KUALA LUMPUR, May 7 (Bernama) -- Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop has called for the development of an inclusive bond market for small and medium enterprises (SMEs) as the country needs the private sector to contribute towards productivity improvements and generate higher value added potentials.

He said the private sector's initiatives to drive growth and undertake structural transformation of the country's economy would necessarily require a more robust corporate bond market in meeting financing requirements over the next decade.

"As we move towards shifting the Malaysian economy onto a high growth path and a high income nation, we must leverage on a more vigorous private sector expansion to provide the lead in unlocking the nation's growth potential," he said in a speech at RAM Holdings Bhd's 20th Anniversary Appreciation Dinner here.

Nor Mohamed, who heads the Economic Planning Unit (EPU), said the strong domestic issuance last year had increased the size of the Malaysian sukuk and corporate debt markets to RM669 billion in aggregate as at end of 2009, compared with RM585 billion at the end of 2008.

"We are now the third largest bond market in Asia, equivalent to 99 per cent of the country's gross domestic product (GDP) at the end of 2009. This compares to 79 per cent of GDP in 2008 and a mere five per cent in 1990," he said.

He said that despite the recent global economic and financial recession, gross issuance of corporate bonds averaged RM4.9 billion a month last year, compared to an average of RM4.1 billion in 2008.

"While we take pride in the tremendous success and achievements of the Malaysian bond market, we must continue to enhance efficiency and promote greater competitiveness.

"In this context, more needs to be done particularly in deepening further the domestic bond market, widening the risk-spectrum and developing an inclusive bond market for the SMEs," he said.

On another note, Nor Mohamed said the EPU was in the last phase of preparing the 10th Malaysia Plan (2011-2015) which would be tabled in Parliament on June 10.

Noting that 2011 would be the 500th anniversary of the Melaka's fall to the Portugese, he said Malaysia could learn from the sultanate's success in the 15th century.

Like Melaka, he said, Malaysia needs to leverage on its strategic location in a manner relevant to today's technology, especially with the expansion of intra-regional flight routes and the country's high speed broadband initiative.

Malaysia, as a relatively small economy, also needs to be effectively integrated with the large and fast growing economies of the region via stronger trade links such as free trade agreements, and also wider investment links such as through local companies with regional operations.

Thirdly, he said, there needs to be a continued focus on improving the Malaysian public delivery system towards enhancing the country's attractiveness as a destination for trade and investment, for both foreign and domestic businesses alike.

In conjunction with the celebration, Nor Mohamed was awarded the Heritage Hall-Visionary Award, honouring him as the man who had the vision and the foresight to establish and institutionalise the bond market in Malaysia.

Meanwhile, Public Bank Bhd was awarded the Heritage Hall-Evolutionary Award for pioneering the Financial Institution Ratings in the country at a time when credit ratings were a novelty.

YTL Power Generation Sdn Bhd was awarded the Heritage Hall-Trendsetter Award while PG Municipal Assets Bhd was awarded the Heritage Hall-Originality Award.

Sunway City Bhd bagged the Heritage Hall-Inspirational Award while the Sabah State Government clinched the Heritage Hall-Genesis Award.-- BERNAMA