03/2011

(838740P)

The War for Talent in the Financial Industry An International Ringgit? Positioning Malaysian Capital Market in the New Decade

Talent Development The New Paradigm

Editor's Note

Contents
2 3 Editor's Note Talent Development : The New Paradigm The War for Talent in the Financial Industry Positioning Malaysian Capital Market in the New Decade

As the world clambers out of the economic downturn, a gradual flow of economic power from the West to East has ignited a talent war in the region. Across Asia, we are hearing laments of employers over the war for talent. The same sentiment was echoed by speakers and delegates during the recent AIF International Symposium on Talent Development organised by the Asian Institute of Finance. The strong headlines economic growth in Asia is translated into the creation of employment, backed by a robust demand in the economy and an increase in business activity. But a closer look at the workforce suggests that not all is rosy in the region. The main issue with employment in contemporary Asia is one of quality, not the number of jobs out there. The shrinking talent pools are building heavy competition for the best employees, especially within the financial services industry. Hence, the biggest challenge for emerging economies in Asia is supporting this impressive growth performance with effective talent management. Although the focus in human capital development has been waxing and waning in the business environment for the last 3 decades, the notion of talent development has once again taken centre stage in many organisations. The workforce landscape has changed dramatically in the last few years but the skills mismatch remains a critical and growing problem. A notable change is that individuals are no longer expecting to grow and develop within the same organisation throughout their career. More often than not, the best way to advance a career is by taking a higher level position in another organisation. Many organisations have woken up to these pressing issues. We are now seeing a resurgence of focus on talent development. Large organisations are now committed to training and talent development in their effort to recognise and nurture the very best in their employees. This is evident with the talent development job titles appearing in the workplace. These new realities and challenges facing the financial services industry in human capital development were the highlight of the AIF International Symposium. The Symposium placed considerable significance on the importance of talent development as a key driver of productivity, competitiveness and growth of the financial services industry. An article on the symposium provides an overview of the main issues discussed. The articles in this issue touch on many hot button issues the talent war, the internationalisation of the ringgit and the Capital Market Masterplan 2. We know you will enjoy reading them and hope they will bolster your thinking on these issues. Dr Amat Taap Manshor Editor amat@aif.org.my

12 An International Ringgit? 16 Learning Programme Assessment and Accreditation Framework for the Financial Services Industry 18 AIF International Symposium 2011 24 Market Alerts 27 Board of Directors 31 Activities and Events

DISCLAIMER: The Asian Institute of Finance does not represent nor warrant the completeness, accuracy, timelines or adequacy of this material and it should not be relied on as such. The Asian Institute of Finance does not accept nor assumes any responsibility or liability whatsoever for any data, errors or omissions that may be contained in this material or for any consequences or results obtained from the use of this information. This publication does not necessarily reflect the views or the positions of the Asian Institute of Finance.

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Human Capital

Talent Development:
The New Paradigm
This is an excerpt from the special address by Tan Sri Zeti Akhtar Aziz, AIF Chairman and Governor of Bank Negara Malaysia, at the opening ceremony of the AIF International Symposium 2011 on 7 April 2011.
regulatory reform both at the national and international level. This has also been reinforced by a tightening of the supervisory oversight. These cumulative developments are also dramatically transforming the financial landscape of the international and national financial systems. is particularly urgent for Asia as it emerges as an important growth centre in the global economy. With Asia's financial services industry poised to grow rapidly, this growth must be supported by the development of capabilities among the financial industry professionals. Going forward, the investment in this core pillar will be a defining factor in the performance and the capacity of the industry to reinvent and transform and thus enhance its resilience and sustainability.

Closing the Talent Gap

The future has therefore become more complex, uncertain, unfamiliar and more ambiguous. I n the contex t of these fundamental and far reaching changes, less attention has however been accorded to the necessary changes to the human capital development that is required for the effective participation and performance in this new financial landscape. Indeed, the talent required also needs to be transformed. These changes have also precipitated a revisit and review of education systems around the world over to address the current discontent that the education has not kept up with the changing human capital requirements of the financial services industry. The World Economic Forum has projected that 'staggering' talent gaps will arise in large parts of the world by 2020, and this will have a bearing on national competitiveness while organisations compete for talent on an unprecedented scale. Managing talent has consequently become significantly more challenging and needs to be addressed with talent development. The objective is to harness the full potential of the workforce. This

Forces Shaping Talent Landscape

The path forward needs to be guided by a strategic response to the forces that are shaping the new talent landscape. There is now an increased demand for highly-skilled knowledge workers that are able to meet the changing requirements of an increasingly globalised and borderless workplace. More interconnected businesses within national economies and across the globe have also increased expectations for employees to be highly versatile and able to adapt to the fast changing conditions. Talent mobility has therefore increased substantially not only across geographical boundaries, but also across sectors, as the demand for talent in financial services by the energy, telecommunications, software and consultancy sectors are likely to increase over time. Organisations including financial institutions therefore need to give greater

Significant new trends continue to reshape the financial services industry. In this recent two decades, the intensification of the globalisation process, the advancement in technology and the unprecedented consequences of the global financial and economic crisis have contributed to these changes. While the global economy is now on a recovery path, several challenges continue to remain. The focus of the crises affected countries have been on the immediate term challenges involving the resumption of the functioning of financial markets and the financial intermediation process while supporting the overall economic growth. As part of the response to the crisis, is the financial

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attention to these shifts and develop clear strategies to narrow the skills gap, in particular to address growing shortages in the mid to senior level talent groups. The recent regulatory reform in the financial sector and the onset of new standards and requirements under both Basel II and Basel III, the emergence of new risk disciplines and the fundamental changes in financial reporting standards, also require financial professionals to be equipped with new knowledge and skills. Similarly, talent shortages continue to be acute in high-growth areas such as wealth management, Islamic finance, and investment advisory services. At the same time, the role of the financial services sector in the recent global economic meltdown has also raised questions on the issue of the quality of the leadership and workforce and for the need to place greater focus on developing ethical and responsible leaders who will be able to lead a sustainable industry over the medium and longer term.

Despite these demands, under investment in learning remains in a significant proportion of financial institutions. This is largely due to the focus on keeping short term costs low. This has however resulted in drawing talent from the existing pool which has in turn resulted in rising costs of talent. Surveys suggest that the biggest skills and knowledge gaps faced by financial institutions are in knowledge of regulatory standards, communications, management skills and risk assessment and management. Professional and technical skills, particularly in the middle to senior levels, are still very much needed in many parts of Asia. These skills shortages will intensify as financial institutions expand their operations. Strategies for talent management and development must therefore change if financial institutions want to be competitive and well positioned to adjust and adapt to the changing conditions.

Innovative Talent Development Strategies

The economic costs of a failure to arrest talent shortages are strategically significant and include low productivity, the slow pace of innovation and lost opportunities. Building a strong talent pipeline has therefore become an economic imperative as human capital rivals financial capital as the critical economic engine of the future. This requires new and innovative ways of thinking about talent development, programs, processes and competencies. The human capital challenge has therefore to be approached with a different set of solutions.

Holistic Approach
Malaysia's financial sector has continued to forge ahead. The contribution of the financial industry to the country's GDP has increased from 9.2% in the year 2000 to 11.7% in 2009 and this figure is expected to grow further in time. Likewise, the employment growth in the financial sector will continue to accelerate, with increasing demands for specialised skills and enhanced expertise in finance. In the fast changing and increasingly complex financial landscape, our workforce in the financial sector must not only rise above current challenges,

"In Malaysia, we have prioritised talent development in the financial sector as a strategic priority and to approach this in a holistic manner, across the spectrum of the financial services industry."
Giving recognition to its importance, in the United States, the accounting rules were adjusted to allow organisations to treat a wider range of talent development costs in the same manner as long-term investments in equipment, manufacturing plants and other facilities. Financial institutions today are also forming stronger relationships with business schools to increase the relevance of their curriculum. The World Economic Forum, through its recent work on skills and talent mobility, has fostered a concerted, multi-stakeholder, cooperation and dialogue among policy-makers, relevant international institutions, governments and businesses to develop interdisciplinary solutions to address the talent shortage. The promotion of more effective international cooperation on training and skills development to meet the changing demands of the industry, more comprehensive strategies on talent development and greater mobility that is consistent with the realities of the global economy will support such talent development. but must be well equipped to excel in the significantly changed environment. In Malaysia, we have prioritised talent development in the financial sector as a strategic priority and to approach this in a holistic manner, across the spectrum of the financial services industry. The goal is to develop a deep pool of financial sector talent with world class capabilities to drive responsible growth and development of the financial sector. As many of the initiatives supporting these strategies are multidisciplinary and multi-layered, the approach is grounded in a shared commitment with the industry in a comprehensive, coordinated and collaborative manner. This is our best hope for rising confidently to the human capital challenge that lies before us. With the strong support of all the key stakeholders and practitioners in the industry, we can make a critical and lasting contribution towards creating a talented workforce for the industry.

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Human Capital

The War

for Talent in the Financial Industry

By Wan Nursofiza Wan Azmi

The phrase War for Talent was first coined by Steven Hankin of McKinsey & Company in 1997 to describe the phenomenon of talent shortage experienced by organisations. This phrase has since been echoed many times and has now taken a new global shape. After two decades, this war continues unabated as organisations engage in fierce competition to attract, hire and retain the very best people. The financial industry in Asia has been feeling the pressure of a skills shortage. If the escalating talent shortages are not addressed properly, this could have serious implications on the sustainable growth of Asias financial industries and subsequently could hamper growth prospects of the emerging Asian economies.

Forces Fuelling the War

The talent war in the financial services industry is not showing any sign of waning, with the increasing shortage of talent affecting all sectors in the financial industry and affecting career paths as well. This event is manifested by a number of sweeping changes. The recent Robert Half Workplace Survey reported that across the Asia Pacific region, the finance and accounting sector is experiencing skills shortage with 82% of employers surveyed acknowledging that the pool of financial talent has not expanded as fast as the industrys growth. This finding is backed up by the results of a separate study conducted by Deloitte Touche Tohmatsu and the Economist Intelligence Unit, in which

57% of CFOs being surveyed believed that finance talent is indeed in short supply. Among the fundamental forces fuelling the talent war are changing workforce demographics, generational differences and growth potential of Asia economies. The most fundamental driver of workforce diversity today is the changing workforce demographics resulting in a much broader range of ages in all professions. As the 'baby boomer' generation ages, organisations face the problem of having a significant part of the workforce retiring at the same time. This translates into two unique challenges - the employees and their implicit knowledge will leave the companies; and the recruitment of a qualified workforce is hampered by

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Table 1: Salary Outlook 2011 for the Financial Services Industry in Malaysia Salary Per Annum (RM) Analyst Team leader/Manager (1 4 years experience) (5 10 years experience) 2010 2011 2010 2011 Front Office Banking Investment Banking Private Banking Private Equity Corporate Banking Commercial Banking Banking Operations Treasury Settlements Cash Management Corporate Governance Compliance Market Risk Operation Risk Internal Audit Credit Risk Financial Accounting Business Analysis Finance Operations 85 - 150k 84 - 110k 80 - 145k 52 - 100k 45 - 96k 89 - 180k 96 - 120k 84 - 160k 58 - 110k 47 - 108k 157 - 240k 100 - 200k 126 - 240k 99 - 192k 78 - 132k 180 - 288k 120 - 220k 160 - 264k 110 - 216k 108 - 145k

generations of workers who will remain in the labour market over the next few decades. In today's constantly changing workplace, one thing remains constant: a younger generation of workers who have vastly different expectations, needs and patterns of behaviour that differ markedly from prior generations. As the baby boomers ease into retirement age, employers must learn to understand the motivations and desires of the younger generation of employees who seem to be more motivated by personal fulfilment opportunities on the job than by traditional monetary rewards. The talent market is now more competitive than ever before and is expected to intensify further in the coming decades. In a knowledge-driven economy, the demand for highly skilled finance professionals is on the rise incessantly. Although the demand may at times decline with financial downturns, the rising trend will continue to linger in the longer run. This remains true in the wake of the global financial crisis. At the height of the crisis, many financial institutions downsized their operations and staff at the expense of further expansion. As the financial sector scrambles back to its feet, competition among financial institutions to expand and rebuild their operations, particularly so in Asia in their intense quest to piggy back on the growth potential of the region, has set off the talent war with Asia as the main battleground. We are now seeing large financial institutions in the likes of Standard Chartered, Citi and UBS focusing and re-focusing global growth on Asia, especially so in China and India.

42 - 72k 40 - 74k

42 - 78k 40 - 78k

82 - 156k 78 - 145k

78 - 174k 78 - 174k

48 - 99k 45 - 99k 45 - 90k 44 89k 44 88k

52 - 109k 49 - 120k 48 - 108k 45 98k 45 96k

99 - 185k 99 - 201k 90 -185k 89 - 185k 90 172k

109 - 212k 120 - 241k 108 - 222k 98 - 212k 96 - 198k

50 72k 42 68k

50 84k 42 84k

72 115k 66 115k

84 156k 84 156k

NB: Figures are basic salaries exclusive of benefits/bonuses unless otherwise specified. Source: Robert Walters Global Salary Survey 2011 Malaysia

skill shortages or talent constraints. Several professions in the financial industry such as accounting and auditing are now clearly feeling the effects of employee retirements and the difficulty in sourcing for new talent.

"Among the fundamental forces fuelling the talent war are changing workforce demographics, generational differences and growth potential of Asia economies."
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As a result of this development, generational diversity has become a new realism. The workforce today is made up of four unique generations (Traditionalist, Baby Boomers, Generation X and Generation Y ). Each of these four generations brings its unique stamp to the workforce and is guided by a different set of values, life experiences, beliefs, expectations and attitudes. With multiple generations actively engaged in the workforce, comes a new set of challenges for employers. Organisations that recognise, leverage, and bridge the generational divide will gain a competitive advantage in the talent market. Further complicating the generational diversity is the change in attitude among the

Talent Economy
At the heart of the talent war is the presence of inflated wages. The scramble for finance professionals in Asia is pushing up the cost of attracting and retaining talent. The talent crunch has driven up wages and narrowed the salary gaps in most economies in Asia. In China, for example, a 20% salary hike is currently being experienced by the financial industry whilst Hong Kong professionals in the financial sector reported an average 30% growth in earnings (salary and bonus) in 2010. The minimum salary for finance professionals working in Singapore has also registered an increment of 8% to 10%.

Human Capital

Table 2: Asia Pacific Talent Index 2012 Rank Country Talent Index Score Demographics (rank) Quality of compulsory education (rank) Stock & flow Proclivity to Mobility Quality of Quality of attracting of foreign universities environment & relative talent direct to nurture openness of & business (rank) the labour investment talent schools (rank) market (rank) (rank) (rank) 9 3 2 10 8 1 6 5 7 4 11 14 15 13 16 17 12 2 1 8 7 4 6 9 5 3 10 12 11 14 17 13 15 16 1 3 8 2 4 13 5 7 12 6 11 9 15 16 10 14 17 2 8 12 1 3 17 14 9 13 6 7 11 4 15 16 10 5 1 2 12 3 4 5 7 9 6 10 11 8 13 14 17 15 16

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Singapore Australia China Hong Kong New Zealand Japan India Taiwan South Korea Malaysia Thailand Philippines Vietnam Indonesia Sri Lanka Pakistan Cambodia

2012 53 52 50 50 48 44 44 42 40 39 32 30 27 25 25 20 19

2007 54 55 47 49 48 40 41 43 38 36 30 29 25 25 26 20 20

10 14 1 16 11 17 2 15 12 7 9 6 5 4 13 3 8

6 2 9 7 1 4 15 3 5 8 10 14 12 13 11 16 17

Source: Heidrick & Struggles

According to Robert Walters Global Salary Survey 2011 for Malaysia, the financial services industry is expected to see salary increments of between 5% and 15% as the job market becomes more and more employee-driven. And, salaries of highly qualified professionals with 5 to 10 years of experience are set to rise by as much as 30% compared to the previous year (refer to Table 1).

facetted approach in recruiting, retaining and developing talent. The global economy has brought about a paradigm shift in talent management as the workforces are increasingly mobile, have highly transferable skills and are technologically savvy. If talent is not nurtured and managed appropriately, the brain drain effect could be detrimental to long term growth. A Global Talent Index developed by Heidrick & Struggles and the Economist Intelligence Unit offers a unique insight into the demand for talent across the globe as it measures countries on their capacity for developing, attracting and retaining talent. The Index reflects not only how well countries are presently developing their domestic sources of talents but also at how this capability is evolving into the future. In the Global Talent Index report for 2011, Malaysia was ranked 36th out of 60 countries and is projected to fall by three places to 39 by 2015. In the recent Asia Pacific Talent Index 2012, Malaysia retained its 10th position but scores fairly low on Quality Environment To Nurture Talent and Proclivity To Attracting Talent (see Table

2). However, Malaysias ability to attract talent is projected to fall from 6th position to 10th in 2012. World Bank, in its report titled Malaysia Economic Monitor: Brain Drain, highlighted that the brain drain situation in Malaysia has grown rapidly and the trend is likely to continue. The report goes on to say that the talent outflow was not being replaced with commensurate levels of inflows. The World Bank report also highlighted that the number of Malaysians with tertiary education who moved abroad had tripled in the last two decades. The results and projections above reflect the countrys struggle with brain drain and retaining talent. If left unchecked, this could have serious implications on Malaysias drive to be a high-income nation by 2020. Hence, Malaysia needs to focus not only on attracting talent back onshore but also on developing strategies for competing for worldwide talent.
Dr Wan Nursofiza Wan Azmi is Senior Research Fellow of the Applied Finance Research and Publication Centre, AIF.

Winning the War

Against the backdrop of stronger economic growth amongst Asian economies, the war for talent in the region has reached new heights as financial institutions embrace more creative talent management practices in terms of sourcing, recruiting and retaining finance professionals. According to ACCA, some of the key retention strategies adopted by institutions include realigning salary packages to current market rates, offering better career development opportunities and providing flexible work schedules. The bottom line is that to win the war for talent, institutions must understand current and future needs of the workforce. This requires taking a multi-

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Capital Market

Positioning Malaysian Capital Market in the New Decade

By Catherine S F Ho
The second Capital Market Master Plan or CMP 2 which was launched in April this year charts the strategic development of Malaysian capital market for the next 10 years. As the successor to the highly successful first master plan, the CMP 2 strategically aims to unlock the potential of the countrys capital market which is expected to grow more than double in size to RM5.8 trillion over this decade. The growth strategies outlined also aim at expanding the role of the capital market in line with the objectives of the New Economic Model (NEM). The enhancement of not only public but also private sector involvement in the capital market would boost value-added alternative investment opportunities for the large amount of savings in the country and also broaden and deepen the capital market to compete in the contemporary global network. The CMP 1 had successfully achieved a 95% completion rate out of the 152 recommendations and 24 strategic initiatives proposed. These included initiatives to improve liquidity; ease fund-raising; reduce transaction costs; develop a broader stock and bond; ensure a strong and facilitative regulatory regime as well as establish Malaysia as an international Islamic capital centre. The strategies adopted resulted in increased efficiencies and competitiveness which laid the framework and provided the landscape for rapid growth of the Malaysian capital market. Lessons learned from the Asian financial crisis have also broadened the Malaysian capital market, equipped it with more sophisticated financing sources and better risk management strategies that enabled the domestic market to come out relatively unscratched from the recent contagious global meltdown. With the evolution of the market into a well-regulated and resilient one, all market participants must enhance their capabilities and professional standards to certify better investor protection. One of the major achievements of the CMP 1 is the strengthening of the domestic financial intermediaries in preparation for the open and competitive global environment. Merger and acquisition strategies implemented on the domestic banking industry have resulted in stronger and larger asset based financial institutions that can operate according to global standards through the achievement of economies of scale and efficiency to

Capital Market Overview

Size (RM bil) Total : 717.5 Total : 2,033.9

The Success Story

Stock market 1,246.7 Bond market 444.4 Bond market 758.7

Stock market 273.1

2000

2010

Source : Securities Commission

Under the first Capital Market Master Plan (CMP 1), several major strides were achieved. The size of the capital market expanded at an annual rate of 11% over the period 2001 2010 from RM717.5 billion in 2000 to cross the RM2 trillion mark as at the end of 2010. The Islamic capital market also registered strong growth at 15.2% in 2010 and outpaced the conventional capital market to register RM1.05 trillion in 2010 from RM293.7 in 2001. The overall size of the capital market is currently about 2.7 times the nominal gross domestic product.

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Capital Market

Achievements under the Capital Market Masterplan 1 Market segments Equity market capitalization Debt securities outstanding Derivatives (notional value traded) Investment management (assets under management) Islamic capital market
Source: Capital Market Master Plan 2

2000 (RM b) 444.4 273.1 84.0 55.2 293.7

2010 (RM b) 1,275.3 758.6 512.1 377.4 1,050.1

CAGR (%) 11.1 10.8 19.8 21.2 13.6

compete in the international domain. Further enhancement and continuous support must be rendered in this area in order to facilitate the exploration of a wider range of business opportunities and investment assets for the industry.

Growth with Governance

An important consideration in the conception of a structural long term plan is a full appreciation of the major transformations of the financial landscape with particular reference to evolution of new technologies, processes, and products and services. In laying down the framework for CMP 2, the changing dynamics of the capital market both locally and globally were taken into consideration with a focus on four key structural changes: The growing size of the capital market which is now in excess of RM2 trillion Broad economic base Significant growth of institutional funds Greater internationalization of the capital market The CMP 2s strategies have been formulated to be comprehensive and flexible in keeping

pace with trends and challenges that are likely to affect the capital market in this decade. The strategies also reflect the current state of affairs in the global financial market especially in fast emerging countries. Therefore, it is essential that the process of growth be monitored and governed by appropriate risk management strategies. Experience from the past financial crises suggests that sustainable growth is only achievable if it is supported by the right degree of accountability and a well-structured governance framework. Hence, the hallmark of the CMP 2 lies on the intricate balance between capital market growth and robust market governance to ensure credibility and integrity of the Malaysian capital market. The adoption of good governance practices is a fundamental pre-requisite for a sound capital market. With hindsight, a well-structured corporate governance framework and a code of good governance provide a conducive climate to the orderly development of the capital market and meet the increasing expectations of investors. The theme Growth and Governance underscores the importance of ensuring good governance and forms the backbone of growth. Through the growth and governance

strategies identified, the CMP 2 strives to enhance the development of the capital market without losing sight of high standards of corporate governance in transforming the competitive dynamics of the capital market over the next decade. Key growth strategies include the need to further spur the capital market development to the next level to support Malaysias economic growth and meet challenges arising from intense competition and globalization. In line with fostering and facilitating innovative growth, the governance strategies ascertain that mechanisms are in place to ensure high standards of investor protection and market integrity. The latter is important as sustainable growth of the capital market depends largely on confidence of investors.

Growth Strategies
Promote capital formation C re a te a c o n d u c i ve i n te r m e d i a t i o n environment to seed private sector emergent companies and industries; nurture the growth of small and mid-cap companies; finance large and high-risk ventures with innovative products and wider access to the long term bond market; and promote socially responsible financing and investments.

Overview of the CMP 2 Strategies Growth Strategies Promote capital formation Expand intermediation efficiency and scope Deepen liquidity and risk intermediation Facilitate internationalization Build capacity and strengthen information infrastructure
Source: Capital Market Master Plan 2

Governance Strategies Enhance product regulation to manage risks Expand accountabilities as intermediation scope widens Robust regulatory framework for a changing market landscape Effective oversight of risks Strengthen corporate governance Broaden participation in governance

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"The CMP 2 is strategically aimed to enhance the role of the capital market in line with the aspirations of the Economic Transformation Program and New Economic Model to transform Malaysia to high-income status based on principles of inclusiveness and sustainability by 2020"

Facilitate internationalization Expand growth boundaries especially in high growth regions by tapping global opportunities to facilitate expansion in scale and to capitalize on hub opportunities in comparative advantage areas specifically in middle and back-office functions; and widen and reinforce the Islamic capital market products, strategies and styles. Build capacity and strengthen information infrastructure Strengthen the knowledge base through talent development and acquisition to support the expansion of the capital market into high value-added areas to meet future demands of the market; build strong and innovative information infrastructure to address information asymmetries; and promote service innovation and efficiency in a highly-electronic environment.

level of transparency and fairness among participants to enhance market quality. Effective oversight of risks Expand regulatory coverage, capacity and tools to ensure effective supervisory reach and strengthen oversight of risks to bolster market stability by identifying critical points of accountability and controls to effectively address risk vulnerabilities; enforce securities law and regulations in maintaining public confidence and ensure adequate investor protection. Strengthen corporate governance Strengthen the effectiveness of corporate governance through broad-based approaches to promote greater stewardship especially the board of directors; promote more concerted and coordinated efforts to empower shareholders as beneficiaries in ensuring good governance; and strengthen gate-keeping accountabilities by professional accountants, analysts and auditors to pledge for accuracy of disclosures. Broaden participation in governance Promote active participation of stakeholders in shaping intermediation and corporate governance on growth-enhancing financial innovation; and promote high levels of transparency, improved flow of information and educational efforts plus a culture of integrity and increased emphasis on socially responsible goals. According to the Chairman of the Securities Commission, Tan Sri Zarinah, in her opening speech during the launching of the Capital Market Masterplan 2, the capital market is envisaged to play an important role in financing Malaysias transformation journey. Hence, the CMP 2 is strategically aimed to enhance the role of the capital market in line with the aspirations of the Economic Transformation Program and New Economic Model to transform Malaysia to high-income status based on principles of inclusiveness and sustainability by 2020. Specifically, the strategies drawn up meet five out of the 10 Entry Point Projects identified under the Financial Services National Key Economic Areas revitalizing Malaysias capital markets; deepening and broadening bond markets; accelerating the growth of the private pension industry; spurring the growth of wealth

Governance strategies
Enhance product regulation to manage risks Foster a more conducive environment for product innovation and diversification while ensuring an efficient framework for active fund-raising and financial innovation that benefit investors; and strengthen reliability and information disclosure, and post-issuance obligations to protect investors interests. Expand accountabilities as intermediation scope widens Create an enabling environment for participants to broaden intermediation functionalities and activities; strengthen industr y capabilities and standards by broadening and upgrading investor education and professional management; and examine and monitor any conflict of interest of all participants including analysts, investment management companies, and especially credit rating agencies. Robust regulatory framework for a changing market landscape Ensure a consistent regulatory approach to the changing market environment and focus on enhancing the quality of markets through accommodating innovative financial processes, products and services, and speed of technological advances; improve the

Expand intermediation efficiency and scope Address structural constraints to enhance the efficiency of public and private sector savings intermediation; and foster an innovative and diverse intermediation environment to expand the scope and supply of assets to meet the needs of investors. Deepen liquidity and risk intermediation Broaden the diversity of investment strategies by promoting diverse portfolio allocations; strengthen market connectivity through risk intermediation derivative products with efficient price discovery and hedging across markets; and widening market connectivity and the range of informed, competent and professional participants.

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Capital Market

Targets Set Under CMP 2 Market segments Equity market capitalization Debt securities outstanding Derivatives (notional value traded) Investment management (assets under management) Islamic capital market
Source: Capital Market Master Plan 2

2010 (RM b) 2,430.3 2,053.5 4,169.5 1,610 2,900.0

CAGR (%) 6.7 10.5 23.3 15.6 10.7

management industry and accelerating the asset management industry. The targets set out by CMP 2 rest on the anticipation that equity financing will play a bigger role in the countrys transition into becoming a high-income nation. The aggregate market capitalization is expected to grow to RM2.4 trillion in the next 10 years from the current RM1.3 trillion. The investment management industry will be driven by the countrys high savings with assets under management projected to rise substantially from RM377.4 billion in 2010 to RM1.6 trillion by 2020. With greater internationalization of the capital market, the Islamic capital market is expected to expand almost threefold from RM1.1 trillion in 2010 to RM2.9 trillion in 2020.

a much needed mature and vibrant capital market. It is certain that the CMP 2 is a timely and appropriate paradigm to move the Malaysian market to the next level. Malaysia should

Committed to New Heights

The challenges of the next decade are multi-angled and vast through the rapid transformation of the global financial scenario. Some of the major challenges include transforming the competitive dynamics of the Malaysian capital market, managing risks of an innovative financial landscape and ensuring sufficient governance to support the growth and public confidence on the capital market integrity. More efficient intermediation and innovative products must be promoted to facilitate product diversity and risk taking to satisfy investors demands. There is undoubtedly a need for a more efficient and trustworthy capital market that can support future growth and is internationally competitive. In addition, an expansion of the derivative market would be critical in providing risk management options to allow intermediaries to build their risk management capabilities. All these indicate definitely capitalize on its comparative advantage on ethical financing and investments from surplus investors in the Middle East and elsewhere, and continue to build on the strength to maintain its position as the world Islamic finance hub. It should however be cautious that this is only a relatively small section of the world capital market and other financial segments cannot be ignored. Relative to other major economies in the region with much larger and more established financial institutions, Malaysia should find opportunities to collaborate with them on a blue ocean strategy term to avoid direct competition. Additionally, improvement in efficiency and effectiveness should be prioritized to remain relevant and be able to compete in the international field. Lessons learned from the recent global financial crisis include the need to constantly

monitor the creation of new financially engineered products and services to prevent high risk intangible hybrid investments. The level of household debts should also be monitored in order to avert a high risk of defaults and asset bubbles. The central bank has recently reinforced the minimum requirement for credit card holders and imposed a higher deposit rate for multiple house owners aiming at reducing bankruptcy risk and speculation activities. More stringent standards are also needed for rigorous credit risk management of financial institutions in their credit creation role especially when approving loans. In addition, conflicting roles of financial institutions in taking deposits on the one hand, and providing investment and financing opportunities and managing investors funds on the other, should be closely supervised to avoid the moral hazard of the too big to fail syndrome as well as the dependency on the lender of the last resort. Hence, it is pertinent that there is a set of continuous guidelines, which must be collectively implemented and enforced, to champion the persistent development of the Malaysian capital market in the next decade. The CMP 2 provides the necessary framework of support and governance to work towards continual promotion of capital growth to accommodate a sustainable system of financial competency and confidence that is in line with the countrys objectives to achieve a high income nation through ethical means.
Dr Catherine SF Ho is an Associate Professor of Finance and Head, Financial Services and Risk Management Dept, Universiti Teknologi MARA, Malaysia.

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Finance

An International

Ringgit?
By Saadiah Mohamad

"The move to liberalize the foreign exchange regime was seen as an imperative condition meant to provide greater flexibility on sources of competitive financing for the real sector as well as to enhance the management of financial resources within the corporate sector."

The decision to implement selective capital control and to de-internationalize the ringgit in September 1998 was instrumental in restoring the stability of the foreign exchange market and in containing the speculative activities on the ringgit during the 1997-1998 Asian financial crisis. However, it was not well received by international observers and analysts who saw it as being counter-intuitive to the open market export led growth. Despite going against the Washington consensus, Malaysia went ahead and maintained what many economists later described as a credible peg. Even some of the hard line critics from the IMF came to acknowledge the role of the peg not long after the crisis. It is now almost six years since the ringgit was depegged from the US dollar from a fixed rate of 3.80, allowing the ringgit to be traded in a managedfloat system which is tied to a basket of different currencies. The move came just hours after Chinas announcement to de-peg its yuan against the US

dollar on July 21, 2005. Since the removal of the peg and the gradual easing of capital controls, financial liberalization continues to become an important agenda in Malaysia. The need for a liberalized, efficient and competitive financial sector is further enhanced in view of Malaysias vision and its increasing role as the global and regional hub for Islamic finance. Despite the substantial financial liberalization that has taken place, the internationalization of the ringgit considered as the last vestige of the capital control imposed in 1998 is still not allowed.

Foreign Exchange Liberalization

In August 2010, Bank Negara Malaysia (BNM) announced a series of foreign exchange liberalization initiatives which reintroduced the ringgit as a valid currency for the countrys export and import transactions. This effectively means that residents can now undertake settlement of international trade in goods and services with

USD Exchange Rate Against Ringgit

3.7 3.6 3.5 3.4 3.3 3.2 3.1 3 2.9 30/3/2009 30/4/2009 31/5/2009 30/6/2009 31/7/2009 31/8/2009 30/9/2009 31/10/2009 30/11/2009 31/12/2009 31/1/2010 28/2/2010 31/3/2010 30/4/2010 31/5/2010 30/6/2010 31/7/2010 31/8/2010 30/9/2010 31/10/2010 30/11/2010 31/12/2010 31/1/2011 28/2/2011 31/3/2011

Source: Data from Bank Negara Malaysia

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"An international currency performs three functions - invoicing currency for international trade, denominating currency for international assets (such as international bonds) and vehicle currency for international reserves."

non-residents in ringgit in addition to using foreign currencies. Other measures of foreign exchange liberalization rules include the loosening of the convertibility of the ringgit for non-residents and the abolition of all limits on cross-border foreign currency inter-company borrowings. The limit on anticipatory hedging for current account transactions with licensed onshore banks was also abolished to facilitate more effective risk management by residents. The move to liberalize the foreign exchange regime was seen as an imperative condition meant to provide greater flexibility on sources of competitive financing for the real sector as well as to enhance the management of financial resources within the corporate sector. At the same time the central bank of China, the Peoples Bank of China, announced the trading of the ringgit against the Chinese RMB and thus, making the ringgit the first Chinas interbank foreign exchange market transaction in emerging market currencies. Could these developments be interpreted as pointing towards the possibility of making ringgit international again? To some, the gradual series of liberalization in foreign exchange market by BNM since 2005 is deemed a precursor towards ringgit internationalization.

quantitative easing has brought large capital flows to this part of the world. In 2010 alone the ringgit appreciated by 11% against the US dollar. The first half of 2011 has seen an even more interesting development, whereby towards May 2011, the ringgit has reached a 13-year high since the 1998 Asian currency crisis, reaching a value of 2.97 ringgit to one US dollar, making an appreciation of almost 20 % since 2009 and a total of almost 22 % percent since the crisis. The rise of the ringgit is in tandem with the weakening US dollar against most currencies in the Asian region. The ringgit has been appreciating not only against the US dollar but also against other major currencies in the world like the euro and pound sterling. In 2010, the ringgit appreciated 20.6 % against the euro and 15 % against pound sterling. Ringgit is now seen as one of the best performing currencies in Asia. Noteworthy is that the recent rise of the ringgit is not only due to the US dollars continued weakness, but is rather attributed to the relative strength and attractiveness of the Malaysian economy vis-a-vis other economies in the region.

understood. For one thing, a currency that is fully convertible outside of its issuing country need not necessarily be an international currency. A national currency qualifies as an international currency when it is used globally for calculations, exchanges and settlements. Hence, an international currency is one that is used and held beyond the borders of the issuing country for transactions with that countrys residents as well as between nonresidents. And to be an international currency, the country need not have a fully liberalized financial sector, although financial liberalization is indeed an important aspect leading toward the development of currency internationalization. Full convertibility currency, on the other hand, implies merely the full conversion of local currency into a foreign currency and vice-versa. Although there are a number of fully convertible currencies besides the US dollar such as the yen, the Australian dollar, the HK dollar and the Singapore dollar; the US dollar and the Euro remain the two very important vehicle currencies of the world. The market share of the US dollar and the Euro as the worlds reserve currency in the second quarter of 2010 is 62.1% and 26.5%, respectively. Generally, the basic functions of a currency are as a medium of exchange, a unit of account and a store of value. In most cases, a currency performs these roles within the country where it is issued. An international currency however is one that effectively plays these roles beyond the borders of the issuance country and can be used for private

Convertible, International or Internationalized?

Against this improved confidence on the economy and upward trend of the ringgit, should the ringgit be made fully convertible and be internationalized? Terms such as an international currency, internationalized currency or a currency that is fully convertible internationally are not always well defined and

Ringgit is Getting Stronger

Since the removal of the peg, the ringgit has been appreciating against the US dollar, albeit by small amounts initially. More rapid appreciation has occurred in the last few years since the global financial crisis and the US

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Finance

as well as for public purposes. For private transactions, the currency may be used as a substitute currency, where it functions as an invoice and vehicle currency at those places where trade and financial assets must be denominated in this currency. The currency may also be used for public purposes such as serving as official reserves, as a foreign exchange intervention and as an anchor currency for pegging. In a nutshell, an international currency performs three functions - invoicing currency for international trade, denominating currency for international assets (such as international bonds) and vehicle currency for international reserves.

trading in Singapore ranked fifth among all countries in the BIS survey of foreign-exchange trading. This illustrates that the internationalization of a currency is not a pre-requisite for the development of a financial centre. To be an international currency, the currency needs to play a dominant role as a global medium of transaction enabling it to be held as foreign exchange reserves. The US dollar, and in recent years the Euro, have strong international presence where trade transactions and financial instruments are denominated in these currencies. Not surprisingly, these two currencies are the most common currencies available in the reserves of most central banks. In the last year or so, China is seen to be making inroads towards making the yuan a more internationalized currency by having bilateral agreements with various nations so that trade can be settled using the yuan instead of the US dollar or the Euro. It has signed such agreement with Malaysia and recently during the Premiers visit to Malaysia this has been strengthened further. Thus, a currency may be fully convertible but at the same time may not qualify as an international currency if its role in the global market is not prominent. The main economic factors underpinning the internationalization of a currency include economic strength, exchange rate stability, a well-developed and liquid financial market as well as trade volume.

How Does a Currency become an International Currency?

We need to differentiate between capital account convertibility and currency internationalization. Convertibility implies that

Market Share of Foreign Exchange Reserves

1999 Q1
6.0% 1.9% 2.7% 4.2%

2010 Q2
3.3% 3.9%

18.1%

26.5%

Benefits and Costs of Ringgit Internationalization

Currency internationalization offers many benefits. First, it reduces or limits exposure to foreign exchange rate risks that are inherent in international trading and financial transactions as the currency becomes the invoice currency for exports and imports. Second, it provides domestic firms and financial institutions access to international financial markets without incurring exchange rate risks. Domestic financial institutions may also gain an edge over external competitors as their international dealings are now conducted in ringgit whilst domestic borrowers have access to international financing but in ringgit terms, thereby avoiding currency mismatches. Finally, currency internationalization offers the benefits of lowering the amount of foreign exchange reserves which are held as a buffer against external financial shocks. Hence, pursuing the internationalization of currency may be important in cushioning adverse effects of external shocks. However, there are potential costs involved in full convertibility and internationalization of the ringgit. On the flipside, the offshore trading of the ringgit would risk the possibility of speculative attacks similar to those that sparked the Asian

71.2% 62.1%

US Dollars Euros Pounds Sterling Japanese Yen Other

Source: IMF

there is no barrier to cross border financial transactions at market determined exchange rates while convertibility is important for currency internationalization. In some cases, currency internationalization can be achieved without complete capital account convertibility. Take Singapore for instance. Singapore has always maintained some forms of control on its foreign exchange rules even though there have been a series of liberalization interventions. Yet, it is a major international financial centre and the volume of currency

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Finance

speculative attacks, asset bubbles and inflationary pressures. Thailand and South Korea have recently made it public that they are not discounting possible efforts towards warding off shortterm capital inflows that could be detrimental to their economies. Other countries have either imposed controls or are in the process of doing so to rein in short-term investments.

to Tan Sri Zeti Akhtar Aziz, Governor of BNM, some of the pre-conditions needed to internationalize the ringgit are already in place as the financial markets are more developed while financial institutions have increased their capacity. However, she reiterated that the internationalization of the ringgit could be done in phases but the central bank is in no rush as yet to put the ringgit on the global mart. When global capital becomes footloose, it can go out as quickly as it comes in. The depreciating ringgit in the 1997/98 crisis has hurt many companies and businesses but the situation has somewhat changed. Most companies have onshore financing and the growth of Islamic finance and particularly in the issuance of sukuk have allowed local investors to take part in financing domestic businesses. There are now more hedging tools available in the market to protect companies against any strengthening or weakening of currency and of late even Islamic finance has come out with its alternative Islamic hedging mechanisms such as Islamic forex forwards and Islamic currency and profit rate swaps. With Islamic hedging, these tools are used for hedging purposes only where there is proof of risk exposure and not for speculative purposes unrelated to real activities. Thus a greater use of shariah compliant products could if done well reduce speculative activities. A currency that does become an international currency is a reflection of both the politics and the economics of the country. The decision to get ringgit fully convertible is not only an economic decision but a political one. Whether the ringgit will eventually get accepted as one of the major international currencies in the world depends very much on the role and contribution of the Malaysian economy in the global market in future years. Besides policy makers who make the important policy decisions, a lot depends on the performance of Malaysian companies, banks, financial institutions as well as the behavior of ordinary consumers like you and me and those abroad.
D r S a a d i a h M o h a m a d i s a Pr o fe s s o r of Economics at Arshad Ayub Graduate Business School, Universiti Teknologi MARA, Malaysia.

Are We Ready?
financial crisis. This may well be one of the reasons that monetary authorities are still holding a lid on their currency. Changes in demand not related to domestic but foreign shocks would also make the currency more vulnerable to currency crises and have the potential to be repeating the debilitating experience of the 1997/98 Asian crisis in which the ringgit had come under speculative attack resulting in it nose-diving against the US dollar. Concerns that the ringgit would suffer a similar fate if internationalized is not without merits. Currency market/foreign exchange market is not like any other markets. It is the largest, most liquid and dynamic market in the world with USD4 trillion (RM12.4 trillion) in daily transactions. It is indeed a market that is prone to excessive movements (volatility) and overshooting. It has been reported that flows of global capital are currently making its way into emerging economies for higher yielding returns. This scenario was triggered by the quantitative easing plans by the Federal Reserve of USA to help revive its economy. The Fed announced in early November 2010 the further easing through its USD600 billion (RM1.86 trillion) bond-buying programme. From the perspective of emerging economies, short-term capital flows could lead to an appreciation of their currencies which will negatively affect their competitiveness. Such phenomena could also result in Bank Negara Malaysia (BNM) is confident that having managed to ride through the crises and learning the lessons well, Malaysia is well-placed and ready to ward off risks of short-term hot money flows. This is mainly attributable to the strong reserves accumulation of USD110.4 billion (as of March 2011) compared to USD20 billion during the 1997/98 financial crisis. Malaysia has also adopted bold capital controls to lay the groundwork for a recovery programme. BNM has since then developed a surveillance system to deter inflows of short-term hot money for speculative purposes. The million dollar question is: Are businesses and financial institutions ready to reap benefits of an internationalized ringgit? Since the de-pegging of ringgit against the US dollar in July 2005, there have been talks amongst the policymakers in Malaysia on the revival of offshore trading of the ringgit. In September 2010, policymakers have aired their commitment to deliberate on the feasibility of the ringgits internationalization. However, no time frame has been set for the full implementation of the internationalization of the ringgit although it has been said that such moves will be carried out gradually in phases. In an interview with CNBC last September, the Prime Minister of Malaysia, Dato Sri Najib Razak, said that Malaysia was quite adaptive and was open to the idea of reviving offshore trading of the ringgit should the policy be deemed helpful for the health of the Malaysian economy. According

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Assurance & Accreditation

Learning Programme Assessment and Accreditation Framework for the

Financial Services Industry
By Sarala J Marimuthu

The Asian Institute of Finance (AIF) has developed the Learning Programme Assessment and Accreditation Framework (LPAAF) with the aim of promoting world standard Learning Programmes in the financial services industry (FSI). The framework was developed from the outset on the recommendations made by Bank Negara Malaysia (BNM) and Securities Commission Malaysia (SC) consistent with the findings published in the concept paper on Transforming the Financial Services Industry Training Landscape. The LPAAF is one of AIFs initiatives towards meeting the demand of the financial services industry for high quality and efficient learning interventions. The LPAAF is a comprehensive quality assurance framework with a certification and accreditation system that aims at raising the quality of the workforce and the training providers in the FSI in Malaysia. The framework is developed

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Assurance & Accreditation

based on international good practices, after extensive research and study of adult learning and higher education quality models adopted by the institutions in Australia, Hong Kong, Singapore, United Kingdom and Malaysia. The three-pronged objectives of LPAAF include setting national standards for Learning Programmes in the financial services industry, standardising Learning Programme development, assessment and accreditation and enabling global recognition of learning and qualifications. Inputs on the needs of the policy makers, the FSI training providers, the FSI and its personnel were sought through dialogues conducted in collaboration with AIFs Affiliated Institutes (AIs) as well as through industry wide training needs analysis. The outcomes and requirements identified through these activities were streamlined and integrated in the development of the LPAAF. The LPAAF will enhance the Learning Programmes offered by FSI training providers by providing clear guidelines to ensure that the Learning Programmes conform to one single, world standard, thereby enhancing the confidence of policy makers, financial services industry and the public in the standards and systems of the Learning Programmes. It is on the basis of this Framework that essential quality assurance standards, termed Learning Programme Standards (LPS) are developed for all registered financial services industry training providers providing financial training services to the FSI personnel in Malaysia. The Framework and Standards serve as a

mechanism towards ensuring the provision of high quality Le a r n i n g Pro gr a m m e s a c c o rd i n g to t h e requirements of the FSI in Malaysia. The LPAAF standardises Learning Programme development, assessment and accreditation. This will enable global recognition of learning and qualifications offered by the FSI training providers. It provides an approach for financial services industry personnel to transfer credits between Learning Programmes conducted by the FSI as well as institutions of higher learning. The LPAAF will also lead to the development of flexible pathways which assist people to move more easily between the education and training sectors and between these sectors and the labour market by providing the basis for recognition of prior learning (RPL), including advanced standing and experience. High quality learning programmes are a strategic priority in order to develop talent with world class competencies to direct FSI growth and development. The LPAAF with the strong support and commitment from the FSI stakeholders will contribute towards creating talented workforces for the FSI.
Sarala J Marimuthu is the General Manager of the Quality Assurance Division, AIF.

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Symposium 2011

From left: Puan Nor Shamsiah Mohd Yunus, Deputy Governor of Bank Negara Malaysia; YB. Datuk Dr. S. Subramaniam, Minister of Human Resources; YBhg. Tan Sri Zarinah Anwar, Chairman of Securities Commission Malaysia and Mr. Daniel P. Viets, Executive Director and CEO of Asian Institute of Finance.

AIF International
By Wan Nursofiza Wan Azmi Asian Link 18

Symposium 2011

Subramaniam. In his opening speech, Datuk Dr Subramaniam stressed the importance of developing talents in the financial industry that are grounded with a strong sense of ethics and morality. He also emphasised the need to create a generation of finance professionals who are driven by the desire to raise high standards of ethics and integrity. In our desire to develop, retain and attract good talent, we have to look at the entire eco-system of business to ensure that such good talent can be developed and retrained, he added. Datuk Dr Subramanian pointed out that talent development encompasses not only issues in skills and knowledge development, but also on the ability of the enterprise and institutions to provide a career path which is sufficiently attractive to retain the best. In his welcoming remarks, Daniel Viets, Executive Director and CEO of AIF, said that such a symposium is significant as productive exchanges of views are essential at a time of dramatic changes in the global financial landscape. He further added that understanding how these changes will impact upon the demand for talent is critical when addressing the global dynamics driving human capital development. Mr Viets encouraged more collaborative efforts between industry and government to address professional development and training needs to meet changing market demands. YBhg Tan Sri Dr Zeti Akhtar Aziz, AIF Chairman and Bank Negara Malaysia Governor, in the special address during the opening ceremony, highlighted the crucial need for Asian countries to invest in human capital as the region emerges as a centre of global economic growth. Investment in talent development, according to Tan Sri Dr Zeti, will be the defining factor in the capacity of the financial industry to reinvent and transform. She urged financial institutions to develop clear strategies in narrowing talent gaps particularly in the areas of regulatory standards, communications, management skills and risk management. The economic costs of a failure to arrest talent shortages are strategically significant and include low productivity, the slow pace of innovation and lost opportunities, she added. She advocated that talent development should be approached in a holistic manner and across the spectrum of the financial industry. Since most of the initiatives towards this end are multi-disciplinary and multi-layered, Tan Sri Dr The Asian Institute of Finance (AIF) had successfully organised its inaugural AIF International Symposium from the 7th to 8th of April 2011 in Kuala Lumpur. The event was a collaborative effort between its four affiliated institutes Institute of Bankers Malaysia (IBBM), Islamic Banking and Finance Institute Malaysia (IBFIM), Malaysian Insurance Institute (MII) and Securities Industry Development Corporation (SIDC). With the aim of the symposium being to provide a platform for industry players and The two-day symposium which carried the theme Talent Development: The New Paradigm was officiated by the Human Resources Minister YBhg Datuk Dr S. those concerned with providing investments in creating talent to discuss human capital development of the financial services industry, each of the plenary sessions was organised around a particular theme. The five themes were: The symposium which featured prominent speakers and personalities sharing their views and thought leadership on the spectrum of human capital development in the financial industry attracted over 380 delegates from 16 countries across 4 regions (Asia Pacific, Middle East, Europe and North America). Zeti pointed out that shared commitment in creating a talented workforce must be based on a comprehensive, coordinated and collaborative approach.

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Symposium 2011

Human Capital and Talent D e ve l o p m e n t i n t h e Financial Sector: The New Paradigm.

Part of the changes in the future financial landscape is the change in attitude among the generations of workers with the majority of the workforce being from Generation Y. This younger generation of workers have vastly different expectations, needs and patterns of behaviour that differ markedly from prior generations. As the baby boomers ease into retirement age, employers must learn to understand the motivations and desires of the younger generation of workers taking over their place. Hence, developing effective strategies to attract, retain and motivate Generation Y employees is an important approach in talent development.

The Changing Financial Landscape View on the Future.

Building a National Training Programme. Current Issues in Raising Standards for Human Capital.

Technological Revolution in Training Delivery.

Some of the main points highlighted during keynote presentations and by discussant-panels during the plenary sessions included: By 2050, the economic centres of the world will gravitate around India-China. Hence, the financial landscape is expected to change in line with the strong economic prospects in Dato Seri Nazir Razak presenting his keynote speech Asia. Such strong growth prospects in the long term continue to attract capital investments into the region and thus, provide tremendous opportunity in wholesale banking in Asia. However, there is a need to develop new talent strategies to fit the changing realities facing the financial industry and the greater role that Asia is envisaged to play in the Dr. Yeah Kim Leng and Prof. Dr. Abbas Mirakhor global industry.

Although the definition of talent development has not changed, its context may already have. Prospering in the present business and economic environment requires organisations to adopt a new talent equation which focuses on engaging employees in the organisations business strategy. Employees role, environment and development characterise employee engagement and are the critical keys to motivating employees. The war for talent in the financial industry is intensifying dramatically as organisations engage in fierce competition to attract, hire and retain the very best people at a time when supply is shrinking and demand is increasing. A number of far-reaching trends are fuelling the talent war. The most fundamental driver is the changing workforce demographics - the work force is aging, and it is growing at a much slower rate. The result is a much broader range of ages in all professions with generational diversity as a new condition that organisations have to face.

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Symposium 2011

Dato' Dr. Adnan Alias, Mr. Hashim Harun, Mr. Tay Kay Luan and Mr. Allen Blewitt The free rider issue in emerging markets especially in financial organisations had led to brain drain problems. While this free-rider approach may be beneficial in the short term for institutions, it will in the long term drive up costs as they continue to depend on external sources for skilled professionals. Skill shortage was also found to be the number one challenge in Asia as market expansion in these emerging economies requires skilled workforces to drive and sustain their economic growth. The current talent gaps between the supply and demand for highly skilled professionals is expected to widen further as emerging economies advance their global competitiveness and compete more strongly with the global powerhouses of the West. Multimedia platforms and technology are changing the training landscape and has thus, created a new paradigm in talent development. This revolution in training has made it possible to reduce the costs associated with delivering training, increase the effectiveness of the learning environment and aid training in contributing to the organisations business goals. It has also transformed organisations into responsive and

The organizing committee members

efficient learning organisations that can readily adapt to changing environment and needs. The plenary sessions were ensued by four concurrent industry workshops on the second day of the symposium whereby a panel of industry experts representing each of the four sectors in the financial industry (conventional banking, insurance, capital markets and Islamic finance) discussed and answered questions from the delegates on the future trends and training needs of each sector. The workshops were structured around building opportunities to share ideas and improve upon the sectoral approach to knowledge and skills development in the financial industrial arena. I n a special highlight on R isks and opportunities in a multi-polar world presented by Andrew Tessler of Oxford Economics, it was explained that the new global economic landscape is characterised by multiple centres of economic power and activity which bring with it multiple risks and opportunities. During the session, he discussed the impact of the Eurozone debt crisis, emerging overheating and the MENA crisis on emerging markets in Asia, particularly in Malaysia. The closing remarks by Tan Sri Zarinah Anwar, Vice Chairman of AIF and Chairman of

Securities Commission Malaysia marked the closing of a successful symposium. On the new paradigm in talent development, she called for a holistic approach to building capacity where technical skills and knowledge of the workforce are complemented by a strong base of values, ethics and morality. Tan Sri Zarinah highlighted that the one common trait shared by organisations that produce quality talent is the CEOs assiduous involvement in talent management. According to her, a considerable investment in time and efforts of the CEO to develop and manage talent is indeed a complex endeavour. Human capital development and management is a critical part of a companys business strategies, she said. Therefore, an analysis of a business performance and its risk profile should include an analysis of the companys talent strategies. In concluding her remarks, she stated The infrastructure for the development of human capital management will become an increasingly important element in defining the potential for the future. The CEOs and senior management need to embrace these changes.
Dr Wan Nursofiza Wan Azmi is the Senior Research Fellow of the Applied Finance Research and Publication Centre, AIF.

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Symposium 2011

EVENT ROUNDUP
AIF International Symposium 2011

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Symposium 2011

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Market Alerts

ASIA
Reappointment of Tan Sri Dr. Zeti Akhtar Aziz as Governor
Bank Negara Malaysia is pleased to announce that His Majesty the Yang di-Pertuan Agong has agreed to the reappointment of Tan Sri Dr. Zeti Akhtar Aziz as Governor of Bank Negara Malaysia for a term of 5 years affective from 1 May 2011. Dr Zeti has held the position of Governor of the Central Bank since May 2000.
Source: Bank Negara Malaysia, 20 April 2011

applicants to have a degree in a relevant field. Diploma holders with a minimum of 10 years of overseas work experience can qualify for the REP if they have relevant industry experience in sectors under the National Key Economic Areas (NKEA).
Source: Bernama, 12 April 2011

Tremendous growth for Islamic banking in Indonesia

Indonesias central bank reported that Islamic banking in Indonesia is expected to surge by 55% to IDR 155 trilion (USD17.4 billion) this year. Mulya Siregar, Bank Indonesias Director of Shariah finance said the forecast was based on total assets which stood at IDR 100.26 trillion (USD11 billion) in 2010, an increase of 47% from the previous year. Indonesias Islamic banks now have more than six million customers and employ over 20,000 workers. Islamic banking currently only accounts for about 3.5% of the total finance sector.
Source: Islamic Finance Asia, March 2011

Increase in the Statutory Reserve Requirement (SRR) Ratio

Bank Negara Malaysia recently announced the increase in the Statutory Reserve Requirement (SRR) Ratio from 2.00% to 3.00%, effective from 16 May 2011 as a pre-emptive measure to manage the significant build-up of liquidity, which may result in financial imbalances and create risks to financial stability. The SRR is an instrument to manage liquidity and is not a signal on the stance of monetary policy. The Overnight Policy Rate (OPR) is the sole indicator used to signal the stance of monetary policy, and is announced through the Monetary Policy Statement released after each Monetary Policy Committee meeting.
Source: Bank Negara Malaysia, 5 May 2011

Tan Sri Zarinah named as Top 25 most influential women in asset management
AsianInvestor recently announced their list of the 25 most influential women in asset management in Asia-Pacific. The editorial staff of AsianInvestor conducted the selection process for AsianInvestors top 25. They received nominations from Asia-Pacific, in addition to their own ideas about who should be featured. Their short list ended up with over 80 candidates. Besides Tan Sri Zarinah Anwar, some of the others in the Top 25 are: Ho Ching (Chief Executive of Temasek Holdings), Deborah Ho (Chief Executive of DBS Asset Management), Jane Kim Yungyoun (CEO of Daol Fund Management) and Alexa Lam (Deputy CEO of Securities and Futures Commission Hong Kong).
Source: The Editors, 14 March 2011

Malaysia aims to be the worlds leading Islamic finance education hub

Under the Economic Transformation Programme (ETP), the International Islamic University Malaysia will lead an initiative to develop and position Malaysia as one of the worlds leading Islamic finance education hub. The Islamic Finance and Banking Education Cluster will pilot efforts to make the Association for Islamic Finance Advancement (AIFA) the main accreditation body for Islamic finance programmes worldwide and ensure the quality, industry relevance and global recognition of Islamic finance education and its related areas. The budgeted investment is RM3.17 million with a GNI impact of RM1.2 Billion by 2020.
Source: PEMANDU, 19 April 2011

Health insurance costs to increase by more than 10% in 2011

According to a Towers Watsons survey of 170 health insurers in 37 countries throughout Asia, Africa, Europe and the Americas, the cost of health insurance provided by employers in Asia Pacific is expected to rise in 2011 by more than 10%. The survey also indicated that 79% of the respondents in Asia Pacific expected health costs to increase over the next five years. Taiwan is projected to lead the rate of increase in 2011 at 17.3% compared to Indonesias projected rate of 14.2% and Malaysias projected rate of 9.6%. The two leading factors cited globally for increase in medical costs are higher costs due to new medical technologies and overuse of care through medical practitioners recommending too many services.
Source: Towers Watson, 20 January 2011

Bringing them back home

Datuk Seri Najib Tun Razak announced returning Malaysian professionals were now eligible for a flat rate of 15% income tax for 5 years as an incentive to lure them from abroad. Datuk Seri Najib also mentioned that the Talent Corp would now take the lead on the Returning Experts Programme (REP). Qualifying criteria now placed a greater emphasis on relevant work experience as opposed to qualifications which required

Malaysia Economic Monitor - April 2011: Brain Drain

According to the 2011 edition of the Malaysia Economic Monitor released by the World Bank, Malaysias economy staged a strong recovery in 2010, with near-term growth expected to develop favorably at 5.3 % for 2011 and 5.5 % in 2012. To succeed in becoming a high income country, however, the report stressed that Malaysia must accelerate structural reforms, and promote skill-intensive growth by developing, attracting and retaining

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Market Alerts

2050 as a result, world GDP should rise in real PPP-adjusted terms from 72 trillion USD in 2010 to 380 trillion USD in 2050. Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam have the most promising (per capita) growth prospects these are the Global Growth Generators (3G) countries. Malaysia was categorized as a Hot country whereby conditions are right for serious growth with projected GDP growth of 5.3%, actual FDI of $1,381 million and competitiveness score of 4.88.0 Human capital as indicated in Citis report is another key ingredient for generating growth. The Programme for International Student Assessment (PISA) 2009 results show that Korea and Finland topped the rankings in the survey of education performance by country, followed by Hong Kong, Singapore, Canada, New Zealand and Japan. The municipality of Shanghai topped the rankings once cities are included. Besides education, relevant indicators of human capital includes health, fertility, and the age distribution of the population.
Source: Citigroup Global Markets Inc, 21 February 2011

talent. To generate lasting growth, the Monitor cautioned that Malaysia needs faster implementation of structural reforms. It emphasized that concrete progress has been made in public service delivery and project-based investment, but added that further efforts are needed to address the cross-cutting structural bottlenecks in the economy with comprehensive policies. The urgency to whole-heartedly tackle the deep-rooted bottlenecks is real, says Philip Schellekens, the World Banks Senior Economist for Malaysia and lead author of the report. Regional competition for talent, trade and FDI has intensified. Other countries are forging ahead with policy reforms similar to Malaysias New Economic Model, so progress will be measured in relative terms. Malaysias journey to high income will also depend on how it handles brain drainthe emigration of high-skill human capital. The report estimates the Malaysian diaspora in 2010 at 1 million, with brain drain at a third of this. By boosting productivity and strengthening inclusiveness, Malaysia can address the brain drain comprehensively, says the Monitor. It recommends a revamp of the education system, an overhaul of the innovation eco-system, and a reorientation of inclusiveness policies towards merit and needpolicy thrusts that are well reflected in Malaysias transformation programmes.

Policy approaches that target the flow of talent across borders directly can complement these comprehensive approaches, but cannot substitute for them, the report said. Once the enabling factors of productivity and inclusiveness are addressed, Malaysia will need to proactively participate in the global competition for talent. Recent initiatives by the Talent Corporation, such as the Residence Pass and the Returning Experts Programme, are welcome in this respect. Malaysia can also engage more deeply with the diaspora. One immediate example is to seek the diasporas input on how to deal with brain drain.
Source: World Bank Malaysia Economic Monitor, 28 April 2011

Uganda & Nigeria to launch Islamic banking

Both Uganda and Nigeria is set to launch Islamic banking operations by early 2012 and late 2011 respectively. The Deputy Director of commercial banking at Bank of Uganda, Grace Stuart Ndyareeba said that banks have the option of either acquiring a local bank or set up a new Islamic bank. Uganda, which is changing its banking rules to allow lenders to operate under Islamic law, is hoping to pass the amendments by early 2012. Central Bank of Nigeria Deputy Director, Kingsley Moghalu, said that two or three conventional banks have already expressed interest in opening Islamic banks. Nigeria, home to 75 million Muslims, has a huge market potential.
Source: Islamic Finance Asia, March 2011

GLOBAL
70% of worlds GDP from emerging markets by 2030
According to Citis Global Growth Generators 2011 report, emerging markets will represent 70% of the worlds $180 trillion GDP by 2030 compared to 52% of $73 trillion in 2010. The report stated that strong growth is expected in the world economy until 2050, with average real GDP growth rates of 4.6% pa until 2030 and 3.8% pa between 2030 and

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Market Alerts

Qatar Central Bank to close Islamic branches of conventional (commercial) banks

Qatar Central Bank has recently issued specific directives to each of the conventional banks that have Islamic branches, directing them to stop opening new Islamic branches, accepting Islamic deposits and dispensing new Islamic finance operations. As for the Islamic branches current assets and liabilities including deposits and finance operations, Qatar Central Bank has given a time frame up to December 31, 2011 to manage these assets and liabilities by collecting the balances, in accordance with the conditions and maturity dates agreed upon and by paying Islamic deposits upon maturity save with regard to finance operations. After December 31, 2011, the conventional bank will continue to manage the remaining Islamic assets in a special portfolio, through its financial position, with the possibility of transferring some of these assets to the Islamic banks. The conventional bank can use the premises of the Islamic branches, upon the end of the specified period, to open conventional branches if need be. Islamic Finance Asia reported that the affected banks has reportedly engage in a dialogue with Qatar Central Bank and present their proposals to merge their Islamic units. Three other possible solutions have also been identified. These include applying for licenses to operate under the Qatar Financial Centre Authority, to apply individual licenses allowing the banks to set up standalone

institutions and lastly, to sell their units to four firms that exclusively practice Islamic finance businesses.
Source: Qatar Central Bank, 10 February 2011

In financial institutions, close alignment of risk and finance functions may be linked to higher profitability, according to new research
Banks and other financial institutions must improve how their finance functions understand and use risk considerations and information. This is not only to better protect themselves against new and emerging risks, but also to help devise a sustainable growth strategy. To do this, finance departments in many financial institutions are taking steps to ensure better access by senior executives to risk-related information. This has expanded dramatically the role of the chief financial officer (CFO) at financial institutions around the world, who must champion a tighter alignment between risk and finance within their organisations. Transforming the CFO role in financial institutions: Towards better alignment of risk, finance and performance management, a new study by the Economist Intelligence Unit, produced in collaboration with CFO Research Services, shows that financial institutions that benchmark themselves well on aligning their risk and finance functions appear to be doing better financially than their peers. In

a survey conducted for the study, of those respondents who rank themselves much better than their peers at alignment between risk and finance, 60% are also much better at financial performance and 92% are above average. The equivalent figures for those who rate their firms as average or worse at alignment are 8% and 32% respectively.
Source: Economist Intelligence Unit, 19 April 2011

Solvency II to be delayed until 2014

The Council of the European Union has proposed to delay the final Solvency II deadline until January 1, 2014, a year later than the previous timetable of January 1, 2013. The proposal, contained in the Council's Presidency Compromise on the Omnibus II directive, suggests Solvency II's legal requirements will need to be transposed into national law by March 31, 2013. Insurers across Europe are due to implement the Solvency II rules, which address insurers' capital requirements and risk management practices, by January 1, 2013.
Source: Insurance Times, 23 June 2011

Solvency II may lead to shift in asset allocation

According Titch Ratings, Solvency II will change how insurers allocate their assets and transform demand and pricing for several asset classes. The report, Solvency II set to Reshape Asset Allocation and Capital Markets, highlighted that the new rules required insurers to value asset and liabilities at market value in determining their solvency position. The report also stated that the main impacts of Solvency II on insurers assets will be : A shift from long-term to short-term debt An increase in the attractiveness of higher-rated corporate debt and government bonds Diversitification of large asset holdings An incerase in the attractiveness of covered bonds A prefence for assets based on the long-term swap rate and a shift from short-dated paper to deposits
Source: Financial Risks Today, 23 June 2011

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Board of Directors

Board of Directors
Tan Sri Dr. Zeti Akhtar Aziz Chairman of the Board Governor, Bank Negara Malaysia Dr. Zeti Akhtar Aziz was appointed Governor of Bank Negara Malaysia in May 2000. As Governor, she has a key role in the monetary policy formulation and implementation and in ensuring stability of the Malaysian financial system. She also oversaw the successful transformation of the Malaysian financial system into one of the most developed and resilient financial systems of an emerging economy. On the international front, Dr. Zeti is actively involved in shaping the future of financial cooperation in the Asian region and in the development of Islamic finance. Dr. Zeti remains deeply committed to the development of human capital in the financial services industry. Significant focus has been directed at putting in place institutional arrangements to enhance talent development efforts at all levels within the financial services sector. In 2009, the Asian Institute of Finance was jointly established by Bank Negara Malaysia and Securities Commission Malaysia to further enhance human capital development to support the advancement of the financial services industry in Malaysia. Dr. Zeti has also been the key driver in the establishment of the ICLIF Leadership and Governance Centre which focuses on leadership development and excellence in corporate governance in the financial services sector in Malaysia and the region. She was also instrumental in the setting up of The International Centre for Education in Islamic Finance (INCEIF) in 2006 to support human capital development for the growth of the Islamic financial services industry. In 2007, Financial Sector Talent Enrichment Programme (FSTEP) was introduced for the development of new talents for the financial sector. In promoting regional integration initiatives, Dr Zeti has chaired the Executives Meeting of East AsiaPacific Central Banks (EMEAP) Taskforce on Regional Cooperation among Central Banks in Asia to draw up the blueprint for future financial cooperation in the region. Dr. Zeti is also a member of the South East Asian Central Banks (SEACEN) Board of Governors and Chairman of SEACENs Board of Directors. She is also a member of the Bank for International Settlements (BIS) Central Bank Governance Group since 2001. Dr Zeti was also one of the founding members of the Asian Consultative Council for BIS and was Chairman of the Council from 2008 to 2010. Dr Zeti received her Bachelor of Economics (Hons) from University of Malaya and her PhD from University of Pennsylvania.

Tan Sri Zarinah Anwar Vice Chairman of the Board Chairman, Securities Commission Malaysia Tan Sri Zarinah Anwar is the Chairman of the Securities Commission Malaysia (SC) since 1 April 2006. She had served as the Deputy Chief Executive of the SC and member of the Commission since 1 December 2001. Tan Sri Zarinah is also the Vice Chairman of the Emerging Markets Committee of IOSCO and represents the Committee on the International Financial Reporting Standards (IFRS) Foundation Monitoring Board. Tan Sri Zarinah currently chairs the Malaysian Venture

Capital Development Council (MVCDC) and the Capital Market Development Fund (CMDF). She is also the Vice Chairman of the Asian Institute of Finance Malaysia (AIF). In addition, Tan Sri Zarinah is a member of the Labuan Offshore Financial Services Authority (LOFSA), the Financial Reporting Foundation (FRF), Malaysia International Islamic Financial Centre (MIFC), and the board of directors of the Institut Integriti Malaysia (IIM). Prior to joining the SC, Tan Sri Zarinah was the Deputy Chairman of Shell Malaysia. She graduated with an LLB (Hons) from the University of Malaya.

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Board of Directors

Tan Sri Azman Hashim Chairman, AmBank Group Tan Sri Azman Hashim is the Chairman of the AmBank Group, the Malaysian Investment Banking Association, the National Productivity Corporation, Board of Trustees Perdana Leadership Foundation, Institute of Bankers Malaysia, East Asia Business Council and, Chairman Emeritus, Pacific Basin Economic Council (PBEC) International. He is President of the Malaysia South-South Association, Malaysia-Japan Economic Association, Malaysian Prison FRIENDS Club. He is a member of the Asian Institute of Finance and the Malaysia-British and the Malaysia-China Business Councils. He is also the Leader of the ASEANJapanese Business Meeting (Malaysia Committee, Keizai Doyukai). He was appointed Pro-Chancellor, Open University of Malaysia and Member, Governing Body of the Asian Productivity Organization and International

Advisory Panel, Bank Negara Malaysia International Center for Education in Islamic Finance (INCEIF). Tan Sri Azman, a Chartered Accountant, a Fellow of the Institute of Chartered Accountants and a Fellow of the Institute of Chartered Secretaries and Administrators, has been in the banking industry since 1960 when he joined Bank Negara Malaysia and served there until 1964. He practised as a Chartered Accountant in Azman Wong Salleh & Co from 1964 to 1971. He then joined the Board of Malayan Banking Berhad (MBB) from 1966 until 1980 and was its Executive Director from 1971 until 1980. He was the Executive Chairman of Kwong Yik Bank Berhad, a subsidiary of MBB, from 1980 until April 1982 when he acquired AmMerchant Bank Berhad. Tan Sri Azman was conferred The Order of Australia (A.O.) and The Order of The Rising Sun, Gold Rays with Neck Ribbon by the Emperor of Japan.

Dato Zukri Samat Managing Director, Bank Islam Malaysia Berhad Dato Sri Zukri Samat was appointed as Managing Director of Bank Islam on 9 June 2006. Prior to this appointment, he was the Executive Director of Investment of Khazanah Nasional Berhad, the investment arm of the Government of Malaysia. Before that, he was the Managing Director of Pengurusan Danahar ta Nasional Ber had, a national Asset Management Company set up by the Government during the 1997/1998 financial crisis. He joined Danaharta in October 1998 as the General Manager, Operations Division and was later promoted as the Director of Operations in August 2001, assuming

direct line responsibility for all loan recovery activities of Danaharta. On 1 July 2003, he was then appointed as the Managing Director until December 2005, when Danaharta ceased its operation. Prior to this he had served in Credit Agricole Indosuez, Commerce International Merchant Bankers Berhad and Public Bank Berhad at the various management positions. Dato Sri Zukri is the Chairman of Islamic Banking and Finance Institute Malaysia Sdn Bhd, a director of Asian Institute of Finance, a member of the Professional Development Panel of International Centre for Education in Islamic Finance, amongst others.

Dato Hj. Syed Moheeb Syed Kamarul Zaman President and CEO, Takaful Ikhlas Sdn Bhd Dato Hj. Syed Moheeb is a chartered insurance practitioner, and an Associate of the Malaysian Insurance Institute. His career in the conventional insurance, reinsurance and takaful industry spans 36 years where he has helmed several local and multinational direct insurance and reinsurance companies. Currently he is the Chairman of the Malaysian Takaful Association, Central Administration Bureau (CAB) and Takaful Network of ICMIF. He is also a board member for the Asian Institute of Finance, the Malaysian Insurance

Institute (MII), ISM Insurance Services Malaysia Bhd, and the International Cooperative and Mutual Insurance Federation (ICMIF). Dato Hj. Syed Moheeb sits on the MII Executive Committee and MIFC Executive Committee. He is a member of the Investment Committee Baitulmal, Perlis and the Professional Development Council of International Centre of Education in Islamic Finance (INCEIF). A familiar face in the lecture circuit, Dato Hj. Syed Moheeb has spoken in many insurance and takaful forums in Europe, Middle East, North Africa and Asia, and is a recognized and sought-after speaker at international conferences on Islamic finance.

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Board of Directors

Dato' Dr. Nik Nozrul Thani Nik Hassan Thani Chairman and Senior Partner, Zaid Ibrahim & Co Dato' Dr. Nik Norzrul Thani Bin Nik Hassan Thani is Chairman and Senior Partner of Zaid Ibrahim & Co., the largest law firm in Malaysia. Prior to joining Zaid Ibrahim & Co, he was practising with the international law firm, Baker & McKenzie. Previously, he worked in a firm of accountants and at a bank in Kuala Lumpur. He is a director of several public listed, as well as government linked companies. Formerly an academic and Dean at International Islamic University Malaysia, he has also been a Visiting Fulbright Scholar at Harvard Law School for 1996/97 and a Chevening Fellow at the Oxford Centre for Islamic Studies for 2004/5.

He authored Legal Aspects of the Malaysian Financial System and co-authored The Law and Practice of Islamic Banking and Finance. Currently, he is co-authoring a book entitled "Law and Practice of Islamic and Conventional Investment and Corporate Finance". He is a Fellow of both the Chartered Institute of Marketing (United Kingdom) and the Financial Services Institute of Australia (FINSIA). He was called to the Bar of England and Wales in 1985 and to the Malaysian Bar as an Advocate and Solicitor of the High Court of Malaya in 1986. He graduated with LL.B (Hons) from University of Buckingham, LL.M from Queen Mary, University of London and Ph.D in Law from the School of Oriental and African Studies (SOAS), University of London and is a Barrister of Lincoln 's Inn. He also possesses a Post-Graduate Diploma in Syariah Law and Practice (with distinction) from the International Islamic University Malaysia.

Dato' Yusli bin Mohamed Yusof Dato' Yusli bin Mohamed Yusoff is a Malaysian, aged 52. He graduated with a Bachelor of Economics from the University of Essex (United Kingdom) in 1981. He is a member of the Institute of Chartered Accountants, England & Wales, the MIA, the Malaysian Institute of Certified Public Accountants as well as an Honorary Member of the Institute of Internal Auditors Malaysia. Dato' Yusli began his career with Peat Marwick Mitchell & Co in London and has since held various key positions in a number of public listed and private companies in

Malaysia, providing him with experience in property and infrastructure development, telecommunications, engineering and merchant banking. His career in stockbroking commenced in 2000, when he was appointed the CEO of CIMB Securities Sdn Bhd. He also served as the Chairman of the ASCM from 2003 to 2004. Dato' Yusli served as CEO and Executive Director of Bursa Malaysia from 2004 to 2011 and led Bursa Malaysia to its own listing in 2005. He also sat on the Board of Capital Market Development Fund and was an executive committee member of the Financial Reporting Foundation of Malaysia.

Assoc. Prof. Low Chee Keong Assoc. Prof. in Corporate Law, The Chinese University of Hong Kong Chee Keong LOW (CK) is an Associate Professor in Corporate Law at The Chinese University of Hong Kong with research interests in issues pertaining to corporate governance and the regulatory framework of capital markets. His research, which has published in journals

in Australasia, Europe and the United States of America, is supported by private sector grants from CLP Group, Ernst & Young, Noble Group and Tricor Services. An Advocate and Solicitor of the High Court of Malaya, CK is a member of the Securities and Futures Appeals Tribunal as well as the Financial Reporting Review Panel in Hong Kong. He was a member of the Listing Committee of the Stock Exchange of Hong Kong from May 2006 to July 2010.

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Board of Directors

Mr. Hashim Harun President and CEO, Malaysian Re Hashim Harun, aged 57, Malaysian. Non-Independent Executive Director since 1 April 2008. Member of the Investment Committee. Currently, the President & Chief Executive Officer of Malaysian Re. He is also the Chairman of Persatuan Insurans Am Malaysia (PIAM) and Malaysian Insurance Institute (MII), a Director of MRDL, MMIP Services Sdn Bhd, Financial Park (Labuan) Sdn Bhd and Asian Institute of Finance (AIF). Obtained his Bachelor of Arts (Hons.) degree from the University of Malaya. He started his career at Credit Corporation (M) Berhad, a finance company, in 1977. He served in various capacities

and was appointed as General Manager in 1988. In 1996, with the acquisition of Credit Corporation (M) Berhad by the DRB Hicom Group, he was appointed as the General Manager at one of its subsidiaries, Automotive Corporation (M) Sdn. Bhd., assembler and distributor of Isuzu vehicles and the national truck, Hicom. In 1998, he served on the Board of SEA Insurance Berhad (now UNI.Asia General Insurance Berhad) and subsequently appointed as CEO in 1999. He served as a Director at UNI. Asia Capital Berhad and UNI.Asia Life Assurance Berhad from 1999 to 2008. Held the position of Chairman of Central Administration Bureau (CAB) from 2003 to 2005. A Director of Malaysian Rating Corporation Berhad from 2005 to 2007.

Mr. Kung Beng Hong Director, Alliance Financial Group Berhad & Alliance Bank Malaysia Berhad Kung Beng Hong holds a Bachelor of Arts (Honours) degree in Economics from the University of Malaya. He is a Fellow and a Council Member of the Institute of Bankers Malaysia. Mr Kung has 43 years working experience in the banking industry and has held numerous senior

management positions, mainly in Malaysia, including CEO/directorship positions in three banks. His experience includes positions held in Citibank N.A. in the United States of America and Singapore. He is presently the Advisor of Fullerton Financial Holdings Pte Ltd and sits on the Boards of Alliance Financial Group Berhad, Alliance Bank Malaysia Berhad and Alliance Investment Bank Berhad. He also holds directorships in Asian Institute of Finance Berhad, UOA Asset Management Sdn Bhd, FIDE Forum and Quill Motorcars Sdn Bhd.

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Activities and Events

13th Malaysian Finance Association Conference 2011

Date : 10th 12th June 2011 Venue : Holiday Villa Beach Resort & Spa, Langkawi Theme : Financial Innovation & Transformation in the 21st Century

Date : 11th February 2011 Venue : Royale Chulan

AIF-IBBM-IBFIM Industry Dialogue

The Asian Institute of Finance (AIF), Institute of Bankers Malaysia (IBBM) and Islamic Banking and Finance Institute Malaysia (IBFIM) organised an industry dialogue with the banking fraternity to share their initiatives to upscale the human capital development in the Financial Services Industry. Among the items discussed were the outcomes of the training needs analysis and the development and implementation of quality assurance and accreditation initiatives. Based on the training needs analysis conducted by AIF, five areas for performance improvement were identified. These include leadership, risk management, compliance, internal audit and corporate governance. The AIF presented its Learning Programme Assessment and Accreditation Framework (LPAAF) to the banking community. The LPAAF is a comprehensive quality assurance framework with a certification and accreditation system that aims at raising the quality of the workforce and training providers in the financial services industry in Malaysia. The Framework is developed based on international good practices, that is, after extensive research and study of adult learning and higher education quality models adopted by the UK, Singapore, Australia and Hong Kong.

The Asian Institute of Finance (AIF) had recently co-organised the 13th Malaysian Finance Association Conference with the Malaysian Finance Association (MFA) and the Universiti Kebangsaan Malaysia Graduate School of Business (GSB). The event which took place at the legendary island of Langkawi, brought together industry professionals and academicians from all over Malaysia. About 120 participants attended the two and a half day conference. Professor Dr. S. Ghon Rhee who is the K.J. Luke Distinguished Professor of International Finance and Banking at the Shidler College of Business, University of Hawaii delivered the first keynote speech. This was followed by a second keynote speech by Professor Dr Volker Nienhaus who is the Former President of the University of Marburg, Germany. The conference also saw participation from key figures from the industry. Most notable were Dr Yeah Kim Leng, Group Chief Economist of RAM Holdings and Professor Dr Humayon Dar, Managing Director and CEO of BMB Islamic Advisory UK and Chairman of Edbiz Consulting Limited, UK. Both participated as speakers in the University-Industry Dialogue session which carried the topic - A Synergistic Model for Interaction between University and Industry. The other two panellists of the session were Professor Dr Obiyathullah Ismath Bacha and Professor Dr Volker Nienhaus. A special luncheon talk was delivered by AIFs Head, Centre of Excellence, Dr Amat Taap Manshor. The topic Human Capital Development in the 21st Century was well attended and had enabled Dr Amat to explain the role of AIF in developing human capital for the financial services industry. Two best paper awards were given out during dinner. AIF is proud of its Associate Research Fellow, Professor Saadiah Mohamad, for winning one of the best papers. Her research paper on Innovative Islamic Hedging Products: Application of Wad was hailed as the most applied research paper of the conference.

Enhanced Operational Risk Measurement & Management Workshop (AIF-IBBM)

Date : 26th 27th May 2011 Venue : Lanai Kijang
A two day workshop on Enhanced Operational Risk Measurement and Management was held recently and lead by Dr David Bobker, Head of Operational and Market Risk at the Asian Institute of Finance. This cross cutting programme covers the basic elements of operational risk quantification within a framework of the overall risk top down approach, term as inverse risk logic. Some of the topics covered were risk quantification, high frequency/low impact events, moderate frequency/moderate impact events, tail distributions high impact/ low frequency events and enhancing operational risk policy. This workshop is part of a series of workshop organised by the AIF Risk Management Centre.

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Level 5, Block 1B, Plaza Sentral, Jalan Stesen Sentral 5, KL Sentral, 50470 Kuala Lumpur. Tel : +603-27871999 Fax : +603-27871900 Email : www.aif.org.my

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