Zeti: Businesses must adjust to lower subsidies and improve efficiency

Friday December 7, 2012

By ZAZALI MUSA and MOHD FARHAAN SHAH
starbiz@thestar.com.my

Zeti delivering her keynote address at the forum.
Zeti delivering her keynote address at the forum.

JOHOR BARU: Businesses and industries must be ready to start adjusting their operations and activities to lower subsidies as Malaysia is gradually cutting them, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz. She said by preparing themselves now, they would be able to look at ways to improve their efficiency and productivity level. She said Malaysia had the means to rationalise and streamline the subsidies in a gradual manner to give more time and space for businesses to adjust to the situation.

“By improving efficiency and productivity, they do not have to  ass the higher cost to consumers which could lead to increase in prices,” said Zeti. She said this after delivering her keynote address on “Banking on Islamic Finance from Legality to Economic Value” at the Eighth World Islamic Economic Forum. Zeti said Malaysians must also be ready that the way forward for the country was to reduce subsidies as the money could be better used for nation’s development.

Separately, she said there was no need to increase the allocation for Islamic micro-financing in Malaysia as it was sufficient for micro-sized enterprises. On the economic outlook for 2013, Zeti said the Government remained positive on Malaysia’s economic performance. “Both the public and the private sectors will continue to drive the economic growth of the country,” she added.

Meanwhile, Bernama reported Zeti as saying that the new Islamic Banking and Takaful Acts, currently undergoing legislative process towards its enactment, would be effective next year. It had already gone for first and second reading in Parliament, she said, adding that it would be called the Islamic Financial Services Act and Islamic Finance and Takaful Act.

“Right now, the industry is covered by the Banking and Financial Institutions Act 1989 and the Islamic Financial Services Act which is expected to come into operation next year,” she said. Earlier, in her address, Zeti said the new legal framework would not only streamline the legal requirements across sectors but would also ensure that the law was reflective of the nature and features of syariah contracts.

It would also ensure that the degree of regulation would commensurate the level of risks that Islamic financial institutions, markets and products pose to the overall financial system, she said. “The greater clarity on the legal and prudential requirements underpinned by syariah principles will enable participants of the Islamic financial system to align to their practices and expectations accordingly when undertaking Islamic financial business and transactions,” she added.

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