KUALA LUMPUR – The Ministry of Finance (MoF) believes that Malaysia’s 2022 first quarter (1Q22) gross domestic product (GDP) growth performance and economic indicators are suggests beginning of economic recovery.
Bank Negara Malaysia’s report of Malaysia’s GDP growth by 5% in 1Q22 prompted the MoF to state that the country’s economy is anticipated to expand between 5.3% and 6.3% this year.
In the MoF’s 95th People’s Financial Report released recently, the ministry explained that the growth projection will be bolstered by increased domestic demand, more economic activity, and further recovery of the local labour market.
Furthermore, MoF’s report added that the tourism sector will also rebound since the reopening of the international borders in April of this year.
“Increase of trade activity will also have a favourable impact on the services sector,” it remarked.
Additionally, growth was also aided by the expansionary policies of Budget 2022, projects with large multiplier effects, and other development programmes under the 12th Malaysia Plan.
However, the report cautions about staying attentive to current global and geopolitical events which may impair Malaysia’s economic recovery momentum. The highlights are especially inflation as commodity prices continue to hike and supply chain disruptions.
In its report, the MoF explained that the government will continue to monitor developments of economic risks in order to ensure external shocks are mitigated so it would not severely impact the well-being of Malaysians and its businesses.
On path for SDG targets
Apart from that, the report also talked about how the ministry is placing emphasis on the awareness of environmental, social and governance (ESG), sustainable development goals (SDGs), and principles for good governance (PGG) in order to achieve targets of diversity, social equity, environmental protection and helping the underprivileged.
“To enhance awareness of SDGs, the MoF has taken steps that includes identifying existing financial funding gaps for SDG-related programmes and projects on ministerial levels.
“The ministry has aligned all programmes and projects under the Ministry Development Expenditure to the relevant SDGs,” the report explained while adding that these measures are also part of efforts to create the principle of sustainability in public spending.
There is a RM450 million allocation in Budget 2022 by MoF to aid in environmental and biodiversity conservation. This includes initiatives like tree planting and nature conservation projects.
The ministry has also started the Malaysia Sustainable Development Goals Trust Fund (MySDG Trust Fund) through collaborating with the United Nations. The fund received an initial allocation of RM20 million.
The report further elaborated that for PGG, the good governance principles initiative is meant to strengthen business resilience for coming challenges, particularly for providing guidelines to SMEs in the government-linked investment companies (GLICs) ecosystem for Malaysia to achieve the targeted ESG and SDG objectives.
“This is crucial to ensure that firms are prepared for an increase of market demands when it comes to ESG, where the principles of good governance urges for incorporating ESG regulatory structures in their investment plans.
“Another equally crucial matter which needs emphasis is the need to expand capacity and competency on ESG matters to ensure the sustainability of these efforts on the long-run,” it added.
According to the MoF, data shows that firms prioritising ESG issues are able to cut costs, increase staff productivity, mitigate various risks and further improve business opportunities.
The COVID-19 pandemic had also demonstrated that the firms which are always prepared and practice good governance have shown a competitive advantage in terms of resilience, which boosts their profitability and viability for the long-term.
MoF’s People’s Financial Report is a rebranding of the Laksana report (the Unit for the Implementation and Coordination of National Agencies on the Economic Stimulus Package) that was previously published weekly since April 2020.
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