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Source: Bank Negara Malaysia

Speeches & Interviews
Officiating Address by YB Deputy Finance Minister at the Closing Ceremony of the Project Greenback 2.0 Kota Kinabalu
Speaker: Venue: Sandakan Sabah Language: English Speech Date: 14 Feb 2020
Yang Berhormat Datuk Zakaria bin Mohd. Edris, Member of Parliament for Libaran,
Encik Fraziali Ismail, Assistant Governor, Bank Negara Malaysia,
Dr Firas Raad, Country Manager for Malaysia, the World Bank Group,
Ms. Irina Astrakhan, Practice Manager, Finance, Competitiveness and Innovation Global Practice, the World Bank Group,
Distinguished guests,
Ladies and gentlemen,
At this very moment, our senses are assailed by a continuous flurry of negative news, tales of suffering, social strife and hardship. It is as if we are living in an age of disintegration, which is characterised by extreme individualism. For that very reason, it warms my heart to be here this evening to celebrate a story of successful partnerships that is driven by the noble aspiration to make real changes in the life of the great many.
On behalf of the Ministry of Finance, I wish to congratulate Bank Negara Malaysia, the World Bank, and the remittance industry for the successful completion of Project Greenback 2.0 Kota Kinabalu which was launched in March 2018.
While retaining the primary objective to foster more cost effective remittance service similar to other ‘remittance champion cities’, the Project Greenback in Sabah gives a special focus to the efforts to accelerate usage of digital channels for remittance.
Many remarkable achievements have been accomplished within the last two years through various initiatives including 26 remittance fairs and other edutainment programs. The results are indeed praiseworthy:
• First, the Project has managed to on-board 16,000 new customers for e-remittance service. This has far exceeded the initial target of 10,000 set by the organisers at the beginning of the Project.
• Second, in terms of remittance costs, Malaysia has surpassed one of the key targets of the Sustainable Development Goals (SDGs) which aims to reduce the transaction costs of migrant remittances to below 3% by 2030.
But what is really heartening is that, there’s more to it beyond these already impressive figures.
Promoting the use of formal remittance channels does not only support the objective of protecting the integrity of financial system by reducing the outflows via unregulated channels, but more importantly it helps to ensure that the workers hard-earned money can be sent to their families in a safe, low cost and efficient manner.
A significant size of worker remittances sent from Sabah go to other developing countries particularly the Philippines and Indonesia. These help to pay for children’s education, food, medical and other basic needs of the families at the receiving ends. It is changing lives and brightening the life prospects of at least thousands!
Project Greenback 2.0 demonstrates Malaysia’s efforts to contribute to the global goals of eradicating poverty and fostering greater prosperity.
Shared Prosperity Vision
Ladies and gentleman,
On the notion of prosperity, it is interesting for us to ponder on an argument by Tim Jackson, a sustainable development specialist and the author of ‘Prosperity without Growth’. In discussing the dilemma of growth, Professor Jackson argued that:
“Far from raising the living standard for those who most needed it, growth let much of the world’s population down, [whereby] wealth trickled up only to the lucky few”.
A similar anecdote can be witnessed here in Malaysia.
In the latest economic survey by the OECD, it was highlighted that Malaysia needs to focus on improving the quality of growth as opposed to just headline growth numbers.
While commending the country’s sustained economic performance, the report underscored the need for Malaysia to address development challenges particularly the income inequality between households, which remains high compared to the OECD average.
We are highly cognisant of this. The Government inaugurated the Shared Prosperity Vision 2030 (or the SPV2030), which was launched by YAB Prime Minister Tun Dr. Mahathir in October 2019.
This ten-year plan introduces a new and critical narrative for development planning in Malaysia. It envisages an idea of development that goes beyond the conventional headline growth concept that is largely based on numerical measures such as the gross domestic product (GDP).
Instead, at its crux, the SPV2030 emphasises on the idea of inclusivity.
This is made clear by its three-pronged objectives: first, development for all; second, addressing wealth and income disparities; and third, united, prosperous and dignified nation.
Sharing many similarities with the United Nations’ Sustainable Development Goals, the SPV2030 is indeed a commitment by the Government to bring about sustainable growth that is characterised by fair and equitable distribution, with the aim to reduce disparities among income groups, regions and ethnicities.
In the next part of my speech, I wish to share some insights on the strategies to achieve the aspirations of the Shared Prosperity Vision 2030.
Supporting the development of digital economy
First, let me share some thoughts on digitalisation itself, which is also the primary theme of Project Greenback 2.0 Kota Kinabalu.
With the aspiration to become a high-income nation, Malaysia continues to explore and identify new sources of quality growth. In recent years, a particular policy focus of the Government is to unlock the potential of digital economy as a new driver of development.
As highlighted in the World Bank’s publication on Malaysia’s digital economy in 2018, digitalisation could play a crucial role in accelerating structural transformation which in the long run will help to enhance productivity, promote diversification, and improve international competitiveness of the Malaysia economy.
Notwithstanding the expected benefits from the digital economy, we must also acknowledge that there are still challenges ahead of us whereby ‘digital divide’ remains a significant issue.
In the Digital Economy Report 2019, the United Nations Conference on Trade and Development (UNCTAD) pointed to the fact that half of the world remains ‘offline’ due to the unavailability of internet connection.
The report also showed that in least developed countries, only one out of five people uses the Internet, which is in stark contrast with the case of developed countries where four out of five people use the Internet.
Failing to close the gaps between the under-connected and the highly digitalised segments may risk exacerbating the problem of inequality, which would risk creating a wide range of social and economic ills.
To quote United Nation’s Secretary-General António Guterres on this topic, “inclusivity is essential to building a digital economy that delivers for all”.
In the efforts to narrow the digital divide particularly between the rural and urban areas in Malaysia, the Government has allocated more than RM20 billion to support the implementation of National Fiberisation and Connectivity Plan (NFCP).
The Plan will help to chart and construct the future for Digital Malaysia. We envisage that by 2023, everyone in this country including those in rural areas would benefit from a high quality digital connectivity.
For the states of Sabah and Sarawak, we want to ensure that geographical barriers would not exclude our good citizens from meaningfully participate in the digital economy. In the Budget 2020 the Government allocates about RM250 million to improve the connectivity issues in remote areas.
I will come back to this topic of inclusivity in a while.
In order to reap the full benefit of digital economy, efforts are also taken to facilitate digitalisation and adoption of new technology among the small and medium size enterprises (SMEs). Among others, about RM10 billion will be channelled via grants and loan guarantees to stimulate the private sector to invest in new technology.
I would like to encourage the businesses in Sabah especially those who are present here this evening, to leverage on these initiatives by the Government. Step forward with your ideas and energy and we will reciprocate.
Finally, creating an enabling environment to allow for the digital economy to thrive is also important. Within the financial sector, Bank Negara Malaysia has recently introduced the licensing framework for digital banking. This is aimed at accelerating adoption of technology in the financial industry, with the hope that it will translate into creation of more innovative products and services particularly to better serve the needs of the underserved segments.
Bridging the gaps to accelerate greater adoption of digital payment and remittance services
Having touched on the strategies to make digital economy more accessible, my next point concerns the efforts to accelerate the adoption of digital payment and remittance services by consumers.
Moving towards a cashless society remains one of the Government’s foremost priorities. Let me reiterate that reducing excessive reliance on cash would bring about tremendous benefits to the economy and our society. These are particularly in terms of protecting the integrity of the financial system and to support the Government’s efforts to tackle the problem of shadow economy.
Pertaining to remittances, Bank Negara Malaysia continues to play an important role in promoting migration to formal channels which is aimed at curbing the prevalent illegal remittance activities or hawala. To this end, a Bill to enhance the Money Services Business Act 2011 will be tabled to Parliament this year, to enhance the effectiveness of enforcement actions against illegal remittance activities.
Ladies and gentlemen,
Based on a research by McKinsey Global Institute, the widespread adoption of digital finance is expected to increase the annual GDP of all emerging economies by $3.7 trillion, by 2025.
The aspiration to move towards cashless society however, hinges on our ability to make digital payment and remittances, more inclusive.
While there is no doubt that such services have gained significant traction among the professionals and younger segments, the question is whether we have done enough to make such services more appealing to the underserved segments?
In this regard, the service providers need to take heed of the diversity of users in designing their products to ensure that innovations introduced do not inadvertently exclude the poor and low-income segments.
From the experience in Project Greenback 2.0, it is clear that creating an inclusive digital remittance service is not a one-time project, but one that involves iterations and requires continuous improvement.
This is where direct engagement with the target groups play an important role.
It is indeed encouraging to hear from the Project team about how the remittance service providers have taken initiatives to make their digital applications more accessible for the migrants by improving the language options and simplifying the process of using digital remittance service.
Beyond product creation, accelerating adoption of digital services also requires more creative approach by the industry players. As part of the Project Greenback, to accelerate the take-up for e-remittance among the target groups, Bank Negara Malaysia and the industry association introduced the “Jom Kirim” initiative which entails implementation of loyalty program that enables users to benefit from continuous usage of e-remittance service. This approach applies what Nobel Laureate Richard Thaler coined as the ‘nudging’ process which is used to help people to make better choice.
Partnerships to support implementation of inclusive development agenda
Ladies and gentlemen,
Fostering shared prosperity requires an inclusive approach as the goal cannot be delivered by a single organisation working in-silo.
For this reason, both SPV2030 and the SDGs underscore the role of partnerships in realising the visions for inclusive development and addressing the most pressing global challenges.
The completion of Project Greenback Kota Kinabalu 2.0 today serves as a testament of successful partnership between public sector agencies and the private sector.
For the policymakers, this Project shows how policy formulation can greatly benefit from listening to the views and opinions from the grassroots level.
It also shows that implementing the initiatives to support the attainment of development agenda requires ideas and commitment from various stakeholders.
In this spirit, I am happy to share that the Ministry of Finance has recently reached a mutual agreement with the World Bank to extend the World Bank Group’s work in Malaysia for another five years whereby the office will be re-named the ‘Inclusive Growth and Sustainable Finance Hub’ in July 2020. If the first five years had been good, now that we know each other better, the next five years will be great!
I want to end my speech with a quote by Margaret Wheatley, an American writer: “there is no power for change greater than a community discovering what it cares about.”
This is what we are celebrating tonight; we celebrate the wonderful work that all of you have done to show that you care about fostering a more inclusive and prosperous world.
Once again, I wish to congratulate Bank Negara Malaysia, the World Bank, the remittance industry and all parties who have contributed in the success of Project Greenback 2.0 Kota Kinabalu.
On that note, it gives me a great pleasure to officiate the closing of Project Greenback 2.0 Kota Kinabalu.
Thank you.

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