Good evening, ladies and gentlemen.
Yang Berbahagia Tan Sri Datuk Tong Kooi Ong, chairman of The Edge Media Group; Yang Berbahagia Datuk Ho Kay Tat, publisher and group CEO of The Edge Media Group, award winners, distinguished guests of The Edge Billion Ringgit Club Awards 2022, ladies and gentlemen.
Thank you, Tan Sri Datuk Tong Kooi Ong and The Edge, for inviting me to this evening’s gala dinner to recognise and celebrate the biggest and best-performing companies on Bursa Malaysia.
It is an honour to be back here and deliver the keynote speech once again, especially since this is the 13th consecutive year of The Edge Billion Ringgit Club awards.
When I was here last year, we had just entered Phase Four of the National Recovery Plan (NRP). Fast forward to today, we have successfully vaccinated 84% of our total population and reopened our international borders beginning April this year. These have gone a long way towards reviving the travel, tourism, aviation sectors as well as boosting our efforts at rejuvenating the economy.
On that note, I have been made to understand that there are currently 178 members of the Billion Ringgit Club. And tonight, 57 awards will be presented to companies across 14 different sectors. This is a clear indication that despite the many global and domestic headwinds faced during the past two years, big companies have been able to prosper, with new milestones achieved.
Global economic challenges will impact all countries, including Malaysia
But what about next year? As all of us are aware, we do not need a crystal ball to portend that the global economy will face multi-pronged challenges from all directions. The International Monetary Fund (IMF) has revised its global growth forecast for 2023 to 2.7%, which is the weakest global growth profile since 2001.
For most parts of the world, it may feel like a recession is looming, mainly because [of the following reasons]:
First, a sharp tightening of financial conditions, which is raising government borrowing costs and is likely to become more constricting, in tandem with rate hikes in major economies. For the government, our main policy response is to ensure that the net effect to the ringgit is as close to neutral as possible.
Second, Russia’s ongoing invasion of Ukraine, which has caused a sharp slowdown of economic activity in Europe. This, in turn, has reduced the demand for Asian exports and growth momentum globally. These global supply chain disruptions have increased global inflationary pressure, resulting in tighter monetary policies in advanced economies. This has also resulted in inflationary pressures in emerging economies.
Third, China’s strict zero-Covid policy and its deepening real estate sector issues have led to a sharp slowdown [that] in turn is weakening momentum in trading partner economies, including Malaysia.
Ladies and gentlemen,
I would like to stress that it is not all doom and gloom. There are still bright spots in 2022, given that it has been a recovery year for Malaysia and our Asean neighbours. Despite these macroeconomic challenges, Malaysia has remained resilient.
Malaysia’s GDP has enjoyed three consecutive quarters of growth since 4Q2021. In the first half of this year, we grew by 6.9%, and recorded 8.9% for 2Q2022. Our unemployment rate in August 2022 was at 3.7%, the lowest since the pandemic. As such, we are confident we will exceed the official 2022 GDP projection of 5.3% to 6.3%, and have actually revised our 2022 outlook to 7% growth in the recently tabled Budget 2023.
In fact, the World Bank has raised Malaysia’s GDP growth forecast to 6.4% for 2022 compared to 5.5%, previously. IMF, too, has projected 5.4%, up from 5.1% previously, for Malaysia.
The encouraging growth numbers overlaid against the low unemployment figures as well as other positive data, gives me hope that we CAN weather the storm that may lie ahead. We see all this as a validation of our impactful policies and fiscal management since the onset of the pandemic in 2020.
For the past 2½ years, the Ministry of Finance has been focused not only on being RESPONSIVE to the short-term needs of the people and businesses, but also on being RESPONSIBLE and REFORMIST in building resilience. In short, is it this disciplined 3R approach throughout that has helped MOF place our economy on a much stronger footing now compared to the height of the pandemic.
Ladies and gentlemen,
I wish to stress that the government fully recognises that to support the nation’s economic recovery moving forward, it is critical to strengthen the resiliency and competitiveness of Malaysia’s industries. To that end, I regard all of you here as our partners in driving sustainable recovery and growth for Malaysia.
I always remind my colleagues at MOF that we must never lose sight of the 3Rs that I have just mentioned. In fact, the recently tabled Budget 2023 was clearly framed based on the 3Rs:
First, in terms of being RESPONSIVE, the 2023 Budget maintains an expansionary fiscal policy to cushion the impact of global developments. This is to ensure that Malaysians and businesses continue to receive adequate support in the face of short-term challenges.
Second, on being RESPONSIBLE, we have carefully balanced supporting the country’s economic growth momentum with the need for financial sustainability. This is important to build resilience and protect us from potential future crises. On this, we are also conscious of creating more fiscal space and MOF has, in fact, conducted advanced studies into rationalisation measures and widening the revenue base. But do not worry: As promised last year, we have not proposed any prosperity tax for 2023, and we will work towards ensuring the Fiscal Responsibility Act will be tabled in the next parliament sitting.
Third, on being REFORMIST. The government presented a budget that not only addresses current challenges but also invests in the long term. This is to drive a more inclusive and sustainable development agenda while supporting the necessary transformation to future-proof our industries.
While we ride this next economic storm together, I feel that the global economy could benefit from better monetary policy coordination between the developed and emerging economies. A viable International Monetary Cooperation Mechanism will also help ensure that medium- to long-term global growth can be achieved equitably, by also considering the unique needs of small, emerging and developing countries.
This idea has been done before, from the 1985 Plaza Accords to the more recent Global Financial Safety Net, which quickly stabilised global markets during the pandemic. Cooperation and coordination such as these are key so that developing economies and emerging markets can grow more equitably and sustainably.
If we in the emerging markets are left at the mercy of global financial players who are looking to arbitrage on interest rate differentials between markets, then we will suffer setbacks in tackling broader global issues such as climate change and, God forbid, another pandemic.
Building back better: how companies can be the government’s key partners on sustainable growth
Ladies and gentlemen,
As Tan Sri Datuk Tong Kooi Ong mentioned in his speech, I echo the hope for the BRC awards to begin to factor in “sustainability” on both the environmental and business fronts. It is critical that we work together and put our best foot forward, especially to create a more sustainable and resilient economy by embracing ESG (environmental, social and governance).
I wish to reaffirm that sustainable growth and addressing climate change remain high on the national agenda. Reducing greenhouse gas emissions to 45% of GDP by 2030 is one of the key priorities under the 12th Malaysia Plan. To complement this, the government also launched a comprehensive National Energy Policy, which provided the blueprint on Malaysia achieving its carbon neutrality goals.
To strengthen ESG efforts, MOF has put in place various sustainability strategies that will support our ESG-based aspirations, including strengthening sustainability-related financing and investment, which complements the United Nations Sustainable Development Goals (UN SDGs) by coordinating initiatives and programmes that incorporate ESG elements.
This effort involves measures such as tagging all programmes under public expenditure to the SDGs in our annual budgets; boosting and attracting low carbon investments via the development of Voluntary Carbon Market (VCM) before transitioning into an Emissions Trading Scheme (MyETS); and issuing a Task Force on Climate-related Financial Disclosures (TCFD) Application Guide for Malaysian Financial Institutions to monitor progress.
There are so many other reformist and ESG-related initiatives that the government has started, particularly since I joined MOF in March 2020. We have introduced various green and SDG-related incentives through previous budgets and Budget 2023, which also goes to show how pro-business we have been.
All that aside, I know that what the corporate captains sitting here today are really looking for is stability in the operating landscape. I know this for a fact because I was once in your shoes.
And the reason is very simple: Stability is what foreign investors are looking for in a market before they decide to invest in our country, and partly through your companies. So, how can all of us move forward as partners, to enable us to restore the shine of Malaysia’s market in the eyes of the foreign investors?
On this, all of you are clearly leaders in your respective industries. As such, I would like to share three key ideas in stabilising the Malaysian market, regardless of external and domestic challenges, for your consideration:
First, I would like to urge all of you to work together with the government on institutionalising ESG. We have established the Malaysia Sustainable Development Goals Trust Fund (MySDG Fund) earlier this year in collaboration with the UN. At MOF, we have also been looking at various ways to incentivise companies to embrace ESG, even beyond tax measures. At the private sector level, I believe that in terms of your production, services and operations, ESG disclosures have helped many companies identify internal gaps, such as analysing your biodiversity footprint to understand its impact and to help you set specific targets to achieve.
Second, you can also collaborate with the government on empowering the SMEs (small and medium enterprises) within your supply chain and ecosystem. The reason is simple: Your respective supply chains will also be under scrutiny by potential global investors. On the one hand, we have funds such as the Low Carbon Transition Fund for SMEs to take advantage of. You, on the other hand, could do your part to guide and handhold the SMEs within your respective ecosystems, in embracing ESG in their operations. If we can consistently do that for at least the next five years, then we will create a win-win momentum for the whole nation, both in achieving our ESG agenda, zero carbon target and in attracting more FDI to your company and to our shores.
Third, both the public and private sectors must collaborate on data to support our nation’s ESG agenda. The perfect showcase for this was when the world’s scientific community collaborated with governments to develop the Covid-19 vaccine. If we could collaborate to save global public health, surely we could also do it for our ESG goals, starting with our own domestic market. Domestically, our test runs on the targeted fuel subsidy are a perfect example of how MOF has collaborated with the private sector to leverage both technology and data to achieve a more equitable social agenda.
There are also many solid ESG-related initiatives through the proposed Budget 2023, which I hope will be re-tabled without many amendments, as it is, in my humble opinion, a solid, balanced and comprehensive budget, even taking into account our rather tight fiscal space.
But I would like to stress again that the key to the success of our ambitious goals and initiatives is a real commitment by the private sector to see this ESG agenda through. And we MUST collaborate to pave the way for Malaysian businesses’ future success, not only because ESG has been proven to help build corporate resilience, but also because it is the right thing to do.
Ladies and gentlemen,
We will elect a new government on Nov 19, 2022. It is critical for Malaysians to choose policymakers that are RESPONSIVE and RESPONSIBLE, while also taking a REFORMIST approach for the sake of our future generation. I hope that post-Nov 19, we will see stability restored to bring back Malaysia’s shine and appeal in the eyes of investors and the international business community.
Before I end my speech, allow me to share a quote by the late Dr Wayne Dyer, an American motivational speaker. I quote: “When you are able to shift your inner awareness to how you can serve others, and when you make this the central focus of your life, you will then be in a position to know true miracles in your progress towards prosperity.”
If all of us could exercise just a little bit of that selfless spirit in each of us on a selfless ESG agenda, and stay united in purpose and action, I am confident we can transform Malaysia to achieve a future of equity and prosperity for all.
My heartiest congratulations to all award winners tonight. To The Edge and all guests, thank you for having me and enjoy the evening!