Assalamualaikum Warahmatullahi Wabarakatuh, Good Evening and Salam Satu Malaysia.
Yang Berbahagia Datuk Tong Kooi Ong; Chairman, The Edge Media Group,
Mr. Ho Kay Tat; Group CEO & Publisher, The Edge Media Group,
Ladies and Gentlemen,
I’m delighted to be here tonight. It’s been three years since the launch of the Edge Billion Ringgit Club. Looking round the room, it seems like there are more members now than ever before. That is good news for you – and the supply side economists among us will argue it is good news for Malaysia, too.
The recipients of tonight’s awards are well deserving. They have been assessed using transparent financial criteria, including profits, Returns on Investment and Returns on Equity. They have earned their place. I would therefore like to congratulate all the members of The Edge Billion Ringgit Club for 2013, especially those who will be winning awards tonight.
However, this event is about much more than trophies. Over the last three years, it has turned a spotlight onto some of Malaysia’s most successful companies. That in turn has encouraged greater efficiency, more transparency, and better governance of our public companies. The benefits will be felt far beyond these four walls.
Ladies and Gentlemen,
The members of this club made their billions during Malaysia’s economic modernization; a period of great change. Over the past decades, our economy shifted from extraction to industrialization, from export of raw commodities to manufacturing and services.
Our post-independence economic success has rested on a simple formula: a close partnership between capital and labour, with government as an enabler.
The state set a clear direction for the economy, using a mix of central planning and market economics to drive Malaysia’s development.
It also spent heavily to create the conditions in which businesses can flourish; investing in infrastructure, in people, in subsidies and incentives. And, since the Asian financial crisis, the Government has been the main engine of growth.
These structural shifts have been accompanied by significant benefits: per capita GDP has increased rapidly, and we are on track to reach developed nation status. But there are limits to how long the Government can continue to be being the main engine of growth; and how far public consumption should be pushed given the current levels of household debts.
In the longer term, excessive household debt can become a national problem, reducing disposable income as interest payments soak up a greater share of people’s salaries. And although our underlying position is strong – with good growth, record foreign reserves, a growing proportion of domestically financed debt and clear deficit reduction targets – we want to ensure that our public finances remain in order.
This is part of a wider conversation about Malaysia’s economic future. As we head toward high income nation status, it is time to ask ourselves not just ‘where next?’ – but also ‘how will we get there’? As we open up our economy and prepare our businesses to compete in a more interdependent global marketplace, it is worth looking again at our recipe for success; and asking ourselves what kind of economy we want to build next.
The economic transformation programme gives us a glimpse of Malaysia’s immediate future: liberalisation, divestment and competition will change the structure of our economy, reducing the role of the state and allowing the private sector to assume greatest responsibility for growth.
This recalibration will complete our economic modernization; and it will bring significant opportunities. Businesses –including many represented here today – will play a lead role in the entry point projects, and provide the bulk of the capital across the national key economic areas. Private investment will continue to pull ahead of public investment; and policy reforms will continue to open up new opportunities. With these opportunities, however, come new responsibilities.
As the global economic balance shifted away from developed countries over the past few years, policymakers became preoccupied with the quality of growth. China’s attempts to focus the next phase of its development on quality and efficiency represents one strain of this anxiety; so do the ongoing conversations about the role of financial sector in Western economies, as evidence uncovers manipulation of interbank lending rates, and the catalytic role of financiers in the credit crunch, emerges.
Economists are also asking whether the business model that puts shareholder value above all else is truly sustainable: not just for companies, but for whole economies. In the US, for example, the relationship between corporate profits and business investment appears to have broken down; profits are at record highs, but investment is not keeping pace. It appears that the focus on short-term results, rather than the long-term health of the company, is warping the investment landscape: one study found that privately listed companies invest almost twice as much as publicly listed companies.
The common thread here is corporate responsibility; of accountability not just to the immediate bottom line, but also to the society which enables transactions to take place.
One of the primary lessons from the 2008 financial crisis was that short-term business decisions can fatally undermine the health not just of companies, but of whole economies. It is incumbent on policymakers to guard against them, and on corporate leaders to avow them. In laying the foundations for high-income status, we must all be careful not to encourage unsustainable growth.
From the government side, we will honour our commitment to secure the public finances, with fiscal reforms to secure Malaysia’s position. We will further rationalize subsidies, broaden the revenue base and manage spending through the infrastructure pipeline. We will stick to both our debt ceiling and our deficit reduction target, ie. 3% by the year 2015.
We will also work to ensure Malaysia’s growth industries rest on firm foundations. We want a vibrant and dynamic financial sector; with the launching of the Tun Abdul Razak Exchange and the linking of Bursa Malaysia to the Bangkok and Singapore exchanges showcasing our ambition. But we have also set up clear regulatory structures, with Bank Negara assuming greater supervisory oversight and enhanced financial surveillance.
However, government alone cannot ensure sustainable growth. It is also up to you, Malaysia’s corporate leaders, to continue to show leadership. It is the cumulative effect of your individual business, investment and ethics decisions that will set the tone for the whole economy.
With that in mind, I ask that you remain committed not just to maximizing your returns on investment and equity, but also to building a more sustainable economy for Malaysia; investing in people as well as projects, and taking business decisions befitting our long-term ambitions, not just short-term aims.
The private sector will be the engine that drives Malaysia’s future growth. As we raise our sights to look beyond developed nation status, I ask that you join us to ensure that no Malaysian is left behind. One of Malaysia’s great strengths is our diversity; we should make it one of the strengths of our economy too, by giving all Malaysians a share in our future. An economy founded on growth with equity and inclusiveness will deliver better outcomes: with economic and social dividends more widely shared amongst the people, and a brighter outlook for the nation as a whole.
By working together and putting sustainability first, we can ensure the next stage of Malaysia’s economic development is more lucrative, and more inclusive, than the last. Of course, that may mean that there is more competition for next year’s awards, and more members of the Billion Ringgit Club. But since my esteemed friends at the Edge are picking up the catering bill, I am quite relaxed about the prospect!
Once again, let me congratulate all the winners tonight, and wish you every success in the months and years ahead.
Wabillahitaufik Walhidayah Wassalamualaikum Warahmatullahi Wabarakatuh.