GROWTH ENABLER: Najib stresses need to reshape their relationship with real economy
DATUK Seri Najib Razak yesterday urged players to use capital markets as a "force for good" as Malaysia's experience shows that they can transform the economy and society.
"Markets do not make decision or judgment calls," said the prime minister in his keynote address at the World Capital Markets Symposium (WCMS), here, yesterday.
Capital markets, he said, are a medium of which behaviour and influence are driven by millions of players, whose choices and interactions have moulded the global financial system into what it is today.
"If we accept the neutrality of the markets, then we can conclude that it is the prerogative of the users to use them as a force for good.
"This, I believe, is the essence of today's symposium - to show the good that markets can do by defining their positive purpose and utility; and to guard against the bad by setting boundaries and reining in excess," Najib told the more than 700 fund managers, bankers and capital market players.
The two-day symposium is being hosted by the Securities Commission Malaysia (SC), in conjunction with its 20th anniversary.
Najib said for the markets to fulfil their role as an enabler of growth, "I believe we need to reshape their relationship with the real economy".
"In doing so, we must acknowledge the socio-economic role of markets, which have such an important impact on the distribution of wealth and opportunities and social mobility."
The relationships between markets and the economy, investors and investees, and issuers and intermediaries should be governed by principles of social justice, such as inclusiveness, equity and sustainability, he said.
Najib said the establishment of strong domestic institutional capacity has been instrumental in Malaysia's economic transformation and for further growth, the government is committed to this approach.
"We have typically adopted a phased approach, ensuring that the domestic building blocks of a strong economy are in place before opening the economy to international competition and measures."
He noted that vibrancy in the country's capital markets in the last 20 years had enabled savings to be more efficiently mobilised and utilised for capital formation.
Malaysia now has one of the highest savings rates in the world and that has contributed significantly to the economy, he added.
The capital market, Najib said, has played a big role in Malaysia's development, enabling enterprises to raise capital and paving the way for the financing of critical public and private infrastructure such as utilities, transportation and telecommunications.
"As a result, our capital market now matters to our economy," he said, citing its value of US$816 billion (RM2.6 trillion), which is two-and-half times Malaysia's gross domestic product (GDP), while the bond market is now worth US$314 billion, making it Asia's third largest relative to GDP.
"We have today the largest unit trust industry in Asean, with a combined net asset value of US$102 billion... our sukuk market accounts for almost 70 per cent of the global total and we are home to the world's largest Islamic unit trust industry."
Also present at the opening of the WCMS were Regent of Perak Raja Dr Nazrin Shah, Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar and SC chairman Datuk Ranjit Ajit Singh.
This year, the WCMS features prominent speakers who include former United Kingdom Financial Services Authority chairman Lord Adair Turner, former United States Federal Deposit Insurance Corporation chairman Sheila C. Bair and Time magazine editor-at-large Dr Fareed Zakaria.