Deputy International Trade and Industry Minister Liew Chin Tong (centre) together with MITI secretary-general Hairil Yahri Yaacob (left) and MITI deputy secretary-general (industry) Datuk Hanafi Sakri during the launch of National Industry Environmental, Social & Governance Framework (i-ESG Framework) at MITI Tower on Monday. - IZZRAFIQ ALIAS/The Star
PETALING JAYA: The national industry environmental, social and governance (i-ESG) framework is expected to help the country tap into a US$12 trillion global market on ESG-focused opportunities, particularly the micro, small and medium enterprises (MSMEs) in the manufacturing sector, says the Investment, Trade and Industry Minister.
Tengku Datuk Seri Zafrul Abdul Aziz said the local manufacturing sector is the second largest contributor to the economy, making up 23.6% of the country’s gross domestic product (GDP) in the second quarter this year.
The sector also accounts for 87.7% of total exports in June and employs 27.5% of Malaysia’s workforce.
He said the manufacturing sector serves as a key engine of growth to drive the nation’s next phase of economic expansion. To that end, it is crucial to develop policies to support sustainable manufacturing growth for the country’s long-term economic stability.
“MSMEs in the manufacturing sector must not be left to fend for themselves in adopting and embracing sustainable practices. MSMEs may not have the capacity or technical knowledge on ESG.
“They must be supported because almost 98% of total business establishments in Malaysia are MSMEs, employing 7.3 million of our workforce. MSMEs in the manufacturing sector contribute about 8% to GDP and 9% to exports,” he said during the launching ceremony of the i-ESG framework in Kuala Lumpur yesterday.
Tengku Zafrul is confident that with the i-ESG framework’s phased approach, the country can achieve its sustainability and net-zero goals within seven years or less.
Divided into two phases, phase 1.0 of the i-ESG framework is known as “Just Transition” from 2024 to 2026 and will be followed by phase 2.0, “Accelerate ESG” from 2027 to 2030.
Featuring the ESG readiness assessment and i-ESG starter kit, the i-ESG phase 1.0 lays the groundwork and fosters the development of a robust ecosystem to help ensure companies’ readiness to meet the more rigorous demands of phase 2.0 from 2027 to 2030.
In phase 1.0, the ministry will conduct sessions to empower and guide 50 companies on producing their first sustainability report. The first clinic will be held at the end of this month.
For MSMEs, the lack of awareness, exertion in understanding the complex ESG policies and regulations, as well as additional cost to organisation with the adoption of new technology remained they challenges they face in adopting ESG practices.
Deputy Investment, Trade and Industry Minister Liew Chin Tong said the main goal with the i-ESG framework and the new industrial master plan 2030 is to help MSMEs become or remain a part of the global supply chain.
“Global businesses want to see a strong supply chain. By helping local MSMEs comply with ESG and enabling them to self-assess their readiness for ESG, global investors can see that in Malaysia there are suppliers who can be a part of their supply chain,” he said.
The ministry’s industry development division senior director Meenachi Muniandy said there are about 75,000 local companies in the manufacturing sector, out of which only 3,000 are large companies and the rest are MSMEs.
She added that while phase 1.0 of the i-ESG framework is voluntary, it is indirectly market driven.
