Keynote address by Minister of Finance Tengku Datuk Seri Zafrul Abdul Aziz

Assalammualaikum and good evening, everyone.

It gives me great pleasure to be here this evening to celebrate the achievements of publicly listed small and mid-sized companies in the country that have performed well over the last three years. Thank you, Tan Sri Datuk Tong Kooi Ong and The Edge Media Group for inviting me to be part of this important event.

It’s great to be back at an event hosted by The Edge, especially with so many familiar faces in the audience. I’m also pleased to learn that CIMB, where I used to work, is the main sponsor of this award.

INTRODUCTION

Ladies and gentlemen,

I am particularly honoured to be here tonight because The Edge Malaysia Centurion Club Corporate Awards this year is not only recognising those who have performed well in terms of numbers, but also those who have proven to be resilient in the face of adversity.

As such, the recognition that The Edge Malaysia Centurion Club Corporate Awards 2022 bestows on all of you “warriors” tonight becomes even more significant, given the odds and how tough operating conditions have been in the last two years. For the winners tonight, you have fought and triumphed in what is arguably humanity’s toughest challenge in recent years, so please give yourselves a round of applause.

A TESTAMENT TO MALAYSIA’S STEADY RECOVERY TRAJECTORY

Ladies and gentlemen,

Indeed, your achievements today are a solid testament to the country’s steady progress towards economic recovery.

The three consecutive quarters of positive growth are primarily due to the government’s swift response in 2020 and 2021, such as the RM21 billion in wage subsidies for businesses. Almost 360,000 employers have received assistance from the Wage Subsidy Programme, which supported the retention of nearly three million local workers.

Business financing and other enablement measures have been paired with job creation initiatives. We exceeded our 500,000 target in 2021, creating approximately 560,000 job opportunities, and we target to create 600,000 jobs in 2022.

So far, all these measures have contributed to our unemployment figures falling for 12 consecutive months. As of the end of July this year, unemployment stood at 3.7%, a figure much lower than the pandemic’s peak of 5.3%.

In fact, I am happy to share that based on the strong recovery momentum recorded thus far, Malaysia’s economic growth this year may exceed our current official estimates of between 5.3% and 6.3%, following the faster growth in the second quarter of 8.9%, along with the prospect of a better performance in the third quarter.

Ladies and gentlemen, distinguished guests,

The MoF has always been responsive and responsible in keeping the country on track for a strong economic recovery. To that end, we remain focused on fiscal accountability and the implementation of strategic structural reforms in order to keep the Malaysian economy resilient.

A testament to this is the introduction of the Semarak Niaga initiative in Budget 2022 worth RM40 billion, to not only provide working capital injections or financing to businesses, but also equity injections to businesses affected by the Covid-19 pandemic.

This was a holistic government support, where all levels of entrepreneurs and businesses are supported, from the micro level to companies listed on Bursa Malaysia. The measures include equity or alternative financing worth RM2.2 billion, SME Soft Loans worth RM14.2 billion, and SJPP Guarantees of up to RM22 billion.

Complementing these are various tax and non-tax incentives, to facilitate reforms that would support the country’s transition to a sustainable economy, as enabled by digital transformation and IR 4.0 (Fourth Industrial Revolution). For example, grants for SME digitalisation and smart automation were introduced, as well as matching grants to accelerate digital transformation and assistance for gig economy players and start-ups to better navigate the world of commerce and business.

Other initiatives in Budget 2022 include those aimed at positioning the country as a competitive investment destination, including the promotion of more strategic investments. For example, we have a RM2 billion special strategic investment fund to attract multinational companies’ foreign investment, smart automation matching grants for 200 manufacturing and service companies worth RM100 million, and skills and training programmes to train 20,000 workers to support specific industry clusters with an allocation of RM80 million.

Overall, Malaysia has remained as an attractive investment destination for both global and regional businesses. In 2021, we recorded more than RM306 billion in approved investments in the manufacturing, services and primary sectors — an increase of more than 83% from 2020.

FDI accounted for 68% of these approved investments, while domestic DDI (domestic direct investment) totalled close to RM98 billion. Throughout the first half of 2022, the total amount of approved investments was RM123 billion, with FDI accounting for 71% or more than RM87 billion of the total, and domestic investments accounting for 29% or close to RM36 billion.

BUILDING RESILIENCE FOR THE FUTURE

Ladies and gentlemen,

All these may be commendable for the short term, but what is most important is how we help build resilience for Malaysian businesses over the long term. The topic of sustainability has taken an urgent turn, and we no longer have the luxury of time to debate on if we should act.

The more critical question is WHEN we should act and the answer is NOW, because societal inequalities and climate disasters have been occurring right here on our home ground and in our backyard. The pandemic, too, has exposed our socioeconomic structural faults, which demand long-term solutions that are critical to saving lives and livelihoods should another major disaster strike.

The silver lining from all these dramatic turns of events, whether Covid- or climate-induced, is the resulting sense of urgency, and the increased awareness on the importance of embracing sustainability and ESG (environmental, social and governance) principles to build long-term climate and socioeconomic resilience.

The Malaysian government is resolute in its commitment to implement development projects and programmes that prioritise ESG principles or are aligned to the United Nations’ Sustainable Development Goals (SDGs). Further, in our goal to become a carbon-neutral nation by as early as 2050, Malaysia will work closely with Asian countries with similar visions through the Asia Zero Emission Community.

How can we achieve this? As far as businesses are concerned, as outlined in the 12th Malaysian Plan, companies need to be empowered to embrace ESG, to have access to sustainability-related funding and investment, and to be incentivised for their ESG-focused programmes.

You may ask, what progress has MoF made in this space? As a first step, the government is walking its talk through the implementation of the Principles of Good Governance for Government-Linked Investment Companies (PGG). PGG includes, among others, the recommendation to establish a governance structure for the oversight of ESG elements in future investment strategies.

There is a wealth of data that shows that companies focusing on ESG issues have managed to reduce costs, increase employee productivity, reduce risks and create more business opportunities. The GLICs (government-linked investment companies) collectively manage RM1.7 trillion of assets, which yield considerable influence in the context of guiding and empowering the SMEs in the GLIC ecosystem to embrace ESG principles. I am certain that many of the companies in this ballroom tonight are also part of the ecosystem of GLICs such as Petronas, Khazanah Nasional and Tenaga Nasional.

More recently, TNB and Petronas have signed a memorandum of understanding (MoU) to strengthen collaboration in advancing innovative decarbonisation solutions, to support Malaysia’s ambitions to become a carbon-neutral nation by 2050.

Through these important operational building blocks, the government aims to encourage the private sector and other segments to be more aware of both the short- and long-term impact of their operational decisions on the environment and communities in which they operate.

The government also perceives businesses as its partners in ESG leadership, whether it is in adapting to climate change, addressing social inequalities or conserving our natural environment, to name a few.

In fact, in Malaysia, at least 44 out of the 54 Sustainable and Responsible Investment (SRI) funds approved by Securities Commission Malaysia were launched in the last two years. As at end-December 2021, 94% of the top 50 listed companies in Malaysia had ESG strategies and 68% had emissions reduction policies.

Beyond our borders, international investment communities have also focused on ESG-related risks and opportunities. Global ESG assets are on track to exceed US$53 trillion by 2025, representing more than a third of the US$140.5 trillion in projected total assets under management.

As such, for our companies to remain competitive regionally and globally, ESG considerations are no longer a choice, but a profit-oriented imperative.

The options are obvious: shape up on ESG or lose out!

To that end, in supporting our national ESG aspiration, I am extremely pleased to note that The Edge has collaborated with Bursa Malaysia and FTSE Russell to launch their inaugural The Edge Malaysia ESG Awards this year. Indeed, collective public-private sector collaboration is the fastest way for us to realise our national vision for a more inclusive, resilient and sustainable Malaysia.

WHAT’S IN STORE FOR 2023

Ladies and gentlemen,

Today, the challenge is to maintain our recovery momentum in the face of global headwinds such as greater global inflationary pressures following the prolonged geopolitical tensions, China’s declining growth due to their conservative Covid-19 policy, increased geopolitical tensions between the US and China, and a tighter global financial condition as a result of central banks around the world tightening their monetary policy.

To face these challenges head on, we must build resilience, as outlined in the 12th Malaysian Plan. But note that it is always the National Budget that breathes life into our longer-term plans.

The upcoming Budget 2023, which will be unveiled on Oct 7, will prioritise maintaining the current economic recovery momentum, continuing reforms to improve people’s welfare, and building resilience to ensure we, as a nation, are ready for any future challenges.

The government will continue to prioritise sustainability and ESG through our whole-of-nation approach. To that end, I am happy to share that, for the last two annual budgets, MoF has been mapping as many of our measures as possible to the SDG goals.

For Budget 2023, three out of six Public Consultation Papers issued by MoF revolve around ESG and sustainability. This clearly reflects MoF’s focus on being RESPONSIVE to ESG developments, and on being RESPONSIBLE in facilitating sustainable development for our better future.

We are doing this not only because it makes better fiscal sense in the long term, but also because it is the right thing to do. We must never fulfil current needs at the expense of our children’s future growth.

In striking that balance, the MoF has also strived to be REFORMIST in our approach to addressing key structural challenges and building the resilience of our nation as well as the competitiveness of our businesses: ESG considerations and SDG goals form the core of that effort.

CLOSING

Ladies and gentlemen,

Before I conclude, I’d like to congratulate The Edge on The Edge Malaysia Centurion Club Corporate Awards, which Tan Sri Datuk Tong started. The awards promote meritocracy — recognising top companies that are members of The Edge Malaysia Centurion Club through key metrics that are transparent and based on merit. With the government’s enabling policies and awards such as these, I hope to see tonight’s winners in The Edge Billion Ringgit Club someday.

I wish all of you the very best, not just in your respective industries, but also in making positive contributions to the environment and communities in which you operate.

Finally, my heartiest congratulations to all the winners of this year’s The Edge Malaysia Centurion Club