Firstly, the primary driving force of an stockmarket is the                                                                                           
anticipation of higher profits from quoted companies. Although                                                                                        
                                                                                                                                                      
there are bound to be short-term consolidation periods, the                                                                                           
longer-term profitability trend looks generally favourable in                                                                                         
Asia's case over the next five years. Malaysia scores highly                                                                                          
on this front.                                                                                                                                        
                                                                                                                                                      
Secondly, political and social stability together with sound                                                                                          
economic policies rank highly with fund managers. Although                                                                                            
some other countries in Asia fall down on this point, Malaysia                                                                                        
                                                                                                                                                      
conversely stands out as a shining example of how to combine a                                                                                        
solid political framework with responsible economic policies                                                                                          
with attractive incentives for overseas investors.                                                                                                    
                                                                                                                                                      
What is the extent of the grouping's savings which can be                                                                                             
expected to be mobile?                                                                                                                                
                                                                                                                                                      
Ford: High ratios of domestic saving and investment as a                                                                                              
proportion of GDP have been a feature of the Asian region, and                                                                                        
                                                                                                                                                      
continue to be sustained at high levels when compared with                                                                                            
OECD countries.                                                                                                                                       
                                                                                                                                                      
In most cases domestic savings (in the form of, for instance,                                                                                         
the EPF and CPF in Malaysia and Singapore respectively, and                                                                                           
mandatory holdings of government securities by other savings'                                                                                         
institutions in the region such as insurance and provident                                                                                            
funds) have historically been locked up in government bonds,                                                                                          
thereby providing cheap and plentiful financing for                                                                                                   
governments' plans for industrialisation and investment in                                                                                            
infrastructure.                                                                                                                                       
                                                                                                                                                      
In recent years, however, the very same economic success some                                                                                         
Asian countries enjoying budget surpluses.  Privatisation has                                                                                         
also had a major hand in this, as large sectors of the economy                                                                                        
                                                                                                                                                      
which used to be owned and funded by the State sector have                                                                                            
moved to the private sector and, indeed, have now become net                                                                                          
income producers for governments as increased profitability                                                                                           
has led to higher tax revenues.                                                                                                                       
                                                                                                                                                      
Thus some governments are now repaying rather than issuing                                                                                            
debt, and many savings institutions are having to turn to                                                                                             
other investment vehicles to make up for the consequent                                                                                               
shortfall in the supply of government debt securities. Just to                                                                                        
                                                                                                                                                      
look at our own EPF, at the end of 1992, 64 per cent of its                                                                                           
assets were held in Malaysian Government bonds. Three years                                                                                           
later, at the end of 1995, government bonds held as a                                                                                                 
percentage of the total had fallen to 40 per cent (Source:                                                                                            
Bank Negara Annual Reports).                                                                                                                          
                                                                                                                                                      
In Singapore the government has an even more reduced                                                                                                  
requirement for large scale financing and, as its need for                                                                                            
issuing debt which the CPF can then take up declines, it has                                                                                          
had to shift the burden of responsibililty a for investing the                                                                                        
assets towards the individual contributors who are now is                                                                                             
encouraged to withdraw their balances to invest in an                                                                                                 
increasing variety of investment instruments, ranging from                                                                                            
property, to unit trusts and insurance, and more recently to                                                                                          
regional investments through approved private sector managed                                                                                          
funds.                                                                                                                                                
                                                                                                                                                      
What this is demonstrating is that a rapid ly increasing                                                                                              
amount of the region's savings will become mobile as                                                                                                  
governments become more and more financially healthy, and less                                                                                        
                                                                                                                                                      
and less inclined there fore to bear the responsibilities                                                                                             
implied by centralised savings schemes. Governments have no                                                                                           
wish themselves to develop the fund management skills required                                                                                        
to seek out alternative forms of investment to government                                                                                             
securities, and the onus for managing these savings                                                                                                   
                                                                                                                                                      
will therefore inevitably move increasingly to the private                                                                                            
sector, where such skills already exist or can be developed.                                                                                          
                                                                                                                                                      
It is for this reason that other vehicles to accommodate                                                                                              
savings, whether they be insurance funds, unit trusts, private                                                                                        
                                                                                                                                                      
sector provident funds or other co-mingled investment vehicles                                                                                        
are being promoted by governments throughout the Asian region.                                                                                        
This trend will have a substantial impact on the region's                                                                                             
capital markets as increasingly large amounts of investment                                                                                           
capital derived from national savings find their way into the                                                                                         
equity and private debt markets, increasing their depth and                                                                                           
liquidity, and perhaps in a counter balance to the vagaries of                                                                                        
portfolio investment flows from without the Asian region.