KEYNOTE ADDRESS BY
YB LIM GUAN ENG
MINISTER OF FINANCE, MALAYSIA
MALAYSIA INVESTOR RELATIONS AWARDS 2019
WEDNESDAY, 30 OCTOBER 2019
“INVESTOR RELATIONS –
BUILDING CONFIDENCE, SUSTAINING VALUE”
YBhg. Datuk Shireen Ann Zaharah Muhiudeen
Chairman of Bursa Malaysia Berhad
YBhg. Datuk Muhamad Umar Swift
CEO of Bursa Malaysia Berhad
Mr. Steven Tan Chek Chye
Chairmanof the Malaysian Investor Relations Association(MIRA)
Directors and members of MIRA as well as the corporate community,
Members of the media,
Ladies and Gentlemen,
Good afternoon and Salam Harapan,
1. Let me first thank the Malaysian Investor Relations Association (MIRA) for inviting me to the 9th Investor Relations Awards ceremony.
2. This annual event is the result of the market study conducted by MIRA with brokers, analysts and investors to obtain their feedback regarding the most effective corporate communicators among the listed companies.
3. The theme for today’s ceremony is“ Investor Relations –Building Confidence, Sustaining Value.” MIRA is the only professional association in Malaysia committed to promoting investor relations (IR), seeking to inculcate the best practices among listed countries,while promoting education and professional development of IR practitioners.
CHANGING INVESTORS’ EXPECTATIONS
4. Key ingredients in building confidence and creating sustainable value among companies have changed considerably since MIRA was formed back in 2007. Investors’ expectations are no longer limited to clarity and disclosure of financial performance and near-term outlook.
5. Investors and the wider audience of stakeholders are keen to understand a company’s approach in managing economic, environmental and social (EES) risks,and make use of opportunities that arise from it. This is reflected by the requirement for listed issuers on the main market to include a Sustainability Statement in the annual reports that was first introduced by Bursa Malaysia in 2016.
6. Recently, Bank Negara Malaysia has also called for greater transparency and disclosure on how financial institutions along with non-financial firms factor in climate risk considerations into their decision-making process. This reflects the growing recognition of investors and stakeholders of EES risks.Successfully addressing and managing these risks would contribute to confidence building and sustainable value within the company.
7. The speed which social media disseminates news has also influenced how companies communicate in this digital age. It is no longer enough for companies to issue quarterly reports on their financial performance. Speaking to analysts and the press does not necessarily mean getting your message across to the target audience.A company’s stakeholders now include its customers and the communities in which the company operates.The public, regardless whether they are your customers,holds values that could potentially affect the standing of the company.
BUDGET 2020AND DIGITALISATION
Ladies and gentlemen,
8. Malaysia is an open economy. The fact that the size of Malaysia’s total trade in 2018 was 128% of our GDP stresses on the importance of the global economy to Malaysia.
TRADE WAR AND THE REORIENTATION OF THE GLOBAL SUPPLY CHAIN
9. The trade war between China and the United States is permanently shifting the global supply chain and Malaysia has an opportunity to reposition ourselves as an important reliable partner for those affected by the shift.The trade tension is a chance for Malaysia to attract new high-quality investment to increase our capacity to cater to the global markets, while serving our maturing domestic market.
10. In the first half of 2019, approved FDI across all sectors rose 97.2% to RM49.5 billion from RM25.1 billion in the same period a year ago.A majority of the approved investment was within the manufacturing sector, with the US being the biggest source of approved investment worth at RM11.7 billion, followed by China with RM4.8 billion.
11. It is in these contexts that I tabled the 2020 Budget earlier this month. The Government is encouraging wide spread adoption of Industry 4.0 technology in our economy by providing various measures incentivising Malaysian companies to digitalise, and to enable them to become more productive by adopting new technology.These include direct incentives worth more than RM21 billion over 5 years for SMEs, large local companies and new multinational corporations to invest in new technology that raises the productivity of the Malaysian economy.In the first year starting from 2020, approximately RM4.5 billion worth of incentives, grants and spending will be provided.
12. This builds up on the Budget 2019 where the Government provided loan guarantees and grants worth about RM10 billion to encourage digitalisation and the adoption of IR4.0 technology like artificial intelligence, automation, big data and robotics.I would like to encourage all businesses present today, regardless of whether you are listed or not, to grasp the opportunities provided by these incentives to step forward into the digital age.
13. The Government is also investing RM21.6 billion in the National Fiberisation and Connectivity Plan (NFCP) through public-private partnership. The investment will widen the coverage of high-speed broadband internet throughout the country,while offering Malaysians with affordable subscription prices. This investment starting from this year until 2023 will make Malaysia 5G ready, and keep us ahead of the curve.
14. These measures will raise our productivity, create new jobs and power Malaysian growth well into the next decade.
RESULTS FROM INSTITUTIONAL REFORMS
15. While we work on improving Malaysia’s economic prospect, this Government remains committed to reforming our public institutions and regaining public trust. I am happy to share some of the positive results.
16. Malaysia became one of the best improved countries in the World Bank’s Worldwide Governance Indicators (WGI),thanks to wide ranging reforms carried out by this Government over the past year. The WGI measures the quality of institutions across 214 economies by taking into account the state of accountability, political stability, government effectiveness, regulatory quality, rule of law and corruption in those countries.
17. Furthermore, Malaysia improved our ranking in the 2020 World Bank Ease of Doing Business Index from 15th place last year to 12th in 2020.We are the 4th easiest place to do business in Asia after Singapore, Hong Kong and South Korea.
18. Both indices are used by credit rating agencies to determine Malaysia’s sovereign credit ratings. Thanks to our institutional reforms and resilient economic growth, as well as our clear and consistent messaging to the investing communities, our credit rating is expected to remain at A-or A3 in the foreseeable future.
19. The decisions by Fitch, Moody’s and S&P to maintain Malaysia’s sovereign credit rating at A-or A3 with stable outlook is an acknowledgement by the global investing community of the present Government’s ability to manage the economy as well as its debt and finances prudently and transparently. This is particularly so when there are tough external challenges arising from the trade war that affect not just Malaysia, but every other country as well.
IMPORTANCE OF COMMUNICATION
20. Transparent, comprehensive and effective communications is a key determinant when it comes to investment decisions,both at national and company levels.Regulators have an important role to play here. I am pleased to share that both of Malaysia’s primary market regulators, the Securities Commission and Bursa Malaysia, have a proactive approach when it comes to demanding adequate disclosure from our listed companies.The disclosure requirements in Malaysia are not just in line with international norms, they are also the leading edge in some cases.
21. The Government through Bursa Malaysia and the Securities Commission is also working to link up the domestic equity market with the Shenzhen Stock Exchange. Once the link is ready, companies can cross list in both Kuala Lumpur and Shenzhen. This collaboration will also encourage exchange of technical expertise and human capital development including in the field of IR between both bourses.This will diversify our offerings to local and regional investors, and raise the profile of our local exchange.
22. But regulators can only do so much. This is where associations of practitioners like MIRA can step into help corporates adhere to the regulations and inform both investors and the public of the relevant information.
23. The 2017 Malaysian Code on Corporate Governance states that“ongoing engagement and communication with stakeholders builds trust and understanding between the company and its stakeholders.”This is the essence of Investor Relations and its purpose.
24. To conclude, I congratulate all today’s winners. I hope this will encourage others to adopt the highest standards possible in communicating to the public and making our capital market more competent, accountable and transparent.