PM calls for global finance reforms to restore trust

By Lee Wei Lian, The Malaysian Insider

KUALA LUMPUR, Sept 27 — The global financial system needs to reform itself and rectify its weaknesses to restore confidence and attract long-term investment, Prime Minister Datuk Seri Najib Razak said today.

He pointed out that investors have become risk averse due to the financial crisis, adding that the private sector needs to make new and substantial investments for the long-term to allow economic recovery to take place.

“Restoring confidence in long-term investing requires reforms that address public trust through an agenda based on governance and co-ordinated among nations,” said Najib in an address delivered by his deputy Tan Sri Muhyiddin Yassin at the World Capital Markets Symposium here today.

The prime minister’s remarks follow significant outcry in some countries at massive corporate profits and stratospheric executive compensation even as the public continue to struggle to make ends meet following the worldwide economic slowdown.

Najib said that market efficiency has been sacrificed as self-serving financial and corporate players exploited loopholes and tax regulations to make profits at the expense of society.

“They have diverted markets from their objective of efficient intermediate for productive investment and unleashed systemic risks in a relentless pursuit of profits,” he said. “As a result, the relationship of financial markets with society is now in disarray.”

Najib stressed however that the global community must learn from its mistakes and face economic adversity with “renewed faith and optimism.”

The prime minister also called for a new global agenda based on mutual benefit, equal access, social justice and environmental sustainability.

He said that good governance must translate into check and balances to avoid domination by influential interests in global decision making process.