The introduction of the Financial Markets Committee (FMC) measures has put in place the foundation for a healthier and more vibrant financial and foreign exchange market. As a result of the strong economic performance in 2017 and the improved sentiments following these measures, the ringgit has strengthened by 14.6% in 2017 and 2018 thus far. The ringgit has also been of the most stable currency in the region. As our economic outlook remains strong, the ringgit will continue to reflect this strength. For Bank Negara, we have always indicated that market forces will determine the value of the ringgit. There has never been a target level for the ringgit exchange rate. With the economy and financial markets constantly evolving, fixation on a particular level of ringgit exchange rate is counterproductive, if not detrimental to the economy. What matters for Bank Negara and all of us here is to ensure that any adjustments taking place is done in a gradual and orderly manner, without causing undue disruptions to businesses and households. The foreign exchange market can sometimes be very fickle. Therefore, we should always remain on our guard, as the global economic and financial conditions may change rapidly following many developments such as normalisation of interest rates, geopolitical risks and the tendency to adopt policies that might curtail open trade. The ringgit’s recent appreciation and stability is not something that we should take for granted. What we have learnt in recent years is to never downplay the unexpected.
In 2017, insurers and takaful operators issued 1.5 million cheques while 5.7 million were collected from customers. This is a huge number. Cheques are very costly, inefficient and obsolete. If the industry does not respond to these challenges, then others will. Over the past year, the Bank has allowed financial product aggregators to offer insurance and takaful products on a nonadvisory basis under the Regulatory Sandbox. These platforms allow consumers to easily compare and assess product offerings, thus increasing the visibility of insurance and takaful products and supporting our objective of digitalising insurance and takaful distribution. The Bank is close to finalising changes to the regulatory framework that will enable online product aggregators to operate with broad access to the insurance and takaful market by the end of this year. This is a game-changing initiative that will pave the way for a more contestable insurance and takaful market going forward, ultimately improving access and choice for consumers. For the industry, it offers the potential to open up new market segments that were previously untapped, particularly younger millennials, and lower the cost of bringing new products to the market. Third, the takaful industry has to have the right people with the right competence. Strong leadership and quality talent are needed to steer the industry forward to reach greater heights. Let us start from the top with each company’s leadership – shareholders, the board and senior management. For the industry to really break new ground, we need to consider a total reimagination of the takaful model.