Oleh/By		:	DATO' SERI DR. MAHATHIR BIN MOHAMAD 
Tempat/Venue 	: 	HOTEL REGENT, KUALA LUMPUR 
Tarikh/Date 	: 	28/04/84 
Tajuk/Title  	: 	MAJLIS PERASMIAN PERSIDANGAN 
			KEBANGSAAN MENGENAI PERINDUSTRIAN 
			SEKURITI DI MALAYSIA 




 Terlebih dahulu saya mengucapkan tahniah kepada Kuala Lumpur Stock
Exchange dan Organisational Resources Sendirian Berhad di atas usaha
mereka menganjurkan Persidangan ini.

Persidangan ini, pada pendapat saya, adalah tepat dan sesuai dengan
keadaan semasa, ketika kita sedang rancak berusaha untuk memperbaiki
jentera dan suasana berbagai aspek pembangunan dan pengurusan negara.

2. The securities industry is an important component of a modern economic
system. For a fast industrialising country like Malaysia, it has a crucial
role in mobilising public interest and participation in the corporate life
of the nation.

3. The Midterm Review of the Fourth Malaysia Plan illustrates the need for
new strategies, approaches, and concepts in our development. Our economy
has performed well but continued dynamism of the economy will have to
depend on increasing private sector involvement in both the traditional
areas as well as those usually reserved for the public sector. This in
itself constitutes a change in approach. Much will depend on how the
private sector rises to meet the new challenge.

4. The Government's perception of the economy as well as the role of the
private sector has obviously undergone a radical change. This perception
is epitomized by the concept of Malaysia Incorporated and its corollary,
Privatisation. The Government no longer harbours the belief that the
private sector is avaricious and is out to exploit the country for its
benefit. Instead, the private sector is now regarded as a partner in
development and as such deserves to be given every assistance. The
Government's role would be to redistribute the wealth created by the
private sector so that there is equitability and a growing standard of
living within the society. This being so, the need for the Government to
arrogate to itself certain monopolistic services is no longer there. Hence
the move towards privatisation.

5. Governments the world over are notorious for inefficiency when running
enterprises, even when aided by monopoly and the authority of
Government. On the other hand the private sector is better motivated and
generally more efficient. It is hoped that privatisation will improve the
economic and general performance of the services, resulting in a more
rapid growth of the nation as a whole.

6. As privatisation and the Malaysia Incorporated concepts are new, there
must be teething problems. Neither the Government nor the private sector
can do these things right the first time. We have to feel our way and
learn from the mistakes we make and those made by others. But with time
and experience, there is no doubt that both Government officers and
private sector executives will become adept and adapted to this new
relationship and methods and the nations growth accelerated.

7. The Government recognises that capital market growth is vital for
national economic development. At a time when the nation faces resource
constraints, we must mobilise savings at all levels to fuel economic
growth. The capital market and, in particular, the securities industry has
therefore a critical role to play in the channelling of financial
resources for the corporate sector.

8. The Malaysian securities industry is relatively new and is beset with
numerous problems. Firstly, it is an industry that is based more on faith
or trust than on tangible assets. As such it needs a level of ethics that
is higher than normal. There is only a thin line drawn between
'speculation' and 'gambling'. In addition the industry lends itself to
unlimited manipulation. Insider trading, rumour-mongering, and a host of
other factors can influence the behaviour of the market. The appointment
of governing bodies, the formulation of rules and laws by themselves are
not adequate. It needs but one rogue elephant to bring the whole structure
to shambles. Yet if funds are to be fully utilised for national
development there must be a proper securities industry.

9. The Government has been stressing the need for good work
ethics. Nowhere is such ethics more important than in the securities
industry. Those who are involved in the running of the industry must be
people with moral courage and strength of character to avoid the many
temptations and to apply the rules fairly. In the long run this will pay
off, not only for the securities market but for the nation as
well. Indeed, everyone will stand to gain if the securities market is well
and honestly run. I would urge everyone to deal swiftly and effectively
against those who undermine public trust in the market.

10. It is clear that the Kuala Lumpur Stock Exchange has grown in both
breadth and depth in the 10 years of its existence. The number of ordinary
stock units have increased from about 3.8 billion in 1974 to about 20
billion as of April this year, an increase of about 414% , while total
market valuation has increased from about $11.8 billion to about $79
billion, an increase of about 565% over the same period. This rapid growth
has served to dispel some of the uncertainty or anxiety about the success
of the securities industry in Malaysia. The prophets of doom and the
doubting Thomases have once again been proven wrong with regard to
Malaysia. The number of companies listed on the KLSE have increased from
about 249 in 1974 to about 273 in April this year, an increase of about
10%. The Exchange has been self-regulating, with the management of its
affairs being entrusted to the Committee.

11. The capital market in Malaysia is relatively young when compared to
those of Europe, America and Japan. Yet there is little doubt that it is a
robust market with great potential. Off and on there have been runaway
prices for certain counters which do not reflect the real value of the
shares. There have been signs of insider trading and manipulations. But
these have been the exceptions rather than the rule. By and large prices
reflect true value based on information generally available to
everyone. Indeed as the media becomes more conscious of the role of the
capital market, more and more information are published in order to guide
investors. The rapid increase in the use of computers will enhance and
update information to the benefit of Malaysian investors.

12. It is essential that the investing public be protected against fraud
and catastrophes that often befall badly managed businesses. There has
been a lot of complaints that the conditions for listing are too severe
and rigid. This is unfortunately necessary if confidence is to be built in
the Malaysian securities industry. The regulatory bodies are there because
the public has to have some assurance that their money will be in safe
hands. Once we have built a sufficiently large corp of directors and
managers known for their integrity and business acumen, the difficulties
in getting a listing may be reduced. Of course, if Malaysians exhibit good
business ethics all the time, there will be no need for the rigidity in
the guidelines for listing. Indeed entirely new ventures may be floated on
the market and will attract the necessary capital. As it is, venture
capital is a scarce commodity in Malaysia, creating frustration among
those with good ideas with no capital, and those with capital but no
projects. It is hoped that over time the Malaysian securities industry
will mature and will be able to cope with all the needs of the capital
market.

13. However, the Kuala Lumpur Stock Exchange has performed fairly
satisfactorily. It has enjoyed a pivotal role in the process of capital
formation which even the worldwide economic slowdown has not been able to
dampen significantly. Such is the dynamism of the Malaysian capital market
that foreign interest in the KLSE is quite manifest.

14. As in other countries, the securities industry in Malaysia is very
sensitive to the environment. Indeed it can be said to be
hyper-sensitive. Nothing happens in the country, be it economic,
political, social or even personal, which does not in some way get
reflected in the market place. Indeed to a certain extent confidence in
the stability of the country can be gauged by the share market index
charts. The Government too is conscious of the significance of the share
market performance. For this and a variety of other reasons, the
Government must keep a watchful eye on the market.

15. The prosperity of a nation depends on the ability of the people to
create wealth. The most prosperous nation are those whose people are
constantly converting whatever is found in their environment into
marketable commodities. Apart from the ideas and know-how, the conversion
process will require capital. The more complex the ideas, the greater is
the need for capital. Thus the great chemical industries which grew out of
laboratory trials would not have been possible without capital. Even the
socialists have to acknowledge the need for capital. Knowledge alone could
not have put the cosmonauts into orbit.

16. The basis of capital formation is savings. But in an inflationary
environment savings may result in a depletion rather than an accumulation
of capital. The Government has urged the people to save. But the savers
must be saved from the effects of inflation. In other words, their savings
must be invested if not in profitable ventures, at least in goods or
property which will appreciate. The capital market is therefore important
not only to people who play the market for capital gains but to savers who
wish to invest for dividends or long-term returns. Provided that
entrepreneurs are constantly starting new enterprises or expanding old
ones, savings should constitute the most reliable and beneficial source of
capital.

17. While those who 'play the market' are knowledgeable about when to buy
and when to sell, the savers are usually not so well-informed. This is
where a well-run Stock Exchange and good stock-brokers are necessary. The
savers should be protected from their tendency to invest in
high-flyers. That way they are less likely to 'burn their fingers'. This
way confidence in the Stock-Market and the integrity of Stock-Brokers will
be enhanced and more capital can be made available.

18. If on the other hand hard-earned savings are constantly being lost in
the stock-market, not only will the securities industry be affected but
people are less likely to save and contribute towards the build up of
capital. And, of course, the prosperity of the nation will be adversely
affected.

19. Another source of capital that has as yet to make an impact on the
securities industry is the institutional funds. Much of such funds are
invested in Government securities. This is as it should be, for the fund
managers cannot afford risks. However, this rule has been relaxed lately
to allow a certain percentage to be invested in the capital market.

20. The need is for more of such institution which can systematically
mobilise capital for investment. Housing societies, pension schemes and
others can help to stimulate rapid growth in the securities industry. In
the process, of course, the nation will gain through savings and the
capitalisation of new enterprises or expansion of existing ones.

21. All in all, there seems to be a bright and interesting future for the
securities industry. Much will depend on how well the industry is run,
what ethics the brokers adhere to, and the role the media plays in
providing information to the investing public. The Government will always
be willing to lend an ear to the complaints and to give a helping hand. We
regard the capital market as an important element in the development of
Malaysia. We want the Stock Exchange to be safe for the investors. We have
no time for smart people who do not care for what happens to the country
as long as they can prove how smart they are.

22. The securities industry, like all other economic activities in this
country must conform to the N. E. P. It is not healthy to have such a
crucial industry monopolised by any one race. The bumiputeras are still
under-represented. It is not easy to correct this situation. But efforts
must be made to correct the imbalance. Brokers firms must take in more
bumiputeras so as to give them the right exposure to this sophisticated
industry. The Government will try to produce candidates with the right
kind of educational background and training. But without experience the
bumiputeras will not make the grade. The Government expects the industry
to comply to the N.E.P. as much as are the companies on the registers.

23. The slogan of the Government is 'Bersih, Cekap dan Amanah'. I would
like to stress the Amanah or Trustworthy part of that slogan. The
securities industry needs that trustworthiness. You cannot function
without it. So police yourself and rid yourself of doubtful characters. Do
not be afraid to act. The Government will back you.

24. On this note, I am pleased to declare this National Conference on the
Securities Industry in Malaysia open and wish you all a fruitful day of
deliberations.

Thank you.