Finance Minister II Datuk Seri Amir Hamzah Azizan.
KUALA LUMPUR: Strengthening international cooperation to address cross-border financial issues will be part and parcel of Malaysia’s efforts as it seeks to work with its Asean counterparts to make trade markets in the region stronger.
Finance Minister II Datuk Seri Amir Hamzah Azizan emphasised the need for connected markets, noting that Asean, with its population of 700 million, is a powerful trading bloc in its own right.
“At the moment, the penetration of cross-Asean trade is lower than what we anticipate or believe it can be. If you look at the region, there are various countries at different developmental stages,” he said during a talk at the 63rd World Federation of Exchanges (WFE) General Assembly and Annual Meeting here yesterday.
According to Amir Hamzah, there is a mental block on competition among Asean countries, and should this mindset be removed, there will be a bigger slice of the pie for everyone.
“A connected Asean region can achieve more, so rather than compete with each other, we work together so that various different pieces can be realised, making the future of all our trade markets brighter,” the minister said.
He added that some of the key initiatives that Malaysia will be driving next year when it assumes the chairmanship of Asean will be in the finance tract.
“We will look at creating mechanisms where the markets are facilitating trade between nations, facilitating payment mechanisms between Asean countries, recognising Asean capital market, connecting the capital markets in a better form and hopefully facilitating things like mutual recognition for new initial public offerings (IPOs),” he noted.
Amir Hamzah said trade markets will also need to pay attention to facilitating a just transition for climate change, while looking at capital raising for the greening of the economy as an important facet.
This, he said, would not rely solely on capital markets but also involve global multilateral agencies, which would help reduce costs.
Amir Hamzah also discussed wealth distribution, clarifying that it was not a case of Robin Hood-style redistribution – where the government takes from the rich to give to the poor – but rather about growing the economy to channel more resources to the lower-income groups and reduce the income gap.
“A much more vibrant domestic market, fuelled by people or wealth, can create a much more robust and stable economy.
“The question is, how can capital markets play a role to facilitate growth in Malaysia? One way is to ensure the vibrancy of the capital markets grows,” he added.
He said liquidity in the market is also a key element and attracting sufficient capacity and funding will help accelerate growth.
Currently, there have been 46 new IPOs on the Malaysian market, spanning the Main Market, ACE Market and LEAP Market.
Amir Hamzah noted that while this represents a good pipeline of connectivity, it is crucial to look at whether companies on the ACE Market are progressing towards maturity and moving up to the Main Market.
“This year has been a good year for us. The number of companies on the ACE Market that have matured and gone onto the Main Market has increased by about 11 this year, which is a good sign,” he said.On what role the government can play, the minister said he will work together with government-linked investment companies (GLICs) to spur growth.
“I believe that if you can extend the chain of the capital market by actually fuelling the private market, the private market in the long term will also come to the capital market in order to cap the rates. And then making this virtuous circle connect in a better form is a big push,” he said.
The GLICs have reportedly stepped up already by committing RM120bil to be spent in Malaysia over the next five years, in addition to the RM440bil that they typically invest during that period.
Amir Hamzah said this means there will be a strong injection of funds into the local economy.
Meanwhile, in a speech by Prime Minister Datuk Seri Anwar Ibrahim that was read out by Amir Hamzah, it was highlighted that Malaysia is currently undergoing a profoundly transformative economic and social resurgence.
Anwar said with gross domestic product growth for the third quarter of 2024 hitting 5.3%, the rest of the world has begun taking notice of the advantages of investing here.
“This year alone, the world’s leading tech giants – from Amazon Web Services to Google and Microsoft – have announced new investments or significant investment expansions totalling US$16.9bil, and leading global ratings agencies have raised their outlook for Malaysia,” he said.
Anwar added that further evidence of economic recovery was visible in the rise of Malaysia’s equity market capitalisation, which has now surpassed RM2 trillion, equivalent to over US$450bil.
“Central to sustaining this confidence is a robust regulatory framework that maintains a fair and orderly market, with diverse fundraising and investment opportunities across equities, derivatives, bonds and sukuk,” the prime minister said.
He also noted the importance of enhancing innovation because it will drive interest in the market including retail participation.
“At the end of 2022, retail participation made up only 25.7% of the value traded on Bursa Malaysia.
“Increasing retail investor involvement will make equities investment a more common source of wealth creation – which is in line with the Madani Economy’s vision of levelling the playing field for all sectors.
“This, in turn, will also enhance market liquidity and dynamism, bringing renewed vigour and interest for all to benefit.”
