3 May 2007

© Copyright 2005 All Rights Reserved

3 May 2007

Presentation by:Wai Keen, LaiGeneral Manager, Policy & International DivisionPerbadanan Insurans Deposit Malaysia


Agenda

Economic setting of Malaysia and some information on its banking system.

Strategic approach and rationale for strengthening consumer activism and enhancing consumer protection infrastructure.

MDIC’s public awareness strategies.


Economic Setting

Economy:

Very open GNI per capita of US$4,650 (2004) An upper middle income economy

Population:

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


Banking Sector Presence of foreign banks in the domestic banking

industry significant. 13 fully foreign owned banks.

Malaysian-owned banks reduced from 54 to 9 presently. Some Malaysian banks expanded operations overseas.

In 1994, all foreign-owned banking institutions required to be incorporated.

Supervisory controls over Malaysian banks venturing overseas directed at ensuring that banks have adequate risk management framework.


Financial Sector Master Plan The Asian crisis brought into focus contagion effects of cross border

problems.

Post crisis, embarked on several strategies to address future problems.

Financial Sector Master Plan (FSMP) released in 2000 - outlined 10 year program to strengthen financial system.

The plan is to: - lay a strong foundation - introduce an increasingly more competitive environment - greater international integration

FSMP promotes active consumerism – establishment of a deposit insurance system part of the measure.


Consumer Education

Malaysia has low financial literacy: - Can facilitate speedy transmission of non-fundamental contagion

Better informed investors: - Less susceptible to unsubstantiated rumours

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

Financially savvy consumers could impose additional discipline on banks.


Role of Deposit Insurer

Protects wealth.

Protects entrepreneurship – SMEs.

Prepares readiness of depositors to participate in an increasingly competitive and liberal banking system.


Public Awareness Strategies Core success factor of deposit insurers - Public trust.

The more informed the depositors, the more they appreciate benefits and limitations of the system. This enhances public confidence in MDIC.

Philosophy:

- Every depositor has right to deposit insurance information

- We reach out and not wait to be reached


Core Elements of Our Communications Policy

Aim: to develop and cultivate a positive image of MDIC.

Must communicate openly in a manner which enhances its credibility.

Must ensure public have clear understanding of key features and benefits of deposit insurance.

Must promote acceptance and confidence that MDIC’s activities and objectives are implemented effectively and efficiently.


Our Five Strategies

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

Create awareness and understanding of MDIC’s mandate.

Promote transparency and accountability.

Promote acceptance and confidence.

Deliver prompt, courteous, quality and responsive service.


Our Initiatives Two strategic thrusts of Integrated Communications Plan 2007-

2011:- Creating awareness of the deposit insurance system - Building the Corporation’s authority and credibility

Comprehensive target audience.

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

Toll-free public help line, website and information brochures in 6 languages.

Allocated about 20% of budget in 2007 for communications initiatives.

Collaborate with strategic partners.


Managing Cross-border Contagion Educate depositors on benefits of deposit insurance.

Publicise information regarding which deposit products are covered.

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.

Strengthen international relations - establish contacts and maintain good working relationships with deposit insurers, especially within IADI.

Monitoring the health of financial systems of countries where Malaysian banks have branches.


Conclusion

Deposit insurer’s fundamental role to protect wealth and entrepreneurship.

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.

Educating the public is an ongoing process. Efforts in this area would remain a key initiative over the short to medium-term.

By extending our public reach, more informed and educated depositors would underpin public confidence and promote financial stability.


Thank you

Documents

3 May 2007