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2.1.5 THE GREAT TECHNOLOGY AND DIGITAL ACCELERATION
Amid the disruptions caused by the pandemic, the world has seen greater innovation – such as those across retail services, healthcare, supply chains and capital markets – driven by significantly altered consumer behaviour as well as operational needs. In this new normal, businesses globally, including industry incumbents, have seen ‘the great technology and digital acceleration’, while technology platforms, in particular BigTechs, have increased in market dominance.
The advent of technologies like 5G, cloud computing, artificial intelligence (AI) and distributed ledger technology (DLT) could significantly reshape the future landscape of capital markets and their infrastructure – among others, transforming how issuers fundraise, redefining intermediation, shaping new investor behaviours as well as revamping clearing and settlement infrastructures. In addition, a new wave of entrepreneurship has emerged on the coattails of the new normal. The surge in creativity arises from the need to respond to new or emerging requirements that are currently not addressed by incumbent institutions. While these trends are expected to accelerate productivity gains, they will also alter the landscape for capital markets.
The rapid change in technology will give rise to data, AI, cloud and other technology-related risks, which requires regulators to rethink their approach to regulating the capital markets and enforcing investor protection. More recently in 2021, some countries have taken steps to protect digital users as well as better regulate digital services and markets by striving towards a level playing field for emerging innovative companies. This may mark the beginning of a new era of regulating technology and digital intermediaries.
To keep abreast with the industry, global regulators have started to adopt greater use of technology to improve oversight, surveillance and analytical capabilities as well as support forward-looking supervision and policymaking. Along with this, regulators have initiated collaborations with forward-looking regulatory technology (RegTech) to improve compliance outcomes, strengthen reporting and better manage key risks for greater overall efficiency.
2.2 OUTLOOK AND PRIORITIES FOR THE MALAYSIAN ECONOMY
Despite the setbacks from the COVID-19 pandemic, Malaysia is expected to continue exhibiting moderately strong growth potential over the medium term, supported by a diversified economy. With the global economy recovering post-pandemic, external demands and exports are also expected to rebound and contribute further to economic resilience. The ongoing pipeline of large-scale public transportation and digital infrastructure projects will also boost economic growth and attractiveness as a foreign direct investments (FDI) destination. Real GDP growth is projected to be between 4.5% and 5.5% p.a. during 2021 to 202310, with Malaysia forecasted to cross into the high-income country threshold as early as the middle of this decade11.
For Malaysia to evolve with global megatrends, achieve its growth potential and transcend its status as a middle-income country, there are several priority areas that would require emphases – some of which have been exacerbated by the pandemic. Of these, there are two critical ones which the capital market can enable – the structural upgrade of the economy and the augmentation of the retirement savings landscape.
10 Fiscal Outlook and Federal Government Revenue Estimates 2021, Ministry of Finance Malaysia, November 2020.
11 Aiming High: Navigating the Next Stage of Malaysia’s Development, World Bank, March 2021.
CAPITAL MARKET MASTERPLAN 3
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