Opening of "The Implication of Ageing Population In ASEAN Countries" and ASEAN Social Security Association 18th Board Meeting

By:
YB Tan Sri Nor Mohamed Yakcop
Minister of Finance II
Monday, 4th September 2006

Yang Berbahagia, Tan Sri Abdul Halim Ali,
Chairman of the Employees Provident Fund Malaysia.

Mr. Khamphouang Inthaseng,
Chairman of ASEAN Social Security Association (ASSA).

Yang Berbahagia Datuk Azlan Zainol,
Chief Executive Officer of the Employees Provident Fund Malaysia.

Yang Berbahagia Dr Soh Chee Seng,
Chief Executive Officer of Social Security Organization Malaysia.

Delegates of ASSA,

Ladies and Gentlemen,

Assalamualaikum warahmatullahi wabarakatuh and a very good morning to all our foreign guests and visitors, welcome to Malaysia and particularly Penang.

1. It is indeed a great honour for me to be here with so many distinguished members from the ASEAN Social Security Association 18th board meeting.

2.              Social security reform has been an important topic of discussion in almost all countries in the world lately. Social security involves many parties, in fact the whole population and the Government.  Hence, there are many complex issues involved.

3.   The reforms usually begin with social security policy makers identifying the economic and demographic challenges facing their countries that have profound effects on social security.  The main demographic challenge is, the ageing population.  In addition to this there are other important challenges such as the limited budgets and globalisation.

4.           In response to these challenges, social security reforms are being implemented not only in developed countries but also in the developing world.  The most important component of this reform is of course the adaptation of the existing pension system to the reality of the changing demography. Such reforms had led to the adoption of the multipillar pension systems, an approach advocated by the World Bank.

5.             I was made to understand that among the ASEAN countries Thailand and the Philippines have adopted this approach.

Ladies and gentlemen,

6.              The most important factor that needs to be taken into consideration in any pension reform is the economic environment that we are operating in, how conducive it is to support the reform and to ensure its successful implementation. Social security system must also be able to promote economic growth and not retard it.  This interdependence between social security systems and the economy must be clearly understood by social security policy makers so that reforms will result in real benefits to the people in the long term.

Ladies and Gentlemen,

7.               In Malaysia, the national retirement schemes are the Government pension scheme for public sector employees and the employees provident fund scheme for the private sector employees.  The self-employed, however remain outside any formal system, although they can opt to contribute to the EPF on voluntary basis.  Therefore, extending coverage of social security system to the informal sector remains a challenge to Malaysia.  I believe coverage beyond the formal sector is a typical problem of developing countries. 

8.                 Like other countries, Malaysia is not spared the common demographic challenges faced by other countries.  However, our population is not ageing as yet.  Our statistics show that only 6 percent of our population is aged 60 years and above.             
Ladies and Gentlemen,

9.                Going forward, there is the need to deal with new requirements of social protection due to a growing global economy and new technologies, which affect labour market and family structures.  There are no easy solutions to this very complex subject.  However, if we care to plan and adopt a more holistic approach in carrying out studies and research in important areas of social security, I am confident that we can design a social security system that best suits our cultures and values.

10.               In this regard I would like to stress the importance of international or regional cooperation in developing new knowledge and new ideas in designing social security system and reforms, ASSA may not have the experience of the international social security association in implementing the co operation, but it can complement the work of ISSA and in time to come, play an even more significant role in the development of social security protection in this region.  To begin with, ASSA can provide the platform to carry out research and studies on social security for the ASEAN member countries.

11.                   And given the common cultural values shared among our member institutions in this region, I am confident ASSA can help bring about mutually beneficial experiences, as well as foster greater cooperation among member institutions. 

12.                  I am confident that ASSA can become a vibrant, dynamic and respected entity in our part of the world.

13.                  Before I conclude, I would like to thank ASSA and EPF for inviting me to grace this occasion.  To our foreign guests enjoy yourselves here in this beautiful island also known as the pearl of the orient.  I hope you will take time to enjoy its rich choices food and visit places of interests in Penang.

14.                And on that note, I now declare the 18th ASSA board meeting officially open.

Thank you.   

Ministry of Finance
4th September 2006