Alhamdulillah, Malaysia has been able to weather through 2016 despite several headwinds that included the slump in crude oil prices and weakening of the ringgit against the US dollar. We registered a decent GDP growth of 4.2% supported by private consumption, which grew 6.1% on the back of steady income growth and supportive fiscal measures.
Our financial system remains resilient against the backdrop of global uncertainties over policy adjustments in the major economies. External events including Brexit and the outcome of the US Election have raised uncertainties globally, as a result the ringgit has been weakened further. Nevertheless, the central bank has been quick to respond with prudent measures to curb outflow and the movement of the ringgit has since been stabilised.
Our domestic banking system is well-capitalised, with ample liquidity to support the financing needs of businesses and households. As a responsible Government, we had to make some hard decisions such as widening the tax base by introducing a Goods and Services Tax (GST) back in 2015, as well as rationalising or removing subsidies. They were not popular moves but necessary to strengthen our economy at a time when we needed it the most.
On the upside, the New Economic Model (NEM) introduced in 2010 is progressing well. Between 2010 and 2016, Gross National Income (GNI) has increased by nearly 50% with 1.8 million jobs created. Inflation remains low while Foreign Direct Investment (FDI) has grown steadily at 6% annually. The NEM is driven by a national development strategy that is focused on creativity and innovation. In this regard, Khazanah has, over the years, ventured into new growth segments and catalytic investments including telecommunications, healthcare, innovation and technology, agrifood, life sciences and creative and media, amongst others. The opening of Khazanah’s London office, which I officiated in May last year, is anticipated to enhance investments as well as provide opportunities for Khazanah to expand into new sources of growth.
Over the years, Khazanah has continued to record strong financial and resilient performance, and this puts it in a good position to deliver its mandate as a strategic investment fund of Malaysia. Its strategic investment in Iskandar Malaysia, for instance, has seen the area transform into a vibrant economic region, attracting RM221 billion of investments and creating more than 700,000 jobs in the past one decade. Khazanah’s core investments in key national assets have seen companies like CIMB Group Holdings Berhad, Tenaga Nasional Berhad and Telekom Malaysia Berhad expanding their respective presence regionally, putting Malaysia on the global map as reputable investors and businesses.
In my Budget 2017 speech, I introduced the Transformasi Nasional 50 (TN50) initiative, as a mechanism to embrace and shape the future of Malaysia sustainably. The Government has already begun a series of national discourses to chart the nation’s direction for the next 30 years under the TN50 plan. Part of the initiatives includes eradicating the urban-rural divide, such as improving physical and digital connectivity in rural areas, and using technology in agriculture to make farms more productive. Development, as such, must be on the basis that no rakyat will be left behind.
In this regard, Khazanah has an important role to ensure that it not only focuses on financials, but also the long term sustainable growth and societal needs of the country. I am pleased to note that The Holstein Milk Company, an investee company of Khazanah, engages contract farmers at a premium price to help them sustain their operations, as well as offers business opportunities for Malaysians to become one of their home-based dealers. Collaboration such as this is in line with the Government’s inclusion efforts, and one that is a win-win situation for all. Khazanah’s involvement in scholarship programmes via Yayasan Khazanah (YK) and Skim Latihan 1Malaysia (SL1M) have respectively provided students opportunities to further their studies and graduates to hone their skills. Since YK’s inception until end 2016, a total of 646 students have benefited from its scholarships programmes while between 2015 and 2016, a total of 5,160 graduated from the SL1M programme under Khazanah.
As Chairman of Khazanah, I would like to take the opportunity to thank all the staff of Khazanah for their dedication and hard work. I would also like to extend my appreciation to my fellow Board members for their collective efforts and contribution in steering Khazanah to greater heights.
We remain committed in Building True Value for the nation, insya-Allah, with perseverance and focus, our efforts will bear further fruit.
Dato’ Sri Mohd Najib
Tun Abdul Razak
Khazanah Nasional Berhad
Board of Directors
© 2017 Khazanah Nasional Berhad (275505-K)