The necessity of a central mechanism to address market inefficiencies

Ladies and gentlemen,

Information efficiency is a crucial element that underpins the smooth functioning of markets. Paul Samuelson put forward that without complete macro-level information, markets cannot allocate resources efficiently, even with in-depth micro-level information.^[1] Rather, the presence of rich micro-information can instead distort true economic signals.^[2]

The core problem market participants face is, ‘How do I collect, synthesise and respond to a given set of information?’ The variance in the starting points, level of understanding and resources across players adds another layer of complexity to market dynamics. Even without considering the other challenges unique to each market, it is clear that investors face a lot of noise that complicates their decision-making process.

This highlights the need for a central mechanism to address information inefficiencies, equipping all investors with the ability to collect, synthesise and respond to information efficiently.

The InvestMalaysia portal will enable a more seamless, informed and efficient decision-making process

Ladies and gentlemen,

This brings us to the main reason we have gathered here today. The InvestMalaysia portal was developed to make investors’ decision-making processes more seamless, informed and efficient. Acting as a one-stop platform, it consolidates the vital information required for sound and timely investment decisions.

In this portal, you will find key policy documents and economic and demographic statistics. You will also have access to details on investment products, credit ratings, publications and resources, including our recent non-deal roadshow presentations, speeches as well as guides on investing in Malaysia.

Ultimately, the platform is akin to an arbiter of Malaysia’s macroeconomic strength and investment potential. One that extracts reliable signals about the country’s fundamentals and imparts this efficiently to investors. In this post-abundance world, often, it is not information that we lack but rather a mechanism to help us decide and evaluate our choices. This effort is imperative for Malaysia as we accelerate structural reforms to strengthen Malaysia’s long-term economic prospects.

Ongoing reforms build on Malaysia’s solid economic fundamentals

Ladies and gentlemen,

This is what sets Malaysia apart. The swift unwinding of our COVID-19 relief measures allowed us to pivot our policy focus and embark on structural reforms that not only build our economic resilience but enable us to seize new opportunities.

In fact, we are seeing early dividends from this in the form of higher growth and rising confidence among domestic and international investors. As we steadily give shape and roll out national masterplans such as the National Investment Aspiration and New Industrial Masterplan, we are starting to see an impact in quality investments. Our pre-existing strengths, such as in the electrical and electronics (E&E) and oil and gas (O&G) industries, provide us with a solid foundation to continue innovating while venturing into new growth areas. For instance, the National Semiconductor Strategy charts our trajectory to solidify our presence in more complex and higher value-added activities in the global semiconductor value chain.

Beyond reforms to attract quality investments and rapidly advance new growth areas, reforms in strengthening fiscal sustainability are also well underway. The ongoing review of taxes and subsidies will widen the Government’s revenue base and enable more productive spending respectively. What is reassuring is also that these measures are being sequenced gradually and thoughtfully, allowing the economy as a whole to adjust with minimal implications to our growth trajectory.

As we are all aware, the global environment has been fraught with uncertainty this year. Geopolitical developments, changes in monetary policy by global central banks, and more recently, the just-concluded US elections, have led to heightened volatility in global financial markets. Despite this, the narrowing of interest rate differentials between Malaysia and advanced economies is positive for the ringgit.

Notwithstanding, we are closely monitoring global developments and stand ready to manage any spillover to domestic markets, including by ensuring sufficient liquidity in the domestic foreign exchange market. Nevertheless, what remains constant is that the domestic landscape remains on firm footing, owing to the country’s solid economic prospects and fundamentals.

The sound economic fundamentals and the highly diversified economic structure have created a highly fertile environment for growth, which will also lend enduring support to the ringgit. Malaysia has and continues to deliver resilient growth performance. Averaging 4.3% since 2011, our growth is higher relative to regional economies and rating peers; and this speaks for sound macroeconomic management.

This combination of exciting reforms and solid fundamentals gives me great confidence that there is high promise in the domestic investment landscape. Undeniably, our status as a small, open economy leaves us exposed to risks emanating from global factors, especially in uncertain times like today. It is to our great advantage that we are facing these challenges from a position of strength. BNM will play our part and do what is needed to ensure both monetary and financial stability and that the financial market environment is conducive for sustainable investment and economic activities to take place. In addition, as detailed in the Financial Sector Blueprint 2022-2026, initiatives are being undertaken for the financial sector to support the transformation of the wider economy.

The InvestMalaysia portal will help materialise our investment prospects into real benefits

Ladies and gentlemen,

In an era where information is as critical as capital, we understand that our investors, analysts, and partners need more than just data; they need insights. The InvestMalaysia portal is built not only to deliver information but to enable closer engagement and facilitate a deeper understanding of the country’s economic performance, strategic initiatives and abundant opportunities.

Thank you.

Bank Negara Malaysia

7 November 2024

[1] See Jung, J. and Shiller, R.J., 2005. Samuelson's dictum and the stock market. Economic Inquiry, 43(2), pp.221-228.

[2] See Choi, Y., Rondina, G. and Walker, T.B., 2023. Information aggregation bias and Samuelson's dictum. Journal of Money, Credit and Banking, 55(5), pp.1119-1145.