Transcript Presentation - Wai Keen Lai

3 May 2007
Presentation by:
Wai Keen, Lai
General Manager, Policy & International Division
Perbadanan Insurans Deposit Malaysia
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Agenda
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Economic setting of Malaysia and some
information on its banking system.
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Strategic approach and rationale for strengthening
consumer activism and enhancing consumer
protection infrastructure.
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MDIC’s public awareness strategies.
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Economic Setting
Economy:
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Very open
GNI per capita of US$4,650 (2004)
An upper middle income economy
Population:
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25 million
Very young (74% at ages 39 or below)
Majority the middle income category
Multiracial
63% stays in urban areas and 37% stays in rural areas
High level of literacy, but low level of consumer
sophistication and financial literacy
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Banking Sector
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Presence of foreign banks in the domestic banking
industry significant. 13 fully foreign owned banks.
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Malaysian-owned banks reduced from 54 to 9 presently.
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Some Malaysian banks expanded operations overseas.
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In 1994, all foreign-owned banking institutions required to
be incorporated.
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Supervisory controls over Malaysian banks venturing
overseas directed at ensuring that banks have adequate
risk management framework.
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Financial Sector Master Plan
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The Asian crisis brought into focus contagion effects of cross border
problems.
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Post crisis, embarked on several strategies to address future problems.
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Financial Sector Master Plan (FSMP) released in 2000 - outlined 10
year program to strengthen financial system.
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The plan is to:
- lay a strong foundation
- introduce an increasingly more competitive
environment
- greater international integration
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FSMP promotes active consumerism – establishment of a deposit
insurance system part of the measure.
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Consumer Education
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Malaysia has low financial literacy:
- Can facilitate speedy transmission of non-fundamental
contagion
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Better informed investors:
- Less susceptible to unsubstantiated rumours
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Financial education helps consumers:
- Make proper assessment of risks, quality and relative prices of
diverse and complex financial products
- with access to information and ability to compare information
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Financially savvy consumers could impose additional discipline on
banks.
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Role of Deposit Insurer
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Protects wealth.
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Protects entrepreneurship – SMEs.
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Prepares readiness of depositors to
participate in an increasingly
competitive and liberal banking
system.
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Public Awareness Strategies
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Core success factor of deposit insurers - Public trust.
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The more informed the depositors, the more they
appreciate benefits and limitations of the system. This
enhances public confidence in MDIC.
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Philosophy:
- Every depositor has right to deposit insurance
information
- We reach out and not wait to be reached
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Core Elements of Our Communications Policy
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Aim: to develop and cultivate a positive image of MDIC.
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Must communicate openly in a manner which
enhances its credibility.
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Must ensure public have clear understanding of key
features and benefits of deposit insurance.
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Must promote acceptance and confidence that MDIC’s
activities and objectives are implemented effectively
and efficiently.
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Our Five Strategies
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Main corporate strategy
create awareness of our credibility through annual reports
and corporate plans.
must have in place systems, policies, practices, better
governance, transparency, standards
must be seen as a well managed and a well governed
credibility and image must be at the forefront of what we
do and say
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Create awareness and understanding of MDIC’s mandate.
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Promote transparency and accountability.
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Promote acceptance and confidence.
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Deliver prompt, courteous, quality and responsive service.
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Our Initiatives
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Two strategic thrusts of Integrated Communications Plan 2007-2011:
Creating awareness of the deposit insurance system
Building the Corporation’s authority and credibility
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Comprehensive target audience.
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Outlined a number of initiatives, which includes:
Print and television advertising
Training for member institutions
Annual Deposit Insurance Awareness Week in Malaysia
Nationwide seminars and roadshows
Media interviews and article
Participation in relevant public exhibitions
Publish and wide dissemination of our policies
Reporting on our performance
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Toll-free public help line, website and information brochures in 6 languages.
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Allocated about 20% of budget in 2007 for communications initiatives.
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Collaborate with strategic partners.
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Managing Cross-border Contagion
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Educate depositors on benefits of deposit insurance.
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Publicise information regarding which deposit products are covered.
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In the event of a cross-border failure, work closely with the Central
Bank in managing perception and issue a press release or hold media
and press conferences on this matter.
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Strengthen international relations - establish contacts and maintain
good working relationships with deposit insurers, especially within
IADI.
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Monitoring the health of financial systems of countries where
Malaysian banks have branches.
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Conclusion
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Deposit insurer’s fundamental role to protect wealth
and entrepreneurship.
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Building credible deposit insurance system – with a
strong reputation, and public awareness and consumer
protection are vital to the operations, credibility and
reputation of MDIC.
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Educating the public is an ongoing process. Efforts in
this area would remain a key initiative over the short to
medium-term.
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By extending our public reach, more informed and
educated depositors would underpin public confidence
and promote financial stability.
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Thank you
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