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Our diverse investments and initiatives are underpinned by our main imperative: Advancing Malaysia. This means delivering strong returns through our portfolio of investments and in doing so, it is vital that we remain guided by a sustainable approach that puts long-term value first.
2022 was undeniably challenging not only for Khazanah but also other domestic and international institutional investors and asset owners. The volatility that shook global markets brought upon an uncertain macroeconomic environment where we saw a negative 5.7% Net Asset Value return for our Investments Portfolio.
I would like to take this opportunity to extend my appreciation to the team here in Khazanah, as through collective effort and commitment, we navigated the downturn by remaining invested, being disciplined in deploying and monetising across asset classes and upholding active stewardship of our portfolio companies, keeping our value creation objectives on track and positioning us to rebound strongly in the future.
Advancing Malaysia also includes looking beyond financial returns. As part of nation-building, our mandate is to drive socio-economic value and impact by developing new growth areas for Malaysia, thereby driving the competitiveness and performance of key companies to grow them into national champions. This in turn spurs innovation across the corporate landscape.
An example is Farm Fresh, one of our long-term portfolio companies. Farm Fresh was a small but ambitious dairy player in 2010, on a mission to disrupt the industry by imploring new methodologies to increase yield and pioneering an innovative distribution method through its home dealer network, enabling access to fresh dairy for rural communities. Fast forward to 12 years later, they have executed one of the most successful IPOs in Malaysia’s history, putting the company in a position to expand their presence internationally.
This success story, among others, is a testament to the value of adopting a longer-term view towards investments; an approach which will continue to guide our strategies and actions.
Our continued commitment to deliver long-term value for Malaysians is governed by the foundations of good governance, in line with the aspirations of Malaysia MADANI.
To illustrate, the Advancing Malaysia strategy is like building a house. The floor of the house represents us building national resilience while the ceiling represents the competitiveness and growth of the nation. In terms of Advancing Malaysia, Khazanah as the builder of the house endeavours to strengthen the floor and raise the ceiling in a sustainable manner and with proper governance.
We are energised by the prospect of working with the government to drive the nation’s growth and development.
We have made firm progress on Dana Impak, a RM6 billion allocation earmarked specifically to invest in areas that aim to increase Malaysia’s economic competitiveness and build national resilience.
In 2022, RM500 million worth of new projects were identified to deliver socio-economic benefits to Malaysians, spanning various impact areas including digital upskilling, boosting investments in local entrepreneurs as well as the venture capital ecosystem and agrifood sectors. Our various initiatives aimed to support the local start-up ecosystem of entrepreneurs, start-ups, venture capital and corporate venture programmes are captured under the Future Malaysia Programme banner, which involves collaboration with both domestic and international partners.
In line with this effort, we are working with various partners such as venture capital funds, accelerator programmes and global innovation platforms to create a vibrant local start-up ecosystem.
To complement this, we have partnered with Sunway Education Group under Dana Impak to establish 42 Malaysia, an innovative peer-to-peer computer science school that provides Malaysians with a unique education opportunity, free-of-charge. With the goal of developing 10,000 skilled tech talents nationwide within the next 10 years, 42 Malaysia will provide Malaysians with in demand skills for access to high quality jobs, leading to improved livelihood while spurring a competitive industry landscape that would drive the economic growth for Malaysia.
Through the lasting social impact it seeks to create, the Dana Impak portfolio embodies our overarching focus on sustainability, continuing a longstanding journey that started in 2005 with our GLC Transformation (GLCT) Programme, evolved to include sustainability-themed investment opportunities, and now sees us playing a leading role in driving ESG adoption across Malaysia’s corporate landscape. In 2022, we launched our Shareholder Expectations and Investment Stewardship statement, detailing six core expectations of our portfolio companies, including their adoption of sustainable business practices.
With the aspiration of shaping an equitable and responsible transition towards a sustainable future for Malaysia, Khazanah’s Sustainability Targets outlines eight time-based targets across the ESG spectrum which includes 30% representation of women in our Board and senior leadership by 2025, enhancing the competencies of our investee companies’ Boards by 2024 and achieving Net Zero emissions by 2050.
The execution of our strategy to create sustainable value is guided by the principles of Just Transition, Khazanah’s Sustainability Framework and our own Guiding Principles for sustainability to ensure that everything we do from investment strategies to internal practices achieves positive and improved outcomes that will not only benefit the economy but society as a whole.
Casting an eye towards the future, there is strong reason to believe that macroeconomic and geopolitical uncertainties will persist through 2023. This equates to a challenging investment environment across asset classes that will continue to threaten our short-term performance.
Amidst these uncertainties, we will remain focused on portfolio rebalancing towards enhancing our diversification, thereby leading to an improved risk-return profile, while continuing to monitor global markets for opportunities in public equity, private equity and real assets. This is our strategy to build portfolio resilience while we continue our value creation and stewardship of our key portfolio companies, with the intention to grow Khazanah’s portfolio for the long-term and place Khazanah on firmer footing and higher capacity to fund our mandate.
Nevertheless, the turbulent operating environment sharpens our focus on investing in opportunities that have the potential to deliver long-term growth, irrespective of current market conditions.
Ultimately, our strategy of Advancing Malaysia will provide clarity to our actions, guiding our investments in catalytic sectors, the Malaysian and global capital markets as well as local communities, united by the imperative of building a stronger and more sustainable nation for the benefit of all Malaysians.
On behalf of the Khazanah family, I would like to extend our warmest welcome to our new Chairman, Dato’ Seri Anwar Ibrahim. It is an honour to have the Prime Minister chair our Board. I would also like to take this opportunity to convey my sincerest gratitude to the Chairman and the Board for their continued guidance and wisdom.
Together, we at Khazanah are excited to play a part in strengthening the nation, in line with the Malaysia MADANI aspirations.
