WeChat Pay launch
YB Tuan Lim Guan Eng
The Finance Minister of Malaysia Grand Hyatt Hotel, Kuala Lumpur
26 March 2019
Yang Berhormat Chong Chieng Jen,
Deputy Minister of Domestic Trade and Consumer Affairs of Malaysia
Ms. Lyu Yan,
Second Secretary, Economic & Commercial Counsellor's Office Embassy of the People's Republic of China in Malaysia
Mr. Hew Wee Choong,
Vice President, Investment & Industry Development, MDEC
Mr. Song Hock Koon,
Director, eCommerce Division, MDEC
Mr. Poshu Yeung,
Vice President of Tencent International Business Group
Mr. Jason Siew,
CEO of WeChat Pay Malaysia Distinguished guests, Ladies and gentlemen,
Good morning and Salam Harapan,
1. I would like to thank WeChat for inviting me to witness the next chapter of its mobile payment system. Deputy Minister of Domestic Trade and Consumer Affairs of Malaysia
CASH AND PAYMENTS LANDSCAPE IN MALAYSIA
2. The use of cash is relatively high in Malaysia, although it is falling. Bank Negara Malaysia data indicate there were RM106 billion worth of cash circulating in the economy in 2018, or about 7.4% of the GDP. This is lower than the 7.7% and the 7.9% recorded in 2017 and the 2016 respectively. The drop coincided with wider application of mobile and online payments in Malaysia. In contrast, a largely cashless economy would have around 2% of cash in circulation or lower, based on IMF staff’s calculations.
3. Malaysians are used to cash but it can be burdensome to carry around in large quantity. Consumers now are seeking quicker, safer and more convenient methods to pay for their purchases. According to a January 2019 report by Nielsen, 67% of consumers surveyed in Malaysia have used cashless payments, with debit cards and online banking being the most preferred non-cash channels.
4. The migration towards cashless has been enabled by Malaysia’s high penetration rate of financial services and widespread availability of internet access. According to Bank Negara, about 92% of Malaysians had some kind of access to bank accounts, with 91% had access to online banking.
E-WALLET IN MALAYSIA
5. Unlike cards and online banking, e-wallet as cashless payments has a long way to go. The same Nielsen study shows only 10% of its respondents used e-wallet as a form of payments. This is despite 88% of Malaysian respondents being familiar with that form of technology.
6. On the other side, local vendors are already at ease with e-wallets because the benefits are clear. E-wallets increase payment speed while reducing capital expenditure for payment infrastructure. I have been informed that this is one of the reasons why there are more than 3,500 merchants in Malaysia now accepting WeChat Pay for mobile top ups, flight tickets, movies and many more.
CONFIDENCE IN MALAYSIA
7. Yes, e-wallet adoption rate is still low but WeChat is betting on Malaysia’s tremendous growth potentials. That’s confidence and it is not WeChat’s alone. Foreign investors are coming into Malaysia in droves. Approved FDI across all sectors rose 48% to RM80.5 billion in 2018, compared to RM54.4 billion in 2017.
8. Malaysia’s role as a safe haven amid the trade war is contributing towards rising investment. Here are the evidences: approved manufacturing FDI from China rose 410.8% to RM19.7 billion in 2018 from RM3.9 billion in 2017. Concurrently, approved manufacturing FDI from the US grew by 184.9% to RM3.2 billion, from RM1.1 billion in 2017.
9. Furthermore, Malaysian exports in January expanded by 3.1% YoY supported by manufacturing. The industrial production index (IPI) in the same month grew by 3.2% YoY. These expansions demonstrate the health of the Malaysian economy in spite of considerable external challenges. These positive trends will help the Government achieve its GDP growth target of 4.9% this year.
10. Additionally, the Government is returning RM37 billion GST and income tax refunds to the economy after years of delay. These RM37 billion refunds are functioning as an implicit stimulus to the economy that not only will improve cash flow, but encourage businesses to spend and invest more than it would otherwise.
11. Our policy to address living costs faced by Malaysians is also working, with the Consumer Price Index declining by 0.7% YoY in January and a further 0.4% YoY in February due to changes in our tax system and cheaper petrol prices.
12. These achievements do not come without hard work. Policy clarity, certainty and consistency provided by a Government are engendering confidence in the economy among investors and the business community. The Government is proceeding with its institutional and fiscal reforms based on the principles of Competency, Accountability and Transparency (CAT). Indeed, the clearest affirmation that our reforms are bearing fruits is the maintenance of our credit ratings at a high grade of A-/A3 by Fitch, Moody’s and S&P.
PREPARING MALAYSIA FOR INDUSTRY 4.0
13. But in the longer term, Malaysia is preparing its economy for Industry 4.0. I believe tech companies like WeChat can help digitalize payments in Malaysia and create an environment conducive for big data analytics and other technologies relevant to Industry 4.0.
14. One of the key global learnings when it comes to Industry 4.0 is that we should pay attention to enablers. Enablers like WeChat foster fertile ground for further innovation to take place. Additionally, the adoption of digital payments will help us fight corruption by increasing transparency throughout the system.
THE RM60 COMMEMORATIVE BILLS WON’T REPLACE THE RM50 NOTES
15. Before I end, I would like to take this opportunity to clarify some confusion on social media about Malaysia’s RM60 commemorative notes. These banknotes were released in 2017 by Bank Negara Malaysia to celebrate the 60th anniversary of the independence of Malaya in 1957.
16. There were rumours stating that these commemorative RM60 notes would replace the existing RM50 bills. Let me assure the public that the rumour is completely false. Your RM50 bills will continue to be valid and so, please use it with confidence.
17. And while the RM60 notes are legal tenders, I advise you to not use it. Instead put it somewhere for safekeeping because there are only 60,000 pieces of RM60 notes out there. No more will be produced. For your information, in contrast, there were more than 900 million pieces of RM50 notes circulating in the economy last year.
18. Now that is out of the way, I would like to congratulate WeChat on the launch of WeChat Pay. I will be following WeChat’s progress in Malaysia closely and I wish you all the best.