In 2016 intra-regional trade contributed USD521 billion or 23.5% of total trade. IntraASEAN investments rose to a record level of USD24 billion in 2016 and accounted for 25% of total FDI flows into the region. Within the region, Indonesia and Thailand are important partners to Malaysia both in trade and direct investments where there is continuous growth propelled by inter-company linkages and cross-border investments. In 2016, Malaysia shared a bilateral trade volume of USD13.8 billion with Indonesia and USD13 billion with Thailand. However, only 5.8% and 11.4% of our trade with Indonesia and Thailand, respectively were settled in local currencies. This is an enormous business opportunity for the financial sector, which has yet to be realised. Similarly, on the investment front, Malaysia has invested USD13 billion and USD2 billion of direct investments into Indonesia and Thailand, as at second quarter of 2017. Indeed, the completion and enhancement of the Frameworks is an important step towards the use of local currencies to support cross-border settlements for trade and direct investments among the three countries. It is an opportunity to mitigate the impact of volatilities in major trading currencies on regional trade and investment activities. We can recall the Global Financial Crisis, where the tightening of global US dollar liquidity was a contributor to the 19% contraction of total trade and 11.5% contraction of total inward FDI into the region.
The competition between the various factions can lead to an inefficient tapping of natural resources and an unsound use of revenues. The spirit of enterprise, talent and energy in both business and political life are used to acquire a share of this income rather than to foster productive activity in both the public and private sector. For an individual company or a group, this activity may seem rational - a 10 per cent chance to win the jackpot could be better than investing in a business that yields an ordinary return. This may have damaging consequences for a country. A sociological explanation is that easily acquired wealth weakens the incentive for innovation and work. We feel that we have become rich and want to live the good life. A possible economic explanation is that a large and broad sector that is exposed to international competition fosters learning and development. Without such a sector, the competitive intensity in the economy may decline and the ability and willingness to be innovative may be impaired. We must be cautious about drawing final conclusions based on historical comparisons. We would prefer to assume that we are managing our wealth better. However, it may be of particular relevance to highlight three critical pre-conditions for succeeding in this. First: Decision-making forms and processes in the political and economic arena must provide effective protection against the acquisition by interest groups of the right to use large shares of the petroleum wealth.