERTIES AND AUTOMOBILES. FURTHERMORE, CORPORATE EARNINGS IN MALAYSIA REMAIN STRONG, CONTRARY TO CERTAIN EXPRESSED OPINIONS. BASED ON BURSA MALAYSIA S RESEARCH FINDINGS, THERE WAS A 14.5 PERCENT INCREASE IN THE AGGREGATED PROFITS OF 829 LISTED COMPANIES THAT FILED CORPORATE RETURNS AT END-DECEMBER 2004, AS COMPARED TO END-DECEMBER OUT OF THIS TOTAL, 513 COMPANIES, OR 62 PERCENT, REPORTED HIGHER PROFITS FOR 2004 COMPARED TO THE PREVIOUS YEAR. 5. GIVEN THE POSITIVE SCENARIO IN THE COUNTRY, WE HAVE WITNESSED INCREASING INVESTOR CONFIDENCE IN THE DOMESTIC ECONOMY, EVIDENCED IN THE RISE OF FOREIGN DIRECT INVESTMENTS (F.D.I.) AS WELL AS IN GREATER PORTFOLIO INFLOWS IN THE COUNTRY. F.D.I. INCREASED TO 17.9 BILLION RINGGIT IN 2004 AS COMPARED TO 9.4 BILLION RINGGIT FOR MEANWHILE, PORTFOLIO INVESTMENTS RECORDED AN INCREASING TREND THROUGHOUT THE THIRD AND FOURTH QUARTERS OF 2004, WHICH BROUGHT INFLOWS TO A TOTAL OF 34.8 BILLION RINGGIT FOR THE WHOLE OF LAST YEAR. 6. IN ALL THIS, THE MALAYSIAN CAPITAL MARKET CONTINUES TO DISPLAY CLEAR SIGNS OF INCREASING MATURITY. THIS MAY BE DEPICTED BY THE STEADILY INCREASING PACE OF BOTH TRADING VOLUME AND VALUE, WHICH IS REFLECTIVE OF THE HEALTHY MIX OF INVESTORS LOCAL, FOREIGN, RETAIL AND INSTITUTIONAL. WE CAN TAKE PRIDE IN NOT ONLY THE DIVERSITY OF INVESTMENT OPTIONS, BUT ALSO THE BREADTH AND DEPTH OF OUR INVESTMENT OFFERINGS FROM EQUITIES TO OFFSHORE INVESTMENTS, FROM CONVENTIONAL TO SYARIAH-BASED INSTRUMENTS ALL CATERING TO THE DISTINCTIVE NEEDS AND RISK APPETITES OF ALL TYPES OF INVESTORS. INDEED, THE LISTING OF BURSA MALAYSIA IS FURTHER EVIDENCE OF THE MALAYSIAN MARKET S COMING OF AGE. TO MY MIND, IT IS AN ANSWER TO THE GOVERNMENT S CALL FOR GREATER EFFICIENCY, TRANSPARENCY AND DISCLOSURE. BURSA, WITH A FREE FLOAT OF 60 PERCENT AT THE TIME OF ITS LISTING, ALSO SETS POSITIVE STANDARDS FOR UP AND COMING MALAYSIAN LISTED COMPANIES.

4 7. AT THIS JUNCTURE, I AM HAPPY TO NOTE THAT ALL THIS ACTIVITY IS TAKING PLACE AT A TIME WHEN THE GOVERNMENT IS PURSUING FISCAL DISCIPLINE AND CONSOLIDATION. FROM A DEFICIT EQUIVALENT TO 5.3 PERCENT OF G.D.P. IN 2003, WE WORKED HARD TO BRING DOWN THE DEFICIT TO 4.3 PERCENT IN 2004, BELOW THE EARLIER PROJECTED 4.5 PERCENT OF G.D.P.. FOR 2005, WE ARE AIMING FOR AN EVEN LOWER DEFICIT OF 3.8 PERCENT. DESPITE ALL THIS, HOWEVER, I WOULD LIKE TO HIGHLIGHT THAT PUBLIC SECTOR EXPENDITURE CONTINUES TO BE MADE IN IMPORTANT AREAS SUCH AS EDUCATION, HOUSING, TRANSPORTATION, AGRICULTURE AND RURAL DEVELOPMENT TARGETED TO BRING MULTIPLE BENEFITS TO THE MALAYSIAN PEOPLE. PERHAPS, IN RECOGNITION OF MY GOVERNMENT S COMMITMENT TO IMPROVING MALAYSIA S LONG-TERM FISCAL POSITION, MOODY S HAS UPGRADED MALAYSIA S FOREIGN CURRENCY RATING FROM B.A.A.1 TO A.3 IN DECEMBER 2004, CONSISTENT WITH FITCH S RATINGS UPGRADE FROM BBB+ TO A- IN NOVEMBER WHEN I TOOK OFFICE ON 31ST OCTOBER 2003, I BEGAN TO LAY DOWN MY ADMINISTRATION S STRATEGY FOR LONG-TERM GROWTH AND DEVELOPMENT, TO TAKE MALAYSIA THAT MUCH CLOSER TOWARDS REALISING ITS GOAL OF BECOMING A FULLY DEVELOPED NATION BY I BELIEVE THAT A HOLISTIC AND BALANCED APPROACH IS REQUIRED FOR THIS PURPOSE, TO PUSH FORWARD AND ENHANCE MALAYSIA S COMPETITIVE STANDING BOTH REGIONALLY AND INTERNATIONALLY. WE NEED TO MOVE OUR BASIS OF GROWTH TOWARDS MORE VALUE-ADDED ACTIVITIES, LEVERAGING ON OUR NATURAL ADVANTAGES AND STRENGTHS. WE NEED TO EMPHASISE STRONGER HUMAN PERFORMANCE AS WELL AS TO SEEK SUPERIOR PRODUCTIVITY GAINS. THE GOVERNMENT, IN TURN, WILL MOVE TOWARDS BECOMING A SUPPORTIVE AND EFFECTIVE ENABLER OF BUSINESS, BY PUTTING IN PLACE CONDUCIVE CONDITIONS AND CREATING OPPORTUNITIES FOR THE PRIVATE SECTOR TO THRIVE. AFTER ALL, ECONOMIC SUSTAINABILITY CAN ONLY COME ABOUT WHEN THERE IS A SECURE AND POLITICALLY STABLE GOVERNMENT IN POWER, ONE THAT IS COMMITTED TO CREATING AND SUSTAINING AN ENVIRONMENT THAT ENCOURAGES GROWTH. 9. TOWARDS THIS END, I HAVE INSTITUTED VARIOUS MEASURES WITHIN MY GOVERNMENT THAT WHEN FULLY IMPLEMENTED WILL HAVE A PROFOUND EFFECT ON THE COST OF DOING BUSINESS IN MALAYSIA. WE HAVE BEGUN TO IMPROVE THE PUBLIC SERVICE DELIVERY SYSTEM IN EARNEST, FOR EXAMPLE, BY REDUCING BUREAUCRACY AND CUTTING RED-TAPE. A NATIONAL INTEGRITY PLAN AND A MALAYSIAN INTEGRITY INSTITUTE HAVE BEEN LAUNCHED TO ENHANCE ETHICS AND INTEGRITY IN THE COUNTRY, AND TO SUPPORT OUR ANTI-CORRUPTION MEASURES. THE POLICE AND OTHER SECURITY FORCES, MEANWHILE, WILL CONTINUE TO BE ENHANCED AND UPGRADED TO ENSURE PEACE AND SECURITY IN THE COUNTRY.

5 10. IN ADDITION, THE SCOPE AND REACH OF MALAYSIA S EDUCATION SYSTEM, INCLUDING VOCATIONAL TRAINING, WILL BE UPGRADED TO DEVELOP SUFFICIENT HUMAN CAPITAL FOR THE NATION. THIS, IN TURN, WILL ALSO AID IN OUR EFFORTS TO INTENSIFY RESEARCH AND DEVELOPMENT ACTIVITIES SO THAT WE CAN PUSH THE INNOVATION AGENDA FORWARD AND BECOME CREATORS OF TECHNOLOGY (AND NOT REMAIN AS MERE CONSUMERS OF TECHNOLOGY). MY GOVERNMENT IS FULLY COMMITTED TO EXPLORING NEW SOURCES OF ECONOMIC GROWTH INCLUDING THROUGH THE MODERNISATION OF AGRICULTURE, THE HARVESTING OF OUR RICH BIODIVERSITY THROUGH THE USE OF BIO-TECHNOLOGY, AS WELL AS THROUGH DEVELOPING VALUE-ADDED SERVICES SUCH AS BUSINESS PROCESS OUTSOURCING AND ISLAMIC FINANCIAL SERVICES. 11. IN DOING ALL THIS, THE PRIVATE SECTOR WILL TAKE THE LEAD IN BEING THE ENGINE OF ECONOMIC GROWTH. I HOPE TO SEE A MUCH STRONGER AND MORE DYNAMIC BUSINESS SECTOR IN MALAYSIA. AS SUCH, I HAVE STARTED THE PROCESS BY INITIATING SUBSTANTIAL REFORMS FOR GOVERNMENT- LINKED COMPANIES (G.L.C. S), TYPICALLY LAGGARDS IN THE PAST IN TERMS OF PERFORMANCE. THE AIM IS TO MAKE THEM MORE PERFORMANCE DRIVEN, MORE EFFICIENTLY MANAGED, MORE COMMERCIALLY FOCUSED AND MORE CUSTOMER SERVICE ORIENTED. I HAVE ALSO SIGNIFICANTLY REORGANISED THE GOVERNMENT S INVESTMENT ARM, KHAZANAH NASIONAL, TO OVERSEE THE G.L.C. TRANSFORMATION PROGRAM. MORE WILL BE DONE FOR THE OTHER GOVERNMENT-LINKED INVESTMENT COMPANIES (G.L.I.C. S) IN THE DAYS AHEAD. 12. THE FIRST STEP IN THE G.L.C. TRANSFORMATION PROGRAM WAS TO IMPLEMENT A SYSTEM OF KEY PERFORMANCE INDICATORS (K.P.I. S) AS WELL AS PERFORMANCE-BASED COMPENSATION FOR SENIOR MANAGEMENT IN THE G.L.C. S. I HAVE ESTABLISHED A STEERING COMMITTEE HEADED BY THE SECOND FINANCE MINISTER TO COORDINATE THE IMPLEMENTATION OF THE K.P.I. S AND TO LOOK AT OTHER MEASURES TO RAISE THE PERFORMANCE BAR FOR G.L.C. S. THESE INITIATIVES SHOULD STEADILY RESULT IN BETTER SHAREHOLDER RETURNS IN THE MEDIUM-TERM. SOME PEOPLE HAVE COMMENTED THAT THIS PROCESS SEEMS RATHER SLOW, ESPECIALLY WHEN SET AGAINST THE EXCITEMENT AND HIGH EXPECTATIONS THAT THE G.L.C. TRANSFORMATION PROGRAM HAS ENGENDERED. BUT I WOULD LIKE TO SAY THAT WE HAVE BEGUN TO SEE SOME RESULTS, ESPECIALLY IN HARVESTING SOME LOW-HANGING FRUITS IN A FEW OF THE G.L.C. S. I AM PERSONALLY COMMITTED TO THIS PROGRAM AND WILL STAY THE COURSE IN CREATING WHAT I HOPE TO BE WORLD-CLASS G.L.C. S IN THE NOT-TOO-DISTANT FUTURE.

6 13. MY GOVERNMENT CONTINUES TO BE COMMITTED TO THE DEVELOPMENT OF A STRONG AND VIBRANT DOMESTIC CAPITAL MARKET AS A KEY ENABLER IN SECURING HEALTHY LONG-TERM ECONOMIC GROWTH. THE IMPORTANCE OF SUCH A CAPITAL MARKET CANNOT BE OVER-EMPHASISED, PARTICULARLY IN THE CONTEXT OF GLOBALISATION WHERE CROSS-BORDER COMMERCIAL AND FINANCIAL TRANSACTIONS HAVE BECOME THE NORM. ACCORDINGLY, A NUMBER OF SPECIFIC MEASURES HAVE BEEN INTRODUCED TO FURTHER STRENGTHEN THE MALAYSIAN CAPITAL MARKET. THESE MEASURES ARE DESIGNED TO FULFIL A WIDE RANGE OF INVESTOR AND BUSINESS INTERESTS, WITH THE ULTIMATE AIM OF ENHANCING PARTICIPATION, TRANSPARENCY, GOVERNANCE, EFFICIENCY, AND FINALLY, PROFITABILITY. 14. ONE OF THE APPROACHES UNDERTAKEN TO IMPROVE PART OF THE CAPITAL MARKET DELIVERY SYSTEM IS THE IMPLEMENTATION OF DISCLOSURE-BASED REGULATION (D.B.R.). D.B.R. IS NOW FULLY IMPLEMENTED BY THE SECURITIES COMMISSION AS WELL AS BY THE FOREIGN INVESTMENT COMMITTEE, AND WILL BE EXTENDED TO OTHER AGENCIES IN THE NEAR TERM. WITH D.B.R., THE GOVERNMENT WILL SHIFT ITS FOCUS FROM THE APPROVAL PROCESS ITSELF TO THE ENFORCEMENT ASPECTS OF REGULATION. I ASSURE YOU THAT REGULATION WILL CONTINUE BE STRICT AND EFFECTIVE, AND LET ME CATEGORICALLY STATE THAT THE PROTECTION OF MINORITY INTERESTS WILL, AT ALL TIMES, REMAIN A CRITICAL PRIORITY OF MY GOVERNMENT TO ENSURE CONFIDENCE IN THE MALAYSIAN CAPITAL MARKET. 15. DURING THE PRESENTATION OF BUDGET 2005 IN SEPTEMBER OF LAST YEAR, I ANNOUNCED SEVERAL MARKET LIBERALISATION MEASURES. ONE MEASURE RELATES TO OUR PLEDGE TO ALLOW UP TO FIVE MAJOR FOREIGN STOCK BROKERS TO OPERATE IN MALAYSIA. I AM HOPEFUL THAT ONCE IMPLEMENTED, THE PRESENCE OF THESE STOCK BROKERS WILL STRENGTHEN THE MARKET DISTRIBUTION NETWORK AS WELL AS INCREASE LIQUIDITY IN THE MARKET. ADDITIONALLY, WE ARE COMMITTED TO ALLOW UP TO FIVE LEADING GLOBAL FUND MANAGERS TO ESTABLISH OPERATIONS IN MALAYSIA. AGAIN, THEIR PRESENCE WILL ENHANCE FUND MANAGEMENT EXPERTISE AND IMPROVE THE QUALITY OF SERVICES RENDERED TO INVESTORS. 16. OF COURSE, THE MALAYSIAN CAPITAL MARKET WILL MEAN VERY LITTLE WITHOUT THE PRESENCE OF STRONG DOMESTIC MARKET PARTICIPANTS. HENCE, MY GOVERNMENT IS ALSO COMMITTED TO UPGRADING LOCAL MARKET INTERMEDIARIES FURTHER. CERTAIN MEASURES WILL BE ANNOUNCED IN DUE COURSE, BUT SUFFICE TO SAY THAT THESE MEASURES ARE INTENDED TO CREATE DOMESTIC PARTICIPANTS WITH FIRST-CLASS CAPABILITIES RIVALING OTHER FINANCIAL INSTITUTIONS REGIONALLY AND INTERNATIONALLY.

7 17. BASED ON THE FACTS THAT I HAVE LAID OUT BEFORE YOU, THERE IS INDEED A GOOD STORY TO TELL ABOUT MALAYSIA. I BELIEVE THAT THIS STORY WILL CONTINUE TO UNFOLD POSITIVELY OVER THE LONG-TERM. HOWEVER, IT IS UNFORTUNATE THAT WE ARE CONSISTENTLY PLAGUED BY A PERCEPTION PROBLEM, ONE THAT PARTICULARLY AFFLICTS THE DECISION MAKING PROCESS OF A LARGE NUMBER OF FOREIGN INVESTORS. WE ARE PERCEIVED TO BE STILL CLINGING TO CAPITAL CONTROLS, WHEN ALL MAJOR CONTROLS HAVE BEEN LIFTED; WE ARE PERCEIVED TO LACK CORPORATE GOVERNANCE, WHEN OUR STANDARDS ARE EQUAL TO IF NOT HIGHER THAN MANY OTHER JURISDICTIONS EVEN AS WE WERE AMONG THE FIRST TO ESTABLISH OUR OWN CORPORATE GOVERNANCE GUIDELINES AND TO INTRODUCE TRAINING FOR DIRECTORS AS A MANDATORY REQUIREMENT. 18. CLEARLY, WE ARE NOT DOING ENOUGH TO PUBLICISE OUR EFFORTS, AND WE ARE NOT REALISING OUR FULL POTENTIAL TO EFFECTIVELY MARKET AND BRAND MALAYSIA. MUCH MORE CAN AND SHOULD BE DONE. MALAYSIA IS TRULY A SECRET THAT NEEDS TO BE DISCOVERED. 19. AS SUCH, IN BRANDING MALAYSIA, LET US BE KNOWN AS A NATION THAT EMPHASISES QUALITY, SECURITY, SERVICE AND EFFICIENCY. IN BRANDING CORPORATE MALAYSIA, LET US BE BOLD IN REINFORCING THAT WE HAVE LARGE AND WELL-MANAGED COMPANIES; THAT WE ARE GOVERNED BY A SOUND REGULATORY FRAMEWORK; THAT WE PRESCRIBE TO HIGH STANDARDS OF DISCLOSURE AND CORPORATE BEST PRACTICES, AND THAT MALAYSIAN COMPANIES ARE ABLE TO COMPETE WITH THE BEST THAT THE GLOBAL BUSINESS COMMUNITY HAS TO OFFER. 20. HENCE, I WOULD LIKE TO URGE ALL MALAYSIAN COMPANIES, PARTICULARLY THE LISTED ONES, TO TAKE EVERY EFFORT IN ADOPTING INVESTOR RELATIONS PRACTICES AND PROGRAMS. BEAR IN MIND THAT HAVING EFFECTIVE INVESTOR RELATIONS (I.R.) SETS YOU APART FROM YOUR COMPETITION. THROUGH EFFECTIVE I.R., YOU COMMUNICATE TRUST TO STAKEHOLDERS AND THE PUBLIC AT LARGE. THROUGH I.R., YOU GROW YOUR VALUE AND BUILD YOUR PROFILE, AND IT IS ALSO THROUGH I.R. THAT YOU WILL BE BENCHMARKED AGAINST OTHER DOMESTIC AND INTERNATIONAL COMPANIES. MOREOVER, THE PROPER USE OF I.R. HELPS TO MANAGE THE EXPECTATIONS OF INVESTORS, ANALYSTS, FUND MANAGERS, MEDIA AND THE PUBLIC AT LARGE. 21. INDEED, I AM CONFIDENT THAT CAREFULLY EXECUTED I.R. WILL LEND MUCH NEEDED CREDIBILITY AND SUPPORT TO THE CREATION OF A MALAYSIAN BRAND. IN THIS RESPECT, THE GOVERNMENT, INDUSTRY REGULATORS AND COMPANIES MUST WORK TOGETHER TO ESTABLISH AND PROMOTE THE MALAYSIAN BRAND. AS SUCH, LET ME ENCOURAGE ALL OF YOU TO GO FORTH AND TELL YOUR STORY. TELL YOUR STORY, AND TELL MALAYSIA S STORY TO THE WORLD. TELL THE STORY WITH PRIDE AND DIGNITY; WITH TRUTH AND TRANSPARENCY; AND, WITH GRACE AND HUMILITY.

8 22. THROUGH INVEST MALAYSIA, I AM CERTAIN THAT YOU WILL GET A TASTE OF WHAT THE MALAYSIAN BRAND HAS TO OFFER. WHILE IT IS LIKELY THAT YOU WILL MEET AND HEAR FROM ONLY A HANDFUL OF MALAYSIAN COMPANIES AND INDIVIDUALS, THIS ALONE WILL GIVE YOU THE CHANCE TO GAUGE THE BREADTH AND DEPTH OF INVESTMENT OPPORTUNITIES THAT MALAYSIA HAS TO OFFER. 23. IN ADDITION, THIS CONFERENCE WILL FACILITATE THE EXCHANGE OF VALUABLE FEEDBACK. TO MY MIND, FEEDBACK, BE IT POSITIVE OR NEGATIVE, IS ALWAYS BENEFICIAL TO THE RECIPIENT WHEN FULLY ABSORBED, AS IT WILL ALLOW PROGRESS AND DEVELOPMENT TO TAKE PLACE. AS SUCH, WE ARE ALWAYS GRATEFUL TO RECEIVE CONSTRUCTIVE FEEDBACK, AND HOPE TO CONTINUE TO RECEIVE VIEWS AND IDEAS FROM YOU AND FROM OTHER MEMBERS OF THE INVESTING COMMUNITY. 24. BEFORE I END MY SPEECH, LET ME REITERATE THAT MALAYSIA WILL INCREASINGLY RELY ON THE PRIVATE SECTOR TO DRIVE FUTURE ECONOMIC GROWTH. IN ORDER FOR THIS TO TAKE PLACE, EFFICIENT MARKET MECHANISMS ARE REQUIRED TO BE PUT IN PLACE TO PERFORM THE TASKS OF MOBILISING CAPITAL, PROMOTING CAPITAL FORMATION, AND ENSURING THAT CAPITAL IS ALLOCATED IN AN EFFICIENT MANNER. THAT IS WHY THE DEVELOPMENT OF THE DOMESTIC CAPITAL MARKET REMAINS HIGH ON THE GOVERNMENT S AGENDA. 25. OUR EFFORTS AT CONSOLIDATION AND GRADUAL DEREGULATION OF THE DOMESTIC CAPITAL MARKET HAS WORKED TOWARDS THE ESTABLISHMENT OF STRONG AND WELL-CAPITALISED DOMESTIC PLAYERS WITH DIVERSE CAPABILITIES AS WELL AS THE ABILITY TO EXPLOIT GREATER ECONOMIES OF SCALE. GOING FORWARD, FURTHER INITIATIVES TO PROGRESSIVELY DEREGULATE THE INDUSTRY WILL BE IMPLEMENTED TO PROVIDE AN OPPORTUNITY FOR MARKET PLAYERS TO ADVANCE THEIR BUSINESS MODELS IN ORDER TO PREPARE THEMSELVES FOR GREATER COMPETITION IN AN INTERNATIONALLY COMPETITIVE MARKETPLACE. 26. AS SUCH, IN CONTINUING WITH THE INITIATIVES TO RESHAPE MALAYSIA S CAPITAL MARKET LANDSCAPE TO MEET FUTURE CHALLENGES, IN LINE WITH BROADER NATIONAL ECONOMIC OBJECTIVES, I AM PLEASED TO MAKE THE FOLLOWING ANNOUNCEMENTS:

9 I. FIRSTLY, BANK NEGARA MALAYSIA AND THE SECURITIES COMMISSION HAVE FINALISED THE FRAMEWORK FOR THE ESTABLISHMENT OF DOMESTIC INVESTMENT BANKS. AS THE FRAMEWORK ENTAILS THE RATIONALISATION OF EXISTING CAPITAL MARKET INTERMEDIARIES THAT UNDERTAKE AS WELL AS OFFER SIMILAR PRODUCTS AND SERVICES, THESE INTERMEDIARIES WILL BE ABLE TO REAP GREATER BENEFITS FROM SYNERGIES AND ECONOMIES OF SCALE THROUGH THE INTEGRATION OF THEIR BUSINESSES, AND LEVERAGE ON A LARGER CAPITAL BASE TO SUPPORT THEIR EXPANDED RANGE OF ACTIVITIES. TO ENSURE THAT THERE ARE NO REGULATORY GAPS, INVESTMENT BANKS WILL BE JOINTLY REGULATED BY BANK NEGARA MALAYSIA AND THE SECURITIES COMMISSION. FURTHER DETAILS OF THE FRAMEWORK WILL BE ANNOUNCED BY BANK NEGARA MALAYSIA TOMORROW. II. SECONDLY, UNIVERSAL BROKERS THAT MEET THE SPECIFIED CRITERIA WILL BE ALLOWED ACCESS TO THE INTER-BANK MARKET. THIS ACCESS WILL BE SUBJECT TO PRUDENTIAL LIMITS AND REGULATIONS IMPOSED BY BANK NEGARA MALAYSIA, SO AS TO ENSURE FINANCIAL STABILITY OF THE SYSTEM. AND III. THIRDLY, STOCK BROKING COMPANIES THAT HAVE COMPLIED WITH AT LEAST 1 PLUS 1 MERGER WILL BE ALLOWED, SUBJECT TO CRITERIA SET BY THE SECURITIES COMMISSION, TO PROVIDE THE FULL RANGE OF CORPORATE ADVISORY SERVICES, INCLUDING SUBMISSIONS OF CORPORATE PROPOSALS TO THE SECURITIES COMMISSION, AND TO HAVE UNRESTRICTED BRANCHING FROM 2006 ONWARDS. 27. IN ADDITION, ANOTHER MEASURE TO ENHANCE THE DEVELOPMENT OF THE DOMESTIC CAPITAL MARKET IS TO ADD A HIGHER DEGREE OF INTERNATIONAL CHARACTER BY INCREASING THE LEVEL OF FOREIGN PARTICIPATION IN THE MARKET. AS THIS MEASURE WAS PART OF THE ANNOUNCEMENTS MADE IN THE BUDGET SPEECH 2005 OF SEPTEMBER LAST YEAR, ALLOW ME TO TAKE THIS OPPORTUNITY TO EXTEND MY APPRECIATION TO ALL THE FOREIGN FIRMS THAT HAVE SUBMITTED THEIR APPLICATIONS FOR LICENSES TO ESTABLISH LOCAL CAPITAL MARKET OPERATIONS. 28. I AM THEREFORE PLEASED TO ANNOUNCE THAT THE FOLLOWING FIVE FOREIGN STOCK BROKING FIRMS HAVE BEEN APPROVED FOR ESTABLISHING OPERATIONS IN MALAYSIA: C.L.S.A., CREDIT SUISSE FIRST BOSTON (C.S.F.B.), J.P. MORGAN, MACQUARIE AND U.B.S.. IN ADDITION, I WOULD LIKE TO ANNOUNCE THAT THE FOLLOWING ONE FOREIGN FUND MANAGEMENT COMPANY HAS BEEN APPROVED FOR ESTABLISHING OPERATIONS IN MALAYSIA: ABERDEEN ASSET MANAGEMENT.

10 29. INDEED, THE COMBINATION OF STRONG DOMESTIC MARKET INTERMEDIARIES WORKING CLOSELY WITH FOREIGN PARTICIPANTS WILL HELP PROVIDE A CONDUCIVE ENVIRONMENT TO ACCELERATE THE GROWTH OF THE MALAYSIAN CAPITAL MARKET. I AM CONFIDENT THAT THIS WILL SERVE TO ENHANCE THE MARKET S INTERNATIONAL POSITIONING, AND HELP ENSURE THAT DOMESTIC CUSTOMERS HAVE ACCESS TO WORLD-CLASS PRODUCTS AND SERVICES. 30. TO ALL FUND MANAGERS AND MARKET ANALYSTS, I SEEK YOUR ASSISTANCE IN FAIRLY PROMOTING OUR COMPANIES AND OUR CAPITAL MARKET. TO MALAYSIAN COMPANIES, I SEEK YOUR ASSISTANCE IN LIFTING THE PROFILE OF CORPORATE MALAYSIA. LET ME TAKE THIS OPPORTUNITY TO WISH ALL OF YOU A FRUITFUL AND SUCCESSFUL CONFERENCE, AND A PROSPEROUS AND PROFITABLE YEAR AHEAD. THANK YOU.