The Malaysian Capital Growth Exposition, PACAP Finance Conference and Seminar Pelabuhan Saham, Kuala Lumpur, 22 June 1993
I must commend all parties involved in organizing the three events today -- the Malaysians Capital Growth Opportunities Exposition, the Fifth Annual PACAP Conference and Seminar Pelaburan Saham. In all, I am confident, these events will immensely contribute towards an appreciation of the strength and potential of the Malaysian capital market and instill a proper outlook among ordinary investors towards our stock market.
The East Asia region has increasingly become the focus today of prospects for the future. There is the Japanese miracle to be savoured and the China promise to look forward to. In between there have been any number of "tigers" and "dragons," of NIC's and NIE's. We in Malaysia are similarly charged in the drive for growth and social betterment. Based on the national foundation, we are now embarked on giving organized regional significance to Asian success and its preservation.
We have grown at a fast clip in recent years and we can look forward to good and stable economic perfomance. We have set ourselves the target of Vision 2020, a fully developed nation in all senses of the word, with the values of meaningful life in society remaining intact. We are looking at a growth rate of 7.5 percent for the coming years. Not just the public sector, but the corporate sector has been gearing up. Malaysian companies have taken up the challenge. They are expanding their activities, in increasing numbers abroad as well, especially in East Asia. You can look forward to good corporate earnings growth in the years to come.
Our capital market has grown by leaps and bounds, especially the KLSE. This has been the result of our economic growth and clear Government policies -- privatization, corporatization of stockbroking firms, giving the KLSE the opportunity of striking out on its own instead of always being associated with Singapore, specific initiatives which have been well received by the KLSE such as the demobilization of share scrips (we can now look forward to a wholly scripless environment in three years) and so on.
Since 1st March this year, the Securities Commission, with overall responsibility for the securities and futures industry, including supervision of exchanges, clearing houses and central depositories, has been fully operational. This move is a very clear signal that the Government means business about the development and growth of the capital market, about efficiency and innovation, about an orderly, fair and transparent marketplace.
I would like the KLSE to insist that companies listed on the exchange volunteer corporate information if their share prices moves sharply or if there are persistent rumours about their corporate fortunes, instead of waiting for a routine query from the exchange, which some companies try to fob off with some nondescript reply. We want the discipline if a listing and responsibility to public shareholders to be well entrenched. We must also force upon listed companies such discipline and sense of responsibility if they are lacking.
We have also noted quite a number of stockbroking firms are suffering from financial, organizational and physical fatigue, as a result of frenetic market activity in the last three months. The stockbroking firms must learn how to conserve their strengths -- without changing rules or moving the goal posts. All parties involved must work towards fair play and structural solutions, if necessary.
Most of all, the system must not place the public investor at a disadvantage. Market intermediaries should not deflect their problems to the customer and, worse, manipulate situations that would impose unbearable costs on the investor. However, I must also emphasize that the individual investor cannot abdicate his personal responsibility, throw caution to the winds, and expect someone else to pick up the pieces. The Malaysian economy is sound and prospects for corporate earnings growth are excellent for good investments as well as pickings on the stock exchange. But this does not mean share prices should be chased, in some instances, to levels which are not supportable by even the best performing companies. The market is going along very nicely and we must not allow isolated cases of excesses to mar it. Certainly we will not tolerate any fixing of the market or other unhealthy practices. The individual investor must also assist by being level-headed and not ensnared, especially he must not be driven by excessive greed and ignore the basics.
In growth, we must not abandon basic values. There will be these challenges and these temptations, while there will be the opportunities which we must not squander. Malaysia needs to nurture and develop its capital market so that it can effectively harness capital for its industries, and efficiently direct it to those that need it most. We have entered a phase in our development when we need to encourage technology and capital intensive industries. Our high growth rate and credit-worthiness will to a certain extent afford us good access to international capital markets. Our own capital market, however, must be effective if the private sector is able to perform its function of being the engine of growth in the next decade, especially in view of the fact that the public sector will continue to be downsized.
There are ample savings within the economy which can be channelled to productive uses. The Employees Provident Fund (EPF), alone has accumulated contributions totalling RM61 billion and this figure is expected to rise to about RM70 billion by the end of 1993. Together with its ability to diversify its investment portfolio, and with the lowering to 50 per cent of the 70 per cent statutory requirement for investments in Malaysian Government securities, the EPF is an institutional source of funds to be reckoned with. Two other local institutions of considerable size are the Tabung Haji (Pilgrims Fund) and the Armed Forces Superannuation Fund, which will also come into play.
The objective of the Malaysian Capital Growth Exposition is to display and disseminate, at a single point, much sought after information on the Malaysian corporate sector, especially our listed companies. This information is sought by the foreign investors as well as our Malaysian investors. The exposition presents it in a most visual form. The participants include strong and well-diversified companies, as well as companies in the industries that will help take Malaysia into the next stage of industrial development.
This, however, is one side of the coin. On the supply side, we must provide these potential lenders with a wide and attractive range of investment instruments which can give good returns. Straight equity will remain attractive but alternatives should also be provided. The Malaysian market is still developing in this area, but those alternatives are already being made available. On the KLSE there are now instruments such as property trusts, transferable subscription rights, and warrants. The Government is encouraging the development of the private bond market as well as of unit trusts. More recently the Futures Industry Act has come into force and we can now look forward to the development of a financial futures market.
The important thing is to keep our minds open to all developments going on around us in other markets, and equip ourselves with as much knowledge as we can. Whatever is useful and suitable for our market can be adapted to suit our environment.
We should seek ideas from any point of the globe, and what better area to concentrate on than from our partners in our highly successful region. I am always mindful that we are located in a dynamic region, the crucible of economic growth and strong social values. The PACAP Finance Conference is the perfect forum to deliberate on current and common topics of interest related to financial systems, new ideas, findings, theories and research methodologies.
Not to be overlooked is the Seminar Pelaburan Saham, to be conducted in the Malay language, which should enlarge the area of exposure to knowledge on the capital and stock market. Sometimes the least is done for those who need the most, and I welcome the holding of this seminar. With these words, it now gives me great pleasure to launch the Malaysia Capital Growth Opportunities Exposition, the Fifth Annual PACAP Finance Conference and Seminar Pelaburan Saham.