As part of our efforts to place the economy in a competitive position in the global economy, it is imperative that we strengthen our soft infrastructure and the regulatory framework so that they are at par with international standards.

In this context I would like to refer, in particular, to the roles of the Securities Commission, the Bank Negara and the Auditor-General's Office, though many of these views below are also relevant to other regulatory authorities in the country.

We must thank the past two chairpersons of the Securities Commissions for having implemented various revisions of the relevant acts, guidelines and practice notes to improve the standards of the securities industry and in the setting up a high standard of corporate convenience and disclosures for compliance by public listed companies.

These improvements have contributed significantly to protecting the best interests of minority shareholders and the investing public.

We now also have the capital market master plan which spells out a long-term plan to be implemented to develop the Malaysian capital market. Similarly, Bank Negara has also come out with the financial sector master plan which charts out the road map for the development of the financial sector in meeting the challenges of globalisation and ensuring a stable and orderly development of the industry.

What is not stated in these two great master plans is the need to integrate these two (capital market and financial) regulatory functions into one. This is the current practice in most advanced countries such as England, Australia, Hong Kong and Singapore, etc.

This is important in order to ensure consistency and a more effective enforcement of policies and supervision. It would also overcome possible conflicts of interest - especially in the case of Bank Negara - in relation to its supervisory role in the financial services industry and as implementer of monetary policies, banker and financial advisor to the government.

It will also help to protect the regulatory authority's reputation especially when it also dabbles in the market as a player and is out to make gains for itself over and above implementing monetary policies.

In the past 15 years, Bank Negara has had three episodes of multi -billion ringgit losses in the foreign exchange markets.

It is for these reasons that developed countries have rationalised the two regulatory functions by setting up a special purpose institution popularly named as 'Financial Services Authority' that is entrusted to supervise both the financial services sector and the capital market. In Singapore, it is known as the Monetary Authority of Singapore.

The role of the Auditor-General's Office is crucial in auditing all regulatory authorities in the country. It has been too long that regulators have been allowed to play God and many a times they have been inefficient, error-prone and abusive.

Financial management teams must also be subject to management audits to gauge their effectiveness and compliance to the desired standards. The impact and consequence of their decisions and actions or lack of them need also be incorporated in the management audit.

In discharging his duties, the auditor-general needs to ensure that the latest accounting standards and practices are adopted.