Dato’ Sri Mohd Najib Tun Abdul Razak
Chairman
Khazanah Nasional Berhad

Malaysia continues to grow stronger on the economic front, enhancing the well being of the people

Alhamdulillah, Malaysia certainly has many things to be grateful for. We are progressing well, both at home and on the international stage. Indeed, Malaysia is moving further forward as a nation, driven by an increasingly sustainable and inclusive high-income economy and enhanced global competitiveness.

Our economy remains on its growth track, posting a stronger GDP growth of 5.9% in 2017 on the back of private sector demand with support from the external sector. Growth is expected to remain favourable in 2018, with domestic demand remaining as the key driver. The anticipated faster expansion in the global economy would continue to benefit Malaysian exports, with positive spill-overs to the domestic economic activity.

As a trading nation, we are achieving greater heights. Malaysia’s trade growth in 2017 was at the highest in 13 years, surging 19.4% to RM1.774 trillion, compared to RM1.486 trillion in the previous year. Exports grew significantly by 18.9%, the strongest growth since 2005, to reach a new high of RM935.39 billion, thanks to strong demand across several economic sectors.

Our capital market, a key facilitator for financing business growth, has continued to grow from strength to strength. The benchmark index, FBM KLCI has increased 105% since 2009 while market capitalisation has jumped by 187%. In 2017, foreign net fund inflow achieved a positive RM10.8 billion, the highest since 2012. The gross issuance of corporate bonds hit a record high of RM124.9 billion in 2017 while the Malaysian Islamic Capital Market as a whole – of which our sukuk market is the largest globally – grew 11.9% to reach a size of RM1.9 trillion versus RM1.7 trillion a year ago. In addition, our ringgit was one of the best performing currencies in Asia, appreciating 10.4% against the greenback in 2017. All these indicators reflect the positive sentiment among investors and a recognition of Malaysia’s excellent economic and financial fundamentals.

The strength of our capital economy provided us with the leverage to strengthen our people economy, including improvement of living standards, upscaling of skills and knowledge transfer among our youthful and an increasingly highly-educated population, and higher productivity. Malaysia’s inflation has been kept low, averaging at 3.7% in 2017, while the diversity of the Malaysian economy has created more employment.Between 2009 and 2016, a total of 2.26 million jobs have been created, of which more than one million are high income employment. It also represents 69% of the 3.3 million jobs we target to create by 2020.

Our progress has achieved international recognition as well. The World Economic Forum’s Global Competitiveness Index for 2017-2018 ranks Malaysia in third for Strength of Investor Protection, fifth for Pay and Productivity, fifth for our low Burden of Government Regulation, and 14th for our Quality of Education System. The World Bank, meanwhile, expects Malaysia to achieve high-income status in the next few years, adding that the Malaysian economy was progressing from a position of strength.

It is important to note that Malaysia’s growth story is not an overnight effort. From the start, we were willing to make tough decisions, decisions that were the right ones for the Malaysian economy and the rakyat. For example, the gradual reduction in petrol subsidies has saved us millions of ringgit, while the introduction of GST (Goods & Services Tax) has generated higher tax income for the country. The benefits of the capital economy must always have a spill over effect on the people economy, and in this sense, we have seen the income per capita of Malaysians improving to RM40,713 in 2017 from RM27,819 in 2010, and is expected to improve further in 2018 to RM42,777.

Khazanah, as the strategic investment fund of the Government of Malaysia, has continued to play its role in our progress as an economically vibrant and globally competitive nation. Khazanah’s operations and investments are located in key markets across the world, and I am pleased to note that many companies under Khazanah have become competitive regional, or even global players. These companies include IHH Healthcare Berhad, the second largest private healthcare provider in the world; CIMB Group, a leading ASEAN universal bank and one of the largest investment banks in Asia; and Axiata Group Berhad, which is one of the leading telecommunications groups in Asia with 350 million subscribers across 11 countries.

At the same time, Khazanah has been actively involved in a broad range of impactful Corporate Responsibility (CR) initiatives through its foundation, Yayasan Hasanah, and related entities Yayasan Khazanah, Khazanah Research Institute and Think City. Khazanah and Yayasan Hasanah have collectively spent RM1.2 billion on CR initiatives since 2006, including in education, community development, and the environment. Khazanah supports the country’s national development agenda by playing an active role in human capital development, including scholarships awards through Yayasan Khazanah, graduate training through its contribution to Skim Latihan 1Malaysia (SL1M), and enhancing the quality of education through the Trust School Programme. Khazanah Research Institute provides important policy inputs through its research on various pressing issues of the country. Khazanah’s work in public spaces, most notably the Taman Tugu project, and urban regeneration and heritage conservation through Think City, are important initiatives to make our cities and community areas more liveable while preserving and developing their heritage, culture and architecture.

As Chairman of Khazanah, I would like to take the opportunity to thank the Board of Directors, senior
management and staff of Khazanah for their efforts and contributions to Malaysia’s continued progress and development. As always, we remain committed in building true value for Malaysia and the rakyat, insyaAllah.

Thank you.

Dato’ Sri Mohd Najib Tun Abdul Razak

Chairman
Khazanah Nasional Berhad

Khazanah Nasional Consulting (Beijing) Company Limited

Khazanah opened the Beijing office in 2008 to build an investment presence in China and participate in the country’s growth story. The Beijing office was Khazanah’s first office established overseas. It also provides a platform for building closer bilateral economic ties between Malaysia and China.

An Overview of an Institution

Khazanah continues to grow as an institution, underpinned by a robust governance and accountability framework. Our Board of Directors, led by our Chairman, Dato’ Sri Mohd Najib Tun Abdul Razak, guides the efforts of our management in executing our mandate.

To add The Khazanah Report 2017 onto your home screen: tap and then Add to Home Screen