© Copyright 2005 All Rights Reserved 3 May 2007 Presentation by: Wai Keen, Lai General Manager, Policy & International Division Perbadanan Insurans Deposit Malaysia

© Copyright 2005 All Rights Reserved 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.

© Copyright 2005 All Rights Reserved 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

© Copyright 2005 All Rights Reserved 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.

© Copyright 2005 All Rights Reserved 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 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.

© Copyright 2005 All Rights Reserved 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.

© Copyright 2005 All Rights Reserved Role of Deposit Insurer  Protects wealth.  Protects entrepreneurship – SMEs.  Prepares readiness of depositors to participate in an increasingly competitive and liberal banking system.

© Copyright 2005 All Rights Reserved 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

© Copyright 2005 All Rights Reserved 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.

© Copyright 2005 All Rights Reserved 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.

© Copyright 2005 All Rights Reserved Our Initiatives  Two strategic thrusts of Integrated Communications Plan : -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.

© Copyright 2005 All Rights Reserved 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.

© Copyright 2005 All Rights Reserved 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.

© Copyright 2005 All Rights Reserved Thank you