RAM Forum: Emerging Risks – How Can Malaysia Steer Ahead?

Published on 03 Nov 2023.

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RAM's Chairman Datuk Kamaruddin (second from left) with the sponsors of RAM Forum, Sarina Dalik of Maybank Investment Bank Berhad,
Yeoh Ru Hann of AmBank (M) Berhad and Wang Hongwei of Credit Guarantee & Investment Facility.

RAM’s inaugural net-zero forum “Emerging Risks – How Can Malaysia Steer Ahead” held on 31 October 2023 successfully hosted more than 350 delegates and 19 expert speakers from the investment community. The forum discussed various imminent risks on the macroeconomic, financial and climate change fronts, exploring how Malaysia can thrive amid these risks and crossroads.  

Datuk Kamaruddin Taib, RAM’s chairman in his opening remarks acknowledged the myriad of challenges, highlighting that “In every crisis, there is potential for resilience and innovation. This cognisance by the government has led to Malaysia’s new masterplans that seek to set a pathway of sustainable development, good governance and inclusivity”. He added that “while we may be too slow in cutting emissions, a herculean but not impossible whole-of-the-world approach” is needed to fight climate change and help meet the Parisian climate goals.

The forum’s morning panel sessions saw lively debate on the US-China trade tensions, its repercussions on supply chains, investments and FDI flows, as well as the weakening ringgit amid high US interest rates. Among the panelists, University Malaya’s Prof Dr Evelyn Shyamala said, “Amid a growing interdependence between trade and geopolitics, the securitisation of supply chains by diversifying outside China is more pertinent. We should also look at regional arrangements beyond ASEAN in a multi-alignment strategy that hedges risk”. While Dr Apurva Sanghi, the World Bank’s Lead Economist for Malaysia acknowledged Malaysia has benefitted from the tensions, upping its share of semiconductor exports to both the US and China but the country “has not been able to move up the semiconductor value chain despite having 8% share of the global integrated circuit market but just 0.07% of the most advanced patents in the same.” 

Economists on the panels urged the government to improve and strengthen supply chains with domestic firms, highlighting the lack of incentives for Direct Domestic Investment (DDI) relative to FDI.  A pragmatic investment strategy to attract FDI that is aligned with the targeted supply chain is also needed.  On the monetary front, panelists agreed that the ringgit is currently undervalued with its weakness primarily caused by high US interest rates, wherein the OPR is not an effective mitigating tool. Economists suggest the central bank look into allowing free float of the ringgit and other structural improvements to enhance its long-term valuation.     

The second part of the forum trained its attention on climate change and how the financial community is empowered to fund and drive the net-zero agenda.  Panelists agreed that clear regulations and guidelines are needed to guide companies to transition to net zero. While a plethora of new regulations have been introduced globally, Azreen Idayu Zainal, General Manager of Sustainability from the Securities Commission, Malaysia commented that, “a phased and facilitative approach to implementing regulations” is desired, supported by “tone from the top where organisations need leadership on board governance, to drive sustainability”. She also added that in the area of sustainable financing, there are national and ASEAN-aligned regional standards, because the latter facilitates cross-border financing.  Bertrand Jabouley, Asia-Pacific Head of Sustainable Finance at S&P Global Ratings Singapore Pte Ltd opined, “To be in a position to read the sustainability roadmap, you need a detailed diagnostic, and to do that, you need data…and regulation to impose quality disclosures as a key enabler to reach ESG objectives.” Panelists agreed that given that ESG performance is now an inherent part of evaluation for financiers and asset managers, it is now a reputational risk for companies not to measure and disclose their ESG performance. Data and solutions need to be made more accessible especially to encourage MSMEs to adapt to a greener way of doing business, given cost is a hurdle for smaller companies. 

One such solution in the market today is the RAM Carbon Management Solutions (carbon.ram.com.my), a fully online and cost-effective solution suite for assisting companies to measure, monitor and report their carbon emissions and decarbonisation efforts.  

The forum closed with an extempore presentation of a nature-based project (Kenyir for Life, kenyirforlife.com) by biologist, Dr Reuben Clements from Nature-based Solutions Sdn Bhd.  As a responsible corporate citizen, RAM aims to create awareness of not just decarbonisation, but also the importance of conserving biodiversity for future generations.  

The RAM Forum was sponsored by the Credit Guarantee & Investment Fund, Ambank (M) Berhad and Maybank Investment Bank Berhad and the net-zero event was made possible by carbon credits sponsored by MVGX Tech Pte Ltd. 

 

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my

 

About RAM Rating Services Berhad (RAM Ratings)

Established in 1990, RAM Ratings is a leading credit rating agency registered under the Securities Commission’s Guidelines on Credit Rating Agencies. In addition to the provision of credit ratings for corporate bonds and sukuk and their issuers, RAM Ratings also provides research and publications on Islamic finance, fixed income and macro-economic and industry analysis as well as data analytics relating to credit risk, counterparty assessments and other related domains. 

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