As forwarded by Pn. Rafidah :
Enclosed herewith is the Governor's New Year Message for 2008, for your
info, please.
We would also like to wish you all the best for the year 2008.
Thank you.
Rafidah Latif
Talent Supply - Scholarship Section
Human Resource Management Department
Bank Negara Malaysia (11 C Floor)
Jalan Dato' Onn
50480 Kuala Lumpur
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The year 2007 had been an excellent year for the Bank. Significant advancement was achieved in macroeconomic management and in developing the financial system and ensuring its soundness and resilience. We have also made significant progress in strengthening the organizational capacity of the Central Bank. These have been possible due to the high level of performance and perseverance of the staff. I would like to thank everyone for the hard work and unwavering commitment throughout the year. Year 2007 had been an excellent year for the Bank. Significant advancement was achieved in macroeconomic management and in developing the financial system and ensuring its soundness and resilience. We have also made significant progress in strengthening the organizational capacity of the Central Bank. These have been possible due to the high level of performance and perseverance of the staff. I would like to thank everyone for the hard work and unwavering commitment throughout the year.
Our economy has continued on a steady growth path despite the slowing external demand, the turmoil and heightened uncertainty in the financial markets and rising inflationary pressures. Strong domestic demand amidst rising incomes and low interest rates have promoted steady consumption spending and rising investment activity. In 2008, the environment can be expected to be even more challenging as growth in the industrial economies slows even further and as inflationary pressures intensify. The challenge for macroeconomic policy will be to sustain steady growth while reining in inflation.
In this challenging environment, the financial sector has demonstrated its resilience and high level of performance. More importantly, the financial sector has been able to perform its intermediation function and thus support the growth and development process. In addition, risk management and governance practices have improved and this has been reinforced by a more flexible regulatory framework, and strengthened surveillance and supervision.
The Bank has also had an important role in promoting an increasingly more diversified
financial system that now provides the full range of financing to consumers, to micro enterprises, SMEs and start-ups, and to large corporations. The Bank was instrumental in introducing institutions that provide micro financing and to the establishment of investment banking which now has begun to have a more significant role. This year, we also saw the establishment of the Cooperative Commission and the Deposit Insurance Corporation's move towards differential premium. All these developments have strengthened our financial system considerably.
In the area of Islamic finance, the international dimension has gained significance. There is greater foreign participation in our Islamic financial institutions and financial markets. And, nearly all international financial centres are now establishing systems to promote Islamic finance. The Islamic Financial Services Board established five years ago in Malaysia has now become an internationally recognized prudential standards setting institution. Going forward, the major part of our efforts and that of the industry need to be on promoting Malaysia as a centre for the origination of Sukuks and as a hub for Islamic financial activities. The cumulative efforts of this progress is that Islamic finance is becoming an important source of growth and employment.
During the year, increased efforts were made to enhance our reserve management. Through proactive strategies to maximise returns and the usage of new money market instruments which have lowered the costs of managing liquidity, the Bank achieved a significantly higher-than-anticipated financial result for 2007, posting a record net profit in the Bank's history. In the region, the Bank played an instrumental role as chair of the Task Force on Regional Financial Cooperation in Asia. All the recommendations of the Task Force have been adopted by EMEAP Governors, with some of them already being implemented. In particular, the Monetary and Financial Stability Committee was established to strengthen regional surveillance and crisis management. This is a tremendous step forward for the region's financial co-operation and integration.
At the Bank, there has been increased investment in the staff, in the facilities and leading edge technology. New governance structures, processes and systems continue to be introduced. This is reinforced by efforts to inculcate the Bank's values and corporate culture. Emphasis has also been given to leadership development. While significant progress has been made on all these fronts, much remains to be done given that the environment before us continues to rapidly evolve.
The year 2009 will celebrate 50 years of Central Banking in Malaysia. In 2008, we must take the opportunity to consolidate, and rationalise so as to optimise the utilisation of our resources in achieving our mandate. This will involve enhancing our strategic focus and giving priority to what matters most. In achieving monetary and financial stability, focus needs to be given to enhancing our surveillance capabilities which is vital in this rapidly evolving and uncertain environment. It needs to be reinforced by assessments of the implications of these developments on the current and future conditions. Our proactive and appropriate policy responses will be based on this information. We have seen in the current international environment that late detection, lack of recognition of the implications of the problems, indecision, inappropriate policy responses and poor coordination among policy makers and regulators have led to disastrous outcomes.
In the continued development of the financial infrastructure, we need to prioritise and accelerate efforts to develop the foreign exchange market and the bond market. This is particularly essential, given the current more liberalised and competitive environment. Indeed, we need to complete the blueprint for liberalisation so that we are aware of the necessary pre-conditions and sequencing to ensure that liberalisation can be efficiently implemented and thereby enabling Malaysia to yment system, the establishment and operationalisation of the Bank's payment subsidiary, the acceleration in deployment of debit card terminals, the greater use of mobile phones for e-payments and the promotion of greater awareness on e-payments will be the priority in 2008.
In terms of our regional role, priority is to be given in driving the regional surveillanceagenda and to putting in place the regional crisis management framework. This is essential for the region to better manage unexpected eventualities that may occur. A major focus will also be to support the SEACEN Centre to be a world-class regional organization in the promotion and development of training and research in central banking.
Finally, the Bank will in 2008, establish a new unit that will co-ordinate the demands on the Bank to provide technical assistance, advisory services and training to other Central Banks. In the recent few years, these demands have been overwhelming. This new unit will more efficiently manage these requests for assistance. For our own organizational development, the focus in 2008 will be on talent management. A robust talent supply framework will be critical in ensuring that the Bank has the right talents to perform their roles effectively. The performance-based culture will continue to be the focus in assessing staff's contribution and in the management of succession planning and implementation of the new progression rule where high performers will be duly recognised and rewarded. Despite the performance bar being constantly raised, the average performance of our staff has continued to improve. The improved benefits and rewards need to be reinforced by strengthened coaching, mentoring and staff rotation programmes as well as ensuring that all staff benefit from learning opportunities available in the Bank. We will continue to place high priority on staff training, given the Bank's committed investment in learning and knowledge management activities of about 12% of total staff salary in 2008, and the provision of enabling facilities. The integration of learning and knowledge management, through the placement of the Knowledge Management Centre in HRDC, has certainly brought synergistic benefits for enhanced learning and knowledge management in the Bank. The launch of the newly-enhanced kijang.net in 2008 will result in the transformation of our working environment into a more unified and collaborative workplace. Kijang.net, the Bank's Enterprise Portal, will enhance information access and visibility across the Bank and provide an enabling platform for innovation and business process transformation.
In 2008, as part of our boundary management, we should be signing off our work on SME development and just focus on SME financing. With the completion of Sasana Kijang, the Lanai Kijang and the Data Centre, we can also sign off all the construction activities. We also hope to complete the Day Care Centre in early 2009. The centre will be able to provide facilities for day care and pre-school activities for 400 children. During the year, three departments will be restructured, namely, Economics, the Currency Management and Operations, and the Internal Audit departments. The year 2007 saw the successful implementation of the departments focussed on financial stability and financial sector development. A new business model will be adopted in the Currency Management department. Focus will also be given on the issues relating to denomination and new designs for the currency. For 2008, the new framework and approach for managing organisational risk will be adopted. All these priorities are encapsulated in our Business Plan for 2008. The Directors of the various departments will have a key role in communicating the plan to the staff so that there will be greater clarity on the business focus and priorities of the Bank and how they fit into attaining the Bank's desired outcomes. This will be essential to ensure the successful implementation of the plan and the delivery of its results. The plan will bring all of our resources together and collectively, with the better understanding of our respective roles, it will lead to achieving the overall objectives of the Bank. It will be an important anchor for steering the Bank towards greater performance in 2008.
Finally, the year 2008 will also devote considerable time to the amendment to the Central Banking Act. After 50 years of Central Banking, it is timely to reflect and assess the major changes that have taken place and how to put in place an Act that will allow the Central Bank to function effectively for the next 50 years. With your steadfast dedication, drive to achieve excellence and unwavering commitment, I am convinced that collectively, we will be able to achieve the objectives set out in our plan in 2008. We have the unique opportunity of celebrating the 50th Anniversary of the Bank in 2009 and I am certain that all of us in the Bank will be proud to be associated with the growth of the Bank and for bringing it to where it is today. Finally, on behalf of the Board and senior management, I would like to take this opportunity in conveying our best wishes for the New Year. May the New Year bring good health and happiness to you and your families.
Dr. Zeti Akhtar Aziz
Governor
Bank Negara Malaysia
4 January 2008
ps : the page-break(s) has been altered from the original for better fit into this webpage.
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