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09 Sep 2021 | Monetary Policy Statement | https://www.bnm.gov.my/-/monetary-policy-statement-09092021 | null | null |
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Monetary Policy Statement
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Monetary Policy Statement
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At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.
The global economy continues to recover, supported by improvements in manufacturing and services activity. The strength of the recovery remains varied across countries mainly corresponding to their vaccination coverage, relaxation of containment measures and degree of policy support. Economies with better progress in their vaccination programmes have eased containment measures, enabling a continued recovery in domestic activity. Sizeable fiscal and monetary stimulus in several major economies continue to support the recovery momentum. Financial conditions also remain supportive of growth. Overall, the balance of risks to the global growth outlook is tilted to the downside. This is attributed mainly to uncertainty over the path of the pandemic amid the emergence of variants of concern, and potential risk of heightened financial market volatility amid adjustments in monetary policy in major economies.
For the Malaysian economy, the re-imposition of nation-wide containment measures to curb the resurgence in COVID-19 cases had dampened the growth momentum. However, the recent gradual relaxations for more economic sectors to operate, along with higher adaptability of firms to the new operating environment and continued policy support, would partly mitigate the impact and allow the economy to resume its recovery path. Moving forward, the further easing of containment measures, rapid progress of the domestic vaccination programme and continued expansion in global demand will support the growth momentum going into 2022. Risks to the growth outlook, however, remain tilted to the downside due to external and domestic factors. These include delays in the easing or re-imposition of broad-based containment measures due to the impact of new COVID-19 variants of concern and a weaker-than-expected global growth recovery.
Year-to-date, headline inflation has averaged 2.3%, and is projected to average between 2.0% and 3.0% for 2021. Underlying inflation, as measured by core inflation, is expected to remain subdued, averaging between 0.5% and 1.5% for the year, amid continued spare capacity in the economy. The outlook, however, continues to be subject to global commodity price developments and policy measures to alleviate the cost burden of the public. Underlying inflation, however, is expected to remain relatively subdued in 2022.
The MPC considers the stance of monetary policy to be appropriate and accommodative. In addition, fiscal and financial measures will continue to cushion the economic impact on businesses and households and provide support to economic activity. Given the uncertainties surrounding the pandemic, the stance of monetary policy will continue to be determined by new data and information and their implications on the overall outlook for inflation and domestic growth. The Bank remains committed to utilise its policy levers as appropriate to foster enabling conditions for a sustainable economic recovery.
Bank Negara Malaysia
9 September 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
07 Sep 2021 | International Reserves of Bank Negara Malaysia as at 30 August 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-30-august-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 30 August 2021
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International Reserves of Bank Negara Malaysia as at 30 August 2021
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The international reserves of Bank Negara Malaysia amounted to USD116.3 billion as at 30 August 2021. The higher reserves level mainly reflects an additional allocation of Special Drawing Rights (SDR) to Malaysia of SDR3.5 billion, equivalent to USD5.0 billion, by the International Monetary Fund (IMF). The SDR allocation will provide additional liquidity to the global financial system, bolster reserves, build confidence, and enhance the resilience of the world economy[1]. The reserves position is sufficient to finance 8.3 months of retained imports and is 1.3 times total short-term external debt.
[1] The overall IMF additional allocation of SDRs amounted to SDR456 billion (equivalent to about USD650 billion) and took effect on 23 August 2021. This allocation is distributed to all member countries in proportion to their respective quota share in the IMF. The IMF press statement can be found here.
Related Assets
BNM Statement of Assets & Liabilities - 30 August 2021
Bank Negara Malaysia
7 September 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
02 Sep 2021 | BIS Innovation Hub and central banks of Australia, Malaysia, Singapore and South Africa will test CBDCs for international settlements | https://www.bnm.gov.my/-/centralbanks-test-cbdcs | null | null |
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BIS Innovation Hub and central banks of Australia, Malaysia, Singapore and South Africa will test CBDCs for international settlements
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BIS Innovation Hub and central banks of Australia, Malaysia, Singapore and South Africa will test CBDCs for international settlements
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JOINT MEDIA RELEASE
Project Dunbar will develop prototypes for shared platforms that will enable international settlements with digital currencies issued by multiple central banks.
System aims to allow direct transactions between institutions, reducing costs and increasing speed.
Results will inform development of global and regional platforms and support G20 roadmap for improving cross-border payments.
The Bank for International Settlements Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, Monetary Authority of Singapore and South African Reserve Bank will join forces to test the use of central bank digital currencies (CBDCs) for international settlements.
Led by the Innovation Hub’s Singapore Centre, Project Dunbar aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs. These multi-CBDC platforms will allow financial institutions to transact directly with each other in the digital currencies issued by participating central banks, eliminating the need for intermediaries and cutting the time and cost of transactions.
The project will work with multiple partners to develop technical prototypes on different distributed ledger technology platforms. It will also explore different governance and operating designs that would enable central banks to share CBDC infrastructures, benefitting from the collaboration between public and private sector experts in different jurisdictions and areas of operation.
Project Dunbar’s work will explore the international dimension of CBDC design and support the efforts of the G20 roadmap for enhancing cross-border payments. Its results, expected to be published in early 2022, will inform the development of future platforms for global and regional settlements. Technical prototypes of the shared platforms, developed in collaboration with different technology partners, will be demonstrated at the Singapore FinTech Festival in November 2021.
“Project Dunbar brings together central banks with years of experience and unique perspectives in CBDC projects and ecosystem partners at advanced stages of technical development on digital currencies. With this group of capable and passionate partners, we are confident that our work on multi-CBDCs for international settlements will break new ground in this next stage of CBDC experimentation and lay the foundation for global payments connectivity,” said Andrew McCormack, Centre Head of the BIS Innovation Hub Singapore Centre.
“We are pleased to collaborate with the BIS Innovation Hub and the central bank partners on this important initiative to explore how a shared platform for multiple CBDCs could be used to improve the speed, cost and transparency of wholesale cross-border transactions. Enhancing cross-border payments has become a priority for the international regulatory community and something that we are also very focused on in our domestic policy work,” said Michele Bullock, Assistant Governor (Financial System), Reserve Bank of Australia.
“The multi-CBDC shared platform explored under Project Dunbar has the potential to leapfrog the legacy payment arrangements and serve as a foundation for a more efficient international settlement platform. We hope the project will spur greater public-private collaboration to enable fast and frictionless cross-border payments, combining both the benefits of distributed ledger technology and the efficiency of a common platform,” said Assistant Governor Fraziali Ismail, Bank Negara Malaysia.
“Project Dunbar’s work on using multi-CBDC platforms to facilitate seamless multi-currency fund transfers is a significant contribution to the global vision to make payments cheaper and faster. The findings on how a common platform can be governed effectively and managed efficiently will shape the blueprint of the next generation payment systems,” said Sopnendu Mohanty, Chief FinTech Officer, Monetary Authority of Singapore.
“After years of mostly domestic research and exploration, we are very pleased to see that these common insights about the need to explore cross-border CBDC payments and interoperability are coming together internationally. We are particularly excited to be part of Project Dunbar given the SARB’s role in operating the regional wholesale settlement system in the Southern African Development Community,” said Deputy Governor Rashad Cassim, South African Reserve Bank.
Bank Negara Malaysia
BIS Innovation Hub
Monetary Authority of Singapore
Reserve Bank of Australia
South African Reserve Bank
2 September 2021
Bank Negara Malaysia
2 September 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
30 Aug 2021 | Monetary and Financial Developments in July 2021 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-july-2021 | https://www.bnm.gov.my/documents/20124/4495210/i_en.pdf | null |
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Monetary and Financial Developments in July 2021
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Monetary and Financial Developments in July 2021
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Headline inflation declined to 2.2% in July
Headline inflation declined to 2.2% in July (June: 3.4%), reflecting lower inflation for transport, as well as housing and utilities respectively.
The lower housing and utilities inflation (July y-o-y: 0.7%; June: 3.2%) was mainly due to the implementation of the three-month electricity tariff rebate, beginning July 2021.
Underlying inflation, as measured by core inflation, remained stable at 0.7%.
Moderate IPI growth at 1.4% following imposition of FMCO
Overall IPI in June recorded moderate growth of 1.4% as FMCO restrictions limited production activity to only essentials and those involved in global value chains. Electricity production also declined amid lower demand during FMCO.
However, manufacturing production continued to expand due to firms' adaptability through extending working days and operationalising new production capacity, particularly among E&E, and selected primary-related industries.
Continued moderation in net financing growth in July
Net financing growth moderated to 4.0% in July (June: 4.3%) due to lower outstanding loan growth (July: 3.0%, June: 3.4%) and outstanding corporate bond growth (July: 6.5%, June: 6.9%).
Outstanding household loans grew by 4.2% (June: 5.2%), with moderation across all loan purposes amid the containment measures and mobility restrictions.
For businesses, outstanding loan growth increased to 1.3% (June: 0.9%), supported by higher working capital loan growth (July: 2.5%, June: 1.6%).
Domestic financial markets continue to be influenced by COVID-19 developments
In July, financial markets were affected by concerns surrounding the global and domestic growth outlook following the rise in the spread of COVID-19.
Globally, these concerns led to an increase in demand for safer assets, contributing to a decline in US Treasury yields and a broad-based strengthening of the US dollar. In line with this, the 10-year MGS yield declined by 11.3 basis points and the ringgit depreciated by 1.8% against the US dollar.
The FBM KLCI had also declined by 2.5% as investor sentiments were affected by the rise in COVID-19 infections domestically and the imposition of stricter containment measures (FMCO) in Kuala Lumpur and Selangor.
Banking system liquidity position remained supportive of financial intermediation
The banking system continued to maintain healthy liquidity buffers with the liquidity coverage ratio (LCR) remaining strong in July (June-21: 149.1%).
Banks’ funding profile remained stable amid sustained growth in deposits as individuals, businesses and non-bank financial institutions continue to maintain precautionary cash buffers.
Asset quality remains supported by sound risk management practices of banks
Overall gross impaired loans ratio increased marginally to 1.7% (Jun-21: 1.6%), driven by the household segment.
Banks continue to set aside additional provisions against potential credit losses, which currently stand at 1.9% of total banking system loans.
Banks continue to facilitate repayment assistance for viable borrowers facing temporary financial difficulties amid credit risk outlook that remains challenging.
See also:
Press release [PDF]
Related Assets
Monthly Highlights and Statistics in July 2021
Bank Negara Malaysia
30 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
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b
-2
2
M
a
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2
2
A
p
r-
2
2
M
a
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-2
2
J
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-2
2
J
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l-
2
2
A
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-2
2
S
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p
-2
2
O
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t-
2
2
N
o
v
-2
2
D
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-2
2
J
a
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-2
3
F
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b
-2
3
M
a
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2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
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2
2
J
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2
2
A
u
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2
2
S
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p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
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2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
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y
2
2
J
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2
2
J
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2
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2
3
M
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3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Aug 2021 | Detailed Disclosure of International Reserves as at end-July 2021 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-july-2021-1 | null | null |
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Detailed Disclosure of International Reserves as at end-July 2021
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Detailed Disclosure of International Reserves as at end-July 2021
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In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD111,059.5 million, while other foreign currency assets amounted to USD183.5 million as at end-July 2021. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD4,597.3 million. The short forward positions amounted to USD7,464.2 million while long forward positions amounted to USD180 million as at end-July 2021, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,371.4 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD386.4 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-July 2021, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (31 July 2021)
Bank Negara Malaysia
30 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
20 Aug 2021 | International Reserves of Bank Negara Malaysia as at 13 August 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-13-august-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 13 August 2021
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International Reserves of Bank Negara Malaysia as at 13 August 2021
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The international reserves of Bank Negara Malaysia amounted to USD111.3 billion as at 13 August 2021. The reserves position is sufficient to finance 7.9 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 13 August 2021
Bank Negara Malaysia
20 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
13 Aug 2021 | Economic and Financial Developments in Malaysia in the Second Quarter of 2021 | https://www.bnm.gov.my/-/economic-and-financial-developments-in-malaysia-in-the-second-quarter-of-2021 | https://www.bnm.gov.my/documents/20124/4325086/2Q_table_en.pdf, https://www.bnm.gov.my/documents/20124/4325086/2Q2021_GDP_Slides.pdf | null |
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Economic and Financial Developments in Malaysia in the Second Quarter of 2021
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Economic and Financial Developments in Malaysia in the Second Quarter of 2021
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The Malaysian economy expanded by 16.1% in the second quarter (1Q 2021: -0.5%)
The Malaysian economy grew by 16.1% in the second quarter (1Q 2021: -0.5%). Economic performance was supported mainly by the improvement in domestic demand and continued robust exports performance. The strong growth also reflected the low base from the significant decline in activity during the second quarter of 2020. Economic activity picked up at the start of the second quarter, but slowed down thereafter, following the re-imposition of stricter containment measures nationwide under Phase 1 of the Full Movement Control Order (FMCO). All economic sectors registered an improvement, particularly the manufacturing sector. On the expenditure side, growth was driven by higher private sector spending and strong trade activity. On a quarter-on-quarter seasonally-adjusted basis, the economy registered a decline of 2.0% (1Q 2021: 2.7%), weighed by the tighter containment measures. Governor Datuk Nor Shamsiah said “While the containment measures weighed on growth, greater adaptability to restrictions and ongoing policy support have partly mitigated the impact.”
As expected, headline inflation increased to 4.1% during the quarter (1Q 2021: 0.5%), due mainly to the base effect from fuel prices, as well as the lapse in the effect from the tiered electricity tariff rebate. Core inflation remained stable at 0.7% during the quarter (1Q 2021: 0.7%).
Exchange rate developments
The ringgit appreciated by 0.1% against the US dollar in the second quarter of 2021. This was largely due to the weakening of the US dollar in the earlier part of the quarter as a result of declining real US Treasury bond yields which led investors towards higher-yielding assets. However, expectations for a faster pace in monetary policy normalisation following the June Federal Open Market Committee (FOMC) meeting, which led to a slight rebalancing of investors’ portfolios towards US dollar-denominated assets at the end of the quarter. Since 1 July, the ringgit has depreciated by 1.7% against the US dollar (as at 9 August). This depreciation was in line with the performance of most other regional currencies amid the broad strengthening of the US dollar. Going forward, as uncertainties linger around the momentum of global and domestic economic recovery, the ringgit is expected to continue to be exposed to periods of heightened volatility.
Financing conditions
Net financing to the private sector recorded an annual growth of 4.4%1 during the quarter (1Q 2021: 4.7%). Outstanding loan growth moderated to 3.6% while outstanding corporate bond2 growth increased to 6.9%. Outstanding business loans recorded an annual growth of 1.3% amid slower outstanding investment-related3 loan growth. Nonetheless, outstanding working capital3 loan growth increased during the quarter. For households, loan demand continued to be forthcoming, particularly for the purchase of residential property.
While the near-term growth outlook has been affected by the recent resurgence in COVID-19 cases, the Malaysian economy remains on a recovery path
The Malaysian economy remains on a recovery path in 2021. While the resurgence of COVID-19 cases and the re-imposition of nationwide containment measures are expected to weigh on growth, the impact will be cushioned by several factors. These include continued allowances for essential economic sectors to operate, higher adaptability to remote work, as well as increased automation and digitalisation. Growth will be further supported by policy measures, which will provide cash flow support, particularly for affected households and businesses. Going forward, the growth trajectory will depend on the ability to contain the epidemic and materialisation of health outcomes from the nationwide vaccination programme. This will allow economic sectors to gradually reopen and provide some lift to household and business sentiments.
Thus, in projecting the revised growth range for the year, the Bank took into account the latest global economic developments, the implementation of the first phase of the National Recovery Plan (NRP), and assumptions on the gradual transitions to the second, third and fourth phases for each state based on the pace of vaccination rollouts, and healthcare system capacities. Against this backdrop, the Malaysian economy is projected to expand between 3.0% and 4.0% in 2021. The new growth projections are lower compared to the previously-announced growth range4, due in large part to the re-imposition of nationwide containment measures. Nevertheless, the expected re-opening of the economy would support a gradual recovery in the fourth quarter this year, with higher global growth and sustained policy support providing a further lift to economic growth. The recovery is expected to accelerate further going into 2022, supported by a gradual normalisation of economic activities as well as the positive spillovers from continued improvement in external demand.
Emphasising the domestic immunisation programme, Governor Datuk Nor Shamsiah explained “Malaysia’s growth recovery is expected to broadly resume in the later part of the second half of 2021 and improve going into 2022. A key catalyst for economic reopening and a driver of positive sentiment will be the continued progress and effectiveness of the national vaccination programme, which would alleviate the strain on healthcare system capacity and allow for the relaxation of containment measures. In addition, growth will be further supported by the ramp-up in commodity production, some materialisation of pent-up demand, and continued investment in large-scale infrastructure projects following lifting of restrictions.”
In the near term, headline inflation is projected to moderate as the base effect from fuel prices dissipates. For 2021 as a whole, headline inflation is expected to average between 2.0% and 3.0%. Underlying inflation, as measured by core inflation, is expected to remain subdued, averaging between 0.5% and 1.5% for the year, amid continued spare capacity in the economy.
See also:
Table 1: GDP by Expenditure Components and Economic Activity
Presentation Slides (PDF)
Press Conference Video
Publication: Quarterly Bulletin Second Quarter 2021
1 Comprises outstanding loans from the banking system and development financial institutions (DFIs), and outstanding corporate bonds.
2 Excludes issuances by Cagamas and non-residents.
3 Classification of business loans by purpose is only available for the banking system.
4 6.0 - 7.5%, 2020 Economic and Monetary Review, Bank Negara Malaysia. Released on 31 March 2021.
Bank Negara Malaysia
13 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights
Moderate IPI growth at 1.4% following imposition of FMCO
• Overall IPI in June recorded moderate
growth of 1.4% as FMCO restrictions
limited production activity to only
essentials and those involved in global
value chains. Electricity production also
declined amid lower demand during
FMCO.
• However, manufacturing production
continued to expand due to firms'
adaptability through extending working
days and operationalising new production
capacity, particularly among E&E, and
selected primary-related industries.
Contribution to Overall IPI (% ppt, yoy)
July 2021
Source: Department of Statistics, Malaysia
-40
-30
-20
-10
0
10
20
30
40
50
60
J
a
n
-2
0
F
e
b
-2
0
M
a
r-
2
0
A
p
r-
2
0
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
A
p
r-
2
1
M
a
y
-2
1
J
u
n
-2
1
Manufacturing Mining Electricity Overall
Headline inflation declined to 2.2% in July
• Headline inflation declined to 2.2% in July
(June: 3.4%), reflecting lower inflation for
transport, as well as housing and utilities
respectively.
• The lower housing and utilities inflation
(July y-o-y: 0.7%; June: 3.2%) was mainly
due to the implementation of the three-
month electricity tariff rebate, beginning
July 2021.
• Underlying inflation, as measured by core
inflation, remained stable at 0.7%.1 Core inflation is computed by excluding price-volatile and price-administered items.
It also excludes the estimated direct impact of tax policy changes.
Source: Department of Statistics Malaysia (DOSM), Bank Negara Malaysia estimates
3.4
2.2
0.7 0.7
-4.00
-2.00
0.00
2.00
4.00
6.00
-4.0
-2.0
0.0
2.0
4.0
6.0
A
u
g
-1
9
S
e
p
-1
9
O
c
t-
1
9
N
o
v
-1
9
D
e
c
-1
9
J
a
n
-2
0
F
e
b
-2
0
M
a
r-
2
0
A
p
r-
2
0
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
A
p
r-
2
1
M
a
y
-2
1
J
u
n
-2
1
J
u
l-
2
1
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
3.0
1.3
4.2
0
1
2
3
4
5
6
7
8
Jul-20 Oct-20 Jan-21 Apr-21
Total loans
Business loans
Household loans
Annual growth (%)
Contribution to Net Financing1 Growth and Outstanding
Loan Growth
1 Refers to outstanding loans of the banking system (excluding development
financial institutions (DFIs)).
Source: Bank Negara Malaysia
Continued moderation in net financing growth in July
1
Contribution to growth
(percentage points)
2.8 2.5 2.2
2.0
1.9
1.8
4.8
4.3
4.0
May-21 Jun-21 Jul-21
Corporate Bonds
Banking System Loans
Net Financing
• Net financing growth moderated to 4.0% in
July (June: 4.3%) due to lower outstanding
loan growth (July: 3.0%, June: 3.4%) and
outstanding corporate bond growth (July:
6.5%, June: 6.9%).
• Outstanding household loans grew
by 4.2% (June: 5.2%), with moderation
across all loan purposes amid the
containment measures and mobility
restrictions.
• For businesses, outstanding loan growth
increased to 1.3% (June: 0.9%), supported
by higher working capital loan growth
(July: 2.5%, June: 1.6%).
Jul-21
Monthly Highlights
July 2021
2
Domestic financial markets continue to be influenced by COVID-19 developments
• In July, financial markets were affected by concerns
surrounding the global and domestic growth outlook
following the rise in the spread of COVID-19.
• Globally, these concerns led to an increase in
demand for safer assets, contributing to a decline in
US Treasury yields and a broad-based
strengthening of the US dollar. In line with this, the
10-year MGS yield declined by 11.3 basis points
and the ringgit depreciated by 1.8% against the US
dollar.
• The FBM KLCI had also declined by 2.5% as
investor sentiments were affected by the rise in
COVID-19 infections domestically and the
imposition of stricter containment measures
(FMCO) in Kuala Lumpur and Selangor.
Source: Bank Negara Malaysia, Bursa Malaysia
4.7
-3.2
-0.4
-11.3
-2.5
-1.8
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-15 -10 -5 0 5 10
Jul-21 Jun-21
Financial Markets Performance in July
Banking system liquidity position remained supportive of financial intermediation
Banking System Liquidity and Funding Ratios
81.0
70.5
152.2
0
40
80
120
160
70
75
80
85
90
95
J
u
l
2
0
A
u
g
2
0
S
e
p
2
0
O
c
t
2
0
N
o
v
2
0
D
e
c
2
0
J
a
n
2
1
F
e
b
2
1
M
a
r
2
1
A
p
r
2
1
M
a
y
2
1
J
u
n
2
1
J
u
l
2
1
% %
Liquidity Coverage Ratio (RHS)
Loan to Fund Ratio
Loan to Fund and Equity Ratio
• The banking system continued to maintain healthy
liquidity buffers with the liquidity coverage ratio
(LCR) remaining strong in July (June-21: 149.1%).
• Banks’ funding profile remained stable amid
sustained growth in deposits as individuals,
businesses and non-bank financial institutions
continue to maintain precautionary cash buffers.
Source: Bank Negara Malaysia
Asset quality remains supported by sound risk management practices of banks
• Overall gross impaired loans ratio increased
marginally to 1.7% (Jun-21: 1.6%), driven by the
household segment.
• Banks continue to set aside additional provisions
against potential credit losses, which currently
stand at 1.9% of total banking system loans.
• Banks continue to facilitate repayment assistance
for viable borrowers facing temporary financial
difficulties amid credit risk outlook that remains
challenging.
1.0
1.7
1.9
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
J
u
l
2
0
A
u
g
2
0
S
e
p
2
0
O
c
t
2
0
N
o
v
2
0
D
e
c
2
0
J
a
n
2
1
F
e
b
2
1
M
a
r
2
1
A
p
r
2
1
M
a
y
2
1
J
u
n
2
1
J
u
l
2
1
Gross Impaired Loans Ratio
Total Provisions to Total Loans
Ratio
Banking System Asset Quality
Source: Bank Negara Malaysia
%
Net Impaired Loans Ratio
PRESS RELEASE
Ref. No.: 08/21/11 EMBARGO: Not for publication or
broadcast before 1500 hours on
Monday, 30 August 2021
Monthly Highlights – July 2021
Headline inflation declined to 2.2% in July
• Headline inflation declined to 2.2% in July (June: 3.4%), reflecting lower
inflation for transport, as well as housing and utilities respectively.
• The lower housing and utilities inflation (July y-o-y: 0.7%; June: 3.2%)
was mainly due to the implementation of the three-month electricity tariff
rebate, beginning July 2021.
• Underlying inflation, as measured by core inflation, remained stable at
0.7%.
Moderate IPI growth at 1.4% following imposition of FMCO
• Overall IPI in June recorded moderate growth of 1.4% as FMCO
restrictions limited production activity to only essentials and those
involved in global value chains. Electricity production also declined amid
lower demand during FMCO.
• However, manufacturing production continued to expand due to firms'
adaptability through extending working days and operationalising new
production capacity, particularly among E&E, and selected primary-
related industries.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Continued moderation in net financing growth in July
• Net financing growth moderated to 4.0% in July (June: 4.3%) due to
lower outstanding loan growth (July: 3.0%, June: 3.4%) and outstanding
corporate bond growth (July: 6.5%, June: 6.9%).
• Outstanding household loans grew by 4.2% (June: 5.2%), with
moderation across all loan purposes amid the containment measures
and mobility restrictions.
• For businesses, outstanding loan growth increased to 1.3%
(June: 0.9%), supported by higher working capital loan growth
(July: 2.5%, June: 1.6%).
Domestic financial markets continue to be influenced by COVID-19
developments
• In July, financial markets were affected by concerns surrounding the
global and domestic growth outlook following the rise in the spread of
COVID-19.
• Globally, these concerns led to an increase in demand for safer assets,
contributing to a decline in US Treasury yields and a broad-based
strengthening of the US dollar. In line with this, the 10-year MGS yield
declined by 11.3 basis points and the ringgit depreciated by 1.8%
against the US dollar.
• The FBM KLCI had also declined by 2.5% as investor sentiments were
affected by the rise in COVID-19 infections domestically and the
imposition of stricter containment measures (FMCO) in Kuala Lumpur
and Selangor.
Banking system liquidity position remained supportive of financial
intermediation
• The banking system continued to maintain healthy liquidity buffers with
the liquidity coverage ratio (LCR) remaining strong in July (June-21:
149.1%).
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• Banks’ funding profile remained stable amid sustained growth in
deposits as individuals, businesses and non-bank financial institutions
continue to maintain precautionary cash buffers.
Asset quality remains supported by sound risk management practices of
banks
• Overall gross impaired loans ratio increased marginally to 1.7% (Jun-
21: 1.6%), driven by the household segment.
• Banks continue to set aside additional provisions against potential credit
losses, which currently stand at 1.9% of total banking system loans.
• Banks continue to facilitate repayment assistance for viable borrowers
facing temporary financial difficulties amid credit risk outlook that
remains challenging.
Bank Negara Malaysia
30 August 2021
20210830 MSB July_EN
20210830 PR_MSB July_EN
GDP 2Q 2021 Press Conference
Sidang Akhbar
Prestasi Ekonomi Suku
13 Ogos 2021
Kedua Tahun 2021
5.9
7.1
7.5
7.9
11.8 12.2
13.7
14.7
1.9
-0.7
8.9
18.3
-3.9
0.5
-1.3
1.5
Korea Indonesia Chinese
Taipei
China Philippines US Euro area Singapore
2Q21 1Q21
Real GDP Growth
Continued improvement in global growth in 2Q 2021, with a dual track recovery
across countries
Source: CEIC, National authorities, IHS Markit
1
Annual change (%)
59.3
50.8
Jan Feb Mar Apr May Jun
Composite PMI
Advanced
Economies
Emerging Market
Economies
Global Growth Developments
• Broad-based recovery of
services and manufacturing
activity in advanced
economies, supported by
relaxation of containment
measures, amid high
vaccination rates
• Goods trade improved,
particularly regional exports
• Disruption of economic
activities in many emerging
market economies due to
containment measures
2021
Low base from the
significant decline in
economic activity in
2Q 2020
Malaysia’s GDP grew by 16.1% in 2Q 2021
Real GDP Growth (2021)
Month % yoy
January -3.6
February -3.6
March 6.1
April 40.1
May 19.8
June -4.4
4.7 5.0 4.5 3.7
0.7
-17.2
-2.7 -3.4
-0.5
16.1
1Q-19 2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21
Real GDP Growth, % yoy
Annual growth
2020: -5.6%
2019: 4.4%
Key Factors:
Improvement in domestic
demand
Stronger external
demand
weighed by…
Re-imposition of stricter
containment measures
in May and June
Stronger growth reflected low base from the significant decline in activity in 2Q 2020
2
Source: Department of Statistics Malaysia
On a seasonally adjusted quarter-on-quarter basis, GDP declined by 2% in 2Q 2021
Continued improvement in most economic sectors, led by manufacturing and services
Source: Department of Statistics Malaysia
3
6.6
26.6
1Q-21 2Q-21
GDP, Annual change (%)
-5.0
13.9
1Q-21 2Q-21
GDP, Annual change (%)
-2.3
13.4
1Q-21 2Q-21
GDP, Annual change (%)
-10.4
40.3
1Q-21 2Q-21
GDP, Annual change (%)
Manufacturing MiningServices Construction Agriculture
Continued robust
external demand for
E&E products
Higher crude oil and
natural gas production
Improved consumer-
related activities,
especially in
April and May
Progress in large
infrastructure works
Weaker oil palm harvesting
activities amid labour
shortages
0.2
-1.5
1Q-21 2Q-21
GDP, Annual change (%)
5.9
9.0
1Q-21 2Q-21
GDP, Annual change (%)
Private Consumption
Source: Department of Statistics Malaysia
Private Investment Public Investment Public Consumption Net exports
Broad-based expansion
across both necessity
and discretionary
spending
Higher capital
expenditure particularly in
the services and
manufacturing sectors
Higher General
Government capital
spending
Higher growth in
supplies and services
Strong
external demand
4
-1.5
11.6
1Q-21 2Q-21
GDP, Annual change (%)
1.3
17.4
1Q-21 2Q-21
GDP, Annual change (%)
-18.6
12.0
1Q-21 2Q-21
GDP, Annual change (%)
0.8
34.3
1Q-21 2Q-21
GDP, Annual change (%)
Growth was driven by higher private sector spending and strong trade activity
Updated
Current account of the balance of payments registered a higher surplus of RM14.4 billion or
3.9% of GDP
Goods
Source: Department of Statistics Malaysia
Services Primary Income Secondary Income
5
36.6
40.7
1Q-21 2Q-21
-5.7 -9.5
1Q-21 2Q-21
-15.0 -15.4
1Q-21 2Q-21
-3.6
-1.4
1Q-21 2Q-21
Larger Goods Surplus
• External demand
supporting exports
Larger Primary
Income Deficit
• Higher investment
income accrued to
foreign investors in
Malaysia
RM billon RM billon RM billon RM billon
Marginally Larger
Services Deficit
• Larger deficits mainly in
transportation and other
business services
Updated
Manufacturing activity was supported by strong external demand,
but the services sector was weighed by mobility restrictions
Latest key indicators from the services sector, however, point
to a tentative turnaround in July
Note: Google mobility data, averaged weekly as at 7 August 2021, is expressed as the percentage change from the 3 January 2020 to 6 February 2020 baseline. Data on total transactions per day, averaged monthly,
refers to online and physical spending.
Source: Department of Statistics Malaysia, Bank Negara Malaysia, Google Mobility Community Report
6
Total Transactions
per day
MY Google Community Mobility Report
RM billion Mobility Changes Compared to Baseline (% decline)
Workplace
Retail, Recreation
& Grocery
-19.2
-40.1
-48.9
-36.9
28
Mar
9
May
20
Jun
1
Aug
-6.6
-21.0
-37.4
-26.7
28
Mar
9
May
20
Jun
1
Aug
2.2
2.1
1.7
1.8
Apr May Jun Jul
123.8
132.2
129.8
129.2
122.4
127.2
Jan Feb Mar Apr May Jun
114.8
119.5
123.4
121.3
118.7
108.8
Jan Feb Mar Apr May Jun
126.8
132.1
129.9
136.4
127.4
105.1
Jan Feb Mar Apr May Jun
IPI for Manufacturing IOWRTIPI for Electricity
Economic activity was weighed by tighter containment measures in the later part of 2Q 2021
Labour market showed improvement up till May-21, before deteriorating in June-21
Source: Department of Statistics Malaysia
* Tourism-related industries include wholesale retail, administrative and support services,
accommodation and F&B, transportation and storage, entertainment and recreation
Source: Employment Insurance System, Social Security Organisation (SOCSO)
5.0
5.3
4.9
4.7 4.7
4.6
4.7
4.8 4.8
4.9
4.8
4.7
4.6
4.5
4.8
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Unemployment rate
3.0
4.8
8.2 7.5
3.6 2.8 2.8 4.6 3.3 3.2 2.8 2.5 1.8 1.3 2.3
3.2
5.2
10.4
9.2
5.6
4.6 4.6
4.5
3.5 5.2
3.5 3.3 3.2 2.4
3.4
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Tourism-related*
Non tourism-related
Jobless claims
Thousands of persons
20
8 6
11
25
43
55
37
40
30
33
37
40
48
35
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Placement rates
35 new job placements
for every 100 jobs lost
Share of labour force (%) Number of new job placements for every 100 job losses
14,933
14,888
14,990
15,073
15,154
15,193
15,207
15,196
15,215
15,237
15,271
15,329
15,352 15,371
15,298
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Employment levels
Thousands of persons
7
Updated
Rapid vaccination rate allowing the gradual relaxation of FMCO restrictions
Ongoing policy support for businesses and households
Continuation of large-scale infrastructure projects
Strong global demand conditions, particularly in major trade partners
Continued global tech upcycle
External factors
Domestic factors
Growth is expected to trough in 3Q 2021 before improving in 4Q 2021,
in line with strong external demand conditions and easing of containment measures
8
Key factors underpinning growth in 2H 2021
1
2
3
4
5
The strong global demand is expected to support the expansion of gross exports
Stronger gross export growth reflecting
broad-based expansion across products…
…underpinned by strong external
demand conditions…
Source: Department of Statistics Malaysia
* Share of 2020 Malaysia’s exports
Source: International Monetary Fund
…which will support employment in
export-oriented industries
1 Bank Negara Malaysia estimates
** Includes agriculture and mining sectors
9
-0.2
-14.9
5.1 5.2
18.0
44.0
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Gross Exports Growth Employment in export-oriented sectors1
2.3
-3.5
-6.5
8.1
7.0
4.6
PR China
(16.2%* of Malaysia's
exports)
US
(11.1%* of Malaysia's
exports)
EU
(9.6%* of Malaysia's
exports)
2020 2021f
Real GDP growth of Malaysia’s Key Trade Partners
2 million workers
Manufacturing sector
1.6 million workers
Services sector
0.8 million workers
Commodities sector**
% yoy% yoy
Updated
Global tech upcycle to support E&E production and exports
Rising demand for semiconductors for
work-from-home & medical devices…
… have benefitted Malaysia as a net
exporter of semiconductors
Source: World Semiconductor Trade Statistics, IC Insights, Department of Statistics Malaysia, International Trade Centre, Bank Negara Malaysia
Recent industrial engagements show
signs of continued positive outlook
10
Findings from BNM Industrial Engagements
6.8
13.0
19.7
24.0
WSTS Semiconductor
Sales
IC Insights Integrated Circuit
Sales
2020 2021f
Industry Forecasts for Global Semiconductor Sales
% yoy
Full order books
throughout 2021
Capacity expansion–
New plants & machinery
for industry 4.0
technologies
Introduction of new
products in fast-growing
segments
E.g. data centres and
medical devices
153.5
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
E&E Industrial Production Index
Index (2015 = 100), seasonally adjusted
9.0
4.7 4.3 2.6
-0.1 -1.0 -1.6
-7.4
TW MY SG KR IN TH CN VN
Global Semiconductor Trade Balance
% of 2020 GDP
2019 Avg.: 125.9
Fast vaccination rates and lower ICU utilisation will enable the swift easing of containment measures
Domestically, rapid vaccination rates with easing demands on healthcare capacity
would lead to better economic outcomes
11
In the baseline assumption, all states are expected to transition to
Phase 3 by October 2021 and Phase 4 by November 2021
Principles in Assuming Phased Transition
1 Refers to share to GDP in 2020
Note: ICU utilisation and vaccination rates refer to the 7-day average between 3 – 9 Aug 2021
Source: COVID-19 Immunisation Task Force, Ministry of Health, Department of Statistics, Malaysia and Bank
Negara Malaysia
0
20
40
60
80
100
120
140
160
0.0 1.0 2.0 3.0
2nd dose vaccination rate, % of state adult
population per day
IC
U
U
ti
li
s
a
ti
o
n
%
MY avg adult vaccination
rate: 1.2% per day
MY avg ICU utilisation: 91%
FastSlow
H
ig
h
L
o
w
Size of bubble indicates % to GDP1
ICU Utilisation and Vaccination Rate by State
Current ICU
utilisation
Current speed of
vaccination rate
Assumed Transition Path
Low Fast
Faster and earlier transition to
Phase 4
Low Slow
As vaccination rate improves,
transition to subsequent
phases is shorter
High Fast
1. Gradual transition to the
next phase as ICU utilisation
stabilises and improves
2. As vaccination rate
progresses and ICU
utilisation improves,
transition to subsequent
phases will be swift
High Slow
Greater adaptability to restrictions and ongoing policy support have partly mitigated
the impact of containment measures
Higher adoption of technology allow selected economic
activity to continue
Policy support to alleviate some of the financial burden of
households and businesses
12
1 Online banking transactions includes 1) financial transaction such as funds transfer and bill payment; and 2) non-
financial transactions including balance inquiries, statement request and loan applications
2 Network-based e-money
3 Refers to Micro, Small & Medium Enterprises
Online banking1
transaction volume
Merchants3 adopting
e-commerce
E-wallet2
transaction volume
Merchant registrations
for QR payments
468
million
1.0
million
509k
1H 2021
8.9
billion
+36%
247
million
+89%
0.6
million
+57%
490k
+19k
1H 2020
12.1
billion
As at end 1H 2021As at end 2020
✓ Targeted Wage Subsidy Program
✓ Enhanced hiring incentives (PenjanaKerjaya) and
re-skilling and up-skilling initiatives
✓ Various cash transfers (e.g. Bantuan Prihatin
Rakyat, Bantuan Khas COVID-19)
✓ Repayment assistance
✓ Various financing schemes
(e.g. Targeted Relief and Recovery Facility, High
Tech Facility, Automation & Digitisation Facility,
various microcredit financing)
✓ Tax incentive, relief and other cost reduction
measures
✓ Repayment assistance
Households
For cash flow
relief and
spending support
Businesses
For cash flow
relief and
business
continuity
Selected policy measures
Source: Bank Negara Malaysia, Malaysia Digital Economy Corporation, Ministry of Entrepreneur Development and Cooperatives
Ramp-up in commodity production and continued investment activity
would also provide the lift to growth
Source: Bank Negara Malaysia, Newsflows
Ramp-up in oil- and gas-related production Continued investment in large infrastructure projects
Operationalisation of
PFLNG2 facility
LNG price :
2021f: RM1200 – RM1300 / tonne
(2020: RM1,230 / tonne)
Restart of RAPID
operations in 4Q 2021
Brent oil price :
2021f: USD 62 - 72 / barrel
(2020: USD43 / barrel)
Natural
gas
Refined
petroleum
LRT3 (2018-2024)
• RM16.6 billion
MRT2 (2016-2022)
• RM30.5 billion
ECRL (2018-2027)
• RM50.0 billion
Pan Borneo Highways
(2016-2023)
• RM23.6 billion
Strategic initiatives catalysing the national digitalisation agenda
National E-Commerce
Strategic Roadmap 2.0
Digital Investment
Office
Malaysia Digital
Economy Blueprint
Jalinan Digital
Negara
13
Updated
Growth will be weighed by containment
measures, before recovering towards the
end of 2021
For 2021, Malaysia’s GDP is projected to grow between 3% and 4%
Source: Department of Statistics Malaysia, Bank Negara Malaysia
-10
-7
-4
-1
2
5
8
2018 2019 2020 2021f
Malaysia’s Real GDP Growth
3.0
4.4
-5.6
4.8
4.0
Annual change (%)
Strong recovery in export-oriented sectors
in tandem with improving global demand
Slow improvement in services sector,
particularly consumer and tourism-related
activities
14
Domestic
factors
External
factors
Near-term growth trajectory, however, is highly dependent on COVID-19 risk factors
15
Global vaccination progress
Highly contingent on vaccine uptake and
effectiveness
1
Materialisation of health
outcomes from vaccination
Effectiveness against new VOCs
2
Duration and stringency of
containment measures
The state of firms’ operating capacity and
consumer spending depends on FMCO
restrictions
1
Supportive global financial
conditions
Continued bouts of volatility given
COVID-19 uncertainties
3
Normalisation in global
economic activity
Severe new variants of concern
(VOCs) could necessitate reimposition
of containment measures
2
Progress of infrastructure
projects
Implementation timeliness subject to
operating and resource constraints
4
Policy certainty
Uncertainties could affect the undertaking
of investment decisions
3
Uncertainty on evolution of the pandemic and the containment measures would affect
growth trajectory
Vaccine Rollout Containment Measures Other Factors
▲ Majority of total population to
be vaccinated by end of
October 2021
▲ Vaccines effective against
prevailing variants
▼ Majority of total population to
be vaccinated by 1Q 2022
▼ Strain on the healthcare
system due to new variants
▲ Faster transition to Phase 4
by September 2021
▲ Faster improvement in the
labour market
▲ Higher pent-up demand
among households
▼ Prolonged tight containment
measures with Phase 4
starting in 2022
▼ Policy uncertainty could
affect the progress of key
investment projects and
investor confidence
▼ Slower recovery in the labour
market
Slower
Recovery
Faster
Recovery
16
Growth is expected to accelerate in 2022
Source: Bank Negara Malaysia
Expansion in commodity-related production capacity
(e.g. Ramp-up of RAPID production, commencement of SK320)
Faster progress in large infrastructure projects
(e.g. ECRL, LRT3, Pan-Borneo Highway and JENDELA)
Further expansion in global growth and trade activity
Key driver for improvement in production activities
Improvement in consumer sentiment
Catalysed by an increasing share of vaccinated population, easing of containment measures,
and the buildup in total household savings in the past year
17
Strengthening of labour market recovery
Key factor underpinning private consumption
Updated
Headline inflation recorded a temporary spike in 2Q 2021 and is expected to moderate in
subsequent quarters
As expected, headline inflation spiked in 2Q 2021, driven by
the transitory base effect from low fuel prices and lapse in
impact from electricity tariff rebates
Headline Inflation is expected to average between 2.0% and
3.0% for the year, while core inflation will remain subdued
18
2018 2019 2020 2021f
1Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
Annual change in inflation and contribution to headline inflation
0.5
4.1
0.7 0.7
-1
0
1
2
3
4
5
1Q 2021 2Q 2021
Fuel (ppt) Price admin ex fuel (ppt) Core inflation (ppt)
Price-volatile items (ppt) Headline Inflation (%) Core Inflation (%) 2
Core inflation would remain subdued
(0.5% – 1.5%) amid continued spare capacity in
the economy
Malaysia’s Headline Inflation
1.0 0.7
-1.2
3.0
2.0
Annual change (%)Annual change (%) /
Contribution to headline inflation (ppt)
1 Headline inflation is expected to moderate in
the near-term as base effects dissipate
Monetary policy remains accommodative
Source: Bank Negara Malaysia
• OPR remains low at 1.75%
• Monetary policy (MP) in 2021 to remain
accommodative
- Provide support to the economy
- Ensure price pressures remain
manageable
• Amid pandemic uncertainty, MP will continue
to be determined by new data and information
Jul-21: 1.75
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Overnight Policy Rate (OPR)
%
19
-2.1
-0.3 0.1 0.2 0.2 0.3
1.6
-4.1
-3.2
-1.7
-0.8
1.1
-1.4
-0.3
-4.5
-3.0
-1.5
0.0
1.5
THB PHP MYR SGD IDR KRW CNY
2Q 21 Since 1 July*
Domestic financial markets were affected by external and domestic factors
*Change in exchange rate against the US dollar from 1 July to 9 August 2021
Source: Bank Negara Malaysia, Reuters
*Regional countries include Indonesia, the Philippines, China, Singapore, Korea and Thailand.
YTD as at 9 August 2021.
Source: Bank Negara Malaysia, Bloomberg
Marginal appreciation of the ringgit in line with the broad-
based weakness in the USD
10-year MGS yields were broadly unchanged while equities
continued to decline amid the increase in domestic COVID-19
cases
-66.2
61.9
1.5 -6.5
-60.8
70.3
-18.6 -19.6
-100.0
-40.0
20.0
80.0
2020 1Q21 2Q21 Since 1 July
Malaysia Regional Average
Movement of 10-Year Sovereign Bond Yields
bps
2.4
-3.3
-2.6 -2.3
1.8
2.8 3.0
-1.1
-5
5
2020 1Q21 2Q21 Since 1 July
Malaysia Regional Average
Movement of Equity Prices
%
20
Movement of Exchange Rate against the US dollar
Net financing continued to expand during the quarter
Net financing expanded by 4.4% in the
second quarter
Higher total business loan disbursements
during the quarter
Note: Data refers to loans from banking system and development financial institutions (DFIs), *Excludes issuances by Cagamas and non-residents
Numbers may not add up due to rounding
Source: Bank Negara Malaysia
Demand for household loans remained
forthcoming, particularly for residential
properties
3.2
2.7
1.5
1.8
4.7
4.4
1Q 2021 2Q 2021
Outstanding corporate bonds*
Outstanding loans
Net financing
Net Financing*
Annual change, % / Cont. to growth, ppt
Household Loan Application for Residential
Property and Passenger Car
RM bn
21
200
180 179
204 228
234
1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21
2017-19 quarterly
average: RM197bn
Business Loan Disbursement
RM bn
52
42
87
80 81
95
16
10
24 22 21 19
1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021
Passenger Car
2017-19 quarterly average: RM60bn
2017-19 quarterly average: RM17bn
Residential Property
122
150 158
75 78 76
2017 - 19
Quarterly average
1Q 2021 2Q 2021
Non-SME SME
Non-SME and SME Loan Disbursement
RM bn
0
25
50
75
3Q20 4Q20 1Q21 2Q21
Investment-related Working Capital
Banks continue to support financing needs of SMEs, complemented by BNM’s Fund
Bank financing to SMEs expanded by 6%
Banks continue to drive the major share
of the financing disbursed to SMEs
Enhanced features of BNM’s Fund for
SMEs
SME Financing Outstanding1
1 Banking system and DFIs, 2 Banking system only
3 Investment-related financing includes loans for purchase of
securities, transport vehicles, non-residential property, fixed
assets, and construction purposes, among others.
Source: Bank Negara Malaysia
1Banking system and DFIs
Source: Bank Negara Malaysia and PFI submission (as at 30 June 2021) 1 For 1 existing financing, except those under BNM’s Fund for SMEs
2017-19 Quarterly Average
98%
from FIs’
own funds
BNM’s Fund
for SMEs
RM3.0 bn
disbursed to
more than
12,000 SMEs
SME Financing Disbursements in 1H 20211
% share
22
RM154
billion
1.6
9.6 10.0
6.0
3Q20 4Q20 1Q21 2Q21
RM bn
%yoy
SME Financing Disbursements2
Refinancing flexibility to reduce
overall borrowing costs1
Expansion of eligible sectors for the
Targeted Relief and Recovery Facility
• Open to viable SMEs in non-services
sector that are still not allowed to
operate in Phase 2 of the National
Recovery Plan (w.e.f. 5 Jul 2021)
• PENJANA Tourism Financing
Up to 50% of total approved
• Targeted Relief and Recovery Facility
Up to 30% of total approved
3
Of which: Of which:
High take-up of repayment assistance will cushion impact from FMCO
Proportion of households and SMEs under repayment assistance remains manageable
Source: Bank Negara Malaysia
Total borrowers under blanket moratorium (Apr-Sept 2020) and
Applications approved for repayment assistance (Oct 2020 to July 20211)
Proportion of loans under blanket moratorium in September 20202 and
under repayment assistance since
76.7
10.6 12.8
Sep-20 May-21 Jun-21
77.1
13.7 16.0
Sep-20 May-21 Jun-21
66.7
9.3 11.9
Sep-20 May-21 Jun-21
67.8
16.9 21.6
Sep-20 May-21 Jun-21
% share of accounts
% share of loan value
Households SMEs
49k
SMEs
61k
SMEs
Jun-21 and Jul-211Oct-20 to May-21
2.1m1.5m
23
Apr-20 to Sep-20
250k
SMEs
8.3m
Note:
1 July 2021 data covers period between 1 to 23 July 2021
2 Excludes borrowers that have resumed repayments over the 6-month moratorium period
% share of accounts
% share of loan value
Banking system is supporting borrowers and ongoing economic recovery
Banks continue to build up loan loss
provisions…
… amid elevated credit risks
1 Refers to loans that have exhibited deterioration in credit risk, for which banks are required to set aside provisions based on lifetime expected losses
2 Projected total capital ratio for December 2022, based on the Adverse Scenario 2 of the macro stress test released in the Financial Stability Review Second Half 2020
* MFRS 9 - Malaysian Financial Reporting Standard 9
Source: Bank Negara Malaysia
Capital and liquidity positions remain
supportive of intermediation activity
Gross Impaired Loans and Stage 2 Loans1 Ratios Total Capital Ratio and Liquidity Coverage RatioProvisions
1.37
1.56 1.58
1.627.8
9.9 9.9 9.7
Sep-20 Dec-20 Mar-21 Jun-21
Impaired Loans MFRS 9* Stage 2 Loans
17.9 149.1
Total Capital Ratio
Mar-21: 18.1
Dec-20: 18.9
Post-stress test2: 16.8
Liquidity Coverage Ratio
Mar-21: 145.1
Dec-20: 148.2
RM billion % %
24
27.1
30.7
32.8 33.8
1.49
1.68
1.77 1.81
0
0
0
0
0
0
0
0
0
0
0
Sep-20 Dec-20 Mar-21 Jun-21
Provisions As % of total loans
Updated
Growth improved in 2Q 2021, with economic activity weighed by
the FMCO in the later part of the quarter
The near-term outlook, however, is highly dependent on COVID-19 risk factors
Growth is expected to trough in 3Q 2021 before improving in 4Q 2021, in line
with strong external demand conditions and easing of containment measures
In summary…
25
The Malaysian economy is now projected to grow between 3% and 4% in 2021
Growth to accelerate in 2022 supported by a normalisation in economic activity amid a high
vaccination rate and continued improvement in external demand
Updated
Additional Information
Malaysia’s GDP growth improved to 16.1% in 2Q 2021
Annual change in GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics Malaysia
Add. Info
26
Real GDP
(% YoY)
Share, %
(2020)
2020 2021
2Q 1Q 2Q
Domestic demand
(excluding stocks)
93.8 -18.8 -1.0 12.3
Private Sector 75.2 -20.4 -0.9 13.0
Consumption 59.5 -18.5 -1.5 11.6
Investment 15.7 -26.1 1.3 17.4
Public Sector 18.6 -11.1 -1.5 9.7
Consumption 13.4 2.2 5.9 9.0
Investment 5.2 -40.1 -18.6 12.0
Net exports of goods and
services
6.5 -37.9 0.8 34.3
Exports 61.5 -21.7 11.9 37.4
Imports 55.0 -19.7 13.0 37.6
Change in stocks, RM bn -0.3 7.3 -1.7 15.8
Real GDP 100.0 -17.2 -0.5 16.1
Real GDP
(% YoY)
Share1 %
(2020)
2020 2021
2Q 1Q 2Q
Services 57.7 -16.2 -2.3 13.4
Manufacturing 23.0 -18.3 6.6 26.6
Agriculture 7.4 0.9 0.2 -1.5
Mining and Quarrying 6.8 -20.8 -5.0 13.9
Construction 4.0 -44.5 -10.4 40.3
Real GDP 100.0 -17.2 -0.5 16.1
Malaysia’s GDP growth improved to 16.1% in 2Q 2021
Percentage point contribution to GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics Malaysia
Add. Info
27
Real GDP
(Ppt contribution, %)
Share, %
(2020)
2020 2021
2Q 1Q 2Q
Domestic demand
(excluding stocks)
93.8 -17.7 -0.9 11.4
Private Sector 75.2 -15.8 -0.7 9.7
Consumption 59.5 -10.8 -0.9 6.6
Investment 15.7 -5.1 0.2 3.0
Public Sector 18.6 -1.8 -0.2 1.7
Consumption 13.4 0.2 0.7 1.3
Investment 5.2 -2.1 -0.9 0.5
Net exports of goods and
services
6.5 -2.6 0.0 1.8
Exports 61.5 -13.9 7.2 22.6
Imports 55.0 -11.3 7.1 20.9
Change in stocks -0.3 3.1 0.4 2.9
Real GDP 100.0 -17.2 -0.5 16.1
Real GDP
(Ppt contribution, %)
Share1 %
(2020)
2020 2021
2Q 1Q 2Q
Services 57.7 -9.3 -1.3 7.8
Manufacturing 23.0 -4.1 1.5 5.9
Agriculture 7.4 0.1 0.0 -0.1
Mining and Quarrying 6.8 -1.6 -0.4 1.0
Construction 4.0 -2.1 -0.5 1.2
Real GDP 100.0 -17.2 -0.5 16.1
Add. Info
28
Financial account registered a net outflow in 2Q 2021
Inflows in direct and portfolio investment accounts partially offset sizeable outflows in other investment account
*As per the IMF’s BPM5 classifications (i.e. directional basis)
Note: Numbers may not add up due to rounding
Source: Department of Statistics Malaysia; and Bank Negara Malaysia
RM billion
2020 2021
3Q 4Q Year 1Q 2Q
Direct Investment -2.2 1.6 2.8 1.4 4.2
Direct Investment Abroad (DIA)* -1.8 -5.2 -11.9 -7.8 -4.0
Foreign Direct Investment (FDI)* -0.3 6.8 14.6 9.1 8.2
Portfolio Investment -20.3 -7.1 -48.2 0.4 20.0
Residents -20.8 -19.9 -59.3 -14.2 -10.6
Non-residents 0.5 12.8 11.1 14.6 30.5
Financial Derivatives -0.5 -0.9 0.4 0.3 -0.6
Other Investment -8.1 -3.7 -31.1 13.9 -30.5
Financial Account Balance -31.1 -10.2 -76.2 16.0 -7.0
Continued FDI inflows amid more
moderate DIA outflows
Significant other investment outflows
due mainly to repayment of interbank
borrowings
Higher portfolio investment inflows
Financial Account by Component
Add. Info
29
Continued FDI net inflows in 2Q 2021
This was driven by larger reinvestment of earnings and sustained equity injections into Malaysia
Larger reinvestment of earnings, mainly in the
manufacturing sector
+RM7.0 billion in 2Q-21 (1Q-21: +RM4.1 billion)
Higher equity injections, mainly driven by additional
capital injection in the financial services sub-sector
+RM4.9 billion in 2Q-21 (1Q-21: +RM4.4 billion)
Sizeable debt outflows, primarily reflecting MNCs’
treasury management operations
-RM3.6 billion in 2Q-21 (1Q-21: +RM0.7 billion)
Source: Department of Statistics Malaysia, Bank Negara Malaysia
5.7
2.5
-0.3
6.8
9.1
8.2
-15
-10
-5
0
5
10
15
1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21
Equity and investment fund shares Reinvestment of earnings
Debt instruments FDI
Quarterly Net Foreign Direct Investment (FDI)
RM billion
Malaysia’s external debt remains manageable
* Consist of currency and deposit placements, and portfolio investments
** Consist of short-term financial institutions’ deposits, interbank borrowings and loans from unrelated counterparties
Source: Bank Negara Malaysia
Banks are resilient to face potential
external shocks…
…while corporates’ external debt is
mainly subject to prudential requirements
65.8
126.6
126.3
61.6
17.9
13.1
Corporate External Debt Breakdown by Instrument
(as at end-2Q 2021)
RM billion
Total: RM411.4 billion
Bonds and
notes
Loans
Other debt liabilities
Intragroup
loans
Trade
credits
NR holdings of domestic
debt securities
Subject to
prudential
requirements
On
concessionary
and flexible
terms
Backed by
export earnings
124.7
59.6
FCY Liquid external
assets
FCY External
debt-at-risk
Banks’ FCY Liquid External Assets* and FCY
External Debt-at-Risk**
RM billion
4.8
3.5
0
2
4
6
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
J
u
l
A
u
g
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
2020 2021
FCY USD
Banks’ FCY and USD Net Open Positions as
Percentage of Capital
% of total capital
Add. Info
…and Government’s external debt mainly
in ringgit
28.4
231.5
Government External Debt Breakdown by
Currency (as at end-2Q 2021)
RM billion
Total: RM259.9 billion
Foreign currency-denominated
Ringgit-denominated
Not affected by ringgit exchange rate
fluctuations
Comprise medium- and long-term loans and
bonds and notes, suggesting limited rollover risks
30
Since the March projection, several developments and key assumptions have altered the
growth outlook
1 MCO 2.0 was imposed in all states except Sarawak on 22 January, which ended in all states at 4 March. Targeted interventions based on localities and cluster locations only.
Source: International Monetary Fund (IMF) January and July 2021 World Economic Outlook (WEO), Bank Negara Malaysia
Add. Info
Changes in key assumptions since EMR publication on 31 March 2021
MCO in most states,
followed by targeted interventions1
Nationwide MCO3.0 and Full
Movement Control Order (FMCO)
Stricter containment measures
Higher commodity prices USD52 - USD62 USD62 - USD72
Better 2021 global growth
outlook
Global growth: 5.5% Global growth: 6.0%
Wider scope of stimulus
measures
• PERMAI Assistance Package
• PEMERKASA
• PERMAI Assistance Package
• PEMERKASA
• PEMERKASA+
• PEMULIH
EMR 2020 QB 2Q 2021
Rapid progress in vaccination
rates
Majority of total population
vaccinated by 1Q 2022
Majority of total population
vaccinated by end-2021
31
Brent crude oil (USD per barrel)
Unleashing of individual savings for consumption could provide additional lift to Malaysia’s
growth in 2021 and 2022
Vaccine Economics, Allianz Research (Dec 2020)
“Unleashed excess savings could bring close to +1.0ppt of GDP
growth in 2021 in Europe through additional consumer spending”
JP Morgan (Jan 2021)
"The household saving rate almost doubled last year to 12.9%
(US). This could translate into a potential $1.5 trillion supporting
pent-up consumer demand as the pandemic subsides."
Chief Economist, Bank of England (Dec 2020)
“Huge pent-up demand will help economy bounce back. As
people’s incomes held up and spending was restrained, they
have amassed around £100bn of excess savings. Once
vaccines are given to people this spending should accelerate.”
Source: Bank Negara Malaysia, various reports and newsflows
1
2
3
Malaysia: Total Stock of Individual Current and Savings Account
(CASA) Balances
RM billion
Significant rise in savings in some advanced economies,
which can potentially fuel pent-up demand in 2021
Similar trend was observed in Malaysia, with a sharp
increase in individual savings since March 2020
306.5
170
210
250
290
Jan-15 Feb-16 Mar-17 Apr-18 May-19 Jun-20
Individual CASA
Jun-21
32
Add. Info
| Press Release |
11 Aug 2021 | Revised Reference Rate Framework | https://www.bnm.gov.my/-/pd-revised-reference-rate | https://www.bnm.gov.my/documents/20124/938039/Consumer+Guide_RRF_EN.pdf, https://www.bnm.gov.my/documents/20124/2294076/RRF_Key_Highlights_EN.pdf | null |
Reading:
Revised Reference Rate Framework
Share:
49
Revised Reference Rate Framework
Embargo :
For immediate release
Not for publication or broadcast before
1800 on
Wednesday, 11 August 2021
11 Aug 2021
Bank Negara Malaysia announced today the release of the revised Reference Rate Framework. The Framework will be effective 1 August 2022. Under the revised framework, the Standardised Base Rate will replace the Base Rate as the reference rate for new retail floating-rate loans.
Reference rates are publicly accessible interest rates that are used by financial institutions as a basis for pricing loans. The Reference Rate Framework was introduced in 2015, which established the Base Rate (BR) as the reference rate for retail floating-rate loans in Malaysia. Under this framework, financial institutions use different methods to set their respective BR, which has made it more difficult for consumers to compare the retail loan products offered by each financial institution and understand the reasons behind changes in their loan repayments. In addition, the different BR methodologies across financial institutions have resulted in a more uneven transmission of monetary policy.
Under the revised Reference Rate Framework, the Standardised Base Rate will be used as the common reference rate for all financial institutions for their new retail floating-rate loans. The Standardised Base Rate will be linked solely to the Overnight Policy Rate (OPR). Changes to the Standardised Base Rate will therefore only occur following changes in the OPR, which is determined by the Monetary Policy Committee of Bank Negara Malaysia. Other components of loan pricing such as borrower’s credit risk, liquidity risk premium, operating costs, profit margin and other costs will continue to be reflected in the spread above the Standardised Base Rate.
The OPR as the Standardised Base Rate improves comparability and is more transparent to consumers. Governor Datuk Nor Shamsiah said “Consumers would find it easier to understand changes in their loan repayments as the OPR will be the only driver of the Standardised Base Rate. The Standardised Base Rate will also facilitate effective monetary policy transmission as complete adjustments to retail loan repayments will take effect following a change in the OPR.”
The Standardised Base Rate will take effect as the reference rate for the pricing of new retail floating-rate loans and the refinancing of existing loans from 1 August 2022 onwards. The one-year transition period will provide sufficient time for financial institutions to undertake the necessary preparations and system enhancements to ensure a smooth implementation of the revised framework. The shift towards the Standardised Base Rate will have no impact on the effective lending rates of existing retail loans, which will continue to be referenced against the BR and Base Lending Rate (BLR). After the effective date, the BR and BLR will move exactly in tandem with the Standardised Base Rate as any adjustments to the Standardised Base Rate will simultaneously be reflected in the corresponding adjustments to the BR and BLR. As such, financial institutions will continue to display their BR and BLR, in addition to the Standardised Base Rate, at all branches and websites after the effective date for customers’ reference.
New retail borrowers should also be largely unaffected by this revision, as effective lending rates for new borrowers would continue to be competitively determined and influenced by multiple factors, including a financial institution’s assessment of a borrower’s credit standing, funding conditions and business strategies.
The shift towards the Standardised Base Rate following the revision in the Reference Rate Framework does not represent a change in the monetary policy stance of the Monetary Policy Committee of Bank Negara Malaysia.
For further information, please refer to the attachment below on the Key Highlights of the Revised Reference Rate Framework.
See also:
Key Highlights of the Revised Reference Rate Framework
Consumer Guide on the Revised Reference Rate Framework
Bank Negara Malaysia
11 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
GDP 2Q 2021 Press Conference
Sidang Akhbar
Prestasi Ekonomi Suku
13 Ogos 2021
Kedua Tahun 2021
5.9
7.1
7.5
7.9
11.8 12.2
13.7
14.7
1.9
-0.7
8.9
18.3
-3.9
0.5
-1.3
1.5
Korea Indonesia Chinese
Taipei
China Philippines US Euro area Singapore
2Q21 1Q21
Real GDP Growth
Continued improvement in global growth in 2Q 2021, with a dual track recovery
across countries
Source: CEIC, National authorities, IHS Markit
1
Annual change (%)
59.3
50.8
Jan Feb Mar Apr May Jun
Composite PMI
Advanced
Economies
Emerging Market
Economies
Global Growth Developments
• Broad-based recovery of
services and manufacturing
activity in advanced
economies, supported by
relaxation of containment
measures, amid high
vaccination rates
• Goods trade improved,
particularly regional exports
• Disruption of economic
activities in many emerging
market economies due to
containment measures
2021
Low base from the
significant decline in
economic activity in
2Q 2020
Malaysia’s GDP grew by 16.1% in 2Q 2021
Real GDP Growth (2021)
Month % yoy
January -3.6
February -3.6
March 6.1
April 40.1
May 19.8
June -4.4
4.7 5.0 4.5 3.7
0.7
-17.2
-2.7 -3.4
-0.5
16.1
1Q-19 2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21
Real GDP Growth, % yoy
Annual growth
2020: -5.6%
2019: 4.4%
Key Factors:
Improvement in domestic
demand
Stronger external
demand
weighed by…
Re-imposition of stricter
containment measures
in May and June
Stronger growth reflected low base from the significant decline in activity in 2Q 2020
2
Source: Department of Statistics Malaysia
On a seasonally adjusted quarter-on-quarter basis, GDP declined by 2% in 2Q 2021
Continued improvement in most economic sectors, led by manufacturing and services
Source: Department of Statistics Malaysia
3
6.6
26.6
1Q-21 2Q-21
GDP, Annual change (%)
-5.0
13.9
1Q-21 2Q-21
GDP, Annual change (%)
-2.3
13.4
1Q-21 2Q-21
GDP, Annual change (%)
-10.4
40.3
1Q-21 2Q-21
GDP, Annual change (%)
Manufacturing MiningServices Construction Agriculture
Continued robust
external demand for
E&E products
Higher crude oil and
natural gas production
Improved consumer-
related activities,
especially in
April and May
Progress in large
infrastructure works
Weaker oil palm harvesting
activities amid labour
shortages
0.2
-1.5
1Q-21 2Q-21
GDP, Annual change (%)
5.9
9.0
1Q-21 2Q-21
GDP, Annual change (%)
Private Consumption
Source: Department of Statistics Malaysia
Private Investment Public Investment Public Consumption Net exports
Broad-based expansion
across both necessity
and discretionary
spending
Higher capital
expenditure particularly in
the services and
manufacturing sectors
Higher General
Government capital
spending
Higher growth in
supplies and services
Strong
external demand
4
-1.5
11.6
1Q-21 2Q-21
GDP, Annual change (%)
1.3
17.4
1Q-21 2Q-21
GDP, Annual change (%)
-18.6
12.0
1Q-21 2Q-21
GDP, Annual change (%)
0.8
34.3
1Q-21 2Q-21
GDP, Annual change (%)
Growth was driven by higher private sector spending and strong trade activity
Updated
Current account of the balance of payments registered a higher surplus of RM14.4 billion or
3.9% of GDP
Goods
Source: Department of Statistics Malaysia
Services Primary Income Secondary Income
5
36.6
40.7
1Q-21 2Q-21
-5.7 -9.5
1Q-21 2Q-21
-15.0 -15.4
1Q-21 2Q-21
-3.6
-1.4
1Q-21 2Q-21
Larger Goods Surplus
• External demand
supporting exports
Larger Primary
Income Deficit
• Higher investment
income accrued to
foreign investors in
Malaysia
RM billon RM billon RM billon RM billon
Marginally Larger
Services Deficit
• Larger deficits mainly in
transportation and other
business services
Updated
Manufacturing activity was supported by strong external demand,
but the services sector was weighed by mobility restrictions
Latest key indicators from the services sector, however, point
to a tentative turnaround in July
Note: Google mobility data, averaged weekly as at 7 August 2021, is expressed as the percentage change from the 3 January 2020 to 6 February 2020 baseline. Data on total transactions per day, averaged monthly,
refers to online and physical spending.
Source: Department of Statistics Malaysia, Bank Negara Malaysia, Google Mobility Community Report
6
Total Transactions
per day
MY Google Community Mobility Report
RM billion Mobility Changes Compared to Baseline (% decline)
Workplace
Retail, Recreation
& Grocery
-19.2
-40.1
-48.9
-36.9
28
Mar
9
May
20
Jun
1
Aug
-6.6
-21.0
-37.4
-26.7
28
Mar
9
May
20
Jun
1
Aug
2.2
2.1
1.7
1.8
Apr May Jun Jul
123.8
132.2
129.8
129.2
122.4
127.2
Jan Feb Mar Apr May Jun
114.8
119.5
123.4
121.3
118.7
108.8
Jan Feb Mar Apr May Jun
126.8
132.1
129.9
136.4
127.4
105.1
Jan Feb Mar Apr May Jun
IPI for Manufacturing IOWRTIPI for Electricity
Economic activity was weighed by tighter containment measures in the later part of 2Q 2021
Labour market showed improvement up till May-21, before deteriorating in June-21
Source: Department of Statistics Malaysia
* Tourism-related industries include wholesale retail, administrative and support services,
accommodation and F&B, transportation and storage, entertainment and recreation
Source: Employment Insurance System, Social Security Organisation (SOCSO)
5.0
5.3
4.9
4.7 4.7
4.6
4.7
4.8 4.8
4.9
4.8
4.7
4.6
4.5
4.8
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Unemployment rate
3.0
4.8
8.2 7.5
3.6 2.8 2.8 4.6 3.3 3.2 2.8 2.5 1.8 1.3 2.3
3.2
5.2
10.4
9.2
5.6
4.6 4.6
4.5
3.5 5.2
3.5 3.3 3.2 2.4
3.4
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Tourism-related*
Non tourism-related
Jobless claims
Thousands of persons
20
8 6
11
25
43
55
37
40
30
33
37
40
48
35
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Placement rates
35 new job placements
for every 100 jobs lost
Share of labour force (%) Number of new job placements for every 100 job losses
14,933
14,888
14,990
15,073
15,154
15,193
15,207
15,196
15,215
15,237
15,271
15,329
15,352 15,371
15,298
Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21
Employment levels
Thousands of persons
7
Updated
Rapid vaccination rate allowing the gradual relaxation of FMCO restrictions
Ongoing policy support for businesses and households
Continuation of large-scale infrastructure projects
Strong global demand conditions, particularly in major trade partners
Continued global tech upcycle
External factors
Domestic factors
Growth is expected to trough in 3Q 2021 before improving in 4Q 2021,
in line with strong external demand conditions and easing of containment measures
8
Key factors underpinning growth in 2H 2021
1
2
3
4
5
The strong global demand is expected to support the expansion of gross exports
Stronger gross export growth reflecting
broad-based expansion across products…
…underpinned by strong external
demand conditions…
Source: Department of Statistics Malaysia
* Share of 2020 Malaysia’s exports
Source: International Monetary Fund
…which will support employment in
export-oriented industries
1 Bank Negara Malaysia estimates
** Includes agriculture and mining sectors
9
-0.2
-14.9
5.1 5.2
18.0
44.0
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21
Gross Exports Growth Employment in export-oriented sectors1
2.3
-3.5
-6.5
8.1
7.0
4.6
PR China
(16.2%* of Malaysia's
exports)
US
(11.1%* of Malaysia's
exports)
EU
(9.6%* of Malaysia's
exports)
2020 2021f
Real GDP growth of Malaysia’s Key Trade Partners
2 million workers
Manufacturing sector
1.6 million workers
Services sector
0.8 million workers
Commodities sector**
% yoy% yoy
Updated
Global tech upcycle to support E&E production and exports
Rising demand for semiconductors for
work-from-home & medical devices…
… have benefitted Malaysia as a net
exporter of semiconductors
Source: World Semiconductor Trade Statistics, IC Insights, Department of Statistics Malaysia, International Trade Centre, Bank Negara Malaysia
Recent industrial engagements show
signs of continued positive outlook
10
Findings from BNM Industrial Engagements
6.8
13.0
19.7
24.0
WSTS Semiconductor
Sales
IC Insights Integrated Circuit
Sales
2020 2021f
Industry Forecasts for Global Semiconductor Sales
% yoy
Full order books
throughout 2021
Capacity expansion–
New plants & machinery
for industry 4.0
technologies
Introduction of new
products in fast-growing
segments
E.g. data centres and
medical devices
153.5
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
E&E Industrial Production Index
Index (2015 = 100), seasonally adjusted
9.0
4.7 4.3 2.6
-0.1 -1.0 -1.6
-7.4
TW MY SG KR IN TH CN VN
Global Semiconductor Trade Balance
% of 2020 GDP
2019 Avg.: 125.9
Fast vaccination rates and lower ICU utilisation will enable the swift easing of containment measures
Domestically, rapid vaccination rates with easing demands on healthcare capacity
would lead to better economic outcomes
11
In the baseline assumption, all states are expected to transition to
Phase 3 by October 2021 and Phase 4 by November 2021
Principles in Assuming Phased Transition
1 Refers to share to GDP in 2020
Note: ICU utilisation and vaccination rates refer to the 7-day average between 3 – 9 Aug 2021
Source: COVID-19 Immunisation Task Force, Ministry of Health, Department of Statistics, Malaysia and Bank
Negara Malaysia
0
20
40
60
80
100
120
140
160
0.0 1.0 2.0 3.0
2nd dose vaccination rate, % of state adult
population per day
IC
U
U
ti
li
s
a
ti
o
n
%
MY avg adult vaccination
rate: 1.2% per day
MY avg ICU utilisation: 91%
FastSlow
H
ig
h
L
o
w
Size of bubble indicates % to GDP1
ICU Utilisation and Vaccination Rate by State
Current ICU
utilisation
Current speed of
vaccination rate
Assumed Transition Path
Low Fast
Faster and earlier transition to
Phase 4
Low Slow
As vaccination rate improves,
transition to subsequent
phases is shorter
High Fast
1. Gradual transition to the
next phase as ICU utilisation
stabilises and improves
2. As vaccination rate
progresses and ICU
utilisation improves,
transition to subsequent
phases will be swift
High Slow
Greater adaptability to restrictions and ongoing policy support have partly mitigated
the impact of containment measures
Higher adoption of technology allow selected economic
activity to continue
Policy support to alleviate some of the financial burden of
households and businesses
12
1 Online banking transactions includes 1) financial transaction such as funds transfer and bill payment; and 2) non-
financial transactions including balance inquiries, statement request and loan applications
2 Network-based e-money
3 Refers to Micro, Small & Medium Enterprises
Online banking1
transaction volume
Merchants3 adopting
e-commerce
E-wallet2
transaction volume
Merchant registrations
for QR payments
468
million
1.0
million
509k
1H 2021
8.9
billion
+36%
247
million
+89%
0.6
million
+57%
490k
+19k
1H 2020
12.1
billion
As at end 1H 2021As at end 2020
✓ Targeted Wage Subsidy Program
✓ Enhanced hiring incentives (PenjanaKerjaya) and
re-skilling and up-skilling initiatives
✓ Various cash transfers (e.g. Bantuan Prihatin
Rakyat, Bantuan Khas COVID-19)
✓ Repayment assistance
✓ Various financing schemes
(e.g. Targeted Relief and Recovery Facility, High
Tech Facility, Automation & Digitisation Facility,
various microcredit financing)
✓ Tax incentive, relief and other cost reduction
measures
✓ Repayment assistance
Households
For cash flow
relief and
spending support
Businesses
For cash flow
relief and
business
continuity
Selected policy measures
Source: Bank Negara Malaysia, Malaysia Digital Economy Corporation, Ministry of Entrepreneur Development and Cooperatives
Ramp-up in commodity production and continued investment activity
would also provide the lift to growth
Source: Bank Negara Malaysia, Newsflows
Ramp-up in oil- and gas-related production Continued investment in large infrastructure projects
Operationalisation of
PFLNG2 facility
LNG price :
2021f: RM1200 – RM1300 / tonne
(2020: RM1,230 / tonne)
Restart of RAPID
operations in 4Q 2021
Brent oil price :
2021f: USD 62 - 72 / barrel
(2020: USD43 / barrel)
Natural
gas
Refined
petroleum
LRT3 (2018-2024)
• RM16.6 billion
MRT2 (2016-2022)
• RM30.5 billion
ECRL (2018-2027)
• RM50.0 billion
Pan Borneo Highways
(2016-2023)
• RM23.6 billion
Strategic initiatives catalysing the national digitalisation agenda
National E-Commerce
Strategic Roadmap 2.0
Digital Investment
Office
Malaysia Digital
Economy Blueprint
Jalinan Digital
Negara
13
Updated
Growth will be weighed by containment
measures, before recovering towards the
end of 2021
For 2021, Malaysia’s GDP is projected to grow between 3% and 4%
Source: Department of Statistics Malaysia, Bank Negara Malaysia
-10
-7
-4
-1
2
5
8
2018 2019 2020 2021f
Malaysia’s Real GDP Growth
3.0
4.4
-5.6
4.8
4.0
Annual change (%)
Strong recovery in export-oriented sectors
in tandem with improving global demand
Slow improvement in services sector,
particularly consumer and tourism-related
activities
14
Domestic
factors
External
factors
Near-term growth trajectory, however, is highly dependent on COVID-19 risk factors
15
Global vaccination progress
Highly contingent on vaccine uptake and
effectiveness
1
Materialisation of health
outcomes from vaccination
Effectiveness against new VOCs
2
Duration and stringency of
containment measures
The state of firms’ operating capacity and
consumer spending depends on FMCO
restrictions
1
Supportive global financial
conditions
Continued bouts of volatility given
COVID-19 uncertainties
3
Normalisation in global
economic activity
Severe new variants of concern
(VOCs) could necessitate reimposition
of containment measures
2
Progress of infrastructure
projects
Implementation timeliness subject to
operating and resource constraints
4
Policy certainty
Uncertainties could affect the undertaking
of investment decisions
3
Uncertainty on evolution of the pandemic and the containment measures would affect
growth trajectory
Vaccine Rollout Containment Measures Other Factors
▲ Majority of total population to
be vaccinated by end of
October 2021
▲ Vaccines effective against
prevailing variants
▼ Majority of total population to
be vaccinated by 1Q 2022
▼ Strain on the healthcare
system due to new variants
▲ Faster transition to Phase 4
by September 2021
▲ Faster improvement in the
labour market
▲ Higher pent-up demand
among households
▼ Prolonged tight containment
measures with Phase 4
starting in 2022
▼ Policy uncertainty could
affect the progress of key
investment projects and
investor confidence
▼ Slower recovery in the labour
market
Slower
Recovery
Faster
Recovery
16
Growth is expected to accelerate in 2022
Source: Bank Negara Malaysia
Expansion in commodity-related production capacity
(e.g. Ramp-up of RAPID production, commencement of SK320)
Faster progress in large infrastructure projects
(e.g. ECRL, LRT3, Pan-Borneo Highway and JENDELA)
Further expansion in global growth and trade activity
Key driver for improvement in production activities
Improvement in consumer sentiment
Catalysed by an increasing share of vaccinated population, easing of containment measures,
and the buildup in total household savings in the past year
17
Strengthening of labour market recovery
Key factor underpinning private consumption
Updated
Headline inflation recorded a temporary spike in 2Q 2021 and is expected to moderate in
subsequent quarters
As expected, headline inflation spiked in 2Q 2021, driven by
the transitory base effect from low fuel prices and lapse in
impact from electricity tariff rebates
Headline Inflation is expected to average between 2.0% and
3.0% for the year, while core inflation will remain subdued
18
2018 2019 2020 2021f
1Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
Annual change in inflation and contribution to headline inflation
0.5
4.1
0.7 0.7
-1
0
1
2
3
4
5
1Q 2021 2Q 2021
Fuel (ppt) Price admin ex fuel (ppt) Core inflation (ppt)
Price-volatile items (ppt) Headline Inflation (%) Core Inflation (%) 2
Core inflation would remain subdued
(0.5% – 1.5%) amid continued spare capacity in
the economy
Malaysia’s Headline Inflation
1.0 0.7
-1.2
3.0
2.0
Annual change (%)Annual change (%) /
Contribution to headline inflation (ppt)
1 Headline inflation is expected to moderate in
the near-term as base effects dissipate
Monetary policy remains accommodative
Source: Bank Negara Malaysia
• OPR remains low at 1.75%
• Monetary policy (MP) in 2021 to remain
accommodative
- Provide support to the economy
- Ensure price pressures remain
manageable
• Amid pandemic uncertainty, MP will continue
to be determined by new data and information
Jul-21: 1.75
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Overnight Policy Rate (OPR)
%
19
-2.1
-0.3 0.1 0.2 0.2 0.3
1.6
-4.1
-3.2
-1.7
-0.8
1.1
-1.4
-0.3
-4.5
-3.0
-1.5
0.0
1.5
THB PHP MYR SGD IDR KRW CNY
2Q 21 Since 1 July*
Domestic financial markets were affected by external and domestic factors
*Change in exchange rate against the US dollar from 1 July to 9 August 2021
Source: Bank Negara Malaysia, Reuters
*Regional countries include Indonesia, the Philippines, China, Singapore, Korea and Thailand.
YTD as at 9 August 2021.
Source: Bank Negara Malaysia, Bloomberg
Marginal appreciation of the ringgit in line with the broad-
based weakness in the USD
10-year MGS yields were broadly unchanged while equities
continued to decline amid the increase in domestic COVID-19
cases
-66.2
61.9
1.5 -6.5
-60.8
70.3
-18.6 -19.6
-100.0
-40.0
20.0
80.0
2020 1Q21 2Q21 Since 1 July
Malaysia Regional Average
Movement of 10-Year Sovereign Bond Yields
bps
2.4
-3.3
-2.6 -2.3
1.8
2.8 3.0
-1.1
-5
5
2020 1Q21 2Q21 Since 1 July
Malaysia Regional Average
Movement of Equity Prices
%
20
Movement of Exchange Rate against the US dollar
Net financing continued to expand during the quarter
Net financing expanded by 4.4% in the
second quarter
Higher total business loan disbursements
during the quarter
Note: Data refers to loans from banking system and development financial institutions (DFIs), *Excludes issuances by Cagamas and non-residents
Numbers may not add up due to rounding
Source: Bank Negara Malaysia
Demand for household loans remained
forthcoming, particularly for residential
properties
3.2
2.7
1.5
1.8
4.7
4.4
1Q 2021 2Q 2021
Outstanding corporate bonds*
Outstanding loans
Net financing
Net Financing*
Annual change, % / Cont. to growth, ppt
Household Loan Application for Residential
Property and Passenger Car
RM bn
21
200
180 179
204 228
234
1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21
2017-19 quarterly
average: RM197bn
Business Loan Disbursement
RM bn
52
42
87
80 81
95
16
10
24 22 21 19
1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021
Passenger Car
2017-19 quarterly average: RM60bn
2017-19 quarterly average: RM17bn
Residential Property
122
150 158
75 78 76
2017 - 19
Quarterly average
1Q 2021 2Q 2021
Non-SME SME
Non-SME and SME Loan Disbursement
RM bn
0
25
50
75
3Q20 4Q20 1Q21 2Q21
Investment-related Working Capital
Banks continue to support financing needs of SMEs, complemented by BNM’s Fund
Bank financing to SMEs expanded by 6%
Banks continue to drive the major share
of the financing disbursed to SMEs
Enhanced features of BNM’s Fund for
SMEs
SME Financing Outstanding1
1 Banking system and DFIs, 2 Banking system only
3 Investment-related financing includes loans for purchase of
securities, transport vehicles, non-residential property, fixed
assets, and construction purposes, among others.
Source: Bank Negara Malaysia
1Banking system and DFIs
Source: Bank Negara Malaysia and PFI submission (as at 30 June 2021) 1 For 1 existing financing, except those under BNM’s Fund for SMEs
2017-19 Quarterly Average
98%
from FIs’
own funds
BNM’s Fund
for SMEs
RM3.0 bn
disbursed to
more than
12,000 SMEs
SME Financing Disbursements in 1H 20211
% share
22
RM154
billion
1.6
9.6 10.0
6.0
3Q20 4Q20 1Q21 2Q21
RM bn
%yoy
SME Financing Disbursements2
Refinancing flexibility to reduce
overall borrowing costs1
Expansion of eligible sectors for the
Targeted Relief and Recovery Facility
• Open to viable SMEs in non-services
sector that are still not allowed to
operate in Phase 2 of the National
Recovery Plan (w.e.f. 5 Jul 2021)
• PENJANA Tourism Financing
Up to 50% of total approved
• Targeted Relief and Recovery Facility
Up to 30% of total approved
3
Of which: Of which:
High take-up of repayment assistance will cushion impact from FMCO
Proportion of households and SMEs under repayment assistance remains manageable
Source: Bank Negara Malaysia
Total borrowers under blanket moratorium (Apr-Sept 2020) and
Applications approved for repayment assistance (Oct 2020 to July 20211)
Proportion of loans under blanket moratorium in September 20202 and
under repayment assistance since
76.7
10.6 12.8
Sep-20 May-21 Jun-21
77.1
13.7 16.0
Sep-20 May-21 Jun-21
66.7
9.3 11.9
Sep-20 May-21 Jun-21
67.8
16.9 21.6
Sep-20 May-21 Jun-21
% share of accounts
% share of loan value
Households SMEs
49k
SMEs
61k
SMEs
Jun-21 and Jul-211Oct-20 to May-21
2.1m1.5m
23
Apr-20 to Sep-20
250k
SMEs
8.3m
Note:
1 July 2021 data covers period between 1 to 23 July 2021
2 Excludes borrowers that have resumed repayments over the 6-month moratorium period
% share of accounts
% share of loan value
Banking system is supporting borrowers and ongoing economic recovery
Banks continue to build up loan loss
provisions…
… amid elevated credit risks
1 Refers to loans that have exhibited deterioration in credit risk, for which banks are required to set aside provisions based on lifetime expected losses
2 Projected total capital ratio for December 2022, based on the Adverse Scenario 2 of the macro stress test released in the Financial Stability Review Second Half 2020
* MFRS 9 - Malaysian Financial Reporting Standard 9
Source: Bank Negara Malaysia
Capital and liquidity positions remain
supportive of intermediation activity
Gross Impaired Loans and Stage 2 Loans1 Ratios Total Capital Ratio and Liquidity Coverage RatioProvisions
1.37
1.56 1.58
1.627.8
9.9 9.9 9.7
Sep-20 Dec-20 Mar-21 Jun-21
Impaired Loans MFRS 9* Stage 2 Loans
17.9 149.1
Total Capital Ratio
Mar-21: 18.1
Dec-20: 18.9
Post-stress test2: 16.8
Liquidity Coverage Ratio
Mar-21: 145.1
Dec-20: 148.2
RM billion % %
24
27.1
30.7
32.8 33.8
1.49
1.68
1.77 1.81
0
0
0
0
0
0
0
0
0
0
0
Sep-20 Dec-20 Mar-21 Jun-21
Provisions As % of total loans
Updated
Growth improved in 2Q 2021, with economic activity weighed by
the FMCO in the later part of the quarter
The near-term outlook, however, is highly dependent on COVID-19 risk factors
Growth is expected to trough in 3Q 2021 before improving in 4Q 2021, in line
with strong external demand conditions and easing of containment measures
In summary…
25
The Malaysian economy is now projected to grow between 3% and 4% in 2021
Growth to accelerate in 2022 supported by a normalisation in economic activity amid a high
vaccination rate and continued improvement in external demand
Updated
Additional Information
Malaysia’s GDP growth improved to 16.1% in 2Q 2021
Annual change in GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics Malaysia
Add. Info
26
Real GDP
(% YoY)
Share, %
(2020)
2020 2021
2Q 1Q 2Q
Domestic demand
(excluding stocks)
93.8 -18.8 -1.0 12.3
Private Sector 75.2 -20.4 -0.9 13.0
Consumption 59.5 -18.5 -1.5 11.6
Investment 15.7 -26.1 1.3 17.4
Public Sector 18.6 -11.1 -1.5 9.7
Consumption 13.4 2.2 5.9 9.0
Investment 5.2 -40.1 -18.6 12.0
Net exports of goods and
services
6.5 -37.9 0.8 34.3
Exports 61.5 -21.7 11.9 37.4
Imports 55.0 -19.7 13.0 37.6
Change in stocks, RM bn -0.3 7.3 -1.7 15.8
Real GDP 100.0 -17.2 -0.5 16.1
Real GDP
(% YoY)
Share1 %
(2020)
2020 2021
2Q 1Q 2Q
Services 57.7 -16.2 -2.3 13.4
Manufacturing 23.0 -18.3 6.6 26.6
Agriculture 7.4 0.9 0.2 -1.5
Mining and Quarrying 6.8 -20.8 -5.0 13.9
Construction 4.0 -44.5 -10.4 40.3
Real GDP 100.0 -17.2 -0.5 16.1
Malaysia’s GDP growth improved to 16.1% in 2Q 2021
Percentage point contribution to GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics Malaysia
Add. Info
27
Real GDP
(Ppt contribution, %)
Share, %
(2020)
2020 2021
2Q 1Q 2Q
Domestic demand
(excluding stocks)
93.8 -17.7 -0.9 11.4
Private Sector 75.2 -15.8 -0.7 9.7
Consumption 59.5 -10.8 -0.9 6.6
Investment 15.7 -5.1 0.2 3.0
Public Sector 18.6 -1.8 -0.2 1.7
Consumption 13.4 0.2 0.7 1.3
Investment 5.2 -2.1 -0.9 0.5
Net exports of goods and
services
6.5 -2.6 0.0 1.8
Exports 61.5 -13.9 7.2 22.6
Imports 55.0 -11.3 7.1 20.9
Change in stocks -0.3 3.1 0.4 2.9
Real GDP 100.0 -17.2 -0.5 16.1
Real GDP
(Ppt contribution, %)
Share1 %
(2020)
2020 2021
2Q 1Q 2Q
Services 57.7 -9.3 -1.3 7.8
Manufacturing 23.0 -4.1 1.5 5.9
Agriculture 7.4 0.1 0.0 -0.1
Mining and Quarrying 6.8 -1.6 -0.4 1.0
Construction 4.0 -2.1 -0.5 1.2
Real GDP 100.0 -17.2 -0.5 16.1
Add. Info
28
Financial account registered a net outflow in 2Q 2021
Inflows in direct and portfolio investment accounts partially offset sizeable outflows in other investment account
*As per the IMF’s BPM5 classifications (i.e. directional basis)
Note: Numbers may not add up due to rounding
Source: Department of Statistics Malaysia; and Bank Negara Malaysia
RM billion
2020 2021
3Q 4Q Year 1Q 2Q
Direct Investment -2.2 1.6 2.8 1.4 4.2
Direct Investment Abroad (DIA)* -1.8 -5.2 -11.9 -7.8 -4.0
Foreign Direct Investment (FDI)* -0.3 6.8 14.6 9.1 8.2
Portfolio Investment -20.3 -7.1 -48.2 0.4 20.0
Residents -20.8 -19.9 -59.3 -14.2 -10.6
Non-residents 0.5 12.8 11.1 14.6 30.5
Financial Derivatives -0.5 -0.9 0.4 0.3 -0.6
Other Investment -8.1 -3.7 -31.1 13.9 -30.5
Financial Account Balance -31.1 -10.2 -76.2 16.0 -7.0
Continued FDI inflows amid more
moderate DIA outflows
Significant other investment outflows
due mainly to repayment of interbank
borrowings
Higher portfolio investment inflows
Financial Account by Component
Add. Info
29
Continued FDI net inflows in 2Q 2021
This was driven by larger reinvestment of earnings and sustained equity injections into Malaysia
Larger reinvestment of earnings, mainly in the
manufacturing sector
+RM7.0 billion in 2Q-21 (1Q-21: +RM4.1 billion)
Higher equity injections, mainly driven by additional
capital injection in the financial services sub-sector
+RM4.9 billion in 2Q-21 (1Q-21: +RM4.4 billion)
Sizeable debt outflows, primarily reflecting MNCs’
treasury management operations
-RM3.6 billion in 2Q-21 (1Q-21: +RM0.7 billion)
Source: Department of Statistics Malaysia, Bank Negara Malaysia
5.7
2.5
-0.3
6.8
9.1
8.2
-15
-10
-5
0
5
10
15
1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21
Equity and investment fund shares Reinvestment of earnings
Debt instruments FDI
Quarterly Net Foreign Direct Investment (FDI)
RM billion
Malaysia’s external debt remains manageable
* Consist of currency and deposit placements, and portfolio investments
** Consist of short-term financial institutions’ deposits, interbank borrowings and loans from unrelated counterparties
Source: Bank Negara Malaysia
Banks are resilient to face potential
external shocks…
…while corporates’ external debt is
mainly subject to prudential requirements
65.8
126.6
126.3
61.6
17.9
13.1
Corporate External Debt Breakdown by Instrument
(as at end-2Q 2021)
RM billion
Total: RM411.4 billion
Bonds and
notes
Loans
Other debt liabilities
Intragroup
loans
Trade
credits
NR holdings of domestic
debt securities
Subject to
prudential
requirements
On
concessionary
and flexible
terms
Backed by
export earnings
124.7
59.6
FCY Liquid external
assets
FCY External
debt-at-risk
Banks’ FCY Liquid External Assets* and FCY
External Debt-at-Risk**
RM billion
4.8
3.5
0
2
4
6
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
J
u
l
A
u
g
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
2020 2021
FCY USD
Banks’ FCY and USD Net Open Positions as
Percentage of Capital
% of total capital
Add. Info
…and Government’s external debt mainly
in ringgit
28.4
231.5
Government External Debt Breakdown by
Currency (as at end-2Q 2021)
RM billion
Total: RM259.9 billion
Foreign currency-denominated
Ringgit-denominated
Not affected by ringgit exchange rate
fluctuations
Comprise medium- and long-term loans and
bonds and notes, suggesting limited rollover risks
30
Since the March projection, several developments and key assumptions have altered the
growth outlook
1 MCO 2.0 was imposed in all states except Sarawak on 22 January, which ended in all states at 4 March. Targeted interventions based on localities and cluster locations only.
Source: International Monetary Fund (IMF) January and July 2021 World Economic Outlook (WEO), Bank Negara Malaysia
Add. Info
Changes in key assumptions since EMR publication on 31 March 2021
MCO in most states,
followed by targeted interventions1
Nationwide MCO3.0 and Full
Movement Control Order (FMCO)
Stricter containment measures
Higher commodity prices USD52 - USD62 USD62 - USD72
Better 2021 global growth
outlook
Global growth: 5.5% Global growth: 6.0%
Wider scope of stimulus
measures
• PERMAI Assistance Package
• PEMERKASA
• PERMAI Assistance Package
• PEMERKASA
• PEMERKASA+
• PEMULIH
EMR 2020 QB 2Q 2021
Rapid progress in vaccination
rates
Majority of total population
vaccinated by 1Q 2022
Majority of total population
vaccinated by end-2021
31
Brent crude oil (USD per barrel)
Unleashing of individual savings for consumption could provide additional lift to Malaysia’s
growth in 2021 and 2022
Vaccine Economics, Allianz Research (Dec 2020)
“Unleashed excess savings could bring close to +1.0ppt of GDP
growth in 2021 in Europe through additional consumer spending”
JP Morgan (Jan 2021)
"The household saving rate almost doubled last year to 12.9%
(US). This could translate into a potential $1.5 trillion supporting
pent-up consumer demand as the pandemic subsides."
Chief Economist, Bank of England (Dec 2020)
“Huge pent-up demand will help economy bounce back. As
people’s incomes held up and spending was restrained, they
have amassed around £100bn of excess savings. Once
vaccines are given to people this spending should accelerate.”
Source: Bank Negara Malaysia, various reports and newsflows
1
2
3
Malaysia: Total Stock of Individual Current and Savings Account
(CASA) Balances
RM billion
Significant rise in savings in some advanced economies,
which can potentially fuel pent-up demand in 2021
Similar trend was observed in Malaysia, with a sharp
increase in individual savings since March 2020
306.5
170
210
250
290
Jan-15 Feb-16 Mar-17 Apr-18 May-19 Jun-20
Individual CASA
Jun-21
32
Add. Info
Key Highlights of the
Revised Reference Rate Framework
1
2
3
4
Borrowing cost of your loan E. g. Base Rate,
Standardised Base Rate
Includes credit and liquidity
risk premiums, operating
costs and profit margins
Lending rate Reference rate
Spread= +
Base Rate (BR) Standardised Base Rate (SBR)
Not standardised across banks,
and components less transparent
to consumers
Standardised across banks
and will only change when
OPR moves
Beginning
1 August 2022
Bank B Bank CBank A
= =
Bank B Bank CBank A
= =
(Floating-rate)
Housing loans
(Floating-rate)
Personal loans
(Fixed-rate)
Hire purchase loans
SME or corporate
loans
Applicable to: Generally not applicable to:
The revised Reference Rate Framework (RRF) will only take place on 1 August 2022.
The new framework offers greater transparency and comparability of loans across
banks. This will help consumers make more informed decisions.
a. There are two parts to lending rates: the reference rate, which banks use as a basis
for pricing, and the spread. Under the revised RRF, the reference rate, which is the
Standardised Base Rate (SBR), will be the same across banks. The SBR will be linked
solely to the Overnight Policy Rate (OPR), which is determined by the Monetary Policy
Committee of Bank Negara Malaysia.
b. As such, borrowers can more easily compare lending rates across banks as the difference
in lending rates will only reflect the spread. This spread is usually different across
individuals and banks as it is based on your own credit risk and each bank’s risk appetite
and business strategies.
This new framework ONLY applies to new floating-rate loans and financing for
individuals beginning 1 August 2022.
If you are an existing borrower who has taken a loan before 1 August 2022, the
introduction of the Standardised Base Rate under this revised framework will not
affect your contracted lending rate.
However, as is the case now, borrowers’ lending rates may still be affected by other
factors, such as borrowers’ credit risk profiles (e.g. repayment track record).
For more detailed explanation, please refer to the Consumer Guide and Frequently Asked
Questions (FAQs) on the Revised Reference Rate Framework at bnm.gov.my/RRF2021
https://www.bnm.gov.my/RRF2021#gsc.tab=0
| Press Release |
06 Aug 2021 | International Reserves of Bank Negara Malaysia as at 30 July 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-30-july-2021 | null | null |
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The international reserves of Bank Negara Malaysia amounted to USD111.1 billion as at 30 July 2021. The reserves position is sufficient to finance 8.1 months of retained imports and is 1.1 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 30 July 2021
Bank Negara Malaysia
6 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
03 Aug 2021 | Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia Advancing the Financial Sector's Response to Climate Risk | https://www.bnm.gov.my/-/jc3-statement-financial-sector-response-to-climate-risk | https://www.bnm.gov.my/documents/20124/3770663/20210803-JC3-Flagship-Conference-2021-Report.pdf | null |
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Tuesday, 3 August 2021
3 Aug 2021
The Joint Committee on Climate Change (JC3) held its fifth meeting on 2 August 2021 to discuss the progress of its current priorities and ongoing initiatives in pursuing collaborative actions for building climate resilience within the Malaysian financial sector.
The JC3 continues to advance initiatives to strengthen the financial sector’s capacity in managing climate-related risks. Following the issuance of the Climate Change and Principle-Based Taxonomy (CCPT) in April 2021, a CCPT Implementation Group will be established to support its consistent and credible implementation by financial institutions. Twelve JC3 members have committed to early adoption of the CCPT, in advance of expectations for financial institutions regulated by BNM to classify and report their lending and investment activities in line with the CCPT from July 2022. The CCPT provides a common framework for the classification of climate risk-related exposures of financial institutions to support risk assessments and encourage financial flows towards greening the economy.
JC3 members also reviewed the progress of work undertaken to develop reference guides on climate risk management and scenario analysis, and climate-related disclosures. The JC3 expects to publish the reference guides in the fourth quarter this year. Concurrently, work will be undertaken by the JC3 to produce relevant localised reference climate scenarios for Malaysia1 to improve the understanding of the physical and transition impact of climate change under different climate pathways. This in turn will support risk assessments, better alignment of business strategies with climate targets, and climate-related disclosures by financial institutions. Members further discussed plans for the mandatory climate-related financial disclosures by financial institutions. Further details on these plans will be released by year-end.
The workplan of the newly established Sub-committee on Bridging Data Gaps was endorsed at the meeting. JC3 members supported the prioritisation of the initial use cases by the Sub-committee, which include data to support investment and lending decisions, macroeconomic modelling, stress testing, scenario analysis and product development. For the use cases, the Sub-committee will work with key public and private sector partners to identify critical data needs and map them to relevant data sources. The Sub-committee will create a catalogue of climate data that can be accessed by the financial sector.
The JC3 continues to actively collaborate and engage with the business community to support the financing needs of corporates and their supply chains in their transition to sustainable practices. The JC3 also continues to deepen its engagements with Government ministries and agencies to promote alignment of financial sector policies and strategies in support of a ‘whole of nation’ approach towards an orderly transition. Members discussed the recently launched Kuala Lumpur Climate Action Plan 2050 and agreed to engage with the Kuala Lumpur City Hall (DBKL) to explore the opportunities for the financial sector in addressing the sustainable financing needs of the city. Members also agreed to nominate JC3 representatives to the CEO Action Network (CAN), a coalition of corporate and SME CEOs committed to catalysing and accelerating adoption of sustainable practices in corporate Malaysia and the business ecosystem.
Following the successful organisation of the virtual JC3 Flagship Conference "Finance for Change" in June 2021, the JC3 has published a report on the key insights, discussions and calls to action from the conference, which can be found here.
Bank Negara Malaysia
Securities Commission Malaysia
3 August 2021
About the JC3
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysia financial sector. The JC3 is co-chaired by Jessica Chew Cheng Lian, Deputy Governor Bank Negara Malaysia and Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive Securities Commission Malaysia with members comprising senior officials from Bursa Malaysia and 19 financial industry players as well as relevant experts. The JC3’s initiatives and priorities are undertaken by its five sub-committees, namely Risk Management; Governance and Disclosure; Product and Innovation; Engagement and Capacity Building; and Bridging Data Gaps.
1 JC3 will build on the Central Banks and Supervisors Network for Greening the Financial System (NGFS) scenarios and country specific analysis.
Bank Negara Malaysia
3 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
JC3 Flagship Conference 2021 Rapporteur Report
23-25 JUNE 2021
REPORT BY JC3 SUB-COMMITTEE 4 ON ENGAGEMENT & CAPACITY BUILDING
An initiative by In collaboration with Co-organisers
Event partners
#FinanceForChange – JC3 Flagship ConferencePage 2
ABOUT JC3 FLAGSHIP CONFERENCE 2021
#FINANCEFORCHANGE
The implications of climate change on financial stability can no longer be
ignored. The financial sector has both the responsibility and ability to
improve its preparedness to manage the impacts of climate change, as well
as mitigate environmental, social and governance risks while supporting
the transition towards a low carbon economy through its products and
services.
As part of its efforts to further engage and build industry capability, the JC3
hosted the JC3 Flagship Conference on 23-25 June 2021.
This virtual conference aimed to accelerate sustainable development and
drive action within all Financial Institutions (FI) in Malaysia as well as
stakeholders in their value chain.
The Flagship Conference hosted over 6,300 participants from over 400
companies, including board members, CEOs, senior management and
practitioners, as well as FI clients, investees and other value chain players.
Source: Unsplash, @esmonde
#FinanceForChange – JC3 Flagship ConferencePage 3
PRESENTATION MATERIALS & PUBLISHED RECORDINGS
The conference recordings are available at the links below:
• Day 1 Morning
• Day 1 Practical Breakout: Institutional Banking
• Day 1 Practical Breakout: Consumer Banking
• Day 1 Practical Breakout: Asset Management
• Day 1 Practical Breakout: Insurance and Takaful
• Day 1 Practical Breakout: Ancillary Services
• Day 2
• Day 3
Featured videos:
• Caring for our planet – Sir David Attenborough
• Minister of Finance’s speech – YB Senator Tengku Datuk Seri Utama Zafrul bin
Tengku Abdul Aziz
• BNM Governor’s keynote – Datuk Nor Shamsiah Binti Mohd Yunus
• SC Chairman’s keynote – Datuk Syed Zaid Albar
• Bursa Malaysia Chairman’s keynote – Tan Sri Abdul Wahid Omar
• Call to Action – Tan Sri Dr. Jemilah Mahmood
Additionally, all speakers’ presentations are available at this link.
https://www.youtube.com/watch?v=rGjVhAod1ZU&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=AhTsbEJ1qH4&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=J7x0hWAFX5Q&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=szPmeTujGAk&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=FJmgagcEp1M&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=iOA-LGuWvCw&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=Wl5v1K-03yw&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=rjl8weRSdqQ&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=3g8UavR9QzQ&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=t-OIqv5-e7E&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=Cn5Dn7KyIhA&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=DmB2GROKcPA&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=yikwbqRO5mU&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=fbNUk527YXo&ab_channel=IBFIMYoutubeChannel
https://ibfimonline.com/programmes/jc3flagshipconference2021/
#FinanceForChange – JC3 Flagship ConferencePage 4
FOREWORD BY JC3 SC4 CHAIR
It is amazing to see what can be achieved and made possible when hearts and
minds unite. The Flagship Conference and this Flagship Report has been
brought about thanks to many individuals sharing a connection on social and
environmental matters, working in their spare time to make the event happen
and therefore this important document available. Thank you to them, and
thank you to you for spending time reading this report.
The financial services sector plays a critical role in supporting sustainable
business activities. From embracing the United Nations Sustainable
Development goals to developing the Value-Based Intermediation, the financial
institutions, Bank Negara Malaysia and the Securities Commission have made
positive strides in accelerating sustainable development and supporting the
transition towards a low carbon economy. The achievements by the financial
industry must be sustained with strategic plans and relentless execution to
shift the nature of capital and increasingly direct it in more sustainable ways.
Since the Joint Committee on Climate Change by Bank Negara Malaysia and the
Securities Commission (JC3) was established in 2019, it has contributed
towards building climate resilience within the Malaysian financial sector. In
2020, the JC3 sub-committees achieved several key initiatives including the
pilot implementation of the Climate Change and Principles-Based Taxonomy
developed for financial institutions. The Securities Commission also plans to
release a public consultation paper on Sustainable and Responsible Investment
Taxonomy by end of 2021 to provide more clarity and guidance in identifying
sustainable investment assets or activities.
Despite the backdrop of the global Covid-19 pandemic we find ourselves in, JC3
organised its Flagship Conference, #FinanceForChange, which gathered bright
minds and key decision makers from the financial sector and beyond to move
the conversations surrounding environmental, social and governance (“ESG”)
issues forward. This Flagship Report captures notable highlights from the
Flagship Conference. The JC3 Sub-Committee 4 on Engagement & Capacity
Building has taken succinct notes on each of the keynotes, panel discussions,
case studies, and fireside chats to make it easy for readers to find something
they can do today to make a difference, a cheat sheet if you will.
The financial institutions have recognised that ESG responsibilities have to be
embedded at the core of each organisation. With clear call-to-action and plans
spelled out at the conference and in the report, the financial industry is
committed to driving the climate resilience agenda to new heights and conduct
business in a way that also benefits the people.
I sincerely hope you find something in this report that helps you not only
enable a better tomorrow but doing something different today.
Yours,
Arsalaan Ahmed (Oz)
Chief Executive Officer, Al Rajhi Banking & Investment Corporation (Malaysia)
Berhad
Chair of the JC3 Sub-Committee 4, Engagement & Capacity Building
#FinanceForChange – JC3 Flagship ConferencePage 5
AGENDA DAY 1: SUSTAINABILITY AS A BUSINESS STRATEGY FOR FINANCIAL
INSTITUTIONS (FIRST HALF)
Date: 23 June 2021 (Wednesday)
Time Topics
9.00am Context setting: Caring for our planet
• Sir David Attenborough, Broadcaster and Naturalist
9.15am Opening keynote
• Datuk Nor Shamsiah binti Mohd Yunus, Governor, Bank Negara Malaysia
9.35am Call to action: COP26 and private finance for net zero
• Ken O'Flaherty, COP26 Regional Ambassador: Asia-Pacific and South Asia
10.05am Panel session: The role of finance
• Dr. Pakorn Peetathawatchai, President, The Stock Exchange of Thailand
• Dato’ Seri Ir. Dr. Zaini Ujang, Secretary General, Ministry of Environment and Water Malaysia
• Joanne Lee, Sustainable Finance Specialist, WWF
• Moderator: Arsalaan Ahmed, CEO, Al Rajhi Bank Malaysia
10.50am Break
11.00am Fireside chat: Sustainability as a strategy
• Teoh Su Yin, Senior Independent Director, CIMB Group
• Shayne Elliot, CEO, ANZ Bank
• Moderator: Mathew Nelson, Global Climate Change and Sustainability Services Leader, EY
11.30am Panel session: Sustainability principles and resources
• Yuki Yasui, Asia Pacific Region Coordination Manager, UNEP FI
• Butch Bacani, Programme Leader, Principles for Sustainable Insurance Initiative
• Matthew McAdam, Director, Asia Pacific, Principles for Responsible Investment
• Moderator: Adriana Kocornik-Mina, Metrics and Research Senior Manager, Global Alliance for Banking on Values
12.30pm Lunch
#FinanceForChange – JC3 Flagship ConferencePage 6
Date: 23 June 2021 (Wednesday)
AGENDA DAY 1: SUSTAINABILITY AS A BUSINESS STRATEGY FOR FINANCIAL
INSTITUTIONS (SECOND HALF)
Institutional Banking
1.30pm Examining the past, visualising the
future – by EY
2.30pm Environmental and social risk
management at the transaction
level
• Ryan W. Bjorkquist, Director,
Environmental and Social Risk
Management, Standard
Chartered Bank
3.30pm Break
3.45pm Transaction level case study
• Roger Charles, Executive
Director, Environmental and
Social Risk Management,
Standard Chartered Bank
4.45pm Sustainable finance opportunities
and client engagement
• Pierre Rousseau, Strategic
Advisor, Sustainable Business,
BNP Paribas
5.30pm Wrap up session
• Gilles Pascual, Strategy and
Transaction Leader, EY
5.40pm End
Consumer Banking
1.30pm Examining the past, visualising the
future – by EY
2.30pm Applying sustainability in retail
banking
• Bas Ruter, Director of
Sustainability, Rabobank
3.10pm Leveraging sustainability from
Islamic Banking
• Mohd Muazzam Mohamed,
CEO, Bank Islam Malaysia Bhd
3.30pm Break
3.45pm Sustainability risk in retail banking
• David Carlin, TCFD Lead, UNEP
FI
4.15pm Financial inclusion
• Antoni Ballabriga, Global Head
of Responsible Business, BBVA
4.55pm Supporting vulnerable customers
• Todd Stevenson, Chief Member
Outcomes Officer, Colonial
First State (CFS)
5.25pm Wrap up session
• Rafe Haneef, CEO of Group
Transaction Banking / Group
Chief Sustainability Officer,
CIMB
5.35pm End
Asset Management
1.30pm Examining the past, visualising the
future – by EY
2.30pm Resilient and sustainable
portfolios
• Marie Gauthier, Assistant Vice
President, Asia Sustainable
Finance, WWF
3.00pm Operationalising sustainability in
operations
• Daniel Ng, Investment
Manager Asian Equities,
Aberdeen Standard
Investments
3.45pm Break
3.55pm Case study
• Louise Kooy-Henckel,
Managing Director, Wellington
Management
4.55pm Sustainable investment: what do
your clients actually want?
• Nicola Stefan Koch, Deputy
Head of Retail Investment, The
2° Investing Initiative (2DII)
• Constanze Bayer, Senior
Analyst, The 2° Investing
Initiative (2DII)
5.25pm Wrap up session
• Angelia Chin-Sharpe, CEO and
Country Head, BNP Paribas
Asset Management
5.35pm End
Insurance and Takaful
1.30pm Examining the past, visualising the
future – by EY
2.30pm Applying sustainability in
insurance
• Junior Cho, CEO, Zurich
General Insurance Malaysia
Bhd
3.15pm Break
3.30pm Understanding sustainability risk
• Marcel Omar Papp, Head of
Reinsurance, SwissRe Malaysia
4.15pm Value-based intermediation (VBI)
for Takaful and its applications
• Elmie Aman Najas, Chairman,
Malaysian Takaful Association
(MTA)
5.00pm Journey towards sustainable
investment
• Luisa Evaristo, Chief Risk
Officer, Etiqa Insurance and
Takaful
• Norlia Mat Yusof, Chief
Investment Officer, Etiqa
Insurance and Takaful
5.45pm Wrap up session
• Marcel Omar Papp, Head of
Reinsurance, SwissRe Malaysia
5.55pm End
Ancillary Services
1.30pm Examining the past, visualising the
future – by EY
2.30pm Legal and compliance
• Kala Anandarajah, Partner,
Head of Competition &
Antitrust and Trade, Rajah &
Tann Singapore LLP
2.50pm Building and facilities
management
• Michael Long, Head of
Sustainability, Lendlease Asia
3.10pm Procurement
• Fredrik Andersen, Corporations
& Supply Chains Lead, CDP
3.30pm Break
3.45pm Human resources
• Karlijn van den Berg,
Transformation Lead, ABN
Amro Bank N.V.
4.05pm Branding, marketing and
communications
• Juan Aranols, CEO, Nestle
Malaysia
4.35pm Wrap up session
• Usman Ahmed, CEO, Citibank
Berhad
4.45pm End
#FinanceForChange – JC3 Flagship ConferencePage 7
AGENDA DAY 2: JC3 OUTCOMES AND IMPLICATIONS FOR FINANCIAL INSTITUTIONS
Date: 24 June 2021 (Thursday)
Time Topics
9.00am Keynote
• Datuk Syed Zaid Albar, Executive Chairman, Securities Commission Malaysia
9.15am Insights: BNM Climate Change and Principles-based Taxonomy: What this means for
FIs
• Hong Chin Pheng, Deputy Director, Financial Conglomerates Supervision Department,
Bank Negara Malaysia
9.35am Discussion session: Application and operationalisation of the Taxonomy
• Tigor M.Siahaan, President and CEO, CIMB Niaga
• Eqhwan Mokhzanee, CEO, AmBank Islamic Berhad
• Moderator: Wei Zhang, Senior Financial Sector Specialist, The World Bank
10.20am Panel session: Impact of the Taxonomy
• Eugene Wong, CEO, Sustainable Finance Institute Asia Limited
• Leonard Ariff Bin Abdul Shatar, Group Managing Director, DuoPharma Biotech
• Moderator: Fraziali Ismail, Assistant Governor, Bank Negara Malaysia
10.50am Break
11.05am Insights and discussion: Changing ESG disclosure requirements in the Malaysian
context
• Julian M Hashim, CEO, Bursa Malaysia Regulations Sdn Bhd
11.30am Masterclass: Evolving sustainability risk disclosure and practices
• Arina Kok, Director of Climate Change and Sustainability Services, EY
12.15pm Discussion session: Task Force on Climate-related Financial Disclosures (TCFD)
• Rosemary Bissett, Head of Sustainability Governance and Risk, National Australia
Bank
• Moderator: Arina Kok, Director of Climate Change and Sustainability Services, EY
12.45pm Lunch
Time Topics
1.45pm Masterclass: Sustainable finance products and innovation
• Gilles Pascual, Strategy and Transaction Leader, EY
2.45pm Panel session: Sharing experience on sustainable finance product development
• Tan Ai Chin, Managing Director, Senior Banker Client Coverage & Head of Global
Investment Banking, OCBC Bank (Malaysia) Berhad
• Jo Ann Eala, Vice President , Head of Sustainability Office, Bank of Philippine Islands
• Yulanda Chung, Head of Sustainability, DBS Bank
• Moderator: Mushtaq Kapasi, Managing Director, Chief Representative for Asia
Pacific, ICMA
3.45pm Break
4.00pm Fireside chat: The national agenda on sustainability
• Dr. Nagulendran Kangayatkarasu, Deputy Secretary General, Ministry of Environment
and Water Malaysia
• Moderator: Datin Seri Sunita Rajakumar, Founding Chairperson, Climate Governance
Malaysia
4.45pm Call to action: The power is in your hands
• Lewis Pugh, United Nations Ocean Advocate
5.15pm Closing plenary: Fostering a sustainability landscape in public finance
• YB Tengku Datuk Seri Utama Zafrul bin Tengku Abdul Aziz, Minister of Finance,
Ministry of Finance Malaysia
5.45pm Wrap up session
• Elena Almeida , Prosperity Programme Adviser, British High Commission
5.55pm End
#FinanceForChange – JC3 Flagship ConferencePage 8
AGENDA DAY 3: SUSTAINABLE FINANCE FOR THE PRIVATE SECTOR
Date: 25 June 2021 (Friday)
Time Topics
9.00am Keynote
• Tan Sri Abdul Wahid Omar, Chairman, Bursa Malaysia
9.15am Call to action: COVID-19 was just the dress rehearsal
• Tan Sri Dr. Jemilah Mahmood, Special Advisor on Public Health to the Prime Minister of Malaysia
9.35am Investor panel session: Sustainability is no longer an option
• Datuk Seri Amir Hamzah Azizan, CEO, Employees Provident Fund
• Jenn Hui Tan, Global Head of Stewardship and Sustainable Investing, Fidelity International
• Tan Sri Azman Mokhtar, Board Member, International Centre for Education in Islamic Finance (INCEIF)
• Moderator: Salmah Bee Mohd Mydin, Executive Director, Market Development, Securities Commission Malaysia
10.20am Break
10.30am Banking panel session: Changing ESG and climate requirements from banks
• Stuart Milne, CEO, HSBC Malaysia
• Shahril Azuar Jimin, Chief Sustainability Officer, Maybank
• Moderator: Helena Fung, Head of Sustainable Investment Asia Pacific, FTSE Russell
11.15am Panel session: Leveraging on sustainable finance for green growth
• Sharif James Zainal Aziz, Head of Group Corporate Sustainability Safety & Sustainability Department, Sime Darby Property Bhd
• Thomas Tsao, Founding Partner, Gobi Partners
• Iain Henderson, Managing Director, Asia Pacific Private Credit, ADM Capital
• Moderator: Dato Rauf Rashid, Country Managing Partner, EY
12.00pm Call to action: Businesses role in tackling climate change
• Maayke-Aimée Damen, Founder, Excess Materials Exchange
12.30pm End
#FinanceForChange – JC3 Flagship ConferencePage 9
HIGHLIGHTS
Context setting: caring for our planet BNM Governor’s keynote address
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Keynote speech
Speaker: Datuk Syed Zaid Albar
Closing plenary: fostering a sustainability landscape in public finance
Speaker: YB Tengku Datuk Seri Utama Zafrul bin Tengku Abdul Aziz
Day
1
Day
1
Day
2
Day
2
#FinanceForChange – JC3 Flagship ConferencePage 10
HIGHLIGHTS
Call to action: The power is in your hands Keynote speech
Speaker: Lewis Pugh Speaker: Tan Sri Abdul Wahid Omar
Call to action: COVID-19 was just the dress rehearsal
Speaker: Tan Sri Dr. Jemilah Mahmood
Day
2
Day
3
Day
3
DAY 1 MORNING SESSIONS
Day
1
9.00 am Context setting: Caring for our planet
9.15 am Opening keynote
9.35 am Call to action: COP26 and private finance for net zero
10.05 am Panel session: The role of finance
11.00 am Fireside chat: Sustainability as a strategy
11.30 am Panel session: Sustainability principles and resources
1.30 pm Examining the past, visualising the future
Sustainability as a business strategy for financial institutions
In collaboration with Co-organisers Event partnersAn initiative by
In collaboration with Co-organisers Event partners
Sir David
Attenborough
Broadcaster and Naturalist
“All of us, no matter who we are, have the responsibility to
care for the planet. The future of all humanity now depends
on us, and on none more than you, in the world of finance.”
Page 12 #FinanceForChange – JC3 Flagship Conference
#FinanceForChange – JC3 Flagship Conference
Key Takeaways/Messages:
Sir David Attenborough
Broadcaster and Naturalist
Day 1, 23rd June 2021 (09.00 am to 09.15 am)
Page 13
CARING FOR THE PLANET
• ASEAN is the site of valuable ecosystems, but is also the site of its degradation. Borneo has lost its rainforest at the fastest rate
in the world, with 30% loss in the last 40 years. In the same time period, Thailand and Vietnam lost half their mangrove forests,
which has resulted in the loss of protection from tidal waves and storms for their coastal and urban areas.
• At the moment, nature loss is not irreversible, and nature can recover provided that sufficient action is taken, such as through
mangrove replanting, rainforest rehabilitation and establishment of urban green spaces to continue performing its role in
temperature and flood regulation. ASEAN has played a central role in the recovery of nature and must continue to do so.
• The world must be rebuilt greener after Covid-19. By working together, global temperatures can be limited to 2 degrees to avert
a global catastrophe. As the host of COP26, the UK is calling for urgent action to put the protection of nature and biodiversity at
the centre of climate policies.
• Financial institutions are in a strategic position to drive change and to put the world on track to meet the Paris Agreement
targets. Actions must be taken now to avoid the irreversible effect of climate change.
In collaboration with Co-organisers Event partners
Datuk Nor Shamsiah
binti Mohd Yunus
Governor, Bank Negara Malaysia
Page 14 #FinanceForChange – JC3 Flagship Conference
“As the lifeblood of the economy, the response of the financial sector is crucial on
several levels – (i) to safeguard the resilience of the financial system through the
identification and management of climate-related risks; (ii) to direct financial flows to
low-carbon activities; and (iii) to support the transition by economic agents through
appropriate financial and risk solutions.”
#FinanceForChange – JC3 Flagship Conference
Datuk Nor Shamsiah binti Mohd Yunus
Governor, Bank Negara Malaysia
Day 1, 23rd June 2021 (09.15 am to 09.35 am)
Page 15
OPENING KEYNOTE (1/2)
Key Takeaways/Messages:
• Introducing frameworks for the identification and classification of economic activities that meet climate objectives and are
environmentally sustainable: Climate Change and Principle-based Taxonomy, sectoral guides under the Value-based
Intermediation Assessment Framework (VBIAF), the VBI Takaful Framework (VBITF).
• Strengthening practices in the treatment and disclosures of climate risks by financial intermediaries: Guidance Documents on
Climate Risk Management and Scenario Analysis and Application Guide for TCFD.
• Ramping up engagement and capacity building efforts to support climate action and risk management in the financial sector:
JC3 contributes to the formulation of national climate policies to promote alignment with the financial sector's response to
climate risks, and working with selected knowledge partners, will continue to deepen its stack of technical programmes.
• Identify and address critical data gaps in climate and environmental risks-related information: A new JC3 sub-committee on
data was established earlier this year.
#FinanceForChange – JC3 Flagship Conference
Datuk Nor Shamsiah binti Mohd Yunus
Governor, Bank Negara Malaysia
Day 1, 23rd June 2021 (09.15 am to 09.35 am)
Page 16
OPENING KEYNOTE (2/2)
.
Key Takeaways/Messages:
• Exploring various options to encourage better risk management approaches by outlier institutions - including through Pillar 2
capital requirements and supervisory assessments to reflect an inadequate consideration of climate risks.
• A four-year plan to prepare for industry-wide climate change stress tests at the counterparty level, supported by modelling of the
macroeconomic impact of climate shocks based on defined climate scenarios.
• Plans for mandatory climate-risk disclosures by financial institutions in consultation with the financial industry.
• The financial sector can fund more sustainability initiatives and incentivise investments in low carbon sectors, e.g. projects under
(i) the National Investment Aspirations (NIA) framework, (ii) the Malaysian Climate Action Council (MyCAC)'s plan for Malaysia to
be a hub in green economy, services and technology, and (iii) the Low Carbon Mobility Development Plan 2021-2030.
• In combining concessional financing and commercial funding, blended finance approaches can avoid excessive debt loads that
could increase future risks. There are also significant opportunities for financial institutions to support a green recovery from the
pandemic through the provision of transition financing linked to sustainable practices.
In collaboration with Co-organisers Event partners
Ken O’Flaherty
COP 26 Regional Ambassador
(Asia-Pacific and South Asia)
“It is estimated that disruptions from climate change like hurricanes, wildfires
and flooding cost over GBP250 billion every year. Those events cost lives,
incomes and property. Flooding in the UK in 2014 cost our economy GBP40
million, and floods in Malaysia in the same year were estimated to cost the
Malaysian economy GBP439 million. As climate change impacts worsen, such
costs will increase significantly. When it comes to climate change, the cost of
inaction could far outweigh the cost of action.”
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (09.35 am to 10.05 am)
Page 18
CALL TO ACTION: COP26 & BUILDING A PRIVATE FINANCE SYSTEM FOR NET ZERO (1/3)
Ken O’Flaherty
Regional Ambassador to Asia-Pacific and South Asia, COP26
Key Takeaways/Messages:
• The cost of inaction far outweighs the cost of action. Solar and wind are already cheaper than fossil fuels in ⅔ of the world, and are
expected to undercut coal globally by 2030.
• The global trade market in low carbon goods and services is expected to grow from GBP150 billion in 2015 to between GBP2.8
trillion and GBP1.5 trillion in 2050. Growth in these sectors means further opportunities for high value jobs.
• The cost of inaction is economically unsustainable. The Stern Review reported that climate change could cost the world more than
20% of its GDP each year if we continue to delay action.
• The low carbon transition requires a transformation of finance, and financial institutions need to take net zero into account, with
banks, insurers and investors adjusting their business model to a low-carbon economy. In total, USD100 billion needs to be
mobilised in public and private finance every year to assist vulnerable and developing countries.
• As host of COP26, the UK government has agreed on a strategic climate framework that focuses on four key goals: mitigation,
adaptation, collaboration and finance.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (09.35 am to 10.05 am)
Page 19
CALL TO ACTION: COP26 & BUILDING A PRIVATE FINANCE SYSTEM FOR NET ZERO (2/3)
Ken O’Flaherty
Regional Ambassador to Asia-Pacific and South Asia, COP26
Key Takeaways/Messages:
• To avoid the worst impacts of climate change, we need to focus on four key areas:
- Halve emissions by 2030 and achieve net zero by 2050. The UK urges all countries to develop ambitious emissions
reductions targets aimed at reaching net zero by 2050. This should include commitments on phasing out coal and ending
deforestation.
- Countries and communities should be supported with strategies to adapt to the impacts of climate change, such as
developing credible plans and mobilizing finance.
- International collaboration between governments, businesses and civil society need to accelerate to further drive
innovation, create stronger incentives for investors, and reduce the costs of the transition. The transition should especially
be made in the largest emitting sectors including power, road transport and land-use.
- Financial institutions need to transform and adjust their business model to cater to the low-carbon transition. In total,
USD100 billion needs to be mobilised in public and private finance every year to assist the transition in developing
countries.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (09.35 am to 10.05 am)
Page 20
CALL TO ACTION: COP26 & BUILDING A PRIVATE FINANCE SYSTEM FOR NET ZERO (3/3)
Ken O’Flaherty
Regional Ambassador to Asia-Pacific and South Asia, COP26
Key Takeaways/Messages:
• As a start, financial institutions may consider the following actions:
- Familiarise with the TCFD recommendations to understand sustainability and climate risks. TCFD is now mandatory in some
countries and may soon become the norm.
- Limit exposure to extremely high risk sectors such as by ending coal financing. The cost of renewable energy has fallen, and
solar and wind power are already cheaper than coal in some parts of the world. They are expected to be even cheaper by
2030, which will create demand and open opportunities for financing in that sector.
- Learn from other financial institutions and organizations, such as the JC3, who have the expertise and resources on
sustainability.
• To mobilise private capital for sustainability, the Bank of England launched the "COP26 Private Finance Agenda" which consists of 3Rs
(Reporting, Risk management, and Returns)
• The UK is committed to assisting financial institutions with adopting TCFD, accounting for climate risks without sacrificing returns and
is undertaking capacity building initiatives, such as the UK’s ASEAN Low Carbon Economy Programme.
#FinanceForChange – JC3 Flagship Conference
Dr. Pakorn Peetathawatchai
President, The Stock Exchange of
Thailand
Dato’ Seri Ir. Dr. Zaini Ujang
Secretary General, Ministry of
Environment and Water
Joanne Lee
Sustainable Finance Specialist, WWF
Arsalaan Ahmed (Oz)
CEO, Al Rajhi Bank Malaysia
Day 1, 23rd June 2021 (10.05 am to 10.50 am)
Page 21
PANEL SESSION: ROLE OF FINANCE (1/2)
Key Takeaways/Messages:
• Climate and nature related risks are becoming increasingly on the radar for investors and on the agenda of policymakers and
supervisors. Internationally, we surpassed 500 policy instruments related to ESG in 2020.
• Market mechanisms are one of the most effective channels to incentivise carbon consciousness for companies. For example, in
the sugar milling industry in Thailand, government initiatives incentivised the use of waste to generate additional products,
thus generating additional revenue to increase profitability for sugar milling companies.
• The incorporation of ESG in the financial sector can be taken through the following steps: (a) financial institutions should
practice active investing which involves the use of ESG information to screen companies, (b) go beyond negative screening and
conduct active ownership, (c) direct capital flow from institutional and retail investors into more ESG products, and (d)
normalise ESG in corporate practices.
#FinanceForChange – JC3 Flagship Conference
Dr. Pakorn Peetathawatchai
President, The Stock Exchange of
Thailand
Dato’ Seri Ir. Dr. Zaini Ujang
Secretary General, Ministry of
Environment and Water
Joanne Lee
Sustainable Finance Specialist, WWF
Arsalaan Ahmed (Oz)
CEO, Al Rajhi Bank Malaysia
Day 1, 23rd June 2021 (10.05 am to 10.50 am)
Page 22
PANEL SESSION: ROLE OF FINANCE (2/2)
Key Takeaways/Messages:
• To solve the issue of limited data availability, ESG-related data should be structured and made accessible for key actors in the
financial sector, and standardised across the industry to promote transparency and comparability. This will catalyse the
development of regional ESG products.
• Financial institutions should take into account natural capital risk, develop sector specific policies, set science-based targets
and decarbonisation pathways.
• The Malaysian government is currently developing carbon market guidelines, Nationally Determined Contributions (NDC), and
is identifying a low carbon emissions trajectory, with a biennial report to the UNFCCC in 2022.
• Climate governance needs to be strengthened to promote effective resource mobilisation within the organisation. The Climate
Action Council in Malaysia is a positive step towards setting commitments and policies to be carbon neutral, particularly at the
level of federal and state governments.
#FinanceForChange – JC3 Flagship Conference
Shayne Elliot
CEO, ANZ Bank
Teoh Su Yin
Senior Independent Director,
CIMB Group
Mathew Nelson
EY Global Leader for Climate Change and
Sustainability Services Leader
Day 1, 23rd June 2021 (11.00 am to 11.30 am)
Page 23
FIRESIDE CHAT: SUSTAINABILITY AS A STRATEGY
Key Takeaways/Messages:
• Over the past 5 years, there has been a massive uptake of interest in ESG and investors have become more progressive and
engaged with sustainability, balancing the focus between risk management and new market opportunities. This has been
complemented by a sense of partnership between customers and investors in shaping the climate transition.
• ESG awareness in Southeast Asia is not as mature as more developed markets. Recently, activist shareholders have been putting
increasing pressure on the carbon emitting sectors. For example, following increased pressure from activist shareholders, Shell
was tried and ruled by the Dutch court to cut its CO2 emissions. Stakeholder activism is likely to continue and will affect not just
the industry, but also financial institutions, both in the West and Southeast Asia.
• Financial institutions should build sustainability awareness and a genuine ESG culture in their organisation, starting at the board
level, ensuring that sustainability matters are taken seriously by the senior management.
• As sustainability is a relatively new topic, it is essential to ensure an appropriate approach is taken in building sustainability
governance. Appointing ESG advisors can be a good start before establishing a dedicated ESG committee who will be responsible
and accountable for ESG-related issues.
• An organisation can begin by leveraging available and existing resources in their talent development and internal capacity building.
#FinanceForChange – JC3 Flagship Conference
Yuki Yasui
Asia Pacific Region Co-ordination Manager,
UNEP FI
Matthew McAdam Director,
Asia Pacific at PRI
Butch Bacani Programme
Leader, PSI
Adriana Kocornik-Mina Metrics
and Research Senior Manager,
Global Alliance for Banking on
Values
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
Page 24
PANEL SESSION: SUSTAINABILITY PRINCIPLES & RESOURCES (1/2)
Key Takeaways/Messages:
• The Principles for Responsible Investment (PRI), Principles for Sustainable Insurance (PSI) and Principles for Responsible
Banking (PRB) are global initiatives that support commitment towards sustainability by providing the relevant assistance,
guidance and tools for financial institutions.
• Financial institutions should engage their clients by:
- Providing guidance, risk assessments and requiring a transition plan and net-zero commitments to reduce emissions.
- Providing sustainability advisory services, which can assist in target-setting and establishing benchmarks to allow
alignment of strategies with those targets.
- For financial institutions wishing to engage with their clients responsibly and sustainably, there is a wealth of
available resources from the PRI, PSI and PRB such as reporting and assessment tools which assess an organisation’s
readiness for the climate transition through establishing baselines, identifying strengths and weaknesses, setting
targets and monitoring, and tracking progress.
#FinanceForChange – JC3 Flagship Conference
Yuki Yasui
Asia Pacific Region Co-ordination
Manager, UNEP FI
Matthew McAdam Director,
Asia Pacific at PRI
Butch Bacani Programme
Leader, PSI
Adriana Kocornik-Mina Metrics
and Research Senior Manager,
Global Alliance for Banking on
Values
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
Page 25
PANEL SESSION: SUSTAINABILITY PRINCIPLES & RESOURCES (2/2)
Key Takeaways/Messages:
• Risk managers, insurers and investors, and insurance companies should be ahead of the curve on ESG issues to capture
opportunities on risk management and the new economy created by the transition to net zero.
• Investors should upgrade their governance for the low-carbon transition to mitigate legal, transition and other risks. This
includes adopting TCFD reporting which provides a mechanism to assess the resilience of an organisation’s strategy and
portfolio towards climate change.
• Lack of awareness, weak customer demand and the absence of necessary national policies are key challenges.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
Page 26
EXAMINING THE PAST, VISUALISING THE FUTURE (1/2)
Key Takeaways/Messages:
• Failure in climate action has been identified as being the second most likely and most impactful long-term risk. Climate
change is a source of economic and financial risks which includes physical and transitional risks.
• In formulating a strategy for sustainability, financial institutions can consider the following actions:
- Creating ESG products to cater to growing demand for sustainability.
- Transforming internal operations, such as establishing a unit to focus on sustainability.
- Impact investing in projects and activities with a positive social and environmental impact.
- Ensuring sustainable and inclusive methods of distribution of financial services to retail customers, for example
through developing voice assistance in banking apps for people with disabilities such as blindness.
- Collaborating through external partnerships between financial institutions and non financial institutions to offer
innovative ESG solutions for customers.
- Enhancing and strengthening policies by integrating ESG into operations and becoming signatories to industry-wide -
ESG frameworks.
Russel Marsh
Director, Strategy and
Transaction, EY
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Suzanne Biegel
Founder, Catalyst at Large
Co-founder, GenderSmart Inveting
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
EXAMINING THE PAST, VISUALISING THE FUTURE (2/2)
Russel Marsh
Director, Strategy and
Transaction, EY
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Suzanne Biegel
Founder, Catalyst at Large
Co-founder, GenderSmart Inveting
Page 27
Key Takeaways/Messages:
• There are large funding gaps in ESG-related investments in both public and private sectors. Between USD3.3 and USD4.5 trillion
is needed to achieve the UN SDGs, with the funding gap for investment in developing countries alone estimated at USD 2.5
trillion. Key gaps are in the power sector, transportation, telecommunications, climate change adaptation and ecosystems.
• We need to be conscious of how climate change can impact certain communities differently. Tackling gender inequalities can
positively impact climate resilience and financing for women can result in overall economic growth.
• It is imperative for financial institutions to embed and institutionalise climate-related risks, which can be achieved through the
following actions:
- Establishing an understanding, oversight and accountability for sustainability at all levels of the organisation by adapting
the three lines of defence approach to an ESG risk management framework.
- Ensuring both strategy governance (defining strategies) and compliance governance (conducting stress tests on
portfolios to inform proactive action) are in place.
- Integrating sustainability into every part of core business processes, from core operations to sales and customer service.
AFTERNOON SESSION
Day
1
2.30 pm
Environmental and social risk management at the
transaction level
Ryan W. Bjorkquist, Director, Environmental and Social Risk
Management, Standard Chartered Bank
3.45 pm
Transaction level case study
Roger Charles , Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
4.45 pm
Sustainable finance opportunities and client
engagement
Pierre Rousseau, Strategic Advisor, Sustainable Business, BNP
Paribas
5.30 pm Wrap up session
Gilles Pascual, Strategy and Transaction Leader, EY
Institutional Banking
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Ryan W. Bjorkquist
Director, Environmental and Social Risk
Management, Standard Chartered Bank
Day 1, 23rd June 2021 (02.30 pm to 03.30 pm)
Page 29
ENVIRONMENTAL & SOCIAL RISK MANAGEMENT AT THE TRANSACTION LEVEL
Key Takeaways/Messages:
• Data from SIGWATCH has highlighted a positive correlation between NGO activity on environmental and social issues, with the
activities in energy, finance and agriculture sectors - validating NGO criticism to a certain extent.
• In Southeast Asia, the most significant ESG issues are the violations of national legislation, impacts on communities and impacts on
landscapes, ecosystems and biodiversity.
• Position statements (on extractive industries, power, infrastructure, chemicals, agro-industries and cross-sector positions on climate
change and human rights) are a key reflection of financial institutions’ commitment and expectation. For example, a position
statement on fossil fuel can state that the bank will not finance new coal-fired power plants in any location, and any coal plant
expansions, retrofits or dedicated infrastructure. This can include a time-bound roadmap for clients who are dependent on thermal
coal, which begins with less than 80% dependence in 2024 and ends with less than 5% in 2030.
• Financial institutions should have an E&S risk measurement framework at the company level (an assessment form which utilizes a
stop light approach to provide a rating can be implemented) and transaction level (consultants may be engaged to provide guidance
and advice).
• In order to educate clients on E&S considerations, financial institutions should ensure that accurate and timely information is given.
This can include client training programs as well as reviewing sector position statements bi-annually.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (03.45 pm to 04.45 pm)
Page 30
TRANSACTION LEVEL CASE STUDY (1/3)
Key Takeaways/Messages:
• Adopting E&S standards raises the concern of clients shifting to other financial institutions with lower standards.
While this may have been true previously, E&S standards now provide a minimum baseline. In fact, some host
countries' regulations are likely to be higher than such standards.
• Timing is a determining factor in financing of a project. A project may already be in the construction phase and
therefore will affect the due diligence process of financial institutions. This is illustrated by a number of case
studies.
• Case Study 1: Road Upgrade Project. This project involved a government-led road widening project. Despite the
fact that under the bank’s framework, infrastructure projects are considered sustainable, this project had a
number of E&S issues, including resettlement, impacts on biodiversity habitats, and a lack of E&S baseline data
due to the absence of an environmental and social impact assessment report. These issues were addressed
through measures which were adopted by the government, including using overpasses to lessen impacts on the
wildlife corridor, establishing a grievance mechanism, and establishing a biodiversity management plan.
Roger Charles
Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (03.45 pm to 04.45 pm)
Page 31
TRANSACTION LEVEL CASE STUDY (2/3)
Key Takeaways/Messages:
• Case Study 2: Renewable Energy. This project posed a number of issues, including impacts on a biodiversity critical
habitat, risk of bird strikes for transmission lines, lack of hazardous waste management plans, and labour influx
who could spread communicable diseases. In order to mitigate the above issues, recommendations were adopted
by the project proponent for the power lines to be buried, to establish a biodiversity action plan and monitoring
program for species, and to leverage on rainwater harvesting and robotic cleaning after construction. The post-
project stage would also involve a cumulative impact study to manage possible future risks.
• Case Study 3: Waste to Energy. To mitigate the issues associated with the project, including a poor regulatory
environment, poor working conditions and the fact that construction had already commenced when the
application was made, the financial institution adopted a number of mitigation measures to meet E&S standards.
This included applying EU design standards, corrective action plans and implementing an E&S action plan with
time-bound milestones which were linked to the disbursement schedule.
Roger Charles
Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (03.45 pm to 04.45 pm)
Page 32
TRANSACTION LEVEL CASE STUDY (3/3)
Key Takeaways/Messages:
• Financial institutions should get engaged in the early stages of the project conception stage and determine their
area of influence. At this stage, financial institutions should further determine necessary information, refer to an
environmental and social impact assessment (ESIA) to identify risks and engage with consultants.
• Financial institutions can consider requiring the customer to change the project design where feasible, develop
action plans and strategies to mitigate risks. Financial institutions can further consider residual risk acceptance and
include E&S provisions in loan documentation for compliance, monitoring and reporting.
• Financial institutions should monitor E&S obligations, such as through ensuring frequency of monitoring, internal
reporting or independent monitoring. Financial institutions should also consider the format of lender reporting,
and other reporting measures such as regulatory and public disclosures.
Roger Charles
Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
#FinanceForChange – JC3 Flagship Conference
Pierre Rousseau
Strategic Advisor, Sustainable
Business, BNP Paribas
Day 1, 23rd June 2021 (04.45 pm to 05.30 pm)
Page 33
SUSTAINABLE FINANCE OPPORTUNITIES & CLIENT ENGAGEMENT (1/2)
Key Takeaways/Messages:
• The signatories of the Net-Zero Banking Alliance (NZBA) manage USD28.5 trillion in assets across 43 banks.
• The net-zero transition presents an enormous business opportunity, and USD100-125 trillion cumulative investments by
2050 will be required, which includes:
- Reducing carbon emissions through research and development of new and disruptive technologies.
- Gradually scaling up planet-positive activities, including carbon capture. Energy companies will be key to this,
however it will likely be implemented at a different pace across the world and laggards will be expected to catch
up through acquisitions.
- Gradually scaling-down carbon emitting activities through divestment, asset sales, disposals and decommissioning.
• Aside from adopting sustainability-linked loans, responsible sourcing, carbon offsetting / hedging and carbon reducing
investments, collaborative financing solutions are key for sustainable transformative projects, e.g. blended finance which
strategically uses development finance and philanthropic funds to mobilize private capital for emerging and frontier
markets (Tropical Landscape Finance Facility (TLFF).
#FinanceForChange – JC3 Flagship Conference
Pierre Rousseau
Strategic Advisor, Sustainable
Business, BNP Paribas
Day 1, 23rd June 2021 (04.45 pm to 05.30 pm)
Page 34
SUSTAINABLE FINANCE OPPORTUNITIES & CLIENT ENGAGEMENT (2/2)
Key Takeaways/Messages:
• For financial institutions, the sustainable transition must be accompanied by a systemic, collaborative and data driven
solution. This should include:
- Setting a vision with a strong corporate value, to address best operational efficiency, risk and opportunity
identification and avoid stressed assets.
- Addressing the systemic challenge through collaboration and data.
- Managing an uneven transition by setting short and long term targets and action at the strategy level.
- Reallocating capital to maximise profit with purpose.
• The integration of climate change, biodiversity loss and inequalities into a financial institution’s traditional business must
be supported by data and research such as the Science-Based Targets Initiative (SBTi). This must be done with the ultimate
solution of moving from carbon avoidance to carbon capture and nature preservation to nature regeneration in mind.
• The majority of the transition (risk) will be outside the balance sheet of the client, so supply chains must be sufficiently
covered in the net-zero strategy of financial institutions.
AFTERNOON SESSION
Day
1
2.30 pm Applying sustainability in retail banking
Bas Ruter, Director of Sustainability, Rabobank
3.10pm Leveraging sustainability from Islamic Banking
Mohd Muazzam Mohamed, CEO, Bank Islam Malaysia Bhd
3.45 pm Sustainability risk in retail banking
David Carlin, TCFD Lead, UNEP FI
4.15 pm Financial inclusion
Antoni Ballabriga, Global Head of Responsible Business, BBVA
4.55pm
Supporting vulnerable customers
Todd Stevenson, Chief Member Outcomes Officer, Colonial
First State (CFS)
5.25pm
Wrap up session
Rafe Haneef, CEO of Group Transaction Banking / Group
Chief Sustainability Officer, CIMB
Consumer Banking
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Bas Ruter
Director of Sustainability, Rabobank
Day 1, 23rd June 2021 (02.30 pm to 03.10 pm)
Page 36
APPLYING SUSTAINABILITY IN RETAIL BANKING
Key Takeaways/Messages:
• Sustainability provides a clear business case to motivate senior line management as it involves short term actions resulting in
positive financial impacts. By encouraging clients to adopt precision farming methods which use less fertilizer while achieving
the same yield, this enables the client to increase profitability and therefore attract more loans. An analysis of sustainability
performance of farmers showed that the least sustainable farmers are more likely to default. Prioritizing sustainability lowers
financial risks.
• Approach sustainability by aiming to move from regulation to mission, and integrate ESG and biodiversity into the climate
program as a crucial part of the sustainability framework.
• Conduct annual assessments of sustainability performance for every client that borrows more than EUR1 million, and set up a
carbon bank to help clients sequester carbon. Develop products and implement climate solutions such as a sustainable living
mortgage and green loan to improve energy efficiency and sustainability amongst customers and linking loan rates to food
waste reduction targets.
• Financial institutions can leverage the capacity and skills of non-financial organizations to assist with product development, e.g.
Engage with start-up to test the product on a small-scale and to conduct the energy analysis.
#FinanceForChange – JC3 Flagship Conference
Mohd Muazzam Mohamed
CEO, Bank Islam
Day 1, 23rd June 2021 (03.10 pm to 03.20 pm)
Page 37
LEVERAGING SUSTAINABILITY FROM ISLAMIC BANKING (1/2)
Key Takeaways/Messages:
• Islamic banking is widely known for its prohibition of usury, but it has a twin purpose. The other angle that is mostly missed
by people is the preservation of good and prevention of harm based on the Shariah.
• Islamic banking has a natural duty to generate positive impacts on people and the planet, which is parallel with the aims of
sustainable banking.
• Islamic banking principles are consistent with the sustainability agenda in the following ways:
- Islamic banking is in accordance with the principles of Shariah which is based on the values of the Al-Quran and Sunnah
that includes being ethical, sustainable, responsible, transparent, green and equitable.
- As Islam teaches that humans are the Khalifah (guardians) of the earth, Islamic banking must generate positive impacts
on people and the planet.
#FinanceForChange – JC3 Flagship Conference
Mohd Muazzam Mohamed
CEO, Bank Islam
Day 1, 23rd June 2021 (03.10 pm to 03.20 pm)
Page 38
LEVERAGING SUSTAINABILITY FROM ISLAMIC BANKING (2/2)
Key Takeaways/Messages:
• VBI provides a catalyst for Islamic banks to deliver the outcomes of Shariah through practices, conduct and offerings that
produce positive and sustainable impacts to the economy, community and environment. This is consistent with the increased
expectations of shareholders and other stakeholders, as customers are becoming increasingly critical of how their funds are
utilized.
• BNM together with a community of practitioners developed the VBI to create a common vision for Islamic banks to transform.
Hence, Islamic banks in Malaysia are encouraged to utilize the VBI framework (including the sectoral guides) to support their
transition journey.
#FinanceForChange – JC3 Flagship Conference
David Carlin
TCFD Programme Lead, UNEP FI
Day 1, 23rd June 2021 (03.45 pm to 04.15 pm)
Page 39
SUSTAINABILITY RISK IN RETAIL BANKING (1/2)
Key Takeaways/Messages:
• The UNEP FI conducted a number of pilot programs:
- The TCFD Banking Pilot Project Phase II explored the use of different climate scenarios, determined the availability of
climate-related data, refined Phase I methodologies, created a risk taxonomy and developed best practices surrounding
climate-related data and identified emerging expectations and standardized approaches for internal governance
processes and TCFD disclosures.
- The Physical Risk Assessment Framework pilot project aids financial institutions in translating physical risk data into
financial and economic impacts using climate scenario analysis, based on data from the agriculture and real estate
sector. The pilot uses different scenarios and converts impacts on outputs, data and methodologies of traditional risk
models into financial risks, and recommends how this data can fit into effective process governance and reporting.
- The TCFD Banking Program Report provides guidance and resources to support forward-looking scenario-based
assessments of physical risks and opportunities.
#FinanceForChange – JC3 Flagship Conference
David Carlin
TCFD Programme Lead, UNEP FI
Day 1, 23rd June 2021 (03.45 pm to 04.15 pm)
Page 40
SUSTAINABILITY RISK IN RETAIL BANKING (2/2)
Key Takeaways/Messages:
- This includes an assessment of data portals covering variables such as floods and cyclones, undertaking a physical risk
heat mapping exercise through mapping vulnerability indicators to sectors and sub-sectors, and undertaking a Physical
Risk Correlation Analysis of financial institutions’ portfolios to identify the relationship between asset values and
extreme events. This includes a step-by-step example of practicing correlation analysis using an Excel tool.
• For financial institutions who are beginning to incorporate sustainability risks, it must be noted that imperfect information is a
reality, and organizations must recognise that to enhance data collection and analyses. The first step is to identify exposure
through risk heat mapping and to make an inventory of these exposures to determine which risks are material. The second
step is to focus on identifying data based on which risk the financial institution is most exposed to.
#FinanceForChange – JC3 Flagship Conference
Antoni Ballabriga
Global Head of Responsible Business,
BBVA
Day 1, 23rd June 2021 (04.15 pm to 04.55 pm)
Page 41
FINANCIAL INCLUSION (1/3)
• Globally there are still 1.7 billion adults who do not use financial institutions in any capacity. Two-thirds of that population are
in possession of a mobile phone. There is also a significant gender gap on financial inclusion particularly in developing
economies. However, financial inclusion is gradually increasing.
• Access to finance is a key challenge to the growth of SMEs and is the second most cited obstacle to growing their business in
emerging and developing markets. The IFC estimates that 40% of SMEs in developing countries have an unmet financing need
of $5.2 trillion every year.
• Vulnerable or unequal groups in banking portfolios include those from low-income groups, migrant workers, ethnic minorities
and indigenous peoples and women. The factors driving this vulnerability include health issues, life events, resilience,
education, digital and financial access and considerations of culture and demographics.
• Financial institutions can use the SDG framework as a tool for strategic review and exploration of areas where greater impact
can be made, such as financial inclusion. Furthermore, the UN Principles for Responsible Banking can further align banks’
strategy and practice with the SDGs.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Antoni Ballabriga
Global Head of Responsible Business,
BBVA
Day 1, 23rd June 2021 (04.15 pm to 04.55 pm)
Page 42
FINANCIAL INCLUSION (2/3)
• The UNEP FI have identified guidelines for target setting in financial inclusion, which includes:
- Understanding the country context and relevant national policies.
- Setting baselines and identifying priorities.
- Setting specific, measurable, achievable, realistic and time-bound (SMART) targets.
- Determining measures and actions.
- Defining key performance indicators.
• In the future, it is expected that there will be a significant transformation and democratisation of finance as a result of greater
digitalization of services, and the role of financial institutions is to ensure universal access to banks.
• Financial institutions may define the vulnerability of customers by looking into country-specific metrics for income, location (such
as rural areas) and other characteristics including age, disabilities, gender, migrants, pensioners, refugees and unemployment.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Antoni Ballabriga
Global Head of Responsible Business,
BBVA
Day 1, 23rd June 2021 (04.15 pm to 04.55 pm)
Page 43
FINANCIAL INCLUSION (3/3)
• Financial institutions should develop financial solutions to promote financial inclusion and financial health, such as:
- Innovative products and reducing costs for vulnerable groups
- Digitalization
- Partnering with non-financial institutions to provide financial services in rural areas
- Providing financial education programmes and digital toolkits
- Providing financial advisory services to promote financial health
• Financial institutions can adapt internal processes within the business, including:
- Improving credit and risk policies to reduce discrimination
- Define standards and improve data to identify and monitor vulnerable clients
- Nurture a culture of fairness, inclusivity and human rights through training
- Improve remuneration strategies and policies to promote financial inclusion and financial health of customers
- Ensure accessibility and clarity of information
- Define and modify sales protocols for vulnerable groups
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Todd Stevenson
Chief Member Outcomes Officer,
Colonial First State (CFS)
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 44
SUPPORTING VULNERABLE CUSTOMERS (1/2)
Key Takeaways/Messages:
• Vulnerable customers are defined as those with:
- Personal or circumstantial conditions susceptible to detriment, including difficulty of members in obtaining and
retaining information or making decisions in their best interests.
- Circumstances surrounding personal (i.e literacy, non-English speaking, indigenous), situational (i.e financial hardship,
natural disaster, serious illness) or structural (access to expertise, asymmetry of information and power) factors.
• The approach used in identifying vulnerable customers can either be reactive, where customers self identify as vulnerable, or
proactive, where we use data to identify certain segments and individuals. Financial institutions can work with specialist
agencies to better understand vulnerable groups and relevant statistics, which helps in developing referral frameworks,
content and staff training.
#FinanceForChange – JC3 Flagship Conference
Todd Stevenson
Chief Member Outcomes Officer,
Colonial First State (CFS)
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 45
SUPPORTING VULNERABLE CUSTOMERS (2/2)
Key Takeaways/Messages:
• The examples of big and visible symbols that financial institutions could use to support vulnerable customers include:
- Program of living the life of a week as a pensioner
- Monthly staff education on the program run
- Link volunteering days for staff to the vulnerable groups
• There are a number of challenges in achieving financial inclusion, and what works for certain financial institutions in certain
countries might not work in other countries due to differing conditions and dynamics. Financial institutions can start by
training their staff on inclusion, identifying specialist teams, linking support for vulnerable customers with a business case,
building networks of support and developing methods of engaging with vulnerable individuals.
AFTERNOON SESSION
Day
1
2.30 pm
Resilient and sustainable portfolios
Marie Gauthier, Assistant Vice President, Asia Sustainable Finance,
WWF
3.00 pm
Operationalising sustainability in operations
Daniel Ng, Investment Manager Asian Equities, Aberdeen Standard
Investments
3.55 pm Case study
Louise Kooy-Henckel, Managing Director, Wellington Management
4.55pm
Sustainable investment: what do your clients actually
want?
Nicola Stefan Koch, Deputy Head of Retail Investment, The 2°
Investing Initiative (2DII)
Constanze Bayer, Senior Analyst, The 2° Investing Initiative (2DII)
5.25pm
Wrap up session
Angelia Chin-Sharpe, CEO and Country Head, BNP Paribas Asset
Management
ASSET MANAGEMENT
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Marie Gauthier
Assistant Vice President, Asia Sustainable Finance,
WWF Singapore
Day 1, 23rd June 2021 (02.30 pm to 03.00 pm)
Page 47
RESILIENT & SUSTAINABLE PORTFOLIOS (1/2)
Key Takeaways/Messages:
• Resilient and Sustainable Portfolios (RESPOND) is a tool developed by WWF for benchmarking asset managers’
approach to ESG. There are presently 30 asset managers being assessed on an annual basis.
• The tool is anchored on a responsible investment framework built on existing best practices, aligned with UN PRI and
TCFD.
• RESPOND users can demonstrate how investment decisions can influence portfolio companies’ sustainable operating
practices and increase resilience, gain new perspective when evaluating external managers’ RI capabilities, etc.
• European asset managers are leading on responsible investment relative to Asian asset managers.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (02.30 pm to 03.00 pm)
Page 48
RESILIENT & SUSTAINABLE PORTFOLIOS (2/2)
Key Takeaways/Messages:
• The following are recommendations for asset managers:
- Active ownership approaches can be strengthened especially among Asian asset managers.
- Set time-bound objectives (e.g. timeframe to track certification by investee companies) and transparency on
progress (e.g. including publicly disclosing progress).
- Reinforce accountability by enhancing training and incentives especially for senior management and board
levels.
- Climate commitments and strategies need to be anchored on setting science-based targets or translated into
robust expectations toward investee companies (e.g. TCFD, Climate Action 100+, SBTi).
- Sector policies need to supplement existing general responsible investment policies.
- Act on recognition of nature loss as a key risk (water risk, deforestation and biodiversity loss, ocean
sustainability) especially through investment expectation and voting.
Marie Gauthier
Assistant Vice President, Asia Sustainable Finance,
WWF Singapore
#FinanceForChange – JC3 Flagship Conference
Daniel Ng
Investment Manager Asian Equities,
Aberdeen Standard Investments
Day 1, 23rd June 2021 (03.00 pm to 03.45 pm)
Page 49
OPERATIONALISING SUSTAINABILITY IN INVESTMENTS
Key Takeaways/Messages:
• Two approaches to ESG investing: Considering ESG issues when building a portfolio (ESG incorporation through integration,
screening and thematic) and improving investees’ ESG performance (engagement and proxy voting).
• ESG factors are financially material and impact corporate performance (improving ESG has under recognised alpha or return
potential).
• Informed and constructive engagement helps foster better ESG performance of the companies as well as protecting and
enhancing the value of clients’ investments (e.g. analyse company’s risk management system and its business strategy, consider if
the company considered future trends and business opportunities, active engagement to identify areas of weakness and potential
areas for improvements)
• Engagements produce a more in-depth understanding of a company's management of ESG risks and opportunities than the
published KPIs which rely on quantitative scoring mechanisms.
• Engagement needs to be part of the investment process, with a focus on performance rather than conformance (e.g. instead of
asking whether a company has an independent board or a labour policy, ask whether the board is truly independent and how the
labour policy is implemented).
#FinanceForChange – JC3 Flagship Conference
Louise Kooy-Henckel
Managing Director, Impact Investing,
Wellington Management
Day 1, 23rd June 2021 (03.55 pm to 04.55 pm)
Page 50
CASE STUDY (1/2)
Key Takeaways/Messages:
• Five market inefficiencies are prevalent in sustainable investing: the market is overly focused on short-term growth, inconsistent and
backward-looking third party ratings, emerging market indexes are underexposed to structural development, most climate analysis is
focused on transition risk not physical climate risk, impact universe is not defined.
• Most scenarios used by the energy industry show fossil fuels losing their share to carbon-free energy sources. As a result, a financial
institution portfolio manager invested in an oil and gas company aligned with the energy transition and eliminated an overweight
position in a company lacking a credible strategy.
• Human capital management is a critical part of a company’s success, particularly after a merger and acquisition (M&A). In this example,
after engaging with a records management and support services company which was in the business acquisition process, poor employee
engagement with the acquired business was recorded. Following this, the CEO announced his retirement, which signalled a further lack
of direction and messy transition period ahead.
#FinanceForChange – JC3 Flagship Conference
Louise Kooy-Henckel
Managing Director, Impact Investing,
Wellington Management
Day 1, 23rd June 2021 (03.55 pm to 04.55 pm)
Page 51
CASE STUDY (2/2)
Key Takeaways/Messages:
• Informed and active ownership is key. “Constructivists” approach influencing positive outcomes for clients which can be done through
active management and multi-disciplinary industry analysis across equity, credit and ESG research.
• The sustainable investment landscape is rapidly evolving and exploiting market inefficiencies provides the opportunity to add value,
although there is no “one size fits all”.
• Material ESG issues are strategic business issues that vary across sectors and companies. There is an implicit opportunity cost for
companies which focus on immaterial ESG issues.
• Focus on the ESG issues most relevant to investment outcomes.
#FinanceForChange – JC3 Flagship Conference
Nicola Stefan Koch
Deputy Head of Retail
Investment, 2DII
Constanze Bayer
Senior Analyst, 2DII
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 52
SUSTAINABLE INVESTMENTS: WHAT DO YOUR CLIENTS ACTUALLY WANT? (1/2)
Key Takeaways/Messages:
• Sustainable and responsible investment has reached the mainstream in Europe and is seen as a multi billion dollar market opportunity by
retail investors. 60-70% of retail investors are interested in sustainable products, and 40% of retail investors want to have an impact with
their investments.
• Most advisors focus on financial and risk topics rather than extra-financial topics, and ignore the diverse opinions of their clients.
Reflecting this, in the retail investing market it was found that many financial products were too broad, taking a ‘one size fits all’
approach which did not reflect actual diverse client demand, and many products were overselling their potential impact, which increases
the risk of greenwashing.
• There is a mismatch between what clients actually want and what they are offered. This includes:
- Client demand for a real world impact, but there is an absence of real world evidence of impacts so far from retail investors.
- Clients have diverse interests which ‘one size fits all’ products do not address.
- Clients wish for voting power in shareholder meetings but no voting mechanisms exist thus far.
- Clients wish for exclusion, however for retail investors exclusions are not transparent, and exclusions according to revenue
thresholds may not be the same as exclusions according to a specific scope of the value chain.
#FinanceForChange – JC3 Flagship Conference
Nicola Stefan Koch
Deputy Head of Retail
Investment, 2DII
Constanze Bayer
Senior Analyst, 2DII
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 53
SUSTAINABLE INVESTMENTS: WHAT DO YOUR CLIENTS ACTUALLY WANT? (2/2)
• It is important to understand the clients’ needs, which can be achieved by choosing the right elicitation format and methodology (e.g.
natural language programming, investment game, focus groups), assessing the clients’ financial and sustainability understanding and
objectives (e.g. impact, exclusion, risks and opportunities), and understanding the clients’ financial and sustainability preferences (e.g.
impact objectives, exclusion criteria, SRI strategy).
• Be transparent and use marketing claims which are based on evidence. Match products according to your clients’ real financing and
sustainability preferences.
• Financial institutions are encouraged to properly identify their clients’ environmental, social and financial needs and preferences, to
minimize mismatch between the supply and demand in sustainable investment and products.
Key Takeaways/Messages:
AFTERNOON SESSION
Day
1
2.30 pm Applying sustainability in insurance
Junior Cho, CEO, Zurich General Insurance Malaysia Bhd
3.30pm Understanding sustainability risk
Marcel Omar Papp, Head of Reinsurance, SwissRe Malaysia
4.15 pm
Value-based intermediation (VBI) for Takaful and its
applications
Elmie Aman Najas, Chairman, Malaysian Takaful Association (MTA)
5.00pm
Journey towards sustainable investment
Luisa Evaristo, Chief Risk Officer, Etiqa Insurance and Takaful
Norlia Mat Yusof, Chief Investment Officer, Etiqa Insurance and
Takaful
5.45pm Wrap up session
Marcel Omar Papp, Head of Reinsurance, SwissRe Malaysia
Insurance and Takaful
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Junior Cho
Chief Executive Officer, Zurich General
Insurance Malaysia
Day 1, 23rd June 2021 (02.30 pm to 03.15 pm)
Page 55
APPLYING SUSTAINABILITY IN INSURANCE
• Sustainability matters as it opens up business opportunities, identifies the right risks and returns, impacts the brand and
reputation, and strengthens positive contributions to society. There is growing sustainability expectation from stakeholders,
including customers, investors and regulators.
• Drives action across three pillars: 1) a climate neutral future; 2) sustainability in work; and 3) enabling a digital society.
• Embed sustainability as part of underwriting through four stages of underwriting: idea conception, product development,
product testing and continuous review and improvement.
• Adjust portfolios to current market conditions and continue to innovate products and services to answer new market demands
and support clients’ transition journey.
• Examples of innovative products include (i) the development of a commercial insurance policy which supports sustainability
standards in infrastructure, and (ii) the Sustainable Mobility Ecosystem platform which incentivises green transportation
practices, Electric Vehicle (EV) ownership and carbon offsetting.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Marcel Omar Papp
Head of Reinsurance, SwissRe
Malaysia
Day 1, 23rd June 2021 (03.30 pm to 04.15 pm)
Page 56
UNDERSTANDING SUSTAINABILTY RISKS (1/2)
Key Takeaways/Messages:
• Climate change is the largest long-term threat to the global economy and Malaysia could lose 36% of its GDP by 2050 in the
event of a 2-2.6 degree temperature rise. The threats of climate change not only pose business risks, but also regulatory
and reputational risks, therefore underlining the importance of incorporating sustainability into underwriting.
• The focus on underwriting has also been on exclusion which gives the short-sighted view that sustainability considerations
are restricting and slowing down business opportunities. In reality, sustainability and climate change considerations are
creating new markets, hence the underwriting is now shifting to include both inclusion and exclusion. As an example, the
growing renewable energy energy sector has created the need for insurance products to cover the risks associated with
new technologies, such as protection against lack of solar irradiation for solar panels.
#FinanceForChange – JC3 Flagship Conference
Marcel Omar Papp
Head of Reinsurance, SwissRe
Malaysia
Day 1, 23rd June 2021 (03.30 pm to 04.15 pm)
Page 57
UNDERSTANDING SUSTAINABILTY RISKS (2/2)
Key Takeaways/Messages:
• The reasons for incorporating sustainability into underwriting include:
- Increasing regulatory pressure across the globe and in the Southeast Asian region, such as the BNM CCPT.
- Investors are widely making sustainability commitments and targets which are being realized into actions.
- The reputational risk associated with not adopting a sustainable business model.
- Improved risk selection where underwriting unsustainable activities will result in negative impacts on the overall portfolio.
- Tapping into a new business opportunity, such as creation of new insurance products.
• The aim of the ESG framework is to mitigate, identify and eliminate sustainability risks. The framework is based on umbrella
policies on human rights and environmental protection, sector specific guidelines, an exclusion list and the overall ESG process.
The ESG process involves a sustainability check on a transaction which uses an assessment tool that classifies the risk. If the risk is
high, it will be escalated to a panel of ESG experts who will further analyse the risk and recommend a decision.
• Sustainability poses both risks and opportunities, hence insurers should include both inclusions and exclusions principles in its
underwriting process.
#FinanceForChange – JC3 Flagship Conference
Elmie Aman Najas
Chairman, Malaysian Takaful Association (MTA)
Day 1, 23rd June 2021 (04.15 pm to 05.00 pm)
Page 58
VALUE-BASED INTERMEDIATION FOR TAKAFUL (VBIT) & ITS APPLICATIONS IN TAKAFUL (1/2)
• Takaful is a part of Islamic finance, which is driven by the core values of Maqasid Shariah, which emphasises positive value
creation and prevention of negative impacts. Through the extension of Maqasid Shariah and Islamic economics, Takaful is able
to balance social responsibilities with aspirations of sustainable prosperity.
• VBI for Takaful serves as a framework to guide the Takaful industry to implement value-based agenda and achieve positive
socio-economic impact in accordance with the Maqasid Shariah.
• Takaful operators may apply the VBI for Takaful by integrating it in the corporate value intent, using comprehensive KPIs to
assess the progress and effectiveness of their VBI for Takaful initiatives, and also employing impact-based disclosure to
demonstrate their commitment in delivering sustainable values.
• The challenges faced by VBI for Takaful include achieving the expected financial requirements/ returns, acquiring the right
expertise, ensuring capital availability, and building trust and awareness level among takaful players and the stakeholders.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Elmie Aman Najas
Chairman, Malaysian Takaful Association (MTA)
Day 1, 23rd June 2021 (04.15 pm to 05.00 pm)
Page 59
VALUE-BASED INTERMEDIATION FOR TAKAFUL (VBIT) & ITS APPLICATIONS IN TAKAFUL (2/2)
• By embracing and highlighting sustainability, Takaful embraces the Maqasid Shariah, therefore strengthening the unique value
proposition of Takaful.
• Takaful operators should also view the VBIT as a long-term investment strategy which will create new market opportunities.
• Takaful operators can collaborate on capacity building through engagements between Takaful operators, and non-financial
institutions such as NGOs and regulators.
• Takaful operators should develop solutions that meet the needs of stakeholders, such as overcoming financial illiteracy, and
providing coverage for under-represented segments such as the disabled community.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Luisa Evaristo
Chief Risk Officer, Etiqa
Insurance and Takaful
Day 1, 23rd June 2021 (05.00 pm to 05.45 pm)
Page 60
JOURNEY TOWARDS SUSTAINABLE INVESTMENTS
Key Takeaways/Messages:
• Sustainable investment is about long-term risk management. Therefore, it rewards insurers in the long-term while also
generating positive environmental and social impacts.
• Integrating ESG into the Investment Risk Management Process could be achieved by aligning ESG risks to Enterprise Risk
Management (ERM) Risk Categories and setting up an effective governance structure which covers risk identification and
assessment, risk measurement, risk control and mitigation, monitoring, and reporting.
• Financial institutions must properly identify the ESG risks they are exposed to, integrate ESG elements into their risk
management, and undertake actions to properly integrate ESG into their financial analysis.
• Investors may integrate ESG risk into their financial analysis through selecting ESG data providers, identifying ESG scoring
methodology, developing an inhouse model combining the ESG data and ESG scoring methodology, and fostering
collaboration with ESG partners (e.g. UN PRI).
Norlia Mat Yusof
Chief Investment Officer, Etiqa
Insurance and Takaful
AFTERNOON SESSION
Day
1
2.30 pm
Legal and compliance - Why legal and compliance is critical
to an organisation's sustainability efforts?
Kala Anandarajah, Partner, Head of Competition & Antitrust and
Trade, Rajah & Tann Singapore LLP
2.50 pm
Building and facilities management - Roles in supporting
sustainability
Michael Long, Head of Sustainability, Lendlease Asia
3.10 pm Procurement – Roles in supporting sustainability
Fredrik Andersen, Corporations & Supply Chains Lead, CDP
3.45 pm
Human resources – Why HR and people play a significant
role in sustainability?
Karlijn van den Berg, Transformation Lead, ABN Amro Bank N.V.
4.05 pm
Branding, marketing and communications – Roles in
supporting sustainability
Juan Aranols, CEO, Nestle Malaysia
4.45 pm Wrap up session
Usman Ahmed, CEO, Citibank Berhad
Ancillary Services
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Kala Anandarajah, PBM
Partner, Head of Competition &
Antitrust and Trade, Rajah & Tann
Day 1, 23rd June 2021 (2.30 PM to 2.50 PM)
Page 62
WHY LEGAL & COMPLIANCE IS CRITICAL TO AN ORGANISATION’S SUSTAINABILITY EFFORTS?
Key Takeaways/Messages:
• At the national level, sustainability is manifested in legislation, regulation and industry codes. As an example, Singapore has
adopted legislation for environmental sustainability standards in new buildings and retrofits.
• Beyond the national level, supra-national laws and regulations may cover carbon pricing, transboundary haze, corporate
governance and sustainability reporting requirements. This includes ASEAN laws focusing on particular environmental issues
including pollution control and air quality. There are also regional guidelines such as the ASEAN Cooperation on Environment.
• Contractual requirements are a key issue in sustainability compliance. When entering into agreements, contractual requirements
must be detailed and clarified, including at the government and supply chain levels, with reference to the sustainability
requirements of a project.
• Financial institutions must manage the complexities of sustainability compliance effectively, including:
- Recognising that every industry, company or institution will have a different sustainability priorities and compliance
approaches.
- Taking into account different structures, terms and conditions for financing different sustainable projects.
- Extending sustainability practice and commitment must cover supply chain management, such as policies in procurement,
responsible sourcing and resource use.
#FinanceForChange – JC3 Flagship Conference
Michael Long
Head of Sustainability, Lendlease Asia
Day 1, 23rd June 2021 (2.50 PM to 3.10 PM)
Page 63
BUILDING & FACILITIES MANAGEMENT: ROLES IN SUPPORTING SUSTAINABILITY
Key Takeaways/Messages:
• 27-30% of the world’s emissions are associated with the built environment. Of this share, the largest emissions come from the
materials used in constructing the building, and emissions from the tenant use.
• From this, most of emissions from scope 1 comes from the fuels used in building construction and gas to heat and cook within
buildings, scope 2 comes from the power consumed during the operation of businesses and assets within those buildings, and
scope 3 comes from the construction materials used and energy consumed by the tenants.
• Organizations should set clear and measurable emissions reductions targets relevant to their material impacts and core business,
and aim for net zero emissions by 2040.
• The organization’s governance and strategy should be aligned to support their emission reduction targets. This may include
adopting the TCFD recommendations, assessing climate change scenarios, undertaking climate risk assessments, putting a shadow
price on carbon and assessing and publicly reporting climate-related risks from major projects and investments.
• Measuring and modelling business and carbon scenarios can be used to identify potential business and decarbonization initiatives
to support the path to net zero.
#FinanceForChange – JC3 Flagship Conference
Fredrik Andersen
Corporations & Supply Chains Lead,
CDP
Day 1, 23rd June 2021 (3.10 PM to 3.30 PM)
Page 64
PROCUREMENT: ROLES IN SUPPORTING SUSTAINABILITY
Key Takeaways/Messages:
• Companies and financial institutions must utilise available data on environmental disclosure from their suppliers to assess and
manage their supply chain’s environmental impact, and make well-informed and sustainable procurement decisions.
• According to CDP data in 2020, on average, supply chain carbon emissions are 11.4 times higher than operational emissions,
making environmental sustainability assessment at the procurement stage all the more necessary. The retail, apparel and services
sectors are among the ones recording the highest supply chain to operational and direct emission ratio.
• CDP also has a 3-phase strategy plan in engaging their members’ supplier, namely: 1) Understanding the importance of supply
chain in climate change; 2) Improving suppliers’ emission performance through company-wide target setting and emissions
reduction initiatives; and 3) Tracking emission reductions in the supply chain via continuous engaging and monitoring. Committing
towards sustainability at the procuring stage will over time cascade action throughout the value chain
• It is crucial for corporations to address supply chain / scope 3 emissions to meet the goals of the Paris Agreement.
#FinanceForChange – JC3 Flagship Conference
Karlijn van den Berg
Transformation Lead, ABN Amro
Day 1, 23rd June 2021 (3.45 PM to 4.10 PM)
Page 65
WHY HR AND PEOPLE PLAY A SIGNIFICANT ROLE IN SUSTAINABILITY?
Key Takeaways/Messages:
• Harmonisation between an organisation’s values and strategies are crucial in leading transformational change towards the
bank’s long term goals.
• Long-term sustainability goals in the following three areas: 1) climate change; 2) circular economy; and 3) social impact,
aligning with the United Nations Sustainable Development Goals.
• Internal social policies include fair and equal hiring, providing personal development and upskilling opportunities and great
ambassadors.
• Corporations embed sustainability in their leadership development and employee journey to unleash the potential of the
talents, believing that good corporate and working culture will shape employees who will in turn make good changes in the
organisation.
#FinanceForChange – JC3 Flagship Conference
Juan Aranols
Chief Executive Officer, Nestle
Malaysia
Day 1, 23rd June 2021 (4.05 PM to 4.25 PM)
Page 66
BRANDING, MARKETING & COMMUNICATIONS: ROLES IN SUPPORTING SUSTAINABILITY
• Corporations should embrace sustainability holistically throughout the business operations, from sustainable sourcing to
packaging and recycling efforts - thus providing consumers with more options for sustainable consumption and inspiring them
to lead a more sustainable lifestyle.
• The Milo Sayang Bumi initiative involves the use of solar powered vans, reducing plastic through the introduction of paper
products, and reducing plastic in landfills through the collection of waste from consumers. The Milo Sayang Bumi initiative
feeds into their other projects, such as the conversion of used cartons into Green roof tiles. On a wider scale, Nestle further
promotes sustainability through Project ReLeaf, with an ambition to plant 3 million trees in Malaysia by 2023.
• To achieve net zero by 2050, it is key to address emissions throughout the value chain and implement regenerative agriculture
and nature-based solutions such as agroforestry and land restoration.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship ConferencePage 67
DAY 1 SESSIONS HIGHLIGHTS
Panel Session: The Role of Finance Fireside Chat: Sustainability as a Strategy
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Asset Management Wrap Up Session Panel Session: Sustainability Principles and Resources
DAY 2 MORNING
Day
2
9.00 am Keynote speech
9.15 am Insights: BNM Climate Change and Principles-based Taxonomy:
What this means for FIs
9.35 am Discussion session: Application and operationalisation of the
Taxonomy
10.20 am Panel session: Impact of the Taxonomy
11.05 am Insights and discussion: Changing ESG disclosure requirements in
the Malaysian context
11.30 am Masterclass: Evolving sustainability risk disclosure and practices
12.15 pm Discussion session: Task Force on Climate-related Financial
Disclosures (TCFD)
JC3 outcomes and implications for FIs
In collaboration with Co-organisers Event partnersAn initiative by
Day
2
In collaboration with Co-organisers Event partners
Datuk Syed Zaid
Albar
Executive Chairman, Securities
Commission Malaysia
Page 69 #FinanceForChange – JC3 Flagship Conference
“The gravity of climate change and its inherent economic and financial impact requires
the financial sector to prepare, adapt and intensify the drive to achieve sustainability. The
window for us to make the necessary and fundamental change is narrowing. All
stakeholders – Government, regulators, financial institutions, investors, companies and
their value chains – must play their part to help achieve the sustainability agenda. We
are all in this together.”
#FinanceForChange – JC3 Flagship Conference
Datuk Syed Zaid Albar
Executive Chairman, Securities Commission Malaysia
Day 2, 24th June 2021 (9.00 AM to 9.15 AM)
Page 70
KEYNOTE (1/2)
Key Takeaways/Messages:
• Sustainability must be at the heart of the financial system. The approach has to shift from avoidance to active participation, with
financial intermediaries as the stewards of climate action. Greater adoption of these and the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) would be a game changer for the Malaysian financial industry moving forward.
• The Malaysian Code on Corporate Governance (MCCG) was revised to encourage companies to address sustainability risks and
opportunities in an integrated and strategic manner. While there is no explicit requirement for boards to set net zero targets, the MCCG
highlights increasing stakeholder expectation for more action including lowering of carbon emissions.
• Adoption of MCCG 2021 as well as board buy-in will be crucial to meaningfully shift the needle towards reliable environmental and
sustainability risk reporting.
• Capital Markets Malaysia has established three centres of excellence to inculcate the principles of sustainability in the wider ecosystem.
The SC recently launched NaviGate, a Capital Market Green Financing series, to heighten corporate awareness on suitable market-
based financing avenues.
• The Securities Commission has identified an SRI Taxonomy for the capital market as a critical building block to facilitate greater product
diversity and accelerate the development of SRI as an asset class. This will give issuers, investors, intermediaries, and asset owners
more clarity and guidance in identifying sustainable investment assets or activities.
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.00 AM to 9.15 AM)
Page 71
KEYNOTE (2/2)
Key Takeaways/Messages:
• Through the ASEAN Capital Markets Forum (ACMF), the SC is involved in two key initiatives: the ASEAN Taxonomy for Sustainable
Finance and the ASEAN Sustainability-linked Bond Standards to provide an avenue for issuers to raise funds to meet their
sustainability targets.
• It is vital for the financial and capital markets to assist businesses in their sustainability journey and to lead the nation’s sustainability
agenda. Financial intermediaries must take it upon themselves to identify and enable conditions for innovation in sustainability-
linked products and solutions to thrive.
• We can expect increased demand for green and sustainability funding across all types of businesses, including micro, small and
medium-sized enterprises (MSMEs).
• Market-based instruments such as green, social and sustainability bonds and sukuk will also provide opportunities for investors to
participate in this emerging asset class.
• Currently, 64% of SRI sukuk issuances are for renewable energy projects. We need to expand this base by targeting transformative
technologies and industries with high spill over benefits for the country.
Datuk Syed Zaid Albar
Executive Chairman, Securities Commission Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.15 AM to 9.35 AM)
Page 72
INSIGHTS: BNM CLIMATE CHANGE & PRINCIPLE-BASED TAXONOMY: WHAT THIS
MEANS FOR FINANCIAL INSTITUTIONS (1/3)
Key Takeaways/Messages:
• The BNM Climate Change and Principle-based Taxonomy (CCPT) provides a framework to assess the impacts of economic
activities on the climate and broader environment. The CCPT adopts an inclusive approach which avoids the outright exclusion of
economic activities by taking into consideration the different stages of the transition and development across economic agents.
• BNM’s supervisory expectations are for the financial institutions to utilise the CCPT to help customers transition and to direct
financing to more sustainable activities. This is done through promoting a better understanding of the business model of
customers, their present and potential impacts to climate change and environmental degradation, and how they address this
through remedial measures.
• The CCPT encourages financial institutions to adopt a whole-of-bank approach to ensure that broader climate considerations are
implemented at all levels, including in the risk management framework, due diligence process and through staff capacity building.
• The CCPT gives financial institutions the ability to assess business proposals that contribute to these principles and align them to
risk appetites. It further allows financial institutions to nurture the transition through encouraging high carbon intensive
customers to shift to a low-carbon transition.
Hong Chin Pheng
Deputy Director, Financial Conglomerates
Supervision Department, Bank Negara Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.15 AM to 9.35 AM)
Page 73
INSIGHTS: BNM CLIMATE CHANGE & PRINCIPLE-BASED TAXONOMY: WHAT THIS
MEANS FOR FINANCIAL INSTITUTIONS (2/3)
Key Takeaways/Messages:
• The CCPT compares a number of metrics against 5 guiding principles which define climate and environmental objectives to
classify economic activities in the following categories:
- Climate supporting activities which meaningfully contribute to climate objectives without causing significant harm to
environmental objectives.
- Transitioning activities where the business undertakes efforts to transition to low carbon and sustainable practices, but
the business may still cause some harm to the broader environment. Financial institutions must therefore assess these
businesses' level of commitment and actions to implement remedial measures.
- Watchlist activities for businesses which do not display any commitment or are not serious in their commitment to
remediate the harm identified and are not undertaking initiatives to transition to sustainable practices.
Hong Chin Pheng
Deputy Director, Financial Conglomerates
Supervision Department, Bank Negara Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.15 AM to 9.35 AM)
Page 74
INSIGHTS: BNM CLIMATE CHANGE & PRINCIPLE-BASED TAXONOMY: WHAT THIS
MEANS FOR FINANCIAL INSTITUTIONS (3/3)
Key Takeaways/Messages:
• Adoption of the CCPT facilitates greater preparedness to make more meaningful climate-related disclosures in the future and
increases expectations for sustainability disclosures by customers. To promote the implementation of the CCPT, BNM is
working to socialise the taxonomy to its stakeholders through establishing a CCPT implementation group to track progress,
understand the challenges associated with its adoption, and report achievements.
• BNM is in the process of developing additional use cases to explore the application of the CCPT in insurance and takaful
underwriting, and will continue making supervisory engagements to enhance the taxonomy.
Hong Chin Pheng
Deputy Director, Financial Conglomerates
Supervision Department, Bank Negara Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.35 AM to 10.20 AM)
Page 75
APPLICATON & OPERATIONALISATION OF THE TAXONOMY (1/3)
Key Takeaways/Messages:
• Financial institutions must manage the local contexts of climate objectives. For example, for CIMB Indonesia, the phasing out of coal
financing by 2040 poses challenges as Indonesia’s energy supply is currently mostly generated through coal and therefore the
renewable transition will take time to materialise.
• Financial institutions can learn from a number of key lessons in operationalizing the CCPT and sustainable finance including:
- Incorporating sustainability into products and services such as through green finance solutions which impact the tenure, pricing
and terms offered to a customer depending on their climate change classification according to the CCPT.
- Using the CCPT guiding principles to establish clear risk acceptance criteria that can be followed by producing an ESG risk score
which overlays credit and climate risk assessment. Financial institutions can integrate the CCPT classifications and VBI sectoral
guides in this process and can develop internal policies and guidelines to further guide the classification.
- Adopting a nurturing approach by recognising a customer’s remedial measures to avoid a disruptive and outright exclusion of
activities. While noting that when engaging with clients to adopt more sustainable practices and transition, the workload and
time-frame is dependent on the client’s readiness and commitment level.
Tigor M.Siahaan
President and CEO,
CIMB Niaga
Eqhwan Mokhzanee
Chief Executive Officer
AmIslamic Bank
Wei Zhang
Senior Financial Sector
Specialist, World Bank
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.35 AM to 10.20 AM)
Page 76
APPLICATON & OPERATIONALISATION OF THE TAXONOMY (2/3)
Key Takeaways/Messages:
- Establishing a list of recognised sustainability-related certifications.
- Conducting sustainability-related disclosures such as by adopting the Task Force for Climate-Related Financial
Disclosures (TCFD) reporting framework.
- Undertaking internal adjustments for governance, such as by appointing board of director members responsible
for sustainability issues and establishing a sustainability working unit.
- Creating a general awareness and culture on sustainability and incorporating it into Key Performance Indicators.
• Adopting a nurturing approach by recognising a customer’s remedial measures is key to avoid a disruptive and
outright exclusion of activities. While noting that when engaging with clients to adopt more sustainable practices and
transition, the workload and time-frame is dependent on the client’s readiness and commitment level.
Tigor M.Siahaan
President and CEO,
CIMB Niaga
Eqhwan Mokhzanee
Chief Executive Officer
AmIslamic Bank
Wei Zhang
Senior Financial Sector
Specialist, World Bank
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.35 AM to 10.20 AM)
Page 77
APPLICATON & OPERATIONALISATION OF THE TAXONOMY (3/3)
Key Takeaways/Messages:
• Financial institutions may face a number of challenges in the implementation of the CCPT and practicing sustainable
finance. This includes access to and organisation of sustainability-related data of financial institutions’ own activities
and those of clients.
• Incorporating sustainability into products and services such as through green finance solutions which impact the
tenure, pricing and terms offered to a customer depending on their climate change classification according to the
CCPT.
• Using the CCPT guiding principles to establish clear risk acceptance criteria that can be followed by producing an ESG
risk score which overlays credit and climate risk assessment. Financial institutions can integrate the CCPT
classifications and VBI sectoral guides in this process and can develop internal policies and guidelines to further guide
the classification.
Tigor M.Siahaan
President and CEO,
CIMB Niaga
Eqhwan Mokhzanee
Chief Executive Officer
AmIslamic Bank
Wei Zhang
Senior Financial Sector
Specialist, World Bank
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (10.20 AM to 10.50 AM)
Page 78
IMPACT OF THE TAXONOMY (1/2)
Key Takeaways/Messages:
• A range of different ESG initiatives and guidance have been issued to the financial industry. The CCPT framework provides a certain
level of consistency and homogeneity on ESG issues.
• The CCPT can support financial institutions in moving the sustainability agenda, including the low-carbon transition and
development of innovative and sustainable products. This is done by:
- Allowing financial institutions to rely on the taxonomy to determine what investments and activities qualify as green for the
client.
- Acting as a tool for financial institutions to align their sustainability goal with lending requirements and better allocate
resources with reference to these requirements.
- Promoting better classification of assets for financial institutions.
- Assisting financial institutions in developing sustainable banking products and services to drive the sustainability agenda.
• Financial institutions should come up with more robust frameworks when applying the taxonomy to determine what sort of
actions to take when engaging with clients to achieve climate goals.
Leonard Ariff Bin
Abdul Shatar
Group Managing Director, DuoPharma
Biotech
Eugene Wong
CEO, Sustainable Finance
Institute Asia Limited
Fraziali Ismail
Assistant Governor, BNM
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (10.20 AM to 10.50 AM)
Page 79
IMPACT OF THE TAXONOMY (2/2)
• The CCPT standardizes and guides data requirements for financial institutions and potential customers. Clients need to be
educated and financial institutions need to gather data and manage the weightages given to qualitative and quantitative data.
Clarity should be provided on the cohesion of data and how to address data gaps (such as metrics for emission intensity) and
consistency of cross-border issues. While noting that a single formula will not work across the industry (for example, SMEs
clients will require higher levels of nurturing, assistance and education specific to their context), the CCPT allows the industry to
agree on the commonalities and provides a base of investors to communicate their position and expectations to customers.
• The government should take a more holistic approach for climate action as the issue of decarbonisation is beyond the goals of
financial institutions or individual industry sectors.
• Efforts through operational alignment, client education, and taxonomy homogeneity are key to driving their interoperability.
Leonard Ariff Bin
Abdul Shatar
Group Managing Director, DuoPharma
Biotech
Eugene Wong
CEO, Sustainable Finance
Institute Asia Limited
Fraziali Ismail
Assistant Governor, BNM
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Julian M Hashim
CEO of Bursa Malaysia Regulation
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 80
INSIGHTS & DISCUSSION: CHANGING RISK DISCLOSURE REQUIREMENTS IN THE
MALAYSIAN CONTEXT
Key Takeaways/Messages:
• Effective ESG management extends beyond risk management to capitalise on business opportunities created through growth
from the climate transition in the future.
• Sustainability matters can be considered material when they reflect significant economic, environmental and social impacts for
companies or substantively influence the assessments and decisions of stakeholders.
• A Bursa review of Malaysian public listed companies’ disclosures identified 5 key areas of weaknesses which need to be
addressed: Prioritization of material matters, disclosure of performance indicators, setting targets, linking sustainability
performance to remuneration, integration of sustainability strategies into business.
• The 2021 priority is to review Bursa’s sustainability reporting framework to enhance availability, quality, and comparability of
sustainability-related disclosures. This also mandates the adoption of sustainability related disclosures by the PLCs as the
stakeholders’ expectation on this has increased in the recent years.
• The JC3 Sub Committee 2 is focusing on developing a practitioner/industry driven guide for adopting the TCFD recommendations
localized to Malaysian context which will be completed by end of 2021. This will be aligned with other local reporting practices,
such as those from BNM’s CCPT and Bursa’s sustainability requirements.
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 81
EVOLVING SUSTAINABILITY RISK DISCLOSURE AND PRACTICES (1/3)
Key Takeaways/Messages:
• EY’s Climate Risk Disclosure Barometer 2020, which analysed the reporting disclosures of the top 100 PLCs in Malaysia, found that
climate change is acknowledged but not sufficiently addressed. In particular, there was:
- Limited focus in climate risk reporting
- A lack of details on climate risk management in enterprise risk management
- Underutilization of scenario analysis
- Limited disclosure of climate-related targets and metrics
• The MCGG (2021) recommends 5 best practices to strengthen oversight of sustainability:
- The board and management should be responsible and have the mandate for the governance of sustainability in the company.
This includes setting strategy, priority and targets, and delegating material sustainability matters to senior management.
- The board should ensure that sustainability strategies, priorities, targets and performance are communicated to internal and
external stakeholders.
- The board should take action to understand sustainability issues relevant to the company including climate-related risks and
opportunities.
- Reviews of board and senior management performance in addressing material sustainability risks and opportunities should be
incorporated into performance evaluations, including KPIs and in the board remuneration committee.
Arina Kok
Director, Climate Change and Sustainability Services, EY
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 82
EVOLVING SUSTAINABILITY RISK DISCLOSURE AND PRACTICES (2/3)
- The board should set up a steering committee to share the management of sustainability and identify a designated person
within management to be the focal person to manage sustainability strategically, including making strategy recommendations at
the board level
• In sustainability risk disclosures, organizations should consider the following aspects:
- The identification, prioritization and materiality of ESG risks, including how these risks are captured by the risk management and
sustainability teams.
- The alignment between disclosures, such as how material sustainability risks are disclosed in the risk management section of
annual reports.
- The timeline for sustainability materiality and risk assessments.
- Measurement of sustainability risk, including the use of tools, scenario analysis or stress testing.
• When embedding climate risk into enterprise risk management, organizations should embed it into the risk management lifecycle,
which includes:
- Risk identification and assessment, such as granular analysis of customers and clients by region and sector.
- Risk taxonomies, such as how granular components are examined in the portfolio to inform credit limits and other controls.
Arina Kok
Director, Climate Change and Sustainability Services, EY
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 83
EVOLVING SUSTAINABILITY RISK DISCLOSURE AND PRACTICES (3/3)
- Risk reporting, with a set of risk metrics which captures own and counterparty climate change risks.
- Risk mitigation, such as the use of climate risk analysis to support decision making.
• Organizations who are looking into climate-related disclosures should: (a) embrace behavioural changes, (b) drive social and impact-
based innovations, (c) increase engagement to deepen collaboration and align public-private commitments, (d) re-examine board
governance and composition, (e) seek out new types of reporting, (f) build resilience through technology, (g) recruit or develop
talent to mitigate new risks, and (h) clarify the risk operating model.
• Organizations can leverage on climate scenarios in order to (a) assess potential climate impacts on business, (b) develop strategy
and risk and opportunity management, (c) reduce climate risk exposure and explore new market opportunities, (d) direct and raise
financing for low carbon projects, and (e) meet increasing stakeholder expectations.
Arina Kok
Director, Climate Change and Sustainability Services, EY
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Rosemary Bissett
Head of Sustainability Governance &
Risk, National Australia Bank
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Day 2, 24th June 2021 (12.15 PM to 12.45 PM)
Page 84
OPERATIONALISING TCFD (1/3)
Key Takeaways/Messages:
• Organizations can refer to the UNEP FI Pilot Phase 1, 2 and 3 to gain understanding of climate risks and scenarios and help
customers in understanding the transition pathways. These reports and guidelines were developed collaboratively with academic
and scientific organizations, and includes information such as:
- Pilot testing and scenario analysis
- Heat mapping exercises for portfolios which identifies carbon and climate-sensitive sectors to aid in ESG related credit
policy and risk appetites
- Overview of key sectors which have the most reputational or transitional risks for financial institutions
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (12.15 PM to 12.45 PM)
Page 85
OPERATIONALISING TCFD (2/3)
• Organizations who are in the early stages of implementing the TCFD should:
- Start early, secure support and commitment from the board, and provide climate related development at the board and
executive levels.
- Nurture relationships and collaborations with the experts and academia, as they can provide support and resources on
the TCFD journey while building internal capacity over time.
- Undertake a gap analysis, including identifying existing open source and validated data as well as relevant industry
initiative, and begin with the level of capacity that the organization has to address.
- Assign a budget and delegate responsibility and accountability for strategy and risk management.
Rosemary Bissett
Head of Sustainability Governance &
Risk, National Australia Bank
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (12.15 PM to 12.45 PM)
Page 86
OPERATIONALISING TCFD (3/3)
Key Takeaways/Messages:
• In order to strengthen climate action and implementation of the TCFD, organizations should also consider:
- Setting up collaborations on mapping decarbonization pathways for portfolios and opportunities for specific sectors
to decarbonize.
- Undertaking a quantitative risk assessment of climate risk and augment bank systems to better capture climate-
related data.
- Identifying other relevant tools, methodologies and data sources and developing methodologies for climate risk
management.
- Delivering the Collective Commitment to Climate Action 2022 target.
• The rationale of net-zero commitments must be based on science and by looking at different climate scenarios. Through
adopting climate commitments, financial institutions will not only be able to understand the risks and opportunities
embedded in the transition, but also identify the scope to aid customers in working towards climate goals.
Rosemary Bissett
Head of Sustainability Governance &
Risk, National Australia Bank
Arina Kok
Director, Climate Change and
Sustainability Services, EY
#FinanceForChange – JC3 Flagship Conference
1.45 pm Masterclass: Sustainable finance products and innovation
2.45 pm Panel session: Sharing experience on sustainable finance
product development
3.45 pm Break
4.00 pm Fireside chat: The national agenda on sustainability
4.45 pm Call to action: The power is in your hands
5.15 pm Closing plenary: Fostering a sustainability landscape in
public finance
5.45 pm Wrap up
5.55 pm End
JC3 outcomes and implications for FIs
DAY 2 AFTERNOON
Day
2
An initiative by In collaboration with Co-organisers Event partners
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (1.45 PM to 2.45 PM)
Page 88
MASTERCLASS : SUSTAINABLE FINANCE PRODUCTS AND INNOVATION (1/2)
Key Takeaways/Messages:
• There have been 22 issuances for green & sustainable bonds in Malaysia to this date. The issuances of Green bonds / sukuk have been
mostly in renewable energy, solar power, hydro power, and green building, which closely follows the global allocation. While these are
the obvious choices of sectors, it is also important to diversify the funding. The financial sector has the ability to fund a large number of
different activities and it is up to the financial sector to start the discussion with clients and drive the allocation of funds to sustainable
products.
• The following are the main drivers of sustainable finance:
- Macro-economic and geopolitical trends; e.g. Paris Agreement, UN SDGs.
- Sustainability focus: There is an increased focus on a long term sustainable investment. This will drive the allocation of capital
and business needs to take into account ESG to maintain the eligibility of raising capitals.
- Investors expectations: Investors are increasingly sceptical, requiring transparency from companies, therefore leading to the
development of new disclosure requirements.
Gilles Pascual
Strategy and Transaction Leader, EY
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (1.45 PM to 2.45 PM)
Page 89
MASTERCLASS : SUSTAINABLE FINANCE PRODUCTS AND INNOVATION (2/2)
Key Takeaways/Messages:
- Demographic shift: The current generation tends to focus more on sustainability. Customers are also demanding products that
are more sustainable, have more transparency, and embed ESG in the entire value chain. 60% of millennials are even willing to
take a pay cut to work for a responsible company. Hence, companies with unsustainable practices will be faced with recruitment
issues and higher costs to attract talent.
- Regulation changes: Over 127 governments have set net-zero commitments. This will flow from country commitments down into
all businesses. Regulations are also becoming stricter (e.g. EU taxonomy). There are many new regulations globally, some are
cross-border and will have an impact on the businesses exporting to those markets.
Gilles Pascual
Strategy and Transaction Leader, EY
#FinanceForChange – JC3 Flagship Conference
Yulanda Chung
Head of Sustainability,
DBS
Tan Ai Chin
Managing Director, Senior Banker Client
Coverage & Head of Global Investment
Banking, OCBC Bank (Malaysia) Berhad
Jo Ann Eala
Vice President, Sustainable
Energy Finance & Specialized
Lending Team, Bank of the
Philippine Islands
Mushtaq Kapasi
Managing Director, Chief
Representative, Asia Pacific, ICMA
Day 2, 24th June 2021 (2.45 PM to 3.45 PM)
Page 90
PANEL SESSION: SHARING EXPERIENCE ON SUSTAINABLE FINANCE PRODUCT
DEVELOPMENT (1/2)
Key Takeaways/Messages:
• Climate transition finance guidance introduced by the ICMA allows issuers that are on a transition pathway to demonstrate,
through disclosure and transparency, their transition pathway and account them as credible green issuers. The climate
transition guidance can be used for green, social, and sustainability-linked bonds.
• Transition finance applies to the use of proceed-specific structures for specific assets and projects which are adopting measures
to transition to net zero. Transition finance supports carbon-heavy industries to transition and puts an emphasis on
decarbonization through avoidance, reduction, and removal of GHG emissions.
• The DBS Sustainable and Transition Finance Framework and Taxonomy serves as a reference guide for clients to adapt and
prepare their resilience for climate change, resource scarcity, and social inequality.
• The Spectrum of transition is based on the sectors (i.e. from dark brown into dark green) and facilitates the incremental
transition from ‘dark brown’ into ‘light green’ over time.
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (2.45 PM to 3.45 PM)
Page 91
PANEL SESSION: SHARING EXPERIENCE ON SUSTAINABLE FINANCE PRODUCT
DEVELOPMENT (2/2)
Key Takeaways/Messages:
• The BPI Sustainable Development Finance program includes:
- Providing free education & technical advice for their clients (through 3rd party IFC consultants).
- Conducting environmental & climate risk assessment and monitoring. The borrowers of the bank are assessed first for
vulnerabilities and hazards before being provided with the loan.
- Project evaluation of financial and technical aspects of the projects before putting together the financial packages the
client needs.
- Offering credit guarantees when the clients do not have sufficient collateral.
• Financial institutions could consider utilizing a second party opinion for bonds-related interpretations and 3rd party assurance
bodies to look into reports to avoid greenwashing. Investors demand more transparency and require companies to be upfront
about the proceeds, how the companies will move forward with sustainability-linked instruments, etc.
Yulanda Chung
Head of Sustainability,
DBS
Tan Ai Chin
Managing Director, Senior Banker Client
Coverage & Head of Global Investment
Banking, OCBC Bank (Malaysia) Berhad
Jo Ann Eala
Vice President, Sustainable
Energy Finance & Specialized
Lending Team, Bank of the
Philippine Islands
Mushtaq Kapasi
Managing Director, Chief
Representative, Asia Pacific, ICMA
#FinanceForChange – JC3 Flagship Conference
Dr. Nagulendran Kangayatkarasu
Deputy Secretary General, Ministry of
Environment and Water
Datin Seri Sunita Rajakumar
Founding Chairperson, Climate
Governance Malaysia
Day 2, 24th June 2021 (4.00 PM to 4.45 PM)
Page 92
FIRESIDE CHAT: THE NATIONAL AGENDA ON SUSTAINABILITY
Key Takeaways/Messages:
• Forests, nature, and biodiversity are crucial in keeping emissions low. KASA has undertaken a number of initiatives to promote emissions
reductions, including conducting a study on plastic circularity markets, setting low-carbon cities masterplan (noting that 77% of
Malaysia’s population live in cities), low-carbon mobility blueprint, nationally determined contributions (NDCs), climate change legal
framework, review of climate change policy, identifying gaps in climate action, low-emissions development strategy, green technology
innovation roadmap, national adaptation plan, green recovery plan, and GHG Inventory.
• Malaysia is also part of the Green Bank Network that connects leaders in clean energy finance to share best practices and supports
investment in clean energy solutions. Financial institutions are able to access and benefit from the network through the MGTC.
• To address environmental issues, federal or state governments need to forge collaborations among relevant agencies, and financial
institutions should support these collaborative efforts.
• There are 5 things that financial institutions can do to facilitate important national agendas: provide funds and capital, push
technological innovations, look at externalities when evaluating projects, influence stakeholders and lenders, and take the stewardship
role by demanding more environmental funding and financing for the whole sustainability agenda.
• Data is a fundamental part in sustainable finance, as it enables the industry players to make better, informed decisions. Sharing of
relevant environmental data from government agencies and expert bodies is key.
#FinanceForChange – JC3 Flagship Conference
Lewis Pugh
United Nations Ocean Advocate
Day 2, 24th June 2021 (4.45 PM to 5.15 PM)
Page 93
CALL TO ACTION: THE POWER IS IN YOUR HANDS
Key Takeaways/Messages:
• Every generation will face its own challenges and the defining issue of our generation is the health of the environment.
• Changes in the Polar regions are happening quickly, and will impact every living thing on the planet. In the seven summers Lewis
Pugh spent training in the Arctic, he saw the ice getting thinner, and glaciers retreating up valleys.
• At the end of his swim across the length of the English Channel, he met Michael Gove, the then Secretary of State for Environment in
the UK, to convey the urgency of protecting the oceans. Since then, the UK committed to promoting the protection of at least 30% of
the world’s oceans by 2030, and after it was raised at the UN, 84 nations have joined the UK in that commitment, which has turned
into one of the largest conservation drives in history.
• After experiencing difficulties in attempting to swim in a glacial lake in the Himalayas, Lewis Pugh was urged to change his swimming
method and take a radical, tactical shift in his mindset in order to overcome the specific difficulties of high-altitude swimming. This
teaches us that while we can change our speed and stroke of swimming, to achieve real and effective change, we also have to alter
our mindset towards a specific challenge.
• Fighting against the climate crisis requires a 100% commitment, as well as the adoption of good habits for resilience and adaptation.
If we do not make these changes, we will drown.
• We need to do everything we can to protect the last great wilderness areas on earth and tackle the climate crisis. The science is very
clear - we need to protect at least 30% of the world’s oceans by 2030 for it to stand any chance of recovery.
In collaboration with Co-organisers Event partners
YB Senator Tengku
Datuk Seri Utama Zafrul
bin Tengku Abdul Aziz
Minister of Finance, Ministry of
Finance Malaysia
Page 94 #FinanceForChange – JC3 Flagship Conference
“The Government has adopted a ‘whole of nation’ approach in addressing the impacts of
climate change. Financial institutions and the private sector play a critical role in
complementing the Government’s efforts to manage these impacts, in order to foster
sustainable growth and development, as well as to facilitate our transition to a low
carbon economy.”
#FinanceForChange – JC3 Flagship Conference
YB Senator Tengku Datuk Seri Utama
Zafrul bin Tengku Abdul Aziz
Minister of Finance, MoF
Day 2, 24th June 2021 (5.15 PM to 5.45 PM)
Page 95
CLOSING PLENARY: FOSTERING A SUSTAINABILITY LANDSCAPE IN PUBLIC FINANCE (1/3)
Key Takeaways/Messages:
• The recently established Malaysian Climate Action Council (MyCAC) adopts a ‘whole of nation’ approach in addressing
climate change issues, by providing a national-level platform and getting all sectors and states to act more systematically
and cohesively. This includes developing Malaysia as a hub for green economy, services and technology, and
implementing various programmes to drive the national climate change agenda. The whole-of-nation approach which the
Government is taking is a crucial element in achieving Net Zero target by 2050.
• The Ministry of Finance (MoF) remains committed to ensure adequate financing for programmes and projects related to
the SDGs. MoF is now working with the UN Development Programme to establish an Integrated National Financing
Framework, which comprises platforms for innovation and reforms spanning from policy, regulation, financial instrument,
institutions as well as greater public and private collaboration.
• MoF has also volunteered to lead the Working Group on Finance for Sustainable Development under the national-level
SDG Steering Committee to align financing flows and policies with economic, social and environmental priorities and
ensure that financing is stable and sustainable.
#FinanceForChange – JC3 Flagship Conference
YB Senator Tengku Datuk Seri Utama
Zafrul bin Tengku Abdul Aziz
Minister of Finance, MoF
Day 2, 24th June 2021 (5.15 PM to 5.45 PM)
Page 96
CLOSING PLENARY: FOSTERING A SUSTAINABILITY LANDSCAPE IN PUBLIC FINANCE (2/3)
Key Takeaways/Messages:
• MoF is now at the tail end of launching a MySDG Trust Fund in collaboration with the UN to complement the development
allocation towards the SDGs in order to meet any financing gaps.
• Another area is on the development of a "green recovery plan" agenda such as the "Green New Deal" so that Malaysia will
become a hub in the field of green economy, services and technology, and will foster green lifestyles in all walks of life
through the concept of planetary health towards holistic sustainable development.
• For Budget 2022, MoF is looking at further driving our sustainability efforts, especially in introducing policies as well as both
tax and non-tax incentives for the green economy to push for more renewable energy investments, sustainable industries
and environment.
• MoF will also look at sustainable infrastructure and sustainable cities that are fit-for-purpose in the post-Covid-19 world.
These include optimising demand-side management for energy, encouraging low-carbon mobility and promoting the
construction of green buildings.
#FinanceForChange – JC3 Flagship Conference
YB Senator Tengku Datuk Seri Utama
Zafrul bin Tengku Abdul Aziz
Minister of Finance, MoF
Day 2, 24th June 2021 (5.15 PM to 5.45 PM)
Page 97
CLOSING PLENARY: FOSTERING A SUSTAINABILITY LANDSCAPE IN PUBLIC FINANCE (3/3)
Key Takeaways/Messages:
• The Government is also looking at other mechanisms to be improved and aligned towards sustainability such as enhancing
government green procurement, SDG tagging, carbon tax, Emission Trading Scheme (ETS), national carbon trading policy
which would act as catalyst in the transition into low carbon activities both by the public and private sectors.
• MoF is currently coordinating all these initiatives and programmes and discussing ways on how these could contribute
towards making Malaysia a Sustainable Financing Hub and preparation for our Sustainable Financing Roadmap.
• Financial services players should identify areas where they can make an impact and set targets to achieve them. Targets must
be set in alignment with national priorities, such as Malaysia’s Paris Agreement commitment to reduce greenhouse gas
intensity by 45% by 2030, and other science-based targets.
• All Malaysian businesses are encouraged to ride on Malaysia’s well-developed financial market, global leadership in Islamic
finance and Government’s initiatives such as the Green Technology Financing Scheme (GTFS) 3.0 to drive sustainable finance
and generate maximum benefits based on the People, Planet, Profit principles.
#FinanceForChange – JC3 Flagship ConferencePage 98
DAY 2 SESSIONS HIGHLIGHTS
CCPT: What this means for FIs Application and Operationalisation of the Taxonomy
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Changing Risk Disclosure Requirements in the Malaysian Context Operationalising TCFD
DAY 3 SESSIONS
Day
3
Sustainable finance for the private sector
9.00 am Keynote speech
9.15 am Call to action: COVID-19 was just the dress rehearsal
9.35 am Investor panel session: Sustainability is no longer an
option
10.35 am Banking panel session: Changing ESG and climate
requirements from banks
11.15 am Panel session: Leveraging on sustainable finance for green
growth
12.00 pm Call to action: Businesses role in tackling climate change
In collaboration with Co-organisers Event partnersAn initiative by
Day
3
In collaboration with Co-organisers Event partners
Tan Sri Abdul Wahid
Omar
Chairman, Bursa Malaysia
Berhad
Page 100 #FinanceForChange – JC3 Flagship Conference
“To tackle the issue of climate change holistically and comprehensively, beyond
addressing the energy use and generation in our country, transition towards net-zero
requires innovations in technology, shifting consumer behaviours and socio-economic
transformations.”
#FinanceForChange – JC3 Flagship Conference
Tan Sri Abdul Wahid Omar
Chairman of Bursa Malaysia
Day 3, 25th June 2021 (9.00 AM to 9.15 AM)
Page 101
KEYNOTE (1/2)
Key Takeaways/Messages:
• To tackle the issue of climate change holistically, beyond addressing the energy use and generation in our country, the
transition towards net-zero requires innovations in technology, shifting consumer behaviour and socio-economic
transformations.
• Accelerating the transition to net-zero will require significant funding from both the public and private finances. This will also
involve developed countries honouring their promise to mobilise at least USD100 billion in climate finance per year, and
trillions more in private finance to secure global net-zero by 2050.
• To achieve the global target of Net-Zero by 2050, countries need to commit to, among other things: (i) Accelerate the phase-
out of coal and encourage investment in renewable energy, (ii) Optimise energy demand and speed up the switch to electric
vehicles, and (iii) Curtail further deforestation
• In 2020, WWF reported that wildlife populations have fallen by 68% over a period of less than 50 years since 1979. Unless
drastic actions are taken, our Malaysian national icon, the Malayan tiger, may be facing the same fate as the Sumatran Rhino.
As of now, the number of Malayan tigers has dwindled to less than 200 compared to 500 a decade ago.
#FinanceForChange – JC3 Flagship Conference
Tan Sri Abdul Wahid Omar
Chairman of Bursa Malaysia
Day 3, 25th June 2021 (9.00 AM to 9.15 AM)
Page 102
KEYNOTE (2/2)
Key Takeaways/Messages:
• The FTSE4Good Bursa Malaysia Index has played an essential role in recognising PLCs that have taken steps to improve their
ESG practices and disclosures. Since its launch in 2014, the number of constituents in the index has tripled from 24 to
76. Bursa Malaysia will be launching the FTSE4Good Bursa Malaysia Shariah Index.
• Bursa Malaysia is expanding collaborative efforts to work with financial institutions to offer sustainable financing products to
PLCs that have shown interest and commitment in improving their ESG practices.
• Since the establishment of the Sustainability Reporting Framework back in 2015, all Malaysian PLCs are now disclosing
Sustainability Statements and Reports annually. The Exchange also assists PLCs along their sustainability journey via the
provision of comprehensive guidance and feedback, undertaking various advocacy and training, and establishing the
BURSASUSTAIN portal (a one-stop knowledge repository for Corporate Governance, sustainability and responsible
investment).
#FinanceForChange – JC3 Flagship Conference
Tan Sri Dr. Jemilah Mahmood
Special Advisor on Public Health to
Prime Minister of Malaysia
Day 3, 25th June 2021 (9.15 AM to 9.35 AM)
Page 103
COVID-19 WAS JUST THE DRESSED REHEARSAL (1/2)
Key Takeaways/Messages:
• The situation that we’re facing now is not ‘climate change’ – it is a climate crisis. A crisis of over-consumption, over-population, of
naked greed, of ecological and climatological rape, of rampant corruption, and rent seeking behaviours by those we seem unable to
hold to account.
• It is a crisis of inequity – evidenced by, for example, the differing vaccine programmes among rich and poor nations. A crisis of
dependency on fossil fuels, driven largely by large corporations that lobby governments to maintain subsidies on fossil fuels rather
than investing in green solutions. A crisis with severe humanitarian consequences – climate migration, food and water scarcity, human
and planetary health degradation, and economic recession.
• Sea levels in the Malaysian waters have been increasing at an average rate of 3.67 mm/year, higher than the projected global rise of
1.7 to 3.1 mm/year. In fact, parts of our West coast towns (like Teluk Intan, Perak and Alor Setar, and Kedah) are projected to be below
the tideline by 2050.
#FinanceForChange – JC3 Flagship Conference
Tan Sri Dr. Jemilah Mahmood
Special Advisor on Public Health to
Prime Minister of Malaysia
Day 3, 25th June 2021 (9.15 AM to 9.35 AM)
Page 104
COVID-19 WAS JUST THE DRESSED REHEARSAL (2/2)
Key Takeaways/Messages:
• To overcome the effects of a pandemic, an estimated USD285 billion over a 10 year period is needed to develop an effective disease
surveillance system which can dramatically reduce the risks of future outbreaks. This finance gap is only between 2.5% to 3.7% of the
costs of COVID-19, which caused an estimated USD11.5 trillion in costs and losses.
• Push for national legislations in favour of an improved planetary health.
• Make sure that these legislations are effectively implemented. This means holding our leaders and even more difficult, holding
ourselves accountable for the decisions we make within our own tiny spaces that affect both other people and the planet.
• Make sustainable practices the new norm. This includes making socially responsible investments and fool-proofing our governance
systems against corruption, malpractices and abuse, and any rent-seeking behaviours.
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (9.35 AM to 10.20 AM)
Datuk Seri Amir
Hamzah Azizan
CEO, Employees Provident Fund
Jenn Hui Tan
Global Head of Stewardship and
Sustainable Investing, Fidelity
International
Tan Sri Azman
Mokhtar
Board Member, INCEIF
Salmah Bee Mohd Mydin
Executive Director, Market Development,
Securities Commission
Page 105
PANEL: SUSTAINABILITY IS NO LONGER AN OPTION (1/2)
Key Takeaways/Messages:
• All financial decisions will carry non-financial consequences, and the financial industry has experienced difficulties in
measuring these consequences as the focus has always been on what can be quantified in a financial model.
• While financial institutions can encourage companies to set challenging decarbonization targets, the gaps between ambitions
and the adoption of ESG and net-zero targets needs to be addressed. This can be done by scrutinizing these companies, such
as whether they have set a net-zero target, have appropriate governance and strategy to implement and achieve it, and
assess any disparities between the rhetoric and the authenticity of the targets.
• Sustainability is about taking a more holistic and broad view of these issues, as externalities may affect business’ financial
performance more now than it has ever done before.
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (9.35 AM to 10.20 AM)
Page 106
PANEL: SUSTAINABILITY IS NO LONGER AN OPTION (2/2)
Key Takeaways/Messages:
• Heightened shareholder activism for material ESG issues can drive change, such as the formation of coalitions to have greater
negotiating power.
• Collaboration across institutions, NGOs and finance to address healthcare, economic and structural changes will be needed
to escape Malaysia’s middle-income trap. As we are coming out of the pandemic, this can be achieved through social and
blended financing, supported by a green new deal framework that is anchored on sustainability and inclusion.
• The general public is also becoming more aware of the importance of sustainability and a large part of this awareness is on
how sustainability is institutionalised within the global capital flow, not just ESG investing as a separate initiative.
Datuk Seri Amir
Hamzah Azizan
CEO, Employees Provident Fund
Jenn Hui Tan
Global Head of Stewardship and
Sustainable Investing, Fidelity
International
Tan Sri Azman
Mokhtar
Board Member, INCEIF
Salmah Bee Mohd Mydin
Executive Director, Market Development,
Securities Commission
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (10.30 AM to 11.15 AM)
Stuart Milne
Chief Executive Officer, HSBC
Malaysia
Helena Fung
Head of Sustainable Investment
Asia Pacific, FTSE Russell
Shahril Azuar Jimin
Chief Sustainability Officer, Maybank
Page 107
CHANGING ESG & CLIMATE REQUIREMENTS OF BANKS (1/2)
Key Takeaways/Messages:
• Financial institutions are partners to national development throughout Southeast Asia, and they are thus related to how
we move towards a just transition, which must address the specific needs of communities in the ASEAN region.
• It is the responsibility of financial institutions to provide the necessary financing for the transition to achieve net-zero.
Net-zero targets cannot be achieved for financial institutions unless customers achieve them too. Hence, financial
institutions must ensure that customers have sufficient finance to achieve these targets. Strong commitments in
excluding coal financing are also key. With the phase out of financing by financial institutions, it will be increasingly
difficult for sponsors to find financing for thermal energy, resulting in stranded assets.
• To ensure that the necessary changes happen, a strong mandate from shareholders to achieve short- and long-term
targets is fundamental. Board directors should ensure that the management team has presented their net-zero plans,
and management teams should work on implementation of such plans.
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (10.30 AM to 11.15 AM)
Page 108
CHANGING ESG & CLIMATE REQUIREMENTS OF BANKS (2/2)
Key Takeaways/Messages:
• Taxonomies are important to allow financial institutions to assess clients beyond adaptation and mitigation approaches. The
taxonomy creates a common language, establishes control mechanisms, determines how risk exposure in certain activities is
considered, sets sustainability criteria and provides green solutions, therefore encouraging financial flows to climate
objectives. For clients, the taxonomy provides a clear framework and expectations related to sustainability, and is thus a
common tool for both financial institutions and clients.
• Financial institutions should inform customers of data requirements, such as carbon emissions, in order to aid in the
customer’s ability to track their emissions and take action. This can be further supported by robust climate data on supply
chains to help customers identify where their supply chain emissions lie.
• Financial institutions should categorise the risk level of projects or activities (i.e. high, medium, and low risk). This can be
achieved through a scrum approach which involves collaborating with clients and industry leaders. Through these
collaborations, internal papers, position statements and risk acceptance criteria can be developed and embedded in the
credit approval process.
Stuart Milne
Chief Executive Officer, HSBC
Malaysia
Helena Fung
Head of Sustainable Investment
Asia Pacific, FTSE Russell
Shahril Azuar Jimin
Chief Sustainability Officer, Maybank
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (11.15 AM to 12.00 PM)
Page 109
PANEL: LEVERAGING ON SUSTAINABLE FINANCE FOR GREEN GROWTH (1/2)
Key Takeaways/Messages:
• There are five key drivers of Sustainable Finance; Regulatory standards (e.g. PRI, TCFD), Demographic shifts (i.e. younger
generation who has stronger focus on long-term sustainable investment), Investors expectations; Sustainability focus
(more focus on sustainability by asset owners and the private markets is driving increasing capital allocation to ESG),
Macroeconomic and geopolitical trends (e.g. Paris Agreement, TCFD, UN SDGs)
• For ESG to be able to provide business opportunities for early-stage businesses (e.g. SME and start-ups), we need to
create a monetizable business model. At this stage, companies are under-resourced, therefore it is difficult to determine
the acceptable metrics to implement ESG.
• One of the important aspects in investing in an early-stage private market is the demographic shift. The current
generation is more motivated by mission-driven enterprises. They have a higher propensity to purchase from brands that
are mission-driven, to work with companies that are mission-driven, and to invest their assets into companies with
purpose.
Thomas Tsao
Founding Partner, Gobi Partners
Sharif James Zainal Aziz
Head of Group Corporate Sustainability,
Sime Darby Property Bhd
Iain Henderson
Managing Director, Asia Pacific
Private Credit, ADM Capital
Dato Rauf Rashid
EY Malaysia Country Managing Partner
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (11.15 AM to 12.00 PM)
Page 110
PANEL: LEVERAGING ON SUSTAINABLE FINANCE FOR GREEN GROWTH (2/2)
Key Takeaways/Messages:
• To attract investors, companies need to focus on their material sustainability issues i.e. through the materiality map.
Determining the material issues to respective sector or business will help attract investors and capture the relevant
opportunities and risks.
• A useful tool for companies starting their sustainability journey are ESG indexes. It allows companies to identify the different
areas of sustainability they need to work on, as well as helping build their sustainability roadmap and framework.
• Today, externality costs are borne by the government or by society. In the future, it will likely be borne by companies and
reflected in their balance sheets, either by regulation and policy changes, or shifts in customer preferences. Therefore taking
action now is important to ensure the business model’s resilience in the future.
• Underrepresented markets may present opportunities for the industry. For example, there should be increased investment
for female-founded businesses, Islamic economy and finance, halal foods, Islamic travel and e-commerce.
Thomas Tsao
Founding Partner, Gobi Partners
Sharif James Zainal Aziz
Head of Group Corporate Sustainability,
Sime Darby Property Bhd
Iain Henderson
Managing Director, Asia Pacific
Private Credit, ADM Capital
Dato Rauf Rashid
EY Malaysia Country Managing Partner
#FinanceForChange – JC3 Flagship Conference
Maayke-Aimée Damen
Founder, Excess Materials Exchange
Day 3, 25th June 2021 (12.00 PM to 12.30 PM)
Page 111
CALL TO ACTION: BUSINESSES ROLE IN TACKLING CLIMATE CHANGE (1/2)
Key Takeaways/Messages:
• 95% of material value is lost after the single use of certain products, e.g. single use cups. In 2050, worldwide waste is expected to
grow by 70%. Material wastes have been proven to cause terrible consequences, e.g. microplastics, where people eat and breath in
at least 50,000 microplastic particles a year.
• Responding to climate change, our focus lies mainly on energy reduction, while about 45% of emissions come from producing the
materials and products we use on a daily basis.
• Even with resource efficiency, we are still running short of valuable resources. Illustrating this is the concept of an overshoot day,
which is the date by which a country has used up all the non-renewable resources available for that year. Malaysia’s overshoot day
is May 30th, which is only 5 months.
• The circular economy is a key solution, and it provides an opportunity of around USD4.5 trillion. This can be enabled by establishing
an excess materials exchange, which is a ‘dating site’ for materials that enables the matching of supply and demand of materials to
reduce environmental impacts while still addressing social concerns (e.g. textiles produced under unethical conditions cannot be
seen as circular).
#FinanceForChange – JC3 Flagship Conference
Maayke-Aimée Damen
Founder, Excess Materials Exchange
Day 3, 25th June 2021 (12.00 PM to 12.30 PM)
Page 112
CALL TO ACTION: BUSINESSES ROLE IN TACKLING CLIMATE CHANGE (2/2)
• To achieve a circular economy through the implementation of an excess materials exchange, an approach based on three ‘I’s’
should be taken:
- Identity: Giving materials and resources an identity (e.g. with ‘Resources / Materials Passport’). It provides information
on what is in a product, how it is put together, whether it can be repaired or taken apart, the production process, the
legal issues involved, the warranty information, etc. It is necessary to make a business case for recycling and reuse.
- Intelligence: transparency of information to support a material match (according to the quality, timing, and location).
This is tricky because not all companies allow such information to be publicly available. For this purpose, Artificial
Intelligence (AI) may be considered to efficiently create a network of information to prompt a match (e.g. legal
requirements, pinpointing the radius of each product, etc).
- Integration: Matching information about material and product streams to financial and environmental valuations, such
as how excess materials including railroad tracks can be repurposed as support beams.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship ConferencePage 113
DAY 3 SESSIONS HIGHLIGHTS
Keynote: Tan Sri Abdul Rahid Omar Sustainabilityy is no Longer an Option
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Changing ESG & Climate Requirements of Banks COVID-19 Was Just the Dressed Rehearsal
In collaboration with Co-organisers Event partners
CALL TO ACTION
Page 114 #FinanceForChange – JC3 Flagship Conference
SUMMARY OF CALL TO ACTION
Build on the taxonomy and
improve data infrastructure
for ESG-related risks
Engage clients in
sustainability and
transition finance
Apply a gender & social
inclusion lens to climate
change action
Integrate climate in risk
management frameworks and
align it with international
standards and best practices
Enhance green &
sustainability funding and
products
Achieve net zero anchored on
science-based targets and put
nature and biodiversity at the
heart of climate policies
Effective implementation of
policies that promote
planetary health
Strengthen governance,
oversight and disclosure of
sustainability
Collaboration and
whole-of-nation
approach
#FinanceForChange – JC3 Flagship ConferencePage 116
CALL TO ACTION #1: COLLABORATION AND WHOLE-OF-NATION APPROACH
• International collaboration between governments, businesses and civil society is needed to accelerate the transition at the
required pace, and to make progress in the largest emitting sectors including power, road transport and land-use.
• Collaboration will further drive innovation to create stronger incentives for investors and to reduce the costs of the transition.
• The Climate Action Council in Malaysia is a positive step towards setting commitments and policies to be carbon neutral,
particularly at the level of federal and state governments. Federal or state governments need to forge collaborations between the
relevant agencies, and financial institutions should support these collaborative efforts.
• Engagement and partnerships with academia, think tanks or global networks are useful and effective in developing methodologies
for measuring financial inclusion and financial health.
• Financial institutions can collaborate and leverage the capacity and skills of other organizations to assist with their product
development, e.g. Rabobank engaged with a start-up company to test their energy efficiency (EE) installation financing program
and cooperate with them to conduct the energy analysis of their clients.
• The whole-of-nation approach which the Government of Malaysia is taking is a crucial element in achieving Net Zero target by
2050.
• Greater public awareness and education are needed to promote green choices and real behavioural change. The public as
consumers are urged to make responsible choices and lead sustainable lifestyles.
• Corporations should embrace sustainability holistically throughout business operations, from sustainable sourcing to packaging
and recycling efforts, thus providing consumers with more options for sustainable consumption and inspiring them to adopt a
more sustainable lifestyle.
#FinanceForChange – JC3 Flagship ConferencePage 117
CALL TO ACTION #2: EFFECTIVE IMPLEMENTATION OF POLICIES THAT PROMOTE
PLANETARY HEALTH
• The push for national legislations in favour of improved planetary health is needed. We need to make sure that these legislations
are effectively implemented, which means holding our leaders and holding ourselves accountable for the decisions we make that
affect both other people and the planet.
• Governments should consider implementing broader tax incentives for sustainability, not only in the bond market as how it is
currently done. Some of the potential frameworks to be considered are carbon tax and a carbon trading system.
• The government should take a more holistic approach for climate action as the issue of decarbonisation is beyond the capacity of
financial institutions or individual industry sectors alone.
#FinanceForChange – JC3 Flagship ConferencePage 118
• Develop ambitious emissions reduction targets aimed at reaching net zero by 2050, including commitments to accelerate the
phase out of coal, invest in renewable energy, optimise energy demand, speed up the switch to electric vehicles and end
deforestation.
• Climate commitments and strategies need to be anchored on setting science-based targets or be translated into robust
expectations toward investee companies (e.g. TCFD, Climate Action 100+, SBTi).
• Address supply chain / scope 3 emissions to meet the goals of the Paris Agreement (supply chains must be sufficiently covered in
the net-zero strategy of financial institutions as the majority of transition risks will be outside the balance sheet of their client).
• Fast track by setting and publishing sector-specific targets for aligning a portfolio with the Paris Agreement by 2022 (Collective
Commitment to Climate Action).
• Set up collaborations on mapping decarbonization pathways for portfolios and opportunities for specific sectors to decarbonize.
Measuring and modelling business and carbon scenarios can be used to identify potential business and decarbonization initiatives
to support the path to net zero.
• Financial institutions to identify areas where they can make an impact and set targets to achieve. Targets must be set in alignment
with national priorities, such as Malaysia’s Paris Agreement commitment to reduce greenhouse gas intensity by 45% by 2030, and
other science-based targets.
• Financial institutions to ensure that clients have sufficient finance to achieve net zero targets.
• All Malaysian corporates to come on board to work together on a possible net-zero pathway for Malaysia.
CALL TO ACTION #3: ACHIEVE NET ZERO ANCHORED ON SCIENCE-BASED TARGETS AND
PUT NATURE AND BIODIVERSITY AT THE HEART OF CLIMATE POLICIES 1/2
#FinanceForChange – JC3 Flagship ConferencePage 119
• Draw insights from the Dasgupta Review on Economics of Biodiversity given the inseparable bond between ecology and the
economy.
• Approach sustainability by aiming to move from regulation to mission, and integrate ESG and biodiversity into the climate
program as a crucial part of the sustainability framework (e.g. protect at least 30% of the world’s oceans by 2030 to ensure its
chance of recovery).
• Act on recognition of nature loss as a key risk (water risk, deforestation and biodiversity loss, ocean sustainability) especially
through investment expectation and voting.
CALL TO ACTION #3: ACHIEVE NET ZERO ANCHORED ON SCIENCE-BASED TARGETS AND
PUT NATURE AND BIODIVERSITY AT THE HEART OF CLIMATE POLICIES 2/2
#FinanceForChange – JC3 Flagship ConferencePage 120
• Heightened shareholder activism for material ESG issues can drive change, such as forming coalitions to have greater negotiating power.
A strong mandate from shareholders to achieve short- and long-term targets is fundamental to ensure that the necessary changes
happen.
• Awareness and a genuine culture around sustainability in the organisation should be built at all levels, from the board level to the
business units.
• Board directors should ensure that the management team has presented their net-zero plans, and management teams should work on
implementation of such plans.
• Adoption of the Malaysian Code on Corporate Governance (MCCG) 2021 as well as board buy-in will be crucial to meaningfully shift the
needle towards reliable environmental and sustainability risk reporting. The MCGG (2021) recommends 5 best practices to strengthen
oversight of sustainability:
- The board and management should be responsible and have the mandate for the governance of sustainability in the company.
This includes setting strategy, priorities and targets, and delegating material sustainability matters to senior management.
- The board should ensure that sustainability strategies, priorities, targets and performance are communicated to internal and
external stakeholders.
- The board should take action to understand sustainability issues relevant to the company including climate-related risks and
opportunities.
- Reviews of board and senior management performance in addressing material sustainability risks and opportunities should be
incorporated into performance evaluations, including KPIs and in the board remuneration committee
- The board should set up a steering committee to share the management and accountability of sustainability and identify a
designated person within management to be the focal person to manage sustainability strategically, including making strategy
recommendations at the board level.
CALL TO ACTION #4: STRENGTHEN GOVERNANCE, OVERSIGHT AND DISCLOSURE OF
SUSTAINABILITY (1/2)
#FinanceForChange – JC3 Flagship ConferencePage 121
• Adapting the three lines of defence approach to an ESG risk management framework may include establishing an understanding,
oversight and accountability for sustainability at all levels of the organization.
• In addition to strategy governance, organisations should also ensure that compliance governance is in place.
• Organizations who are looking into climate-related disclosures should: 1) embrace behavioural changes; 2) drive social and impact-
based innovations; 3) increase engagement to deepen collaboration and align public-private commitments; 4) re-examine board
governance and composition; 5) seek out new types of reporting; 6) build resilience through technology; 7) recruit or develop talent to
mitigate new risks; and 8) clarify the risk operating model.
• The following are relevant aspects that organisations should consider in sustainability risk disclosures:
- The identification, prioritization and materiality of ESG risks, including how these risks are captured by the risk management and
sustainability teams.
- The alignment between disclosures, such as how material sustainability risks are disclosed in the risk management section of
annual reports.
- The timeline for sustainability materiality and risk assessments
- Measurement of sustainability risk, including the use of tools, scenario analysis or stress testing.
• As TCFD is becoming mandatory in some regions and countries, and may soon become the norm, it is essential to become familiar with
the recommendations of the TCFD to understand sustainability and climate risks, and adopt its reporting framework for sustainability-
related disclosures.
• Based on Bursa’s review of Malaysian public listed companies’ disclosures, there are five key areas of weaknesses which need to be
addressed: 1) prioritization of material matters; 2) disclosure of performance indicators; 3) setting targets; 4) linking sustainability
performance to remuneration; and 5) integration of sustainability strategies into business. The 2021 priority is to review Bursa’s
sustainability reporting framework to enhance availability, quality, and comparability of sustainability-related disclosures.
CALL TO ACTION #4: STRENGTHEN GOVERNANCE, OVERSIGHT AND DISCLOSURE OF
SUSTAINABILITY (2/2)
#FinanceForChange – JC3 Flagship ConferencePage 122
• The financial sector in Malaysia can be more deliberate in funding sustainability initiatives and incentivising investments in low
carbon sectors, e.g. projects under (i) the National Investment Aspirations (NIA) framework, (ii) the Malaysian Climate Action
Council (MyCAC)'s plan for Malaysia to be a hub in green economy, services and technology, and (iii) the Low Carbon Mobility
Development Plan 2021-2030.
• Malaysian corporations are encouraged to ride on Malaysia’s well-developed financial market, global leadership in Islamic finance
and governmnet initiatives such as the Green Technology Financing Scheme (GTFS) 3.0 to drive sustainability and generate a
maximum positive impact to the People, Planet, Profit principle.
• We may expect an increased demand for green and sustainability funding across all types of businesses, including micro, small and
medium-sized enterprises (MSMEs). Market-based instruments such as green, social and sustainability bonds and sukuk will
provide opportunities for investors to participate in this emerging asset class. Financial institutions must take into account
different structures, terms and conditions for the financing of different projects.
• Currently, 64% of SRI sukuk issuances are for renewable energy projects. By targeting transformative technologies and industries
with high spillover benefits for the country, this base can be expanded further.
• Financial institutions can also gradually scale-down carbon emitting activities through divestment, asset sales, disposals and
decommissioning.
• There are untapped opportunities in the underrepresented markets as well. For example, there should be an increased
investment for female-founded businesses, Islamic economy and finance, halal foods, Islamic travel and e-commerce.
CALL TO ACTION #5: ENHANCE GREEN & SUSTAINABILITY FUNDING AND PRODUCTS (1/2)
#FinanceForChange – JC3 Flagship ConferencePage 123
• Another opportunity to tap is the circular economy concept such as through the implementation of an excess materials exchange
via materials passports (giving materials and resources an identity), intelligence (transparency of information in order to make a
match in materials supply and demand), and integration (information on materials input and output).
• Collaborative financing is one of the key solutions to fund sustainable transformative projects. For instance, blended finance
which strategically uses development finance and philanthropic funds can be used to support the mobilization of private capital
for emerging and frontier markets (e.g the case of Tropical Landscape Finance Facility (TLFF).
• Sustainability poses both risks and opportunities, hence insurers should include both inclusions and exclusions principles in its
underwriting process. At a time of growing expectations for incorporation of sustainability-related factors into businesses,
insurers can develop frameworks to mitigate sustainability risks and underwrite innovative products and services by building on
opportunities of new markets to drive purpose and contributions to society.
• Banks may tap into opportunities in climate solutions such as by developing sustainable mortgage products and offer green loans
to improve energy efficiency of their mortgage clients.
CALL TO ACTION #5: ENHANCE GREEN & SUSTAINABILITY FUNDING AND PRODUCTS (2/2)
#FinanceForChange – JC3 Flagship ConferencePage 124
• When integrating climate risk into enterprise risk management, financial institutions should embed it into the risk management
lifecycle, which includes:
- Risk identification and assessment, such as granular analysis of customers and clients by region and sector.
- Risk taxonomies, such as how granular components are examined in the portfolio to inform credit limits and other controls.
- Risk reporting, with a set of risk metrics which captures own and counterparty climate change risks.
- Risk mitigation, such as the use of climate risk analysis to support decision making.
• There are various available data sources, tools and methodologies which may help financial institutions in developing the
framework for their internal climate risk identification and assessment. These include:
- Risk identification and assessment, such as granular analysis of customers and clients by region and sector.
- Heat-mapping exercises and materiality maps will guide financial institutions to identify and prioritise materials issues, and
therefore formulate their risk appetites.
- Climate risk scenario and stressing as a form of quantitative risk assessment of climate risk and to augment bank systems to
better capture climate-related data.
- Accurate and comprehensive data sources to ensure timely risk assessment
• Financial institutions should also implement a framework ESG risk measurement at the client level, as well as the transaction level.
These may be in the form of an assessment form which utilizes a stop-light approach to provide a rating which can be
implemented internally or through hiring third-party consultants to provide advice, noting that there is no one-size-fits-all
approach in assessing client projects and transactions.
CALL TO ACTION #6: INTEGRATE CLIMATE IN RISK MANAGEMENT FRAMEWORKS AND
ALIGN IT WITH INTERNATIONAL STANDARD AND BEST PRACTICES
#FinanceForChange – JC3 Flagship ConferencePage 125
• Financial institutions may benefit from the existing international framework and tools such as the Principles for Responsible
Investment (PRI), Principles for Sustainable Insurance (PSI) and Principles for Responsible Banking (PRB).
• The integration of climate change, biodiversity loss and inequalities into a financial institution’s traditional business must be
supported by data and research such as through the Science-Based Targets Initiative (SBTi).
• Malaysia is part of the Green Bank Network that connects leaders in clean energy finance to share best practices and supports
investment in clean energy solutions. Financial institutions are able to access and benefit from the network through the MGTC.
• Financial institutions are encouraged to establish a list of recognised sustainability-related certifications to assess the ESG risks of
their clients.
CALL TO ACTION #6: INTEGRATE CLIMATE IN RISK MANAGEMENT FRAMEWORKS AND
ALIGN IT WITH INTERNATIONAL STANDARD AND BEST PRACTICES
#FinanceForChange – JC3 Flagship ConferencePage 126
• Regulators and financial institutions should ensure less fragmentation across taxonomies and ensure that the CCPT is applicable
for international investors at the regional and global market levels. We should build on commonalities instead of the differences
between existing taxonomies and use the CCPT as a foundation to build from. Efforts through operational alignment, client
education, and taxonomy homogeneity are key to driving their interoperability.
• Financial institutions and clients should use the CCPT as a foundation to provide critical information on climate action and for the
classification of activities in Malaysia and ASEAN through metrics and thresholds which can be supplemented by guidance from
other taxonomies.
• The CCPT encourages financial institutions to adopt a whole-of-bank approach to ensure that broader climate considerations are
implemented at all levels, including in the risk management framework, due diligence process and through staff capacity building.
• Financial institutions and clients need to be prepared for the operationalisation of the taxonomy. Clients need to be educated and
financial institutions need to gather data and manage the weightages given to qualitative and quantitative data.
• The CCPT enables financial institutions to conduct the following:
- Incorporating sustainability into products and services such as through green finance solutions which impact the tenure,
pricing and terms offered to a customer depending on their climate change classification according to the CCPT.
- Using the CCPT guiding principles to establish clear risk acceptance criteria that can be followed by producing an ESG risk
score that overlays credit and climate risk assessment. Financial institutions can integrate the CCPT classifications and VBI
sectoral guides in this process and can develop internal policies and guidelines to further guide the classification.
- Adopting a nurturing approach by recognising a customer’s remedial measures to avoid a disruptive and outright exclusion
of activities, taking into account clients’ readiness and commitment level.
CALL TO ACTION #7: BUILD ON THE TAXONOMY AND IMPROVE THE DATA
INFRASTRUCTURE FOR ESG-RELATED RISKS
#FinanceForChange – JC3 Flagship ConferencePage 127
• To enhance data collection and analysis, ESG-related data should be structured and made accessible for key actors in the financial
sector. The data should also be standardised across the industry to promote transparency and comparability. This will catalyse the
development of regional ESG products.
• Financial institutions should encourage their clients to disclose their emissions in order to help them take action. This can be
further supported by robust climate data on supply chains to help customers identify where their supply chain emissions lie. The
clients can then communicate and engage their suppliers accordingly and make well-informed sustainable procurement decisions.
• The government should provide the relevant climate data to help financial institutions and industry players in their climate
transition.
• Financial institutions should identify their exposure through risk heat mapping and determine which vulnerabilities are material.
They must also focus on identifying data based on the vulnerabilities the financial institution is most exposed to.
• Financial institutions must undertake a gap analysis, including identifying existing open source and validated data as well as
relevant industry initiatives, and begin the transition journey with their current level of capacity.
• Financial institutions and clients need to be prepared for the operationalisation of the taxonomy. Financial institutions need to
gather data, put weightages on qualitative and quantitative data, and educate the clients.
• Clarity should be provided on the cohesion of data and how to address data gaps (such as metrics for emission intensity) and
consistency of cross-border issues.
CALL TO ACTION #7: BUILD ON THE TAXONOMY AND IMPROVE THE DATA
INFRASTRUCTURE FOR ESG-RELATED RISKS
#FinanceForChange – JC3 Flagship ConferencePage 128
• Understanding clients’ needs is crucial. This can be achieved by choosing the right elicitation format and methodology (e.g. natural
language programming, investment game, focus groups), assessing the clients’ financial and sustainability objectives (e.g. impact,
exclusion, risks and opportunities), and understanding the clients’ financial and sustainability preferences (e.g. impact objectives,
exclusion criteria, SRI strategy). Financial institutions can then match their product offering according to the clients’ financing
needs and sustainability objectives.
• In engaging clients and guiding them to transition, financial institutions should consider a multitude of factors such as their
impacts during screening, the structure in integration, and performance engagement including tracking progress of engagement.
• Active ownership approaches i.e. the use of the rights and position of ownership to influence the activities or behaviour of
investee companies can be strengthened especially among Asian asset managers.
• Financial institutions may consult experts in the relevant fields to understand their customers’ business, provide advisory services,
and deliver assistance to transform the sustainability practices of their customers’ value chain. This includes guidance on how to
develop transition plans and setting net-zero commitments for clients who aim to reduce their emissions.
• Financial institutions should engage their clients in the early stages of the project and determine their area of influence. They may
require the clients to provide necessary information (such as an environmental and social impact assessment (ESIA) and engage
with consultants to identify the client’s ESG risks.
• Ensure accurate and timely information is given to clients, including client training programs and reviewing sector position
statements bi-annually.
CALL TO ACTION #8: ENGAGE CLIENTS IN SUSTAINABILITY AND TRANSITION FINANCE
(1/2)
#FinanceForChange – JC3 Flagship ConferencePage 129
• Engagement needs to be part of the investment process, with a focus on performance rather than conformance (e.g. instead of
asking whether a company has an independent board or a labour policy, ask whether the board is truly independent and how the
labour policy is implemented).
• Financial institutions may set an action plan as a requirement for granting financing to their clients and include E&S provisions in
the loan documentation for compliance and monitoring purposes. In monitoring the clients, financial institutions should evaluate
the agreed time-bound action plan (e.g. timeframe to track certification by clients) and transparency on progress (e.g. publicly
disclosing progress).
• Financial institutions should monitor their clients’ ESG performance, such as by conducting independent monitoring and requiring
their clients to provide sustainability disclosure in their reporting.
• Financial institutions are encouraged to conduct annual assessments of the sustainability performance of every client that
borrows more than a certain threshold, and set up a carbon bank to help the clients sequester carbon.
CALL TO ACTION #8: ENGAGE CLIENTS IN SUSTAINABILITY AND TRANSITION FINANCE
(2/2)
#FinanceForChange – JC3 Flagship ConferencePage 130
• Financial institutions may define the vulnerability of their customers by looking into country-specific metrics for income, location
(such as rural areas) and other characteristics including age, disabilities, gender, migrants, pensioners, refugees and
unemployment.
• Financial institutions should make a collective effort on stewardship and advocate for public policies addressing financial inclusion
and financial health.
• Takaful operators should develop solutions that meet the needs of stakeholders, such as overcoming financial illiteracy, and
providing coverage for under-represented segments such as the disabled community.
• Gender-smart climate finance can be applied through:
- Adopting a gender lens to climate finance, such as taking into consideration how a climate finance product could positively
or negatively impact the lives of women.
- Adopting a climate lens to gender finance, such as considering how gender finance could impact climate and environmental
objectives.
- Integrating gender into climate finance through gender-specific opportunities which also improves climate and business
performance.
CALL TO ACTION #9: APPLY GENDER & SOCIAL INCLUSION LENS TO CLIMATE CHANGE
ACTION
#FinanceForChange – JC3 Flagship ConferencePage 131
JC3 Flagship Conference: Organising Team Members (1/2)
Organisation Name Designation
Bank Negara Malaysia Dr. Hamim Syahrum Ahmad Mokhtar Deputy Director, Islamic Banking and Takaful Department
Liris Eliana Shamsir Manager, Islamic Banking and Takaful Department
Capital Markets Malaysia Zalina Shamsudin General Manager
Navina Balasingam Head, Stakeholder Engagement
CIMB Bank Luanne Sieh Head, CIMB Group Sustainability and Corporate Responsibility
Preetha S. Jenarthan Manager, Group Sustainability
Lee Hui Tze Intern, Group Sustainability
Chang Shao Yang Summer Associate
Daniel Loi Weijie Summer Associate
Ed Patrick Guño Summer Associate
Other Contributor Low Su Yi
Zurich Life Insurance Malaysia Berhad Charlie Chai Yueh Chian Head, Brand Marketing & Communications
SME Bank Faiiza Mohd. Mokhtar Head, Strategic Alliance
Rosmah Daud Manager, Corporate Affair
IBFIM Mohammad Khairi Saat Director, Training and Talent Development Department
Rafizah Abu Bakar Head, Digital Learning Training and Talent Development
Department
Mohd. Najib Yin Senior Executive, Digital Learning Training and Talent
Development Department
Hafizan Ahmad Executive, Digital Learning Training and Talent Development
Department
Khairulnizam Mohamed Assistant Manager, Digital Learning Training and Talent
Development Department
Safzuan Abdullah Mohd. Sahimi System Engineer, IT Unit
#FinanceForChange – JC3 Flagship ConferencePage 132
JC3 Flagship Conference: Organising Team Members (2/2)
Organisation Name Designation
British High Commission, Kuala Lumpur Elena Almeida (Former) Prosperity Fund Adviser
Ernst & Young
(Malaysia & Singapore)
Gilles Pascual Partner, EY, Programme Director, ASEAN Low Carbon Energy
Programme (LCEP)
Arina Kok Partner, EY, Malaysia Green Finance (GF) Team, ASEAN LCEP
Russel marsh Director, EY, Green Finance Lead, ASEAN LCEP
Sonal Agarwal Associate Director, EY, Malaysia GF Lead, ASEAN LCEP
Joel Khaw Manager, EY, Malaysia GF Delivery Team Manager, ASEAN
LCEP
Cheng Jo Yinn Senior Associate, EY, Malaysia GF Delivery Team, ASEAN LCEP
Foong Hui Yi Associate, EY, Malaysia GF Delivery Team, ASEAN LCEP
WWF Malaysia Thiagarajan Nadeson Head of Market and Education
Adam Ng Sustainable Finance Advisor
Shajaratuldur Hashim Senior Communications Manager
Firmansyah Shidiq Wardhana Sustainable Finance Engagement Manager
Siti Kholifatul Rizkiah Sustainable Finance Analyst
Wan Noorfatin Wan Mohd. Zani Sustainable Finance Senior Executive
Adam Farhan Salmaan Hussain Sustainable Finance Engagement Executive
Muhammad Awfa Sustainable Finance Research Assistant
#FinanceForChange – JC3 Flagship Conference
Rapporteur of the report
Page 133
REPORT BY JC3 SUB-COMMITTEE 4 ON ENGAGEMENT & CAPACITY BUILDING
:
Rapporteurs: Fatin Zani, Adam Farhan, Muhammad Awfa, Siti Kholifatul Rizkiah, Adam Ng
| Press Release |
02 Aug 2021 | Expansion of Local Currency Settlement Framework between Bank Negara Malaysia and Bank Indonesia | https://www.bnm.gov.my/-/expansion-local-currency-settlement-framework-bnm-bi | https://www.bnm.gov.my/documents/20124/2294076/FAQs_LCF_EN.pdf | null |
Reading:
Expansion of Local Currency Settlement Framework between Bank Negara Malaysia and Bank Indonesia
Share:
Expansion of Local Currency Settlement Framework between Bank Negara Malaysia and Bank Indonesia
Embargo :
For immediate release
Not for publication or broadcast before
1000 on
Monday, 2 August 2021
2 Aug 2021
Bank Negara Malaysia and Bank Indonesia today announced the expansion of the ringgit-rupiah settlement framework. The framework was first launched on 11 December 2017 in accordance with the Memorandum of Understanding between Bank Negara Malaysia and Bank Indonesia that was signed on 23 December 2016. This expansion, which will be effective from today, 2 August 2021, is part of the continuous effort to facilitate wider use of local currencies for settlement of trade and direct investment between Malaysia and Indonesia.
The expanded framework now includes direct investment, income and transfer, in addition to trade, as eligible underlying transactions. It also includes expansion of eligible users of the framework, such as individuals, and additional foreign exchange policy flexibilities, such as more simple documentation requirement, to facilitate the operationalisation of the framework.
Given the expansion, Bank Negara Malaysia and Bank Indonesia have also appointed additional qualified commercial banks in both countries to support the operationalisation of the expanded ringgit-rupiah settlement framework. In general, the appointed banks are experienced in facilitating trade and direct investment between the two countries, have a wide customer base and have established strong business relationships with banks in the counterparty country.
The appointed banks are as follows:
Malaysia
Additional appointed banks:
HSBC Bank Malaysia Berhad
MUFG Bank Malaysia Berhad
Existing appointed banks:
CIMB Bank Berhad
Hong Leong Bank Berhad
Malayan Banking Berhad
Public Bank Berhad
RHB Bank Berhad
Indonesia
Additional appointed banks:
PT Bank HSBC Indonesia
MUFG Bank Ltd, Jakarta branch
Existing appointed banks:
PT Bank Rakyat Indonesia (Persero) Tbk
PT Bank Mandiri (Persero) Tbk
PT Bank Central Asia Tbk
PT Bank Negara Indonesia (Persero) Tbk
PT Bank CIMB Niaga Tbk
PT Bank Maybank Indonesia Tbk
See also: Frequently Asked Questions on Bank Negara Malaysia (BNM)-Bank Indonesia (BI) Expansion of MYR-IDR Local Currency Settlement Framework
Bank Negara Malaysia
Bank Indonesia
2 August 2021
Bank Negara Malaysia
2 August 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
JC3 Flagship Conference 2021 Rapporteur Report
23-25 JUNE 2021
REPORT BY JC3 SUB-COMMITTEE 4 ON ENGAGEMENT & CAPACITY BUILDING
An initiative by In collaboration with Co-organisers
Event partners
#FinanceForChange – JC3 Flagship ConferencePage 2
ABOUT JC3 FLAGSHIP CONFERENCE 2021
#FINANCEFORCHANGE
The implications of climate change on financial stability can no longer be
ignored. The financial sector has both the responsibility and ability to
improve its preparedness to manage the impacts of climate change, as well
as mitigate environmental, social and governance risks while supporting
the transition towards a low carbon economy through its products and
services.
As part of its efforts to further engage and build industry capability, the JC3
hosted the JC3 Flagship Conference on 23-25 June 2021.
This virtual conference aimed to accelerate sustainable development and
drive action within all Financial Institutions (FI) in Malaysia as well as
stakeholders in their value chain.
The Flagship Conference hosted over 6,300 participants from over 400
companies, including board members, CEOs, senior management and
practitioners, as well as FI clients, investees and other value chain players.
Source: Unsplash, @esmonde
#FinanceForChange – JC3 Flagship ConferencePage 3
PRESENTATION MATERIALS & PUBLISHED RECORDINGS
The conference recordings are available at the links below:
• Day 1 Morning
• Day 1 Practical Breakout: Institutional Banking
• Day 1 Practical Breakout: Consumer Banking
• Day 1 Practical Breakout: Asset Management
• Day 1 Practical Breakout: Insurance and Takaful
• Day 1 Practical Breakout: Ancillary Services
• Day 2
• Day 3
Featured videos:
• Caring for our planet – Sir David Attenborough
• Minister of Finance’s speech – YB Senator Tengku Datuk Seri Utama Zafrul bin
Tengku Abdul Aziz
• BNM Governor’s keynote – Datuk Nor Shamsiah Binti Mohd Yunus
• SC Chairman’s keynote – Datuk Syed Zaid Albar
• Bursa Malaysia Chairman’s keynote – Tan Sri Abdul Wahid Omar
• Call to Action – Tan Sri Dr. Jemilah Mahmood
Additionally, all speakers’ presentations are available at this link.
https://www.youtube.com/watch?v=rGjVhAod1ZU&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=AhTsbEJ1qH4&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=J7x0hWAFX5Q&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=szPmeTujGAk&feature=youtu.be&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=FJmgagcEp1M&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=iOA-LGuWvCw&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=Wl5v1K-03yw&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=rjl8weRSdqQ&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=3g8UavR9QzQ&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=t-OIqv5-e7E&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=Cn5Dn7KyIhA&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=DmB2GROKcPA&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=yikwbqRO5mU&ab_channel=IBFIMYoutubeChannel
https://www.youtube.com/watch?v=fbNUk527YXo&ab_channel=IBFIMYoutubeChannel
https://ibfimonline.com/programmes/jc3flagshipconference2021/
#FinanceForChange – JC3 Flagship ConferencePage 4
FOREWORD BY JC3 SC4 CHAIR
It is amazing to see what can be achieved and made possible when hearts and
minds unite. The Flagship Conference and this Flagship Report has been
brought about thanks to many individuals sharing a connection on social and
environmental matters, working in their spare time to make the event happen
and therefore this important document available. Thank you to them, and
thank you to you for spending time reading this report.
The financial services sector plays a critical role in supporting sustainable
business activities. From embracing the United Nations Sustainable
Development goals to developing the Value-Based Intermediation, the financial
institutions, Bank Negara Malaysia and the Securities Commission have made
positive strides in accelerating sustainable development and supporting the
transition towards a low carbon economy. The achievements by the financial
industry must be sustained with strategic plans and relentless execution to
shift the nature of capital and increasingly direct it in more sustainable ways.
Since the Joint Committee on Climate Change by Bank Negara Malaysia and the
Securities Commission (JC3) was established in 2019, it has contributed
towards building climate resilience within the Malaysian financial sector. In
2020, the JC3 sub-committees achieved several key initiatives including the
pilot implementation of the Climate Change and Principles-Based Taxonomy
developed for financial institutions. The Securities Commission also plans to
release a public consultation paper on Sustainable and Responsible Investment
Taxonomy by end of 2021 to provide more clarity and guidance in identifying
sustainable investment assets or activities.
Despite the backdrop of the global Covid-19 pandemic we find ourselves in, JC3
organised its Flagship Conference, #FinanceForChange, which gathered bright
minds and key decision makers from the financial sector and beyond to move
the conversations surrounding environmental, social and governance (“ESG”)
issues forward. This Flagship Report captures notable highlights from the
Flagship Conference. The JC3 Sub-Committee 4 on Engagement & Capacity
Building has taken succinct notes on each of the keynotes, panel discussions,
case studies, and fireside chats to make it easy for readers to find something
they can do today to make a difference, a cheat sheet if you will.
The financial institutions have recognised that ESG responsibilities have to be
embedded at the core of each organisation. With clear call-to-action and plans
spelled out at the conference and in the report, the financial industry is
committed to driving the climate resilience agenda to new heights and conduct
business in a way that also benefits the people.
I sincerely hope you find something in this report that helps you not only
enable a better tomorrow but doing something different today.
Yours,
Arsalaan Ahmed (Oz)
Chief Executive Officer, Al Rajhi Banking & Investment Corporation (Malaysia)
Berhad
Chair of the JC3 Sub-Committee 4, Engagement & Capacity Building
#FinanceForChange – JC3 Flagship ConferencePage 5
AGENDA DAY 1: SUSTAINABILITY AS A BUSINESS STRATEGY FOR FINANCIAL
INSTITUTIONS (FIRST HALF)
Date: 23 June 2021 (Wednesday)
Time Topics
9.00am Context setting: Caring for our planet
• Sir David Attenborough, Broadcaster and Naturalist
9.15am Opening keynote
• Datuk Nor Shamsiah binti Mohd Yunus, Governor, Bank Negara Malaysia
9.35am Call to action: COP26 and private finance for net zero
• Ken O'Flaherty, COP26 Regional Ambassador: Asia-Pacific and South Asia
10.05am Panel session: The role of finance
• Dr. Pakorn Peetathawatchai, President, The Stock Exchange of Thailand
• Dato’ Seri Ir. Dr. Zaini Ujang, Secretary General, Ministry of Environment and Water Malaysia
• Joanne Lee, Sustainable Finance Specialist, WWF
• Moderator: Arsalaan Ahmed, CEO, Al Rajhi Bank Malaysia
10.50am Break
11.00am Fireside chat: Sustainability as a strategy
• Teoh Su Yin, Senior Independent Director, CIMB Group
• Shayne Elliot, CEO, ANZ Bank
• Moderator: Mathew Nelson, Global Climate Change and Sustainability Services Leader, EY
11.30am Panel session: Sustainability principles and resources
• Yuki Yasui, Asia Pacific Region Coordination Manager, UNEP FI
• Butch Bacani, Programme Leader, Principles for Sustainable Insurance Initiative
• Matthew McAdam, Director, Asia Pacific, Principles for Responsible Investment
• Moderator: Adriana Kocornik-Mina, Metrics and Research Senior Manager, Global Alliance for Banking on Values
12.30pm Lunch
#FinanceForChange – JC3 Flagship ConferencePage 6
Date: 23 June 2021 (Wednesday)
AGENDA DAY 1: SUSTAINABILITY AS A BUSINESS STRATEGY FOR FINANCIAL
INSTITUTIONS (SECOND HALF)
Institutional Banking
1.30pm Examining the past, visualising the
future – by EY
2.30pm Environmental and social risk
management at the transaction
level
• Ryan W. Bjorkquist, Director,
Environmental and Social Risk
Management, Standard
Chartered Bank
3.30pm Break
3.45pm Transaction level case study
• Roger Charles, Executive
Director, Environmental and
Social Risk Management,
Standard Chartered Bank
4.45pm Sustainable finance opportunities
and client engagement
• Pierre Rousseau, Strategic
Advisor, Sustainable Business,
BNP Paribas
5.30pm Wrap up session
• Gilles Pascual, Strategy and
Transaction Leader, EY
5.40pm End
Consumer Banking
1.30pm Examining the past, visualising the
future – by EY
2.30pm Applying sustainability in retail
banking
• Bas Ruter, Director of
Sustainability, Rabobank
3.10pm Leveraging sustainability from
Islamic Banking
• Mohd Muazzam Mohamed,
CEO, Bank Islam Malaysia Bhd
3.30pm Break
3.45pm Sustainability risk in retail banking
• David Carlin, TCFD Lead, UNEP
FI
4.15pm Financial inclusion
• Antoni Ballabriga, Global Head
of Responsible Business, BBVA
4.55pm Supporting vulnerable customers
• Todd Stevenson, Chief Member
Outcomes Officer, Colonial
First State (CFS)
5.25pm Wrap up session
• Rafe Haneef, CEO of Group
Transaction Banking / Group
Chief Sustainability Officer,
CIMB
5.35pm End
Asset Management
1.30pm Examining the past, visualising the
future – by EY
2.30pm Resilient and sustainable
portfolios
• Marie Gauthier, Assistant Vice
President, Asia Sustainable
Finance, WWF
3.00pm Operationalising sustainability in
operations
• Daniel Ng, Investment
Manager Asian Equities,
Aberdeen Standard
Investments
3.45pm Break
3.55pm Case study
• Louise Kooy-Henckel,
Managing Director, Wellington
Management
4.55pm Sustainable investment: what do
your clients actually want?
• Nicola Stefan Koch, Deputy
Head of Retail Investment, The
2° Investing Initiative (2DII)
• Constanze Bayer, Senior
Analyst, The 2° Investing
Initiative (2DII)
5.25pm Wrap up session
• Angelia Chin-Sharpe, CEO and
Country Head, BNP Paribas
Asset Management
5.35pm End
Insurance and Takaful
1.30pm Examining the past, visualising the
future – by EY
2.30pm Applying sustainability in
insurance
• Junior Cho, CEO, Zurich
General Insurance Malaysia
Bhd
3.15pm Break
3.30pm Understanding sustainability risk
• Marcel Omar Papp, Head of
Reinsurance, SwissRe Malaysia
4.15pm Value-based intermediation (VBI)
for Takaful and its applications
• Elmie Aman Najas, Chairman,
Malaysian Takaful Association
(MTA)
5.00pm Journey towards sustainable
investment
• Luisa Evaristo, Chief Risk
Officer, Etiqa Insurance and
Takaful
• Norlia Mat Yusof, Chief
Investment Officer, Etiqa
Insurance and Takaful
5.45pm Wrap up session
• Marcel Omar Papp, Head of
Reinsurance, SwissRe Malaysia
5.55pm End
Ancillary Services
1.30pm Examining the past, visualising the
future – by EY
2.30pm Legal and compliance
• Kala Anandarajah, Partner,
Head of Competition &
Antitrust and Trade, Rajah &
Tann Singapore LLP
2.50pm Building and facilities
management
• Michael Long, Head of
Sustainability, Lendlease Asia
3.10pm Procurement
• Fredrik Andersen, Corporations
& Supply Chains Lead, CDP
3.30pm Break
3.45pm Human resources
• Karlijn van den Berg,
Transformation Lead, ABN
Amro Bank N.V.
4.05pm Branding, marketing and
communications
• Juan Aranols, CEO, Nestle
Malaysia
4.35pm Wrap up session
• Usman Ahmed, CEO, Citibank
Berhad
4.45pm End
#FinanceForChange – JC3 Flagship ConferencePage 7
AGENDA DAY 2: JC3 OUTCOMES AND IMPLICATIONS FOR FINANCIAL INSTITUTIONS
Date: 24 June 2021 (Thursday)
Time Topics
9.00am Keynote
• Datuk Syed Zaid Albar, Executive Chairman, Securities Commission Malaysia
9.15am Insights: BNM Climate Change and Principles-based Taxonomy: What this means for
FIs
• Hong Chin Pheng, Deputy Director, Financial Conglomerates Supervision Department,
Bank Negara Malaysia
9.35am Discussion session: Application and operationalisation of the Taxonomy
• Tigor M.Siahaan, President and CEO, CIMB Niaga
• Eqhwan Mokhzanee, CEO, AmBank Islamic Berhad
• Moderator: Wei Zhang, Senior Financial Sector Specialist, The World Bank
10.20am Panel session: Impact of the Taxonomy
• Eugene Wong, CEO, Sustainable Finance Institute Asia Limited
• Leonard Ariff Bin Abdul Shatar, Group Managing Director, DuoPharma Biotech
• Moderator: Fraziali Ismail, Assistant Governor, Bank Negara Malaysia
10.50am Break
11.05am Insights and discussion: Changing ESG disclosure requirements in the Malaysian
context
• Julian M Hashim, CEO, Bursa Malaysia Regulations Sdn Bhd
11.30am Masterclass: Evolving sustainability risk disclosure and practices
• Arina Kok, Director of Climate Change and Sustainability Services, EY
12.15pm Discussion session: Task Force on Climate-related Financial Disclosures (TCFD)
• Rosemary Bissett, Head of Sustainability Governance and Risk, National Australia
Bank
• Moderator: Arina Kok, Director of Climate Change and Sustainability Services, EY
12.45pm Lunch
Time Topics
1.45pm Masterclass: Sustainable finance products and innovation
• Gilles Pascual, Strategy and Transaction Leader, EY
2.45pm Panel session: Sharing experience on sustainable finance product development
• Tan Ai Chin, Managing Director, Senior Banker Client Coverage & Head of Global
Investment Banking, OCBC Bank (Malaysia) Berhad
• Jo Ann Eala, Vice President , Head of Sustainability Office, Bank of Philippine Islands
• Yulanda Chung, Head of Sustainability, DBS Bank
• Moderator: Mushtaq Kapasi, Managing Director, Chief Representative for Asia
Pacific, ICMA
3.45pm Break
4.00pm Fireside chat: The national agenda on sustainability
• Dr. Nagulendran Kangayatkarasu, Deputy Secretary General, Ministry of Environment
and Water Malaysia
• Moderator: Datin Seri Sunita Rajakumar, Founding Chairperson, Climate Governance
Malaysia
4.45pm Call to action: The power is in your hands
• Lewis Pugh, United Nations Ocean Advocate
5.15pm Closing plenary: Fostering a sustainability landscape in public finance
• YB Tengku Datuk Seri Utama Zafrul bin Tengku Abdul Aziz, Minister of Finance,
Ministry of Finance Malaysia
5.45pm Wrap up session
• Elena Almeida , Prosperity Programme Adviser, British High Commission
5.55pm End
#FinanceForChange – JC3 Flagship ConferencePage 8
AGENDA DAY 3: SUSTAINABLE FINANCE FOR THE PRIVATE SECTOR
Date: 25 June 2021 (Friday)
Time Topics
9.00am Keynote
• Tan Sri Abdul Wahid Omar, Chairman, Bursa Malaysia
9.15am Call to action: COVID-19 was just the dress rehearsal
• Tan Sri Dr. Jemilah Mahmood, Special Advisor on Public Health to the Prime Minister of Malaysia
9.35am Investor panel session: Sustainability is no longer an option
• Datuk Seri Amir Hamzah Azizan, CEO, Employees Provident Fund
• Jenn Hui Tan, Global Head of Stewardship and Sustainable Investing, Fidelity International
• Tan Sri Azman Mokhtar, Board Member, International Centre for Education in Islamic Finance (INCEIF)
• Moderator: Salmah Bee Mohd Mydin, Executive Director, Market Development, Securities Commission Malaysia
10.20am Break
10.30am Banking panel session: Changing ESG and climate requirements from banks
• Stuart Milne, CEO, HSBC Malaysia
• Shahril Azuar Jimin, Chief Sustainability Officer, Maybank
• Moderator: Helena Fung, Head of Sustainable Investment Asia Pacific, FTSE Russell
11.15am Panel session: Leveraging on sustainable finance for green growth
• Sharif James Zainal Aziz, Head of Group Corporate Sustainability Safety & Sustainability Department, Sime Darby Property Bhd
• Thomas Tsao, Founding Partner, Gobi Partners
• Iain Henderson, Managing Director, Asia Pacific Private Credit, ADM Capital
• Moderator: Dato Rauf Rashid, Country Managing Partner, EY
12.00pm Call to action: Businesses role in tackling climate change
• Maayke-Aimée Damen, Founder, Excess Materials Exchange
12.30pm End
#FinanceForChange – JC3 Flagship ConferencePage 9
HIGHLIGHTS
Context setting: caring for our planet BNM Governor’s keynote address
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Keynote speech
Speaker: Datuk Syed Zaid Albar
Closing plenary: fostering a sustainability landscape in public finance
Speaker: YB Tengku Datuk Seri Utama Zafrul bin Tengku Abdul Aziz
Day
1
Day
1
Day
2
Day
2
#FinanceForChange – JC3 Flagship ConferencePage 10
HIGHLIGHTS
Call to action: The power is in your hands Keynote speech
Speaker: Lewis Pugh Speaker: Tan Sri Abdul Wahid Omar
Call to action: COVID-19 was just the dress rehearsal
Speaker: Tan Sri Dr. Jemilah Mahmood
Day
2
Day
3
Day
3
DAY 1 MORNING SESSIONS
Day
1
9.00 am Context setting: Caring for our planet
9.15 am Opening keynote
9.35 am Call to action: COP26 and private finance for net zero
10.05 am Panel session: The role of finance
11.00 am Fireside chat: Sustainability as a strategy
11.30 am Panel session: Sustainability principles and resources
1.30 pm Examining the past, visualising the future
Sustainability as a business strategy for financial institutions
In collaboration with Co-organisers Event partnersAn initiative by
In collaboration with Co-organisers Event partners
Sir David
Attenborough
Broadcaster and Naturalist
“All of us, no matter who we are, have the responsibility to
care for the planet. The future of all humanity now depends
on us, and on none more than you, in the world of finance.”
Page 12 #FinanceForChange – JC3 Flagship Conference
#FinanceForChange – JC3 Flagship Conference
Key Takeaways/Messages:
Sir David Attenborough
Broadcaster and Naturalist
Day 1, 23rd June 2021 (09.00 am to 09.15 am)
Page 13
CARING FOR THE PLANET
• ASEAN is the site of valuable ecosystems, but is also the site of its degradation. Borneo has lost its rainforest at the fastest rate
in the world, with 30% loss in the last 40 years. In the same time period, Thailand and Vietnam lost half their mangrove forests,
which has resulted in the loss of protection from tidal waves and storms for their coastal and urban areas.
• At the moment, nature loss is not irreversible, and nature can recover provided that sufficient action is taken, such as through
mangrove replanting, rainforest rehabilitation and establishment of urban green spaces to continue performing its role in
temperature and flood regulation. ASEAN has played a central role in the recovery of nature and must continue to do so.
• The world must be rebuilt greener after Covid-19. By working together, global temperatures can be limited to 2 degrees to avert
a global catastrophe. As the host of COP26, the UK is calling for urgent action to put the protection of nature and biodiversity at
the centre of climate policies.
• Financial institutions are in a strategic position to drive change and to put the world on track to meet the Paris Agreement
targets. Actions must be taken now to avoid the irreversible effect of climate change.
In collaboration with Co-organisers Event partners
Datuk Nor Shamsiah
binti Mohd Yunus
Governor, Bank Negara Malaysia
Page 14 #FinanceForChange – JC3 Flagship Conference
“As the lifeblood of the economy, the response of the financial sector is crucial on
several levels – (i) to safeguard the resilience of the financial system through the
identification and management of climate-related risks; (ii) to direct financial flows to
low-carbon activities; and (iii) to support the transition by economic agents through
appropriate financial and risk solutions.”
#FinanceForChange – JC3 Flagship Conference
Datuk Nor Shamsiah binti Mohd Yunus
Governor, Bank Negara Malaysia
Day 1, 23rd June 2021 (09.15 am to 09.35 am)
Page 15
OPENING KEYNOTE (1/2)
Key Takeaways/Messages:
• Introducing frameworks for the identification and classification of economic activities that meet climate objectives and are
environmentally sustainable: Climate Change and Principle-based Taxonomy, sectoral guides under the Value-based
Intermediation Assessment Framework (VBIAF), the VBI Takaful Framework (VBITF).
• Strengthening practices in the treatment and disclosures of climate risks by financial intermediaries: Guidance Documents on
Climate Risk Management and Scenario Analysis and Application Guide for TCFD.
• Ramping up engagement and capacity building efforts to support climate action and risk management in the financial sector:
JC3 contributes to the formulation of national climate policies to promote alignment with the financial sector's response to
climate risks, and working with selected knowledge partners, will continue to deepen its stack of technical programmes.
• Identify and address critical data gaps in climate and environmental risks-related information: A new JC3 sub-committee on
data was established earlier this year.
#FinanceForChange – JC3 Flagship Conference
Datuk Nor Shamsiah binti Mohd Yunus
Governor, Bank Negara Malaysia
Day 1, 23rd June 2021 (09.15 am to 09.35 am)
Page 16
OPENING KEYNOTE (2/2)
.
Key Takeaways/Messages:
• Exploring various options to encourage better risk management approaches by outlier institutions - including through Pillar 2
capital requirements and supervisory assessments to reflect an inadequate consideration of climate risks.
• A four-year plan to prepare for industry-wide climate change stress tests at the counterparty level, supported by modelling of the
macroeconomic impact of climate shocks based on defined climate scenarios.
• Plans for mandatory climate-risk disclosures by financial institutions in consultation with the financial industry.
• The financial sector can fund more sustainability initiatives and incentivise investments in low carbon sectors, e.g. projects under
(i) the National Investment Aspirations (NIA) framework, (ii) the Malaysian Climate Action Council (MyCAC)'s plan for Malaysia to
be a hub in green economy, services and technology, and (iii) the Low Carbon Mobility Development Plan 2021-2030.
• In combining concessional financing and commercial funding, blended finance approaches can avoid excessive debt loads that
could increase future risks. There are also significant opportunities for financial institutions to support a green recovery from the
pandemic through the provision of transition financing linked to sustainable practices.
In collaboration with Co-organisers Event partners
Ken O’Flaherty
COP 26 Regional Ambassador
(Asia-Pacific and South Asia)
“It is estimated that disruptions from climate change like hurricanes, wildfires
and flooding cost over GBP250 billion every year. Those events cost lives,
incomes and property. Flooding in the UK in 2014 cost our economy GBP40
million, and floods in Malaysia in the same year were estimated to cost the
Malaysian economy GBP439 million. As climate change impacts worsen, such
costs will increase significantly. When it comes to climate change, the cost of
inaction could far outweigh the cost of action.”
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (09.35 am to 10.05 am)
Page 18
CALL TO ACTION: COP26 & BUILDING A PRIVATE FINANCE SYSTEM FOR NET ZERO (1/3)
Ken O’Flaherty
Regional Ambassador to Asia-Pacific and South Asia, COP26
Key Takeaways/Messages:
• The cost of inaction far outweighs the cost of action. Solar and wind are already cheaper than fossil fuels in ⅔ of the world, and are
expected to undercut coal globally by 2030.
• The global trade market in low carbon goods and services is expected to grow from GBP150 billion in 2015 to between GBP2.8
trillion and GBP1.5 trillion in 2050. Growth in these sectors means further opportunities for high value jobs.
• The cost of inaction is economically unsustainable. The Stern Review reported that climate change could cost the world more than
20% of its GDP each year if we continue to delay action.
• The low carbon transition requires a transformation of finance, and financial institutions need to take net zero into account, with
banks, insurers and investors adjusting their business model to a low-carbon economy. In total, USD100 billion needs to be
mobilised in public and private finance every year to assist vulnerable and developing countries.
• As host of COP26, the UK government has agreed on a strategic climate framework that focuses on four key goals: mitigation,
adaptation, collaboration and finance.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (09.35 am to 10.05 am)
Page 19
CALL TO ACTION: COP26 & BUILDING A PRIVATE FINANCE SYSTEM FOR NET ZERO (2/3)
Ken O’Flaherty
Regional Ambassador to Asia-Pacific and South Asia, COP26
Key Takeaways/Messages:
• To avoid the worst impacts of climate change, we need to focus on four key areas:
- Halve emissions by 2030 and achieve net zero by 2050. The UK urges all countries to develop ambitious emissions
reductions targets aimed at reaching net zero by 2050. This should include commitments on phasing out coal and ending
deforestation.
- Countries and communities should be supported with strategies to adapt to the impacts of climate change, such as
developing credible plans and mobilizing finance.
- International collaboration between governments, businesses and civil society need to accelerate to further drive
innovation, create stronger incentives for investors, and reduce the costs of the transition. The transition should especially
be made in the largest emitting sectors including power, road transport and land-use.
- Financial institutions need to transform and adjust their business model to cater to the low-carbon transition. In total,
USD100 billion needs to be mobilised in public and private finance every year to assist the transition in developing
countries.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (09.35 am to 10.05 am)
Page 20
CALL TO ACTION: COP26 & BUILDING A PRIVATE FINANCE SYSTEM FOR NET ZERO (3/3)
Ken O’Flaherty
Regional Ambassador to Asia-Pacific and South Asia, COP26
Key Takeaways/Messages:
• As a start, financial institutions may consider the following actions:
- Familiarise with the TCFD recommendations to understand sustainability and climate risks. TCFD is now mandatory in some
countries and may soon become the norm.
- Limit exposure to extremely high risk sectors such as by ending coal financing. The cost of renewable energy has fallen, and
solar and wind power are already cheaper than coal in some parts of the world. They are expected to be even cheaper by
2030, which will create demand and open opportunities for financing in that sector.
- Learn from other financial institutions and organizations, such as the JC3, who have the expertise and resources on
sustainability.
• To mobilise private capital for sustainability, the Bank of England launched the "COP26 Private Finance Agenda" which consists of 3Rs
(Reporting, Risk management, and Returns)
• The UK is committed to assisting financial institutions with adopting TCFD, accounting for climate risks without sacrificing returns and
is undertaking capacity building initiatives, such as the UK’s ASEAN Low Carbon Economy Programme.
#FinanceForChange – JC3 Flagship Conference
Dr. Pakorn Peetathawatchai
President, The Stock Exchange of
Thailand
Dato’ Seri Ir. Dr. Zaini Ujang
Secretary General, Ministry of
Environment and Water
Joanne Lee
Sustainable Finance Specialist, WWF
Arsalaan Ahmed (Oz)
CEO, Al Rajhi Bank Malaysia
Day 1, 23rd June 2021 (10.05 am to 10.50 am)
Page 21
PANEL SESSION: ROLE OF FINANCE (1/2)
Key Takeaways/Messages:
• Climate and nature related risks are becoming increasingly on the radar for investors and on the agenda of policymakers and
supervisors. Internationally, we surpassed 500 policy instruments related to ESG in 2020.
• Market mechanisms are one of the most effective channels to incentivise carbon consciousness for companies. For example, in
the sugar milling industry in Thailand, government initiatives incentivised the use of waste to generate additional products,
thus generating additional revenue to increase profitability for sugar milling companies.
• The incorporation of ESG in the financial sector can be taken through the following steps: (a) financial institutions should
practice active investing which involves the use of ESG information to screen companies, (b) go beyond negative screening and
conduct active ownership, (c) direct capital flow from institutional and retail investors into more ESG products, and (d)
normalise ESG in corporate practices.
#FinanceForChange – JC3 Flagship Conference
Dr. Pakorn Peetathawatchai
President, The Stock Exchange of
Thailand
Dato’ Seri Ir. Dr. Zaini Ujang
Secretary General, Ministry of
Environment and Water
Joanne Lee
Sustainable Finance Specialist, WWF
Arsalaan Ahmed (Oz)
CEO, Al Rajhi Bank Malaysia
Day 1, 23rd June 2021 (10.05 am to 10.50 am)
Page 22
PANEL SESSION: ROLE OF FINANCE (2/2)
Key Takeaways/Messages:
• To solve the issue of limited data availability, ESG-related data should be structured and made accessible for key actors in the
financial sector, and standardised across the industry to promote transparency and comparability. This will catalyse the
development of regional ESG products.
• Financial institutions should take into account natural capital risk, develop sector specific policies, set science-based targets
and decarbonisation pathways.
• The Malaysian government is currently developing carbon market guidelines, Nationally Determined Contributions (NDC), and
is identifying a low carbon emissions trajectory, with a biennial report to the UNFCCC in 2022.
• Climate governance needs to be strengthened to promote effective resource mobilisation within the organisation. The Climate
Action Council in Malaysia is a positive step towards setting commitments and policies to be carbon neutral, particularly at the
level of federal and state governments.
#FinanceForChange – JC3 Flagship Conference
Shayne Elliot
CEO, ANZ Bank
Teoh Su Yin
Senior Independent Director,
CIMB Group
Mathew Nelson
EY Global Leader for Climate Change and
Sustainability Services Leader
Day 1, 23rd June 2021 (11.00 am to 11.30 am)
Page 23
FIRESIDE CHAT: SUSTAINABILITY AS A STRATEGY
Key Takeaways/Messages:
• Over the past 5 years, there has been a massive uptake of interest in ESG and investors have become more progressive and
engaged with sustainability, balancing the focus between risk management and new market opportunities. This has been
complemented by a sense of partnership between customers and investors in shaping the climate transition.
• ESG awareness in Southeast Asia is not as mature as more developed markets. Recently, activist shareholders have been putting
increasing pressure on the carbon emitting sectors. For example, following increased pressure from activist shareholders, Shell
was tried and ruled by the Dutch court to cut its CO2 emissions. Stakeholder activism is likely to continue and will affect not just
the industry, but also financial institutions, both in the West and Southeast Asia.
• Financial institutions should build sustainability awareness and a genuine ESG culture in their organisation, starting at the board
level, ensuring that sustainability matters are taken seriously by the senior management.
• As sustainability is a relatively new topic, it is essential to ensure an appropriate approach is taken in building sustainability
governance. Appointing ESG advisors can be a good start before establishing a dedicated ESG committee who will be responsible
and accountable for ESG-related issues.
• An organisation can begin by leveraging available and existing resources in their talent development and internal capacity building.
#FinanceForChange – JC3 Flagship Conference
Yuki Yasui
Asia Pacific Region Co-ordination Manager,
UNEP FI
Matthew McAdam Director,
Asia Pacific at PRI
Butch Bacani Programme
Leader, PSI
Adriana Kocornik-Mina Metrics
and Research Senior Manager,
Global Alliance for Banking on
Values
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
Page 24
PANEL SESSION: SUSTAINABILITY PRINCIPLES & RESOURCES (1/2)
Key Takeaways/Messages:
• The Principles for Responsible Investment (PRI), Principles for Sustainable Insurance (PSI) and Principles for Responsible
Banking (PRB) are global initiatives that support commitment towards sustainability by providing the relevant assistance,
guidance and tools for financial institutions.
• Financial institutions should engage their clients by:
- Providing guidance, risk assessments and requiring a transition plan and net-zero commitments to reduce emissions.
- Providing sustainability advisory services, which can assist in target-setting and establishing benchmarks to allow
alignment of strategies with those targets.
- For financial institutions wishing to engage with their clients responsibly and sustainably, there is a wealth of
available resources from the PRI, PSI and PRB such as reporting and assessment tools which assess an organisation’s
readiness for the climate transition through establishing baselines, identifying strengths and weaknesses, setting
targets and monitoring, and tracking progress.
#FinanceForChange – JC3 Flagship Conference
Yuki Yasui
Asia Pacific Region Co-ordination
Manager, UNEP FI
Matthew McAdam Director,
Asia Pacific at PRI
Butch Bacani Programme
Leader, PSI
Adriana Kocornik-Mina Metrics
and Research Senior Manager,
Global Alliance for Banking on
Values
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
Page 25
PANEL SESSION: SUSTAINABILITY PRINCIPLES & RESOURCES (2/2)
Key Takeaways/Messages:
• Risk managers, insurers and investors, and insurance companies should be ahead of the curve on ESG issues to capture
opportunities on risk management and the new economy created by the transition to net zero.
• Investors should upgrade their governance for the low-carbon transition to mitigate legal, transition and other risks. This
includes adopting TCFD reporting which provides a mechanism to assess the resilience of an organisation’s strategy and
portfolio towards climate change.
• Lack of awareness, weak customer demand and the absence of necessary national policies are key challenges.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
Page 26
EXAMINING THE PAST, VISUALISING THE FUTURE (1/2)
Key Takeaways/Messages:
• Failure in climate action has been identified as being the second most likely and most impactful long-term risk. Climate
change is a source of economic and financial risks which includes physical and transitional risks.
• In formulating a strategy for sustainability, financial institutions can consider the following actions:
- Creating ESG products to cater to growing demand for sustainability.
- Transforming internal operations, such as establishing a unit to focus on sustainability.
- Impact investing in projects and activities with a positive social and environmental impact.
- Ensuring sustainable and inclusive methods of distribution of financial services to retail customers, for example
through developing voice assistance in banking apps for people with disabilities such as blindness.
- Collaborating through external partnerships between financial institutions and non financial institutions to offer
innovative ESG solutions for customers.
- Enhancing and strengthening policies by integrating ESG into operations and becoming signatories to industry-wide -
ESG frameworks.
Russel Marsh
Director, Strategy and
Transaction, EY
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Suzanne Biegel
Founder, Catalyst at Large
Co-founder, GenderSmart Inveting
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (11.30 am to 12.30 am)
EXAMINING THE PAST, VISUALISING THE FUTURE (2/2)
Russel Marsh
Director, Strategy and
Transaction, EY
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Suzanne Biegel
Founder, Catalyst at Large
Co-founder, GenderSmart Inveting
Page 27
Key Takeaways/Messages:
• There are large funding gaps in ESG-related investments in both public and private sectors. Between USD3.3 and USD4.5 trillion
is needed to achieve the UN SDGs, with the funding gap for investment in developing countries alone estimated at USD 2.5
trillion. Key gaps are in the power sector, transportation, telecommunications, climate change adaptation and ecosystems.
• We need to be conscious of how climate change can impact certain communities differently. Tackling gender inequalities can
positively impact climate resilience and financing for women can result in overall economic growth.
• It is imperative for financial institutions to embed and institutionalise climate-related risks, which can be achieved through the
following actions:
- Establishing an understanding, oversight and accountability for sustainability at all levels of the organisation by adapting
the three lines of defence approach to an ESG risk management framework.
- Ensuring both strategy governance (defining strategies) and compliance governance (conducting stress tests on
portfolios to inform proactive action) are in place.
- Integrating sustainability into every part of core business processes, from core operations to sales and customer service.
AFTERNOON SESSION
Day
1
2.30 pm
Environmental and social risk management at the
transaction level
Ryan W. Bjorkquist, Director, Environmental and Social Risk
Management, Standard Chartered Bank
3.45 pm
Transaction level case study
Roger Charles , Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
4.45 pm
Sustainable finance opportunities and client
engagement
Pierre Rousseau, Strategic Advisor, Sustainable Business, BNP
Paribas
5.30 pm Wrap up session
Gilles Pascual, Strategy and Transaction Leader, EY
Institutional Banking
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Ryan W. Bjorkquist
Director, Environmental and Social Risk
Management, Standard Chartered Bank
Day 1, 23rd June 2021 (02.30 pm to 03.30 pm)
Page 29
ENVIRONMENTAL & SOCIAL RISK MANAGEMENT AT THE TRANSACTION LEVEL
Key Takeaways/Messages:
• Data from SIGWATCH has highlighted a positive correlation between NGO activity on environmental and social issues, with the
activities in energy, finance and agriculture sectors - validating NGO criticism to a certain extent.
• In Southeast Asia, the most significant ESG issues are the violations of national legislation, impacts on communities and impacts on
landscapes, ecosystems and biodiversity.
• Position statements (on extractive industries, power, infrastructure, chemicals, agro-industries and cross-sector positions on climate
change and human rights) are a key reflection of financial institutions’ commitment and expectation. For example, a position
statement on fossil fuel can state that the bank will not finance new coal-fired power plants in any location, and any coal plant
expansions, retrofits or dedicated infrastructure. This can include a time-bound roadmap for clients who are dependent on thermal
coal, which begins with less than 80% dependence in 2024 and ends with less than 5% in 2030.
• Financial institutions should have an E&S risk measurement framework at the company level (an assessment form which utilizes a
stop light approach to provide a rating can be implemented) and transaction level (consultants may be engaged to provide guidance
and advice).
• In order to educate clients on E&S considerations, financial institutions should ensure that accurate and timely information is given.
This can include client training programs as well as reviewing sector position statements bi-annually.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (03.45 pm to 04.45 pm)
Page 30
TRANSACTION LEVEL CASE STUDY (1/3)
Key Takeaways/Messages:
• Adopting E&S standards raises the concern of clients shifting to other financial institutions with lower standards.
While this may have been true previously, E&S standards now provide a minimum baseline. In fact, some host
countries' regulations are likely to be higher than such standards.
• Timing is a determining factor in financing of a project. A project may already be in the construction phase and
therefore will affect the due diligence process of financial institutions. This is illustrated by a number of case
studies.
• Case Study 1: Road Upgrade Project. This project involved a government-led road widening project. Despite the
fact that under the bank’s framework, infrastructure projects are considered sustainable, this project had a
number of E&S issues, including resettlement, impacts on biodiversity habitats, and a lack of E&S baseline data
due to the absence of an environmental and social impact assessment report. These issues were addressed
through measures which were adopted by the government, including using overpasses to lessen impacts on the
wildlife corridor, establishing a grievance mechanism, and establishing a biodiversity management plan.
Roger Charles
Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (03.45 pm to 04.45 pm)
Page 31
TRANSACTION LEVEL CASE STUDY (2/3)
Key Takeaways/Messages:
• Case Study 2: Renewable Energy. This project posed a number of issues, including impacts on a biodiversity critical
habitat, risk of bird strikes for transmission lines, lack of hazardous waste management plans, and labour influx
who could spread communicable diseases. In order to mitigate the above issues, recommendations were adopted
by the project proponent for the power lines to be buried, to establish a biodiversity action plan and monitoring
program for species, and to leverage on rainwater harvesting and robotic cleaning after construction. The post-
project stage would also involve a cumulative impact study to manage possible future risks.
• Case Study 3: Waste to Energy. To mitigate the issues associated with the project, including a poor regulatory
environment, poor working conditions and the fact that construction had already commenced when the
application was made, the financial institution adopted a number of mitigation measures to meet E&S standards.
This included applying EU design standards, corrective action plans and implementing an E&S action plan with
time-bound milestones which were linked to the disbursement schedule.
Roger Charles
Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (03.45 pm to 04.45 pm)
Page 32
TRANSACTION LEVEL CASE STUDY (3/3)
Key Takeaways/Messages:
• Financial institutions should get engaged in the early stages of the project conception stage and determine their
area of influence. At this stage, financial institutions should further determine necessary information, refer to an
environmental and social impact assessment (ESIA) to identify risks and engage with consultants.
• Financial institutions can consider requiring the customer to change the project design where feasible, develop
action plans and strategies to mitigate risks. Financial institutions can further consider residual risk acceptance and
include E&S provisions in loan documentation for compliance, monitoring and reporting.
• Financial institutions should monitor E&S obligations, such as through ensuring frequency of monitoring, internal
reporting or independent monitoring. Financial institutions should also consider the format of lender reporting,
and other reporting measures such as regulatory and public disclosures.
Roger Charles
Executive Director, Environmental and Social
Risk Management, Standard Chartered Bank
#FinanceForChange – JC3 Flagship Conference
Pierre Rousseau
Strategic Advisor, Sustainable
Business, BNP Paribas
Day 1, 23rd June 2021 (04.45 pm to 05.30 pm)
Page 33
SUSTAINABLE FINANCE OPPORTUNITIES & CLIENT ENGAGEMENT (1/2)
Key Takeaways/Messages:
• The signatories of the Net-Zero Banking Alliance (NZBA) manage USD28.5 trillion in assets across 43 banks.
• The net-zero transition presents an enormous business opportunity, and USD100-125 trillion cumulative investments by
2050 will be required, which includes:
- Reducing carbon emissions through research and development of new and disruptive technologies.
- Gradually scaling up planet-positive activities, including carbon capture. Energy companies will be key to this,
however it will likely be implemented at a different pace across the world and laggards will be expected to catch
up through acquisitions.
- Gradually scaling-down carbon emitting activities through divestment, asset sales, disposals and decommissioning.
• Aside from adopting sustainability-linked loans, responsible sourcing, carbon offsetting / hedging and carbon reducing
investments, collaborative financing solutions are key for sustainable transformative projects, e.g. blended finance which
strategically uses development finance and philanthropic funds to mobilize private capital for emerging and frontier
markets (Tropical Landscape Finance Facility (TLFF).
#FinanceForChange – JC3 Flagship Conference
Pierre Rousseau
Strategic Advisor, Sustainable
Business, BNP Paribas
Day 1, 23rd June 2021 (04.45 pm to 05.30 pm)
Page 34
SUSTAINABLE FINANCE OPPORTUNITIES & CLIENT ENGAGEMENT (2/2)
Key Takeaways/Messages:
• For financial institutions, the sustainable transition must be accompanied by a systemic, collaborative and data driven
solution. This should include:
- Setting a vision with a strong corporate value, to address best operational efficiency, risk and opportunity
identification and avoid stressed assets.
- Addressing the systemic challenge through collaboration and data.
- Managing an uneven transition by setting short and long term targets and action at the strategy level.
- Reallocating capital to maximise profit with purpose.
• The integration of climate change, biodiversity loss and inequalities into a financial institution’s traditional business must
be supported by data and research such as the Science-Based Targets Initiative (SBTi). This must be done with the ultimate
solution of moving from carbon avoidance to carbon capture and nature preservation to nature regeneration in mind.
• The majority of the transition (risk) will be outside the balance sheet of the client, so supply chains must be sufficiently
covered in the net-zero strategy of financial institutions.
AFTERNOON SESSION
Day
1
2.30 pm Applying sustainability in retail banking
Bas Ruter, Director of Sustainability, Rabobank
3.10pm Leveraging sustainability from Islamic Banking
Mohd Muazzam Mohamed, CEO, Bank Islam Malaysia Bhd
3.45 pm Sustainability risk in retail banking
David Carlin, TCFD Lead, UNEP FI
4.15 pm Financial inclusion
Antoni Ballabriga, Global Head of Responsible Business, BBVA
4.55pm
Supporting vulnerable customers
Todd Stevenson, Chief Member Outcomes Officer, Colonial
First State (CFS)
5.25pm
Wrap up session
Rafe Haneef, CEO of Group Transaction Banking / Group
Chief Sustainability Officer, CIMB
Consumer Banking
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Bas Ruter
Director of Sustainability, Rabobank
Day 1, 23rd June 2021 (02.30 pm to 03.10 pm)
Page 36
APPLYING SUSTAINABILITY IN RETAIL BANKING
Key Takeaways/Messages:
• Sustainability provides a clear business case to motivate senior line management as it involves short term actions resulting in
positive financial impacts. By encouraging clients to adopt precision farming methods which use less fertilizer while achieving
the same yield, this enables the client to increase profitability and therefore attract more loans. An analysis of sustainability
performance of farmers showed that the least sustainable farmers are more likely to default. Prioritizing sustainability lowers
financial risks.
• Approach sustainability by aiming to move from regulation to mission, and integrate ESG and biodiversity into the climate
program as a crucial part of the sustainability framework.
• Conduct annual assessments of sustainability performance for every client that borrows more than EUR1 million, and set up a
carbon bank to help clients sequester carbon. Develop products and implement climate solutions such as a sustainable living
mortgage and green loan to improve energy efficiency and sustainability amongst customers and linking loan rates to food
waste reduction targets.
• Financial institutions can leverage the capacity and skills of non-financial organizations to assist with product development, e.g.
Engage with start-up to test the product on a small-scale and to conduct the energy analysis.
#FinanceForChange – JC3 Flagship Conference
Mohd Muazzam Mohamed
CEO, Bank Islam
Day 1, 23rd June 2021 (03.10 pm to 03.20 pm)
Page 37
LEVERAGING SUSTAINABILITY FROM ISLAMIC BANKING (1/2)
Key Takeaways/Messages:
• Islamic banking is widely known for its prohibition of usury, but it has a twin purpose. The other angle that is mostly missed
by people is the preservation of good and prevention of harm based on the Shariah.
• Islamic banking has a natural duty to generate positive impacts on people and the planet, which is parallel with the aims of
sustainable banking.
• Islamic banking principles are consistent with the sustainability agenda in the following ways:
- Islamic banking is in accordance with the principles of Shariah which is based on the values of the Al-Quran and Sunnah
that includes being ethical, sustainable, responsible, transparent, green and equitable.
- As Islam teaches that humans are the Khalifah (guardians) of the earth, Islamic banking must generate positive impacts
on people and the planet.
#FinanceForChange – JC3 Flagship Conference
Mohd Muazzam Mohamed
CEO, Bank Islam
Day 1, 23rd June 2021 (03.10 pm to 03.20 pm)
Page 38
LEVERAGING SUSTAINABILITY FROM ISLAMIC BANKING (2/2)
Key Takeaways/Messages:
• VBI provides a catalyst for Islamic banks to deliver the outcomes of Shariah through practices, conduct and offerings that
produce positive and sustainable impacts to the economy, community and environment. This is consistent with the increased
expectations of shareholders and other stakeholders, as customers are becoming increasingly critical of how their funds are
utilized.
• BNM together with a community of practitioners developed the VBI to create a common vision for Islamic banks to transform.
Hence, Islamic banks in Malaysia are encouraged to utilize the VBI framework (including the sectoral guides) to support their
transition journey.
#FinanceForChange – JC3 Flagship Conference
David Carlin
TCFD Programme Lead, UNEP FI
Day 1, 23rd June 2021 (03.45 pm to 04.15 pm)
Page 39
SUSTAINABILITY RISK IN RETAIL BANKING (1/2)
Key Takeaways/Messages:
• The UNEP FI conducted a number of pilot programs:
- The TCFD Banking Pilot Project Phase II explored the use of different climate scenarios, determined the availability of
climate-related data, refined Phase I methodologies, created a risk taxonomy and developed best practices surrounding
climate-related data and identified emerging expectations and standardized approaches for internal governance
processes and TCFD disclosures.
- The Physical Risk Assessment Framework pilot project aids financial institutions in translating physical risk data into
financial and economic impacts using climate scenario analysis, based on data from the agriculture and real estate
sector. The pilot uses different scenarios and converts impacts on outputs, data and methodologies of traditional risk
models into financial risks, and recommends how this data can fit into effective process governance and reporting.
- The TCFD Banking Program Report provides guidance and resources to support forward-looking scenario-based
assessments of physical risks and opportunities.
#FinanceForChange – JC3 Flagship Conference
David Carlin
TCFD Programme Lead, UNEP FI
Day 1, 23rd June 2021 (03.45 pm to 04.15 pm)
Page 40
SUSTAINABILITY RISK IN RETAIL BANKING (2/2)
Key Takeaways/Messages:
- This includes an assessment of data portals covering variables such as floods and cyclones, undertaking a physical risk
heat mapping exercise through mapping vulnerability indicators to sectors and sub-sectors, and undertaking a Physical
Risk Correlation Analysis of financial institutions’ portfolios to identify the relationship between asset values and
extreme events. This includes a step-by-step example of practicing correlation analysis using an Excel tool.
• For financial institutions who are beginning to incorporate sustainability risks, it must be noted that imperfect information is a
reality, and organizations must recognise that to enhance data collection and analyses. The first step is to identify exposure
through risk heat mapping and to make an inventory of these exposures to determine which risks are material. The second
step is to focus on identifying data based on which risk the financial institution is most exposed to.
#FinanceForChange – JC3 Flagship Conference
Antoni Ballabriga
Global Head of Responsible Business,
BBVA
Day 1, 23rd June 2021 (04.15 pm to 04.55 pm)
Page 41
FINANCIAL INCLUSION (1/3)
• Globally there are still 1.7 billion adults who do not use financial institutions in any capacity. Two-thirds of that population are
in possession of a mobile phone. There is also a significant gender gap on financial inclusion particularly in developing
economies. However, financial inclusion is gradually increasing.
• Access to finance is a key challenge to the growth of SMEs and is the second most cited obstacle to growing their business in
emerging and developing markets. The IFC estimates that 40% of SMEs in developing countries have an unmet financing need
of $5.2 trillion every year.
• Vulnerable or unequal groups in banking portfolios include those from low-income groups, migrant workers, ethnic minorities
and indigenous peoples and women. The factors driving this vulnerability include health issues, life events, resilience,
education, digital and financial access and considerations of culture and demographics.
• Financial institutions can use the SDG framework as a tool for strategic review and exploration of areas where greater impact
can be made, such as financial inclusion. Furthermore, the UN Principles for Responsible Banking can further align banks’
strategy and practice with the SDGs.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Antoni Ballabriga
Global Head of Responsible Business,
BBVA
Day 1, 23rd June 2021 (04.15 pm to 04.55 pm)
Page 42
FINANCIAL INCLUSION (2/3)
• The UNEP FI have identified guidelines for target setting in financial inclusion, which includes:
- Understanding the country context and relevant national policies.
- Setting baselines and identifying priorities.
- Setting specific, measurable, achievable, realistic and time-bound (SMART) targets.
- Determining measures and actions.
- Defining key performance indicators.
• In the future, it is expected that there will be a significant transformation and democratisation of finance as a result of greater
digitalization of services, and the role of financial institutions is to ensure universal access to banks.
• Financial institutions may define the vulnerability of customers by looking into country-specific metrics for income, location (such
as rural areas) and other characteristics including age, disabilities, gender, migrants, pensioners, refugees and unemployment.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Antoni Ballabriga
Global Head of Responsible Business,
BBVA
Day 1, 23rd June 2021 (04.15 pm to 04.55 pm)
Page 43
FINANCIAL INCLUSION (3/3)
• Financial institutions should develop financial solutions to promote financial inclusion and financial health, such as:
- Innovative products and reducing costs for vulnerable groups
- Digitalization
- Partnering with non-financial institutions to provide financial services in rural areas
- Providing financial education programmes and digital toolkits
- Providing financial advisory services to promote financial health
• Financial institutions can adapt internal processes within the business, including:
- Improving credit and risk policies to reduce discrimination
- Define standards and improve data to identify and monitor vulnerable clients
- Nurture a culture of fairness, inclusivity and human rights through training
- Improve remuneration strategies and policies to promote financial inclusion and financial health of customers
- Ensure accessibility and clarity of information
- Define and modify sales protocols for vulnerable groups
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Todd Stevenson
Chief Member Outcomes Officer,
Colonial First State (CFS)
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 44
SUPPORTING VULNERABLE CUSTOMERS (1/2)
Key Takeaways/Messages:
• Vulnerable customers are defined as those with:
- Personal or circumstantial conditions susceptible to detriment, including difficulty of members in obtaining and
retaining information or making decisions in their best interests.
- Circumstances surrounding personal (i.e literacy, non-English speaking, indigenous), situational (i.e financial hardship,
natural disaster, serious illness) or structural (access to expertise, asymmetry of information and power) factors.
• The approach used in identifying vulnerable customers can either be reactive, where customers self identify as vulnerable, or
proactive, where we use data to identify certain segments and individuals. Financial institutions can work with specialist
agencies to better understand vulnerable groups and relevant statistics, which helps in developing referral frameworks,
content and staff training.
#FinanceForChange – JC3 Flagship Conference
Todd Stevenson
Chief Member Outcomes Officer,
Colonial First State (CFS)
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 45
SUPPORTING VULNERABLE CUSTOMERS (2/2)
Key Takeaways/Messages:
• The examples of big and visible symbols that financial institutions could use to support vulnerable customers include:
- Program of living the life of a week as a pensioner
- Monthly staff education on the program run
- Link volunteering days for staff to the vulnerable groups
• There are a number of challenges in achieving financial inclusion, and what works for certain financial institutions in certain
countries might not work in other countries due to differing conditions and dynamics. Financial institutions can start by
training their staff on inclusion, identifying specialist teams, linking support for vulnerable customers with a business case,
building networks of support and developing methods of engaging with vulnerable individuals.
AFTERNOON SESSION
Day
1
2.30 pm
Resilient and sustainable portfolios
Marie Gauthier, Assistant Vice President, Asia Sustainable Finance,
WWF
3.00 pm
Operationalising sustainability in operations
Daniel Ng, Investment Manager Asian Equities, Aberdeen Standard
Investments
3.55 pm Case study
Louise Kooy-Henckel, Managing Director, Wellington Management
4.55pm
Sustainable investment: what do your clients actually
want?
Nicola Stefan Koch, Deputy Head of Retail Investment, The 2°
Investing Initiative (2DII)
Constanze Bayer, Senior Analyst, The 2° Investing Initiative (2DII)
5.25pm
Wrap up session
Angelia Chin-Sharpe, CEO and Country Head, BNP Paribas Asset
Management
ASSET MANAGEMENT
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Marie Gauthier
Assistant Vice President, Asia Sustainable Finance,
WWF Singapore
Day 1, 23rd June 2021 (02.30 pm to 03.00 pm)
Page 47
RESILIENT & SUSTAINABLE PORTFOLIOS (1/2)
Key Takeaways/Messages:
• Resilient and Sustainable Portfolios (RESPOND) is a tool developed by WWF for benchmarking asset managers’
approach to ESG. There are presently 30 asset managers being assessed on an annual basis.
• The tool is anchored on a responsible investment framework built on existing best practices, aligned with UN PRI and
TCFD.
• RESPOND users can demonstrate how investment decisions can influence portfolio companies’ sustainable operating
practices and increase resilience, gain new perspective when evaluating external managers’ RI capabilities, etc.
• European asset managers are leading on responsible investment relative to Asian asset managers.
#FinanceForChange – JC3 Flagship Conference
Day 1, 23rd June 2021 (02.30 pm to 03.00 pm)
Page 48
RESILIENT & SUSTAINABLE PORTFOLIOS (2/2)
Key Takeaways/Messages:
• The following are recommendations for asset managers:
- Active ownership approaches can be strengthened especially among Asian asset managers.
- Set time-bound objectives (e.g. timeframe to track certification by investee companies) and transparency on
progress (e.g. including publicly disclosing progress).
- Reinforce accountability by enhancing training and incentives especially for senior management and board
levels.
- Climate commitments and strategies need to be anchored on setting science-based targets or translated into
robust expectations toward investee companies (e.g. TCFD, Climate Action 100+, SBTi).
- Sector policies need to supplement existing general responsible investment policies.
- Act on recognition of nature loss as a key risk (water risk, deforestation and biodiversity loss, ocean
sustainability) especially through investment expectation and voting.
Marie Gauthier
Assistant Vice President, Asia Sustainable Finance,
WWF Singapore
#FinanceForChange – JC3 Flagship Conference
Daniel Ng
Investment Manager Asian Equities,
Aberdeen Standard Investments
Day 1, 23rd June 2021 (03.00 pm to 03.45 pm)
Page 49
OPERATIONALISING SUSTAINABILITY IN INVESTMENTS
Key Takeaways/Messages:
• Two approaches to ESG investing: Considering ESG issues when building a portfolio (ESG incorporation through integration,
screening and thematic) and improving investees’ ESG performance (engagement and proxy voting).
• ESG factors are financially material and impact corporate performance (improving ESG has under recognised alpha or return
potential).
• Informed and constructive engagement helps foster better ESG performance of the companies as well as protecting and
enhancing the value of clients’ investments (e.g. analyse company’s risk management system and its business strategy, consider if
the company considered future trends and business opportunities, active engagement to identify areas of weakness and potential
areas for improvements)
• Engagements produce a more in-depth understanding of a company's management of ESG risks and opportunities than the
published KPIs which rely on quantitative scoring mechanisms.
• Engagement needs to be part of the investment process, with a focus on performance rather than conformance (e.g. instead of
asking whether a company has an independent board or a labour policy, ask whether the board is truly independent and how the
labour policy is implemented).
#FinanceForChange – JC3 Flagship Conference
Louise Kooy-Henckel
Managing Director, Impact Investing,
Wellington Management
Day 1, 23rd June 2021 (03.55 pm to 04.55 pm)
Page 50
CASE STUDY (1/2)
Key Takeaways/Messages:
• Five market inefficiencies are prevalent in sustainable investing: the market is overly focused on short-term growth, inconsistent and
backward-looking third party ratings, emerging market indexes are underexposed to structural development, most climate analysis is
focused on transition risk not physical climate risk, impact universe is not defined.
• Most scenarios used by the energy industry show fossil fuels losing their share to carbon-free energy sources. As a result, a financial
institution portfolio manager invested in an oil and gas company aligned with the energy transition and eliminated an overweight
position in a company lacking a credible strategy.
• Human capital management is a critical part of a company’s success, particularly after a merger and acquisition (M&A). In this example,
after engaging with a records management and support services company which was in the business acquisition process, poor employee
engagement with the acquired business was recorded. Following this, the CEO announced his retirement, which signalled a further lack
of direction and messy transition period ahead.
#FinanceForChange – JC3 Flagship Conference
Louise Kooy-Henckel
Managing Director, Impact Investing,
Wellington Management
Day 1, 23rd June 2021 (03.55 pm to 04.55 pm)
Page 51
CASE STUDY (2/2)
Key Takeaways/Messages:
• Informed and active ownership is key. “Constructivists” approach influencing positive outcomes for clients which can be done through
active management and multi-disciplinary industry analysis across equity, credit and ESG research.
• The sustainable investment landscape is rapidly evolving and exploiting market inefficiencies provides the opportunity to add value,
although there is no “one size fits all”.
• Material ESG issues are strategic business issues that vary across sectors and companies. There is an implicit opportunity cost for
companies which focus on immaterial ESG issues.
• Focus on the ESG issues most relevant to investment outcomes.
#FinanceForChange – JC3 Flagship Conference
Nicola Stefan Koch
Deputy Head of Retail
Investment, 2DII
Constanze Bayer
Senior Analyst, 2DII
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 52
SUSTAINABLE INVESTMENTS: WHAT DO YOUR CLIENTS ACTUALLY WANT? (1/2)
Key Takeaways/Messages:
• Sustainable and responsible investment has reached the mainstream in Europe and is seen as a multi billion dollar market opportunity by
retail investors. 60-70% of retail investors are interested in sustainable products, and 40% of retail investors want to have an impact with
their investments.
• Most advisors focus on financial and risk topics rather than extra-financial topics, and ignore the diverse opinions of their clients.
Reflecting this, in the retail investing market it was found that many financial products were too broad, taking a ‘one size fits all’
approach which did not reflect actual diverse client demand, and many products were overselling their potential impact, which increases
the risk of greenwashing.
• There is a mismatch between what clients actually want and what they are offered. This includes:
- Client demand for a real world impact, but there is an absence of real world evidence of impacts so far from retail investors.
- Clients have diverse interests which ‘one size fits all’ products do not address.
- Clients wish for voting power in shareholder meetings but no voting mechanisms exist thus far.
- Clients wish for exclusion, however for retail investors exclusions are not transparent, and exclusions according to revenue
thresholds may not be the same as exclusions according to a specific scope of the value chain.
#FinanceForChange – JC3 Flagship Conference
Nicola Stefan Koch
Deputy Head of Retail
Investment, 2DII
Constanze Bayer
Senior Analyst, 2DII
Day 1, 23rd June 2021 (04.55 pm to 05.25 pm)
Page 53
SUSTAINABLE INVESTMENTS: WHAT DO YOUR CLIENTS ACTUALLY WANT? (2/2)
• It is important to understand the clients’ needs, which can be achieved by choosing the right elicitation format and methodology (e.g.
natural language programming, investment game, focus groups), assessing the clients’ financial and sustainability understanding and
objectives (e.g. impact, exclusion, risks and opportunities), and understanding the clients’ financial and sustainability preferences (e.g.
impact objectives, exclusion criteria, SRI strategy).
• Be transparent and use marketing claims which are based on evidence. Match products according to your clients’ real financing and
sustainability preferences.
• Financial institutions are encouraged to properly identify their clients’ environmental, social and financial needs and preferences, to
minimize mismatch between the supply and demand in sustainable investment and products.
Key Takeaways/Messages:
AFTERNOON SESSION
Day
1
2.30 pm Applying sustainability in insurance
Junior Cho, CEO, Zurich General Insurance Malaysia Bhd
3.30pm Understanding sustainability risk
Marcel Omar Papp, Head of Reinsurance, SwissRe Malaysia
4.15 pm
Value-based intermediation (VBI) for Takaful and its
applications
Elmie Aman Najas, Chairman, Malaysian Takaful Association (MTA)
5.00pm
Journey towards sustainable investment
Luisa Evaristo, Chief Risk Officer, Etiqa Insurance and Takaful
Norlia Mat Yusof, Chief Investment Officer, Etiqa Insurance and
Takaful
5.45pm Wrap up session
Marcel Omar Papp, Head of Reinsurance, SwissRe Malaysia
Insurance and Takaful
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Junior Cho
Chief Executive Officer, Zurich General
Insurance Malaysia
Day 1, 23rd June 2021 (02.30 pm to 03.15 pm)
Page 55
APPLYING SUSTAINABILITY IN INSURANCE
• Sustainability matters as it opens up business opportunities, identifies the right risks and returns, impacts the brand and
reputation, and strengthens positive contributions to society. There is growing sustainability expectation from stakeholders,
including customers, investors and regulators.
• Drives action across three pillars: 1) a climate neutral future; 2) sustainability in work; and 3) enabling a digital society.
• Embed sustainability as part of underwriting through four stages of underwriting: idea conception, product development,
product testing and continuous review and improvement.
• Adjust portfolios to current market conditions and continue to innovate products and services to answer new market demands
and support clients’ transition journey.
• Examples of innovative products include (i) the development of a commercial insurance policy which supports sustainability
standards in infrastructure, and (ii) the Sustainable Mobility Ecosystem platform which incentivises green transportation
practices, Electric Vehicle (EV) ownership and carbon offsetting.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Marcel Omar Papp
Head of Reinsurance, SwissRe
Malaysia
Day 1, 23rd June 2021 (03.30 pm to 04.15 pm)
Page 56
UNDERSTANDING SUSTAINABILTY RISKS (1/2)
Key Takeaways/Messages:
• Climate change is the largest long-term threat to the global economy and Malaysia could lose 36% of its GDP by 2050 in the
event of a 2-2.6 degree temperature rise. The threats of climate change not only pose business risks, but also regulatory
and reputational risks, therefore underlining the importance of incorporating sustainability into underwriting.
• The focus on underwriting has also been on exclusion which gives the short-sighted view that sustainability considerations
are restricting and slowing down business opportunities. In reality, sustainability and climate change considerations are
creating new markets, hence the underwriting is now shifting to include both inclusion and exclusion. As an example, the
growing renewable energy energy sector has created the need for insurance products to cover the risks associated with
new technologies, such as protection against lack of solar irradiation for solar panels.
#FinanceForChange – JC3 Flagship Conference
Marcel Omar Papp
Head of Reinsurance, SwissRe
Malaysia
Day 1, 23rd June 2021 (03.30 pm to 04.15 pm)
Page 57
UNDERSTANDING SUSTAINABILTY RISKS (2/2)
Key Takeaways/Messages:
• The reasons for incorporating sustainability into underwriting include:
- Increasing regulatory pressure across the globe and in the Southeast Asian region, such as the BNM CCPT.
- Investors are widely making sustainability commitments and targets which are being realized into actions.
- The reputational risk associated with not adopting a sustainable business model.
- Improved risk selection where underwriting unsustainable activities will result in negative impacts on the overall portfolio.
- Tapping into a new business opportunity, such as creation of new insurance products.
• The aim of the ESG framework is to mitigate, identify and eliminate sustainability risks. The framework is based on umbrella
policies on human rights and environmental protection, sector specific guidelines, an exclusion list and the overall ESG process.
The ESG process involves a sustainability check on a transaction which uses an assessment tool that classifies the risk. If the risk is
high, it will be escalated to a panel of ESG experts who will further analyse the risk and recommend a decision.
• Sustainability poses both risks and opportunities, hence insurers should include both inclusions and exclusions principles in its
underwriting process.
#FinanceForChange – JC3 Flagship Conference
Elmie Aman Najas
Chairman, Malaysian Takaful Association (MTA)
Day 1, 23rd June 2021 (04.15 pm to 05.00 pm)
Page 58
VALUE-BASED INTERMEDIATION FOR TAKAFUL (VBIT) & ITS APPLICATIONS IN TAKAFUL (1/2)
• Takaful is a part of Islamic finance, which is driven by the core values of Maqasid Shariah, which emphasises positive value
creation and prevention of negative impacts. Through the extension of Maqasid Shariah and Islamic economics, Takaful is able
to balance social responsibilities with aspirations of sustainable prosperity.
• VBI for Takaful serves as a framework to guide the Takaful industry to implement value-based agenda and achieve positive
socio-economic impact in accordance with the Maqasid Shariah.
• Takaful operators may apply the VBI for Takaful by integrating it in the corporate value intent, using comprehensive KPIs to
assess the progress and effectiveness of their VBI for Takaful initiatives, and also employing impact-based disclosure to
demonstrate their commitment in delivering sustainable values.
• The challenges faced by VBI for Takaful include achieving the expected financial requirements/ returns, acquiring the right
expertise, ensuring capital availability, and building trust and awareness level among takaful players and the stakeholders.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Elmie Aman Najas
Chairman, Malaysian Takaful Association (MTA)
Day 1, 23rd June 2021 (04.15 pm to 05.00 pm)
Page 59
VALUE-BASED INTERMEDIATION FOR TAKAFUL (VBIT) & ITS APPLICATIONS IN TAKAFUL (2/2)
• By embracing and highlighting sustainability, Takaful embraces the Maqasid Shariah, therefore strengthening the unique value
proposition of Takaful.
• Takaful operators should also view the VBIT as a long-term investment strategy which will create new market opportunities.
• Takaful operators can collaborate on capacity building through engagements between Takaful operators, and non-financial
institutions such as NGOs and regulators.
• Takaful operators should develop solutions that meet the needs of stakeholders, such as overcoming financial illiteracy, and
providing coverage for under-represented segments such as the disabled community.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Luisa Evaristo
Chief Risk Officer, Etiqa
Insurance and Takaful
Day 1, 23rd June 2021 (05.00 pm to 05.45 pm)
Page 60
JOURNEY TOWARDS SUSTAINABLE INVESTMENTS
Key Takeaways/Messages:
• Sustainable investment is about long-term risk management. Therefore, it rewards insurers in the long-term while also
generating positive environmental and social impacts.
• Integrating ESG into the Investment Risk Management Process could be achieved by aligning ESG risks to Enterprise Risk
Management (ERM) Risk Categories and setting up an effective governance structure which covers risk identification and
assessment, risk measurement, risk control and mitigation, monitoring, and reporting.
• Financial institutions must properly identify the ESG risks they are exposed to, integrate ESG elements into their risk
management, and undertake actions to properly integrate ESG into their financial analysis.
• Investors may integrate ESG risk into their financial analysis through selecting ESG data providers, identifying ESG scoring
methodology, developing an inhouse model combining the ESG data and ESG scoring methodology, and fostering
collaboration with ESG partners (e.g. UN PRI).
Norlia Mat Yusof
Chief Investment Officer, Etiqa
Insurance and Takaful
AFTERNOON SESSION
Day
1
2.30 pm
Legal and compliance - Why legal and compliance is critical
to an organisation's sustainability efforts?
Kala Anandarajah, Partner, Head of Competition & Antitrust and
Trade, Rajah & Tann Singapore LLP
2.50 pm
Building and facilities management - Roles in supporting
sustainability
Michael Long, Head of Sustainability, Lendlease Asia
3.10 pm Procurement – Roles in supporting sustainability
Fredrik Andersen, Corporations & Supply Chains Lead, CDP
3.45 pm
Human resources – Why HR and people play a significant
role in sustainability?
Karlijn van den Berg, Transformation Lead, ABN Amro Bank N.V.
4.05 pm
Branding, marketing and communications – Roles in
supporting sustainability
Juan Aranols, CEO, Nestle Malaysia
4.45 pm Wrap up session
Usman Ahmed, CEO, Citibank Berhad
Ancillary Services
In collaboration with Co-organisers Event partnersAn initiative by
Day
1
#FinanceForChange – JC3 Flagship Conference
Kala Anandarajah, PBM
Partner, Head of Competition &
Antitrust and Trade, Rajah & Tann
Day 1, 23rd June 2021 (2.30 PM to 2.50 PM)
Page 62
WHY LEGAL & COMPLIANCE IS CRITICAL TO AN ORGANISATION’S SUSTAINABILITY EFFORTS?
Key Takeaways/Messages:
• At the national level, sustainability is manifested in legislation, regulation and industry codes. As an example, Singapore has
adopted legislation for environmental sustainability standards in new buildings and retrofits.
• Beyond the national level, supra-national laws and regulations may cover carbon pricing, transboundary haze, corporate
governance and sustainability reporting requirements. This includes ASEAN laws focusing on particular environmental issues
including pollution control and air quality. There are also regional guidelines such as the ASEAN Cooperation on Environment.
• Contractual requirements are a key issue in sustainability compliance. When entering into agreements, contractual requirements
must be detailed and clarified, including at the government and supply chain levels, with reference to the sustainability
requirements of a project.
• Financial institutions must manage the complexities of sustainability compliance effectively, including:
- Recognising that every industry, company or institution will have a different sustainability priorities and compliance
approaches.
- Taking into account different structures, terms and conditions for financing different sustainable projects.
- Extending sustainability practice and commitment must cover supply chain management, such as policies in procurement,
responsible sourcing and resource use.
#FinanceForChange – JC3 Flagship Conference
Michael Long
Head of Sustainability, Lendlease Asia
Day 1, 23rd June 2021 (2.50 PM to 3.10 PM)
Page 63
BUILDING & FACILITIES MANAGEMENT: ROLES IN SUPPORTING SUSTAINABILITY
Key Takeaways/Messages:
• 27-30% of the world’s emissions are associated with the built environment. Of this share, the largest emissions come from the
materials used in constructing the building, and emissions from the tenant use.
• From this, most of emissions from scope 1 comes from the fuels used in building construction and gas to heat and cook within
buildings, scope 2 comes from the power consumed during the operation of businesses and assets within those buildings, and
scope 3 comes from the construction materials used and energy consumed by the tenants.
• Organizations should set clear and measurable emissions reductions targets relevant to their material impacts and core business,
and aim for net zero emissions by 2040.
• The organization’s governance and strategy should be aligned to support their emission reduction targets. This may include
adopting the TCFD recommendations, assessing climate change scenarios, undertaking climate risk assessments, putting a shadow
price on carbon and assessing and publicly reporting climate-related risks from major projects and investments.
• Measuring and modelling business and carbon scenarios can be used to identify potential business and decarbonization initiatives
to support the path to net zero.
#FinanceForChange – JC3 Flagship Conference
Fredrik Andersen
Corporations & Supply Chains Lead,
CDP
Day 1, 23rd June 2021 (3.10 PM to 3.30 PM)
Page 64
PROCUREMENT: ROLES IN SUPPORTING SUSTAINABILITY
Key Takeaways/Messages:
• Companies and financial institutions must utilise available data on environmental disclosure from their suppliers to assess and
manage their supply chain’s environmental impact, and make well-informed and sustainable procurement decisions.
• According to CDP data in 2020, on average, supply chain carbon emissions are 11.4 times higher than operational emissions,
making environmental sustainability assessment at the procurement stage all the more necessary. The retail, apparel and services
sectors are among the ones recording the highest supply chain to operational and direct emission ratio.
• CDP also has a 3-phase strategy plan in engaging their members’ supplier, namely: 1) Understanding the importance of supply
chain in climate change; 2) Improving suppliers’ emission performance through company-wide target setting and emissions
reduction initiatives; and 3) Tracking emission reductions in the supply chain via continuous engaging and monitoring. Committing
towards sustainability at the procuring stage will over time cascade action throughout the value chain
• It is crucial for corporations to address supply chain / scope 3 emissions to meet the goals of the Paris Agreement.
#FinanceForChange – JC3 Flagship Conference
Karlijn van den Berg
Transformation Lead, ABN Amro
Day 1, 23rd June 2021 (3.45 PM to 4.10 PM)
Page 65
WHY HR AND PEOPLE PLAY A SIGNIFICANT ROLE IN SUSTAINABILITY?
Key Takeaways/Messages:
• Harmonisation between an organisation’s values and strategies are crucial in leading transformational change towards the
bank’s long term goals.
• Long-term sustainability goals in the following three areas: 1) climate change; 2) circular economy; and 3) social impact,
aligning with the United Nations Sustainable Development Goals.
• Internal social policies include fair and equal hiring, providing personal development and upskilling opportunities and great
ambassadors.
• Corporations embed sustainability in their leadership development and employee journey to unleash the potential of the
talents, believing that good corporate and working culture will shape employees who will in turn make good changes in the
organisation.
#FinanceForChange – JC3 Flagship Conference
Juan Aranols
Chief Executive Officer, Nestle
Malaysia
Day 1, 23rd June 2021 (4.05 PM to 4.25 PM)
Page 66
BRANDING, MARKETING & COMMUNICATIONS: ROLES IN SUPPORTING SUSTAINABILITY
• Corporations should embrace sustainability holistically throughout the business operations, from sustainable sourcing to
packaging and recycling efforts - thus providing consumers with more options for sustainable consumption and inspiring them
to lead a more sustainable lifestyle.
• The Milo Sayang Bumi initiative involves the use of solar powered vans, reducing plastic through the introduction of paper
products, and reducing plastic in landfills through the collection of waste from consumers. The Milo Sayang Bumi initiative
feeds into their other projects, such as the conversion of used cartons into Green roof tiles. On a wider scale, Nestle further
promotes sustainability through Project ReLeaf, with an ambition to plant 3 million trees in Malaysia by 2023.
• To achieve net zero by 2050, it is key to address emissions throughout the value chain and implement regenerative agriculture
and nature-based solutions such as agroforestry and land restoration.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship ConferencePage 67
DAY 1 SESSIONS HIGHLIGHTS
Panel Session: The Role of Finance Fireside Chat: Sustainability as a Strategy
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Asset Management Wrap Up Session Panel Session: Sustainability Principles and Resources
DAY 2 MORNING
Day
2
9.00 am Keynote speech
9.15 am Insights: BNM Climate Change and Principles-based Taxonomy:
What this means for FIs
9.35 am Discussion session: Application and operationalisation of the
Taxonomy
10.20 am Panel session: Impact of the Taxonomy
11.05 am Insights and discussion: Changing ESG disclosure requirements in
the Malaysian context
11.30 am Masterclass: Evolving sustainability risk disclosure and practices
12.15 pm Discussion session: Task Force on Climate-related Financial
Disclosures (TCFD)
JC3 outcomes and implications for FIs
In collaboration with Co-organisers Event partnersAn initiative by
Day
2
In collaboration with Co-organisers Event partners
Datuk Syed Zaid
Albar
Executive Chairman, Securities
Commission Malaysia
Page 69 #FinanceForChange – JC3 Flagship Conference
“The gravity of climate change and its inherent economic and financial impact requires
the financial sector to prepare, adapt and intensify the drive to achieve sustainability. The
window for us to make the necessary and fundamental change is narrowing. All
stakeholders – Government, regulators, financial institutions, investors, companies and
their value chains – must play their part to help achieve the sustainability agenda. We
are all in this together.”
#FinanceForChange – JC3 Flagship Conference
Datuk Syed Zaid Albar
Executive Chairman, Securities Commission Malaysia
Day 2, 24th June 2021 (9.00 AM to 9.15 AM)
Page 70
KEYNOTE (1/2)
Key Takeaways/Messages:
• Sustainability must be at the heart of the financial system. The approach has to shift from avoidance to active participation, with
financial intermediaries as the stewards of climate action. Greater adoption of these and the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) would be a game changer for the Malaysian financial industry moving forward.
• The Malaysian Code on Corporate Governance (MCCG) was revised to encourage companies to address sustainability risks and
opportunities in an integrated and strategic manner. While there is no explicit requirement for boards to set net zero targets, the MCCG
highlights increasing stakeholder expectation for more action including lowering of carbon emissions.
• Adoption of MCCG 2021 as well as board buy-in will be crucial to meaningfully shift the needle towards reliable environmental and
sustainability risk reporting.
• Capital Markets Malaysia has established three centres of excellence to inculcate the principles of sustainability in the wider ecosystem.
The SC recently launched NaviGate, a Capital Market Green Financing series, to heighten corporate awareness on suitable market-
based financing avenues.
• The Securities Commission has identified an SRI Taxonomy for the capital market as a critical building block to facilitate greater product
diversity and accelerate the development of SRI as an asset class. This will give issuers, investors, intermediaries, and asset owners
more clarity and guidance in identifying sustainable investment assets or activities.
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.00 AM to 9.15 AM)
Page 71
KEYNOTE (2/2)
Key Takeaways/Messages:
• Through the ASEAN Capital Markets Forum (ACMF), the SC is involved in two key initiatives: the ASEAN Taxonomy for Sustainable
Finance and the ASEAN Sustainability-linked Bond Standards to provide an avenue for issuers to raise funds to meet their
sustainability targets.
• It is vital for the financial and capital markets to assist businesses in their sustainability journey and to lead the nation’s sustainability
agenda. Financial intermediaries must take it upon themselves to identify and enable conditions for innovation in sustainability-
linked products and solutions to thrive.
• We can expect increased demand for green and sustainability funding across all types of businesses, including micro, small and
medium-sized enterprises (MSMEs).
• Market-based instruments such as green, social and sustainability bonds and sukuk will also provide opportunities for investors to
participate in this emerging asset class.
• Currently, 64% of SRI sukuk issuances are for renewable energy projects. We need to expand this base by targeting transformative
technologies and industries with high spill over benefits for the country.
Datuk Syed Zaid Albar
Executive Chairman, Securities Commission Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.15 AM to 9.35 AM)
Page 72
INSIGHTS: BNM CLIMATE CHANGE & PRINCIPLE-BASED TAXONOMY: WHAT THIS
MEANS FOR FINANCIAL INSTITUTIONS (1/3)
Key Takeaways/Messages:
• The BNM Climate Change and Principle-based Taxonomy (CCPT) provides a framework to assess the impacts of economic
activities on the climate and broader environment. The CCPT adopts an inclusive approach which avoids the outright exclusion of
economic activities by taking into consideration the different stages of the transition and development across economic agents.
• BNM’s supervisory expectations are for the financial institutions to utilise the CCPT to help customers transition and to direct
financing to more sustainable activities. This is done through promoting a better understanding of the business model of
customers, their present and potential impacts to climate change and environmental degradation, and how they address this
through remedial measures.
• The CCPT encourages financial institutions to adopt a whole-of-bank approach to ensure that broader climate considerations are
implemented at all levels, including in the risk management framework, due diligence process and through staff capacity building.
• The CCPT gives financial institutions the ability to assess business proposals that contribute to these principles and align them to
risk appetites. It further allows financial institutions to nurture the transition through encouraging high carbon intensive
customers to shift to a low-carbon transition.
Hong Chin Pheng
Deputy Director, Financial Conglomerates
Supervision Department, Bank Negara Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.15 AM to 9.35 AM)
Page 73
INSIGHTS: BNM CLIMATE CHANGE & PRINCIPLE-BASED TAXONOMY: WHAT THIS
MEANS FOR FINANCIAL INSTITUTIONS (2/3)
Key Takeaways/Messages:
• The CCPT compares a number of metrics against 5 guiding principles which define climate and environmental objectives to
classify economic activities in the following categories:
- Climate supporting activities which meaningfully contribute to climate objectives without causing significant harm to
environmental objectives.
- Transitioning activities where the business undertakes efforts to transition to low carbon and sustainable practices, but
the business may still cause some harm to the broader environment. Financial institutions must therefore assess these
businesses' level of commitment and actions to implement remedial measures.
- Watchlist activities for businesses which do not display any commitment or are not serious in their commitment to
remediate the harm identified and are not undertaking initiatives to transition to sustainable practices.
Hong Chin Pheng
Deputy Director, Financial Conglomerates
Supervision Department, Bank Negara Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.15 AM to 9.35 AM)
Page 74
INSIGHTS: BNM CLIMATE CHANGE & PRINCIPLE-BASED TAXONOMY: WHAT THIS
MEANS FOR FINANCIAL INSTITUTIONS (3/3)
Key Takeaways/Messages:
• Adoption of the CCPT facilitates greater preparedness to make more meaningful climate-related disclosures in the future and
increases expectations for sustainability disclosures by customers. To promote the implementation of the CCPT, BNM is
working to socialise the taxonomy to its stakeholders through establishing a CCPT implementation group to track progress,
understand the challenges associated with its adoption, and report achievements.
• BNM is in the process of developing additional use cases to explore the application of the CCPT in insurance and takaful
underwriting, and will continue making supervisory engagements to enhance the taxonomy.
Hong Chin Pheng
Deputy Director, Financial Conglomerates
Supervision Department, Bank Negara Malaysia
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.35 AM to 10.20 AM)
Page 75
APPLICATON & OPERATIONALISATION OF THE TAXONOMY (1/3)
Key Takeaways/Messages:
• Financial institutions must manage the local contexts of climate objectives. For example, for CIMB Indonesia, the phasing out of coal
financing by 2040 poses challenges as Indonesia’s energy supply is currently mostly generated through coal and therefore the
renewable transition will take time to materialise.
• Financial institutions can learn from a number of key lessons in operationalizing the CCPT and sustainable finance including:
- Incorporating sustainability into products and services such as through green finance solutions which impact the tenure, pricing
and terms offered to a customer depending on their climate change classification according to the CCPT.
- Using the CCPT guiding principles to establish clear risk acceptance criteria that can be followed by producing an ESG risk score
which overlays credit and climate risk assessment. Financial institutions can integrate the CCPT classifications and VBI sectoral
guides in this process and can develop internal policies and guidelines to further guide the classification.
- Adopting a nurturing approach by recognising a customer’s remedial measures to avoid a disruptive and outright exclusion of
activities. While noting that when engaging with clients to adopt more sustainable practices and transition, the workload and
time-frame is dependent on the client’s readiness and commitment level.
Tigor M.Siahaan
President and CEO,
CIMB Niaga
Eqhwan Mokhzanee
Chief Executive Officer
AmIslamic Bank
Wei Zhang
Senior Financial Sector
Specialist, World Bank
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.35 AM to 10.20 AM)
Page 76
APPLICATON & OPERATIONALISATION OF THE TAXONOMY (2/3)
Key Takeaways/Messages:
- Establishing a list of recognised sustainability-related certifications.
- Conducting sustainability-related disclosures such as by adopting the Task Force for Climate-Related Financial
Disclosures (TCFD) reporting framework.
- Undertaking internal adjustments for governance, such as by appointing board of director members responsible
for sustainability issues and establishing a sustainability working unit.
- Creating a general awareness and culture on sustainability and incorporating it into Key Performance Indicators.
• Adopting a nurturing approach by recognising a customer’s remedial measures is key to avoid a disruptive and
outright exclusion of activities. While noting that when engaging with clients to adopt more sustainable practices and
transition, the workload and time-frame is dependent on the client’s readiness and commitment level.
Tigor M.Siahaan
President and CEO,
CIMB Niaga
Eqhwan Mokhzanee
Chief Executive Officer
AmIslamic Bank
Wei Zhang
Senior Financial Sector
Specialist, World Bank
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (9.35 AM to 10.20 AM)
Page 77
APPLICATON & OPERATIONALISATION OF THE TAXONOMY (3/3)
Key Takeaways/Messages:
• Financial institutions may face a number of challenges in the implementation of the CCPT and practicing sustainable
finance. This includes access to and organisation of sustainability-related data of financial institutions’ own activities
and those of clients.
• Incorporating sustainability into products and services such as through green finance solutions which impact the
tenure, pricing and terms offered to a customer depending on their climate change classification according to the
CCPT.
• Using the CCPT guiding principles to establish clear risk acceptance criteria that can be followed by producing an ESG
risk score which overlays credit and climate risk assessment. Financial institutions can integrate the CCPT
classifications and VBI sectoral guides in this process and can develop internal policies and guidelines to further guide
the classification.
Tigor M.Siahaan
President and CEO,
CIMB Niaga
Eqhwan Mokhzanee
Chief Executive Officer
AmIslamic Bank
Wei Zhang
Senior Financial Sector
Specialist, World Bank
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (10.20 AM to 10.50 AM)
Page 78
IMPACT OF THE TAXONOMY (1/2)
Key Takeaways/Messages:
• A range of different ESG initiatives and guidance have been issued to the financial industry. The CCPT framework provides a certain
level of consistency and homogeneity on ESG issues.
• The CCPT can support financial institutions in moving the sustainability agenda, including the low-carbon transition and
development of innovative and sustainable products. This is done by:
- Allowing financial institutions to rely on the taxonomy to determine what investments and activities qualify as green for the
client.
- Acting as a tool for financial institutions to align their sustainability goal with lending requirements and better allocate
resources with reference to these requirements.
- Promoting better classification of assets for financial institutions.
- Assisting financial institutions in developing sustainable banking products and services to drive the sustainability agenda.
• Financial institutions should come up with more robust frameworks when applying the taxonomy to determine what sort of
actions to take when engaging with clients to achieve climate goals.
Leonard Ariff Bin
Abdul Shatar
Group Managing Director, DuoPharma
Biotech
Eugene Wong
CEO, Sustainable Finance
Institute Asia Limited
Fraziali Ismail
Assistant Governor, BNM
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (10.20 AM to 10.50 AM)
Page 79
IMPACT OF THE TAXONOMY (2/2)
• The CCPT standardizes and guides data requirements for financial institutions and potential customers. Clients need to be
educated and financial institutions need to gather data and manage the weightages given to qualitative and quantitative data.
Clarity should be provided on the cohesion of data and how to address data gaps (such as metrics for emission intensity) and
consistency of cross-border issues. While noting that a single formula will not work across the industry (for example, SMEs
clients will require higher levels of nurturing, assistance and education specific to their context), the CCPT allows the industry to
agree on the commonalities and provides a base of investors to communicate their position and expectations to customers.
• The government should take a more holistic approach for climate action as the issue of decarbonisation is beyond the goals of
financial institutions or individual industry sectors.
• Efforts through operational alignment, client education, and taxonomy homogeneity are key to driving their interoperability.
Leonard Ariff Bin
Abdul Shatar
Group Managing Director, DuoPharma
Biotech
Eugene Wong
CEO, Sustainable Finance
Institute Asia Limited
Fraziali Ismail
Assistant Governor, BNM
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Julian M Hashim
CEO of Bursa Malaysia Regulation
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 80
INSIGHTS & DISCUSSION: CHANGING RISK DISCLOSURE REQUIREMENTS IN THE
MALAYSIAN CONTEXT
Key Takeaways/Messages:
• Effective ESG management extends beyond risk management to capitalise on business opportunities created through growth
from the climate transition in the future.
• Sustainability matters can be considered material when they reflect significant economic, environmental and social impacts for
companies or substantively influence the assessments and decisions of stakeholders.
• A Bursa review of Malaysian public listed companies’ disclosures identified 5 key areas of weaknesses which need to be
addressed: Prioritization of material matters, disclosure of performance indicators, setting targets, linking sustainability
performance to remuneration, integration of sustainability strategies into business.
• The 2021 priority is to review Bursa’s sustainability reporting framework to enhance availability, quality, and comparability of
sustainability-related disclosures. This also mandates the adoption of sustainability related disclosures by the PLCs as the
stakeholders’ expectation on this has increased in the recent years.
• The JC3 Sub Committee 2 is focusing on developing a practitioner/industry driven guide for adopting the TCFD recommendations
localized to Malaysian context which will be completed by end of 2021. This will be aligned with other local reporting practices,
such as those from BNM’s CCPT and Bursa’s sustainability requirements.
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 81
EVOLVING SUSTAINABILITY RISK DISCLOSURE AND PRACTICES (1/3)
Key Takeaways/Messages:
• EY’s Climate Risk Disclosure Barometer 2020, which analysed the reporting disclosures of the top 100 PLCs in Malaysia, found that
climate change is acknowledged but not sufficiently addressed. In particular, there was:
- Limited focus in climate risk reporting
- A lack of details on climate risk management in enterprise risk management
- Underutilization of scenario analysis
- Limited disclosure of climate-related targets and metrics
• The MCGG (2021) recommends 5 best practices to strengthen oversight of sustainability:
- The board and management should be responsible and have the mandate for the governance of sustainability in the company.
This includes setting strategy, priority and targets, and delegating material sustainability matters to senior management.
- The board should ensure that sustainability strategies, priorities, targets and performance are communicated to internal and
external stakeholders.
- The board should take action to understand sustainability issues relevant to the company including climate-related risks and
opportunities.
- Reviews of board and senior management performance in addressing material sustainability risks and opportunities should be
incorporated into performance evaluations, including KPIs and in the board remuneration committee.
Arina Kok
Director, Climate Change and Sustainability Services, EY
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 82
EVOLVING SUSTAINABILITY RISK DISCLOSURE AND PRACTICES (2/3)
- The board should set up a steering committee to share the management of sustainability and identify a designated person
within management to be the focal person to manage sustainability strategically, including making strategy recommendations at
the board level
• In sustainability risk disclosures, organizations should consider the following aspects:
- The identification, prioritization and materiality of ESG risks, including how these risks are captured by the risk management and
sustainability teams.
- The alignment between disclosures, such as how material sustainability risks are disclosed in the risk management section of
annual reports.
- The timeline for sustainability materiality and risk assessments.
- Measurement of sustainability risk, including the use of tools, scenario analysis or stress testing.
• When embedding climate risk into enterprise risk management, organizations should embed it into the risk management lifecycle,
which includes:
- Risk identification and assessment, such as granular analysis of customers and clients by region and sector.
- Risk taxonomies, such as how granular components are examined in the portfolio to inform credit limits and other controls.
Arina Kok
Director, Climate Change and Sustainability Services, EY
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (11.05 AM to 11.30 AM)
Page 83
EVOLVING SUSTAINABILITY RISK DISCLOSURE AND PRACTICES (3/3)
- Risk reporting, with a set of risk metrics which captures own and counterparty climate change risks.
- Risk mitigation, such as the use of climate risk analysis to support decision making.
• Organizations who are looking into climate-related disclosures should: (a) embrace behavioural changes, (b) drive social and impact-
based innovations, (c) increase engagement to deepen collaboration and align public-private commitments, (d) re-examine board
governance and composition, (e) seek out new types of reporting, (f) build resilience through technology, (g) recruit or develop
talent to mitigate new risks, and (h) clarify the risk operating model.
• Organizations can leverage on climate scenarios in order to (a) assess potential climate impacts on business, (b) develop strategy
and risk and opportunity management, (c) reduce climate risk exposure and explore new market opportunities, (d) direct and raise
financing for low carbon projects, and (e) meet increasing stakeholder expectations.
Arina Kok
Director, Climate Change and Sustainability Services, EY
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Rosemary Bissett
Head of Sustainability Governance &
Risk, National Australia Bank
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Day 2, 24th June 2021 (12.15 PM to 12.45 PM)
Page 84
OPERATIONALISING TCFD (1/3)
Key Takeaways/Messages:
• Organizations can refer to the UNEP FI Pilot Phase 1, 2 and 3 to gain understanding of climate risks and scenarios and help
customers in understanding the transition pathways. These reports and guidelines were developed collaboratively with academic
and scientific organizations, and includes information such as:
- Pilot testing and scenario analysis
- Heat mapping exercises for portfolios which identifies carbon and climate-sensitive sectors to aid in ESG related credit
policy and risk appetites
- Overview of key sectors which have the most reputational or transitional risks for financial institutions
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (12.15 PM to 12.45 PM)
Page 85
OPERATIONALISING TCFD (2/3)
• Organizations who are in the early stages of implementing the TCFD should:
- Start early, secure support and commitment from the board, and provide climate related development at the board and
executive levels.
- Nurture relationships and collaborations with the experts and academia, as they can provide support and resources on
the TCFD journey while building internal capacity over time.
- Undertake a gap analysis, including identifying existing open source and validated data as well as relevant industry
initiative, and begin with the level of capacity that the organization has to address.
- Assign a budget and delegate responsibility and accountability for strategy and risk management.
Rosemary Bissett
Head of Sustainability Governance &
Risk, National Australia Bank
Arina Kok
Director, Climate Change and
Sustainability Services, EY
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (12.15 PM to 12.45 PM)
Page 86
OPERATIONALISING TCFD (3/3)
Key Takeaways/Messages:
• In order to strengthen climate action and implementation of the TCFD, organizations should also consider:
- Setting up collaborations on mapping decarbonization pathways for portfolios and opportunities for specific sectors
to decarbonize.
- Undertaking a quantitative risk assessment of climate risk and augment bank systems to better capture climate-
related data.
- Identifying other relevant tools, methodologies and data sources and developing methodologies for climate risk
management.
- Delivering the Collective Commitment to Climate Action 2022 target.
• The rationale of net-zero commitments must be based on science and by looking at different climate scenarios. Through
adopting climate commitments, financial institutions will not only be able to understand the risks and opportunities
embedded in the transition, but also identify the scope to aid customers in working towards climate goals.
Rosemary Bissett
Head of Sustainability Governance &
Risk, National Australia Bank
Arina Kok
Director, Climate Change and
Sustainability Services, EY
#FinanceForChange – JC3 Flagship Conference
1.45 pm Masterclass: Sustainable finance products and innovation
2.45 pm Panel session: Sharing experience on sustainable finance
product development
3.45 pm Break
4.00 pm Fireside chat: The national agenda on sustainability
4.45 pm Call to action: The power is in your hands
5.15 pm Closing plenary: Fostering a sustainability landscape in
public finance
5.45 pm Wrap up
5.55 pm End
JC3 outcomes and implications for FIs
DAY 2 AFTERNOON
Day
2
An initiative by In collaboration with Co-organisers Event partners
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (1.45 PM to 2.45 PM)
Page 88
MASTERCLASS : SUSTAINABLE FINANCE PRODUCTS AND INNOVATION (1/2)
Key Takeaways/Messages:
• There have been 22 issuances for green & sustainable bonds in Malaysia to this date. The issuances of Green bonds / sukuk have been
mostly in renewable energy, solar power, hydro power, and green building, which closely follows the global allocation. While these are
the obvious choices of sectors, it is also important to diversify the funding. The financial sector has the ability to fund a large number of
different activities and it is up to the financial sector to start the discussion with clients and drive the allocation of funds to sustainable
products.
• The following are the main drivers of sustainable finance:
- Macro-economic and geopolitical trends; e.g. Paris Agreement, UN SDGs.
- Sustainability focus: There is an increased focus on a long term sustainable investment. This will drive the allocation of capital
and business needs to take into account ESG to maintain the eligibility of raising capitals.
- Investors expectations: Investors are increasingly sceptical, requiring transparency from companies, therefore leading to the
development of new disclosure requirements.
Gilles Pascual
Strategy and Transaction Leader, EY
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (1.45 PM to 2.45 PM)
Page 89
MASTERCLASS : SUSTAINABLE FINANCE PRODUCTS AND INNOVATION (2/2)
Key Takeaways/Messages:
- Demographic shift: The current generation tends to focus more on sustainability. Customers are also demanding products that
are more sustainable, have more transparency, and embed ESG in the entire value chain. 60% of millennials are even willing to
take a pay cut to work for a responsible company. Hence, companies with unsustainable practices will be faced with recruitment
issues and higher costs to attract talent.
- Regulation changes: Over 127 governments have set net-zero commitments. This will flow from country commitments down into
all businesses. Regulations are also becoming stricter (e.g. EU taxonomy). There are many new regulations globally, some are
cross-border and will have an impact on the businesses exporting to those markets.
Gilles Pascual
Strategy and Transaction Leader, EY
#FinanceForChange – JC3 Flagship Conference
Yulanda Chung
Head of Sustainability,
DBS
Tan Ai Chin
Managing Director, Senior Banker Client
Coverage & Head of Global Investment
Banking, OCBC Bank (Malaysia) Berhad
Jo Ann Eala
Vice President, Sustainable
Energy Finance & Specialized
Lending Team, Bank of the
Philippine Islands
Mushtaq Kapasi
Managing Director, Chief
Representative, Asia Pacific, ICMA
Day 2, 24th June 2021 (2.45 PM to 3.45 PM)
Page 90
PANEL SESSION: SHARING EXPERIENCE ON SUSTAINABLE FINANCE PRODUCT
DEVELOPMENT (1/2)
Key Takeaways/Messages:
• Climate transition finance guidance introduced by the ICMA allows issuers that are on a transition pathway to demonstrate,
through disclosure and transparency, their transition pathway and account them as credible green issuers. The climate
transition guidance can be used for green, social, and sustainability-linked bonds.
• Transition finance applies to the use of proceed-specific structures for specific assets and projects which are adopting measures
to transition to net zero. Transition finance supports carbon-heavy industries to transition and puts an emphasis on
decarbonization through avoidance, reduction, and removal of GHG emissions.
• The DBS Sustainable and Transition Finance Framework and Taxonomy serves as a reference guide for clients to adapt and
prepare their resilience for climate change, resource scarcity, and social inequality.
• The Spectrum of transition is based on the sectors (i.e. from dark brown into dark green) and facilitates the incremental
transition from ‘dark brown’ into ‘light green’ over time.
#FinanceForChange – JC3 Flagship Conference
Day 2, 24th June 2021 (2.45 PM to 3.45 PM)
Page 91
PANEL SESSION: SHARING EXPERIENCE ON SUSTAINABLE FINANCE PRODUCT
DEVELOPMENT (2/2)
Key Takeaways/Messages:
• The BPI Sustainable Development Finance program includes:
- Providing free education & technical advice for their clients (through 3rd party IFC consultants).
- Conducting environmental & climate risk assessment and monitoring. The borrowers of the bank are assessed first for
vulnerabilities and hazards before being provided with the loan.
- Project evaluation of financial and technical aspects of the projects before putting together the financial packages the
client needs.
- Offering credit guarantees when the clients do not have sufficient collateral.
• Financial institutions could consider utilizing a second party opinion for bonds-related interpretations and 3rd party assurance
bodies to look into reports to avoid greenwashing. Investors demand more transparency and require companies to be upfront
about the proceeds, how the companies will move forward with sustainability-linked instruments, etc.
Yulanda Chung
Head of Sustainability,
DBS
Tan Ai Chin
Managing Director, Senior Banker Client
Coverage & Head of Global Investment
Banking, OCBC Bank (Malaysia) Berhad
Jo Ann Eala
Vice President, Sustainable
Energy Finance & Specialized
Lending Team, Bank of the
Philippine Islands
Mushtaq Kapasi
Managing Director, Chief
Representative, Asia Pacific, ICMA
#FinanceForChange – JC3 Flagship Conference
Dr. Nagulendran Kangayatkarasu
Deputy Secretary General, Ministry of
Environment and Water
Datin Seri Sunita Rajakumar
Founding Chairperson, Climate
Governance Malaysia
Day 2, 24th June 2021 (4.00 PM to 4.45 PM)
Page 92
FIRESIDE CHAT: THE NATIONAL AGENDA ON SUSTAINABILITY
Key Takeaways/Messages:
• Forests, nature, and biodiversity are crucial in keeping emissions low. KASA has undertaken a number of initiatives to promote emissions
reductions, including conducting a study on plastic circularity markets, setting low-carbon cities masterplan (noting that 77% of
Malaysia’s population live in cities), low-carbon mobility blueprint, nationally determined contributions (NDCs), climate change legal
framework, review of climate change policy, identifying gaps in climate action, low-emissions development strategy, green technology
innovation roadmap, national adaptation plan, green recovery plan, and GHG Inventory.
• Malaysia is also part of the Green Bank Network that connects leaders in clean energy finance to share best practices and supports
investment in clean energy solutions. Financial institutions are able to access and benefit from the network through the MGTC.
• To address environmental issues, federal or state governments need to forge collaborations among relevant agencies, and financial
institutions should support these collaborative efforts.
• There are 5 things that financial institutions can do to facilitate important national agendas: provide funds and capital, push
technological innovations, look at externalities when evaluating projects, influence stakeholders and lenders, and take the stewardship
role by demanding more environmental funding and financing for the whole sustainability agenda.
• Data is a fundamental part in sustainable finance, as it enables the industry players to make better, informed decisions. Sharing of
relevant environmental data from government agencies and expert bodies is key.
#FinanceForChange – JC3 Flagship Conference
Lewis Pugh
United Nations Ocean Advocate
Day 2, 24th June 2021 (4.45 PM to 5.15 PM)
Page 93
CALL TO ACTION: THE POWER IS IN YOUR HANDS
Key Takeaways/Messages:
• Every generation will face its own challenges and the defining issue of our generation is the health of the environment.
• Changes in the Polar regions are happening quickly, and will impact every living thing on the planet. In the seven summers Lewis
Pugh spent training in the Arctic, he saw the ice getting thinner, and glaciers retreating up valleys.
• At the end of his swim across the length of the English Channel, he met Michael Gove, the then Secretary of State for Environment in
the UK, to convey the urgency of protecting the oceans. Since then, the UK committed to promoting the protection of at least 30% of
the world’s oceans by 2030, and after it was raised at the UN, 84 nations have joined the UK in that commitment, which has turned
into one of the largest conservation drives in history.
• After experiencing difficulties in attempting to swim in a glacial lake in the Himalayas, Lewis Pugh was urged to change his swimming
method and take a radical, tactical shift in his mindset in order to overcome the specific difficulties of high-altitude swimming. This
teaches us that while we can change our speed and stroke of swimming, to achieve real and effective change, we also have to alter
our mindset towards a specific challenge.
• Fighting against the climate crisis requires a 100% commitment, as well as the adoption of good habits for resilience and adaptation.
If we do not make these changes, we will drown.
• We need to do everything we can to protect the last great wilderness areas on earth and tackle the climate crisis. The science is very
clear - we need to protect at least 30% of the world’s oceans by 2030 for it to stand any chance of recovery.
In collaboration with Co-organisers Event partners
YB Senator Tengku
Datuk Seri Utama Zafrul
bin Tengku Abdul Aziz
Minister of Finance, Ministry of
Finance Malaysia
Page 94 #FinanceForChange – JC3 Flagship Conference
“The Government has adopted a ‘whole of nation’ approach in addressing the impacts of
climate change. Financial institutions and the private sector play a critical role in
complementing the Government’s efforts to manage these impacts, in order to foster
sustainable growth and development, as well as to facilitate our transition to a low
carbon economy.”
#FinanceForChange – JC3 Flagship Conference
YB Senator Tengku Datuk Seri Utama
Zafrul bin Tengku Abdul Aziz
Minister of Finance, MoF
Day 2, 24th June 2021 (5.15 PM to 5.45 PM)
Page 95
CLOSING PLENARY: FOSTERING A SUSTAINABILITY LANDSCAPE IN PUBLIC FINANCE (1/3)
Key Takeaways/Messages:
• The recently established Malaysian Climate Action Council (MyCAC) adopts a ‘whole of nation’ approach in addressing
climate change issues, by providing a national-level platform and getting all sectors and states to act more systematically
and cohesively. This includes developing Malaysia as a hub for green economy, services and technology, and
implementing various programmes to drive the national climate change agenda. The whole-of-nation approach which the
Government is taking is a crucial element in achieving Net Zero target by 2050.
• The Ministry of Finance (MoF) remains committed to ensure adequate financing for programmes and projects related to
the SDGs. MoF is now working with the UN Development Programme to establish an Integrated National Financing
Framework, which comprises platforms for innovation and reforms spanning from policy, regulation, financial instrument,
institutions as well as greater public and private collaboration.
• MoF has also volunteered to lead the Working Group on Finance for Sustainable Development under the national-level
SDG Steering Committee to align financing flows and policies with economic, social and environmental priorities and
ensure that financing is stable and sustainable.
#FinanceForChange – JC3 Flagship Conference
YB Senator Tengku Datuk Seri Utama
Zafrul bin Tengku Abdul Aziz
Minister of Finance, MoF
Day 2, 24th June 2021 (5.15 PM to 5.45 PM)
Page 96
CLOSING PLENARY: FOSTERING A SUSTAINABILITY LANDSCAPE IN PUBLIC FINANCE (2/3)
Key Takeaways/Messages:
• MoF is now at the tail end of launching a MySDG Trust Fund in collaboration with the UN to complement the development
allocation towards the SDGs in order to meet any financing gaps.
• Another area is on the development of a "green recovery plan" agenda such as the "Green New Deal" so that Malaysia will
become a hub in the field of green economy, services and technology, and will foster green lifestyles in all walks of life
through the concept of planetary health towards holistic sustainable development.
• For Budget 2022, MoF is looking at further driving our sustainability efforts, especially in introducing policies as well as both
tax and non-tax incentives for the green economy to push for more renewable energy investments, sustainable industries
and environment.
• MoF will also look at sustainable infrastructure and sustainable cities that are fit-for-purpose in the post-Covid-19 world.
These include optimising demand-side management for energy, encouraging low-carbon mobility and promoting the
construction of green buildings.
#FinanceForChange – JC3 Flagship Conference
YB Senator Tengku Datuk Seri Utama
Zafrul bin Tengku Abdul Aziz
Minister of Finance, MoF
Day 2, 24th June 2021 (5.15 PM to 5.45 PM)
Page 97
CLOSING PLENARY: FOSTERING A SUSTAINABILITY LANDSCAPE IN PUBLIC FINANCE (3/3)
Key Takeaways/Messages:
• The Government is also looking at other mechanisms to be improved and aligned towards sustainability such as enhancing
government green procurement, SDG tagging, carbon tax, Emission Trading Scheme (ETS), national carbon trading policy
which would act as catalyst in the transition into low carbon activities both by the public and private sectors.
• MoF is currently coordinating all these initiatives and programmes and discussing ways on how these could contribute
towards making Malaysia a Sustainable Financing Hub and preparation for our Sustainable Financing Roadmap.
• Financial services players should identify areas where they can make an impact and set targets to achieve them. Targets must
be set in alignment with national priorities, such as Malaysia’s Paris Agreement commitment to reduce greenhouse gas
intensity by 45% by 2030, and other science-based targets.
• All Malaysian businesses are encouraged to ride on Malaysia’s well-developed financial market, global leadership in Islamic
finance and Government’s initiatives such as the Green Technology Financing Scheme (GTFS) 3.0 to drive sustainable finance
and generate maximum benefits based on the People, Planet, Profit principles.
#FinanceForChange – JC3 Flagship ConferencePage 98
DAY 2 SESSIONS HIGHLIGHTS
CCPT: What this means for FIs Application and Operationalisation of the Taxonomy
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Changing Risk Disclosure Requirements in the Malaysian Context Operationalising TCFD
DAY 3 SESSIONS
Day
3
Sustainable finance for the private sector
9.00 am Keynote speech
9.15 am Call to action: COVID-19 was just the dress rehearsal
9.35 am Investor panel session: Sustainability is no longer an
option
10.35 am Banking panel session: Changing ESG and climate
requirements from banks
11.15 am Panel session: Leveraging on sustainable finance for green
growth
12.00 pm Call to action: Businesses role in tackling climate change
In collaboration with Co-organisers Event partnersAn initiative by
Day
3
In collaboration with Co-organisers Event partners
Tan Sri Abdul Wahid
Omar
Chairman, Bursa Malaysia
Berhad
Page 100 #FinanceForChange – JC3 Flagship Conference
“To tackle the issue of climate change holistically and comprehensively, beyond
addressing the energy use and generation in our country, transition towards net-zero
requires innovations in technology, shifting consumer behaviours and socio-economic
transformations.”
#FinanceForChange – JC3 Flagship Conference
Tan Sri Abdul Wahid Omar
Chairman of Bursa Malaysia
Day 3, 25th June 2021 (9.00 AM to 9.15 AM)
Page 101
KEYNOTE (1/2)
Key Takeaways/Messages:
• To tackle the issue of climate change holistically, beyond addressing the energy use and generation in our country, the
transition towards net-zero requires innovations in technology, shifting consumer behaviour and socio-economic
transformations.
• Accelerating the transition to net-zero will require significant funding from both the public and private finances. This will also
involve developed countries honouring their promise to mobilise at least USD100 billion in climate finance per year, and
trillions more in private finance to secure global net-zero by 2050.
• To achieve the global target of Net-Zero by 2050, countries need to commit to, among other things: (i) Accelerate the phase-
out of coal and encourage investment in renewable energy, (ii) Optimise energy demand and speed up the switch to electric
vehicles, and (iii) Curtail further deforestation
• In 2020, WWF reported that wildlife populations have fallen by 68% over a period of less than 50 years since 1979. Unless
drastic actions are taken, our Malaysian national icon, the Malayan tiger, may be facing the same fate as the Sumatran Rhino.
As of now, the number of Malayan tigers has dwindled to less than 200 compared to 500 a decade ago.
#FinanceForChange – JC3 Flagship Conference
Tan Sri Abdul Wahid Omar
Chairman of Bursa Malaysia
Day 3, 25th June 2021 (9.00 AM to 9.15 AM)
Page 102
KEYNOTE (2/2)
Key Takeaways/Messages:
• The FTSE4Good Bursa Malaysia Index has played an essential role in recognising PLCs that have taken steps to improve their
ESG practices and disclosures. Since its launch in 2014, the number of constituents in the index has tripled from 24 to
76. Bursa Malaysia will be launching the FTSE4Good Bursa Malaysia Shariah Index.
• Bursa Malaysia is expanding collaborative efforts to work with financial institutions to offer sustainable financing products to
PLCs that have shown interest and commitment in improving their ESG practices.
• Since the establishment of the Sustainability Reporting Framework back in 2015, all Malaysian PLCs are now disclosing
Sustainability Statements and Reports annually. The Exchange also assists PLCs along their sustainability journey via the
provision of comprehensive guidance and feedback, undertaking various advocacy and training, and establishing the
BURSASUSTAIN portal (a one-stop knowledge repository for Corporate Governance, sustainability and responsible
investment).
#FinanceForChange – JC3 Flagship Conference
Tan Sri Dr. Jemilah Mahmood
Special Advisor on Public Health to
Prime Minister of Malaysia
Day 3, 25th June 2021 (9.15 AM to 9.35 AM)
Page 103
COVID-19 WAS JUST THE DRESSED REHEARSAL (1/2)
Key Takeaways/Messages:
• The situation that we’re facing now is not ‘climate change’ – it is a climate crisis. A crisis of over-consumption, over-population, of
naked greed, of ecological and climatological rape, of rampant corruption, and rent seeking behaviours by those we seem unable to
hold to account.
• It is a crisis of inequity – evidenced by, for example, the differing vaccine programmes among rich and poor nations. A crisis of
dependency on fossil fuels, driven largely by large corporations that lobby governments to maintain subsidies on fossil fuels rather
than investing in green solutions. A crisis with severe humanitarian consequences – climate migration, food and water scarcity, human
and planetary health degradation, and economic recession.
• Sea levels in the Malaysian waters have been increasing at an average rate of 3.67 mm/year, higher than the projected global rise of
1.7 to 3.1 mm/year. In fact, parts of our West coast towns (like Teluk Intan, Perak and Alor Setar, and Kedah) are projected to be below
the tideline by 2050.
#FinanceForChange – JC3 Flagship Conference
Tan Sri Dr. Jemilah Mahmood
Special Advisor on Public Health to
Prime Minister of Malaysia
Day 3, 25th June 2021 (9.15 AM to 9.35 AM)
Page 104
COVID-19 WAS JUST THE DRESSED REHEARSAL (2/2)
Key Takeaways/Messages:
• To overcome the effects of a pandemic, an estimated USD285 billion over a 10 year period is needed to develop an effective disease
surveillance system which can dramatically reduce the risks of future outbreaks. This finance gap is only between 2.5% to 3.7% of the
costs of COVID-19, which caused an estimated USD11.5 trillion in costs and losses.
• Push for national legislations in favour of an improved planetary health.
• Make sure that these legislations are effectively implemented. This means holding our leaders and even more difficult, holding
ourselves accountable for the decisions we make within our own tiny spaces that affect both other people and the planet.
• Make sustainable practices the new norm. This includes making socially responsible investments and fool-proofing our governance
systems against corruption, malpractices and abuse, and any rent-seeking behaviours.
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (9.35 AM to 10.20 AM)
Datuk Seri Amir
Hamzah Azizan
CEO, Employees Provident Fund
Jenn Hui Tan
Global Head of Stewardship and
Sustainable Investing, Fidelity
International
Tan Sri Azman
Mokhtar
Board Member, INCEIF
Salmah Bee Mohd Mydin
Executive Director, Market Development,
Securities Commission
Page 105
PANEL: SUSTAINABILITY IS NO LONGER AN OPTION (1/2)
Key Takeaways/Messages:
• All financial decisions will carry non-financial consequences, and the financial industry has experienced difficulties in
measuring these consequences as the focus has always been on what can be quantified in a financial model.
• While financial institutions can encourage companies to set challenging decarbonization targets, the gaps between ambitions
and the adoption of ESG and net-zero targets needs to be addressed. This can be done by scrutinizing these companies, such
as whether they have set a net-zero target, have appropriate governance and strategy to implement and achieve it, and
assess any disparities between the rhetoric and the authenticity of the targets.
• Sustainability is about taking a more holistic and broad view of these issues, as externalities may affect business’ financial
performance more now than it has ever done before.
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (9.35 AM to 10.20 AM)
Page 106
PANEL: SUSTAINABILITY IS NO LONGER AN OPTION (2/2)
Key Takeaways/Messages:
• Heightened shareholder activism for material ESG issues can drive change, such as the formation of coalitions to have greater
negotiating power.
• Collaboration across institutions, NGOs and finance to address healthcare, economic and structural changes will be needed
to escape Malaysia’s middle-income trap. As we are coming out of the pandemic, this can be achieved through social and
blended financing, supported by a green new deal framework that is anchored on sustainability and inclusion.
• The general public is also becoming more aware of the importance of sustainability and a large part of this awareness is on
how sustainability is institutionalised within the global capital flow, not just ESG investing as a separate initiative.
Datuk Seri Amir
Hamzah Azizan
CEO, Employees Provident Fund
Jenn Hui Tan
Global Head of Stewardship and
Sustainable Investing, Fidelity
International
Tan Sri Azman
Mokhtar
Board Member, INCEIF
Salmah Bee Mohd Mydin
Executive Director, Market Development,
Securities Commission
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (10.30 AM to 11.15 AM)
Stuart Milne
Chief Executive Officer, HSBC
Malaysia
Helena Fung
Head of Sustainable Investment
Asia Pacific, FTSE Russell
Shahril Azuar Jimin
Chief Sustainability Officer, Maybank
Page 107
CHANGING ESG & CLIMATE REQUIREMENTS OF BANKS (1/2)
Key Takeaways/Messages:
• Financial institutions are partners to national development throughout Southeast Asia, and they are thus related to how
we move towards a just transition, which must address the specific needs of communities in the ASEAN region.
• It is the responsibility of financial institutions to provide the necessary financing for the transition to achieve net-zero.
Net-zero targets cannot be achieved for financial institutions unless customers achieve them too. Hence, financial
institutions must ensure that customers have sufficient finance to achieve these targets. Strong commitments in
excluding coal financing are also key. With the phase out of financing by financial institutions, it will be increasingly
difficult for sponsors to find financing for thermal energy, resulting in stranded assets.
• To ensure that the necessary changes happen, a strong mandate from shareholders to achieve short- and long-term
targets is fundamental. Board directors should ensure that the management team has presented their net-zero plans,
and management teams should work on implementation of such plans.
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (10.30 AM to 11.15 AM)
Page 108
CHANGING ESG & CLIMATE REQUIREMENTS OF BANKS (2/2)
Key Takeaways/Messages:
• Taxonomies are important to allow financial institutions to assess clients beyond adaptation and mitigation approaches. The
taxonomy creates a common language, establishes control mechanisms, determines how risk exposure in certain activities is
considered, sets sustainability criteria and provides green solutions, therefore encouraging financial flows to climate
objectives. For clients, the taxonomy provides a clear framework and expectations related to sustainability, and is thus a
common tool for both financial institutions and clients.
• Financial institutions should inform customers of data requirements, such as carbon emissions, in order to aid in the
customer’s ability to track their emissions and take action. This can be further supported by robust climate data on supply
chains to help customers identify where their supply chain emissions lie.
• Financial institutions should categorise the risk level of projects or activities (i.e. high, medium, and low risk). This can be
achieved through a scrum approach which involves collaborating with clients and industry leaders. Through these
collaborations, internal papers, position statements and risk acceptance criteria can be developed and embedded in the
credit approval process.
Stuart Milne
Chief Executive Officer, HSBC
Malaysia
Helena Fung
Head of Sustainable Investment
Asia Pacific, FTSE Russell
Shahril Azuar Jimin
Chief Sustainability Officer, Maybank
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (11.15 AM to 12.00 PM)
Page 109
PANEL: LEVERAGING ON SUSTAINABLE FINANCE FOR GREEN GROWTH (1/2)
Key Takeaways/Messages:
• There are five key drivers of Sustainable Finance; Regulatory standards (e.g. PRI, TCFD), Demographic shifts (i.e. younger
generation who has stronger focus on long-term sustainable investment), Investors expectations; Sustainability focus
(more focus on sustainability by asset owners and the private markets is driving increasing capital allocation to ESG),
Macroeconomic and geopolitical trends (e.g. Paris Agreement, TCFD, UN SDGs)
• For ESG to be able to provide business opportunities for early-stage businesses (e.g. SME and start-ups), we need to
create a monetizable business model. At this stage, companies are under-resourced, therefore it is difficult to determine
the acceptable metrics to implement ESG.
• One of the important aspects in investing in an early-stage private market is the demographic shift. The current
generation is more motivated by mission-driven enterprises. They have a higher propensity to purchase from brands that
are mission-driven, to work with companies that are mission-driven, and to invest their assets into companies with
purpose.
Thomas Tsao
Founding Partner, Gobi Partners
Sharif James Zainal Aziz
Head of Group Corporate Sustainability,
Sime Darby Property Bhd
Iain Henderson
Managing Director, Asia Pacific
Private Credit, ADM Capital
Dato Rauf Rashid
EY Malaysia Country Managing Partner
#FinanceForChange – JC3 Flagship Conference
Day 3, 25th June 2021 (11.15 AM to 12.00 PM)
Page 110
PANEL: LEVERAGING ON SUSTAINABLE FINANCE FOR GREEN GROWTH (2/2)
Key Takeaways/Messages:
• To attract investors, companies need to focus on their material sustainability issues i.e. through the materiality map.
Determining the material issues to respective sector or business will help attract investors and capture the relevant
opportunities and risks.
• A useful tool for companies starting their sustainability journey are ESG indexes. It allows companies to identify the different
areas of sustainability they need to work on, as well as helping build their sustainability roadmap and framework.
• Today, externality costs are borne by the government or by society. In the future, it will likely be borne by companies and
reflected in their balance sheets, either by regulation and policy changes, or shifts in customer preferences. Therefore taking
action now is important to ensure the business model’s resilience in the future.
• Underrepresented markets may present opportunities for the industry. For example, there should be increased investment
for female-founded businesses, Islamic economy and finance, halal foods, Islamic travel and e-commerce.
Thomas Tsao
Founding Partner, Gobi Partners
Sharif James Zainal Aziz
Head of Group Corporate Sustainability,
Sime Darby Property Bhd
Iain Henderson
Managing Director, Asia Pacific
Private Credit, ADM Capital
Dato Rauf Rashid
EY Malaysia Country Managing Partner
#FinanceForChange – JC3 Flagship Conference
Maayke-Aimée Damen
Founder, Excess Materials Exchange
Day 3, 25th June 2021 (12.00 PM to 12.30 PM)
Page 111
CALL TO ACTION: BUSINESSES ROLE IN TACKLING CLIMATE CHANGE (1/2)
Key Takeaways/Messages:
• 95% of material value is lost after the single use of certain products, e.g. single use cups. In 2050, worldwide waste is expected to
grow by 70%. Material wastes have been proven to cause terrible consequences, e.g. microplastics, where people eat and breath in
at least 50,000 microplastic particles a year.
• Responding to climate change, our focus lies mainly on energy reduction, while about 45% of emissions come from producing the
materials and products we use on a daily basis.
• Even with resource efficiency, we are still running short of valuable resources. Illustrating this is the concept of an overshoot day,
which is the date by which a country has used up all the non-renewable resources available for that year. Malaysia’s overshoot day
is May 30th, which is only 5 months.
• The circular economy is a key solution, and it provides an opportunity of around USD4.5 trillion. This can be enabled by establishing
an excess materials exchange, which is a ‘dating site’ for materials that enables the matching of supply and demand of materials to
reduce environmental impacts while still addressing social concerns (e.g. textiles produced under unethical conditions cannot be
seen as circular).
#FinanceForChange – JC3 Flagship Conference
Maayke-Aimée Damen
Founder, Excess Materials Exchange
Day 3, 25th June 2021 (12.00 PM to 12.30 PM)
Page 112
CALL TO ACTION: BUSINESSES ROLE IN TACKLING CLIMATE CHANGE (2/2)
• To achieve a circular economy through the implementation of an excess materials exchange, an approach based on three ‘I’s’
should be taken:
- Identity: Giving materials and resources an identity (e.g. with ‘Resources / Materials Passport’). It provides information
on what is in a product, how it is put together, whether it can be repaired or taken apart, the production process, the
legal issues involved, the warranty information, etc. It is necessary to make a business case for recycling and reuse.
- Intelligence: transparency of information to support a material match (according to the quality, timing, and location).
This is tricky because not all companies allow such information to be publicly available. For this purpose, Artificial
Intelligence (AI) may be considered to efficiently create a network of information to prompt a match (e.g. legal
requirements, pinpointing the radius of each product, etc).
- Integration: Matching information about material and product streams to financial and environmental valuations, such
as how excess materials including railroad tracks can be repurposed as support beams.
Key Takeaways/Messages:
#FinanceForChange – JC3 Flagship ConferencePage 113
DAY 3 SESSIONS HIGHLIGHTS
Keynote: Tan Sri Abdul Rahid Omar Sustainabilityy is no Longer an Option
Speaker: Sir David Attenborough Speaker: Datuk Nor Shamsiah binti Mohd Yunus
Changing ESG & Climate Requirements of Banks COVID-19 Was Just the Dressed Rehearsal
In collaboration with Co-organisers Event partners
CALL TO ACTION
Page 114 #FinanceForChange – JC3 Flagship Conference
SUMMARY OF CALL TO ACTION
Build on the taxonomy and
improve data infrastructure
for ESG-related risks
Engage clients in
sustainability and
transition finance
Apply a gender & social
inclusion lens to climate
change action
Integrate climate in risk
management frameworks and
align it with international
standards and best practices
Enhance green &
sustainability funding and
products
Achieve net zero anchored on
science-based targets and put
nature and biodiversity at the
heart of climate policies
Effective implementation of
policies that promote
planetary health
Strengthen governance,
oversight and disclosure of
sustainability
Collaboration and
whole-of-nation
approach
#FinanceForChange – JC3 Flagship ConferencePage 116
CALL TO ACTION #1: COLLABORATION AND WHOLE-OF-NATION APPROACH
• International collaboration between governments, businesses and civil society is needed to accelerate the transition at the
required pace, and to make progress in the largest emitting sectors including power, road transport and land-use.
• Collaboration will further drive innovation to create stronger incentives for investors and to reduce the costs of the transition.
• The Climate Action Council in Malaysia is a positive step towards setting commitments and policies to be carbon neutral,
particularly at the level of federal and state governments. Federal or state governments need to forge collaborations between the
relevant agencies, and financial institutions should support these collaborative efforts.
• Engagement and partnerships with academia, think tanks or global networks are useful and effective in developing methodologies
for measuring financial inclusion and financial health.
• Financial institutions can collaborate and leverage the capacity and skills of other organizations to assist with their product
development, e.g. Rabobank engaged with a start-up company to test their energy efficiency (EE) installation financing program
and cooperate with them to conduct the energy analysis of their clients.
• The whole-of-nation approach which the Government of Malaysia is taking is a crucial element in achieving Net Zero target by
2050.
• Greater public awareness and education are needed to promote green choices and real behavioural change. The public as
consumers are urged to make responsible choices and lead sustainable lifestyles.
• Corporations should embrace sustainability holistically throughout business operations, from sustainable sourcing to packaging
and recycling efforts, thus providing consumers with more options for sustainable consumption and inspiring them to adopt a
more sustainable lifestyle.
#FinanceForChange – JC3 Flagship ConferencePage 117
CALL TO ACTION #2: EFFECTIVE IMPLEMENTATION OF POLICIES THAT PROMOTE
PLANETARY HEALTH
• The push for national legislations in favour of improved planetary health is needed. We need to make sure that these legislations
are effectively implemented, which means holding our leaders and holding ourselves accountable for the decisions we make that
affect both other people and the planet.
• Governments should consider implementing broader tax incentives for sustainability, not only in the bond market as how it is
currently done. Some of the potential frameworks to be considered are carbon tax and a carbon trading system.
• The government should take a more holistic approach for climate action as the issue of decarbonisation is beyond the capacity of
financial institutions or individual industry sectors alone.
#FinanceForChange – JC3 Flagship ConferencePage 118
• Develop ambitious emissions reduction targets aimed at reaching net zero by 2050, including commitments to accelerate the
phase out of coal, invest in renewable energy, optimise energy demand, speed up the switch to electric vehicles and end
deforestation.
• Climate commitments and strategies need to be anchored on setting science-based targets or be translated into robust
expectations toward investee companies (e.g. TCFD, Climate Action 100+, SBTi).
• Address supply chain / scope 3 emissions to meet the goals of the Paris Agreement (supply chains must be sufficiently covered in
the net-zero strategy of financial institutions as the majority of transition risks will be outside the balance sheet of their client).
• Fast track by setting and publishing sector-specific targets for aligning a portfolio with the Paris Agreement by 2022 (Collective
Commitment to Climate Action).
• Set up collaborations on mapping decarbonization pathways for portfolios and opportunities for specific sectors to decarbonize.
Measuring and modelling business and carbon scenarios can be used to identify potential business and decarbonization initiatives
to support the path to net zero.
• Financial institutions to identify areas where they can make an impact and set targets to achieve. Targets must be set in alignment
with national priorities, such as Malaysia’s Paris Agreement commitment to reduce greenhouse gas intensity by 45% by 2030, and
other science-based targets.
• Financial institutions to ensure that clients have sufficient finance to achieve net zero targets.
• All Malaysian corporates to come on board to work together on a possible net-zero pathway for Malaysia.
CALL TO ACTION #3: ACHIEVE NET ZERO ANCHORED ON SCIENCE-BASED TARGETS AND
PUT NATURE AND BIODIVERSITY AT THE HEART OF CLIMATE POLICIES 1/2
#FinanceForChange – JC3 Flagship ConferencePage 119
• Draw insights from the Dasgupta Review on Economics of Biodiversity given the inseparable bond between ecology and the
economy.
• Approach sustainability by aiming to move from regulation to mission, and integrate ESG and biodiversity into the climate
program as a crucial part of the sustainability framework (e.g. protect at least 30% of the world’s oceans by 2030 to ensure its
chance of recovery).
• Act on recognition of nature loss as a key risk (water risk, deforestation and biodiversity loss, ocean sustainability) especially
through investment expectation and voting.
CALL TO ACTION #3: ACHIEVE NET ZERO ANCHORED ON SCIENCE-BASED TARGETS AND
PUT NATURE AND BIODIVERSITY AT THE HEART OF CLIMATE POLICIES 2/2
#FinanceForChange – JC3 Flagship ConferencePage 120
• Heightened shareholder activism for material ESG issues can drive change, such as forming coalitions to have greater negotiating power.
A strong mandate from shareholders to achieve short- and long-term targets is fundamental to ensure that the necessary changes
happen.
• Awareness and a genuine culture around sustainability in the organisation should be built at all levels, from the board level to the
business units.
• Board directors should ensure that the management team has presented their net-zero plans, and management teams should work on
implementation of such plans.
• Adoption of the Malaysian Code on Corporate Governance (MCCG) 2021 as well as board buy-in will be crucial to meaningfully shift the
needle towards reliable environmental and sustainability risk reporting. The MCGG (2021) recommends 5 best practices to strengthen
oversight of sustainability:
- The board and management should be responsible and have the mandate for the governance of sustainability in the company.
This includes setting strategy, priorities and targets, and delegating material sustainability matters to senior management.
- The board should ensure that sustainability strategies, priorities, targets and performance are communicated to internal and
external stakeholders.
- The board should take action to understand sustainability issues relevant to the company including climate-related risks and
opportunities.
- Reviews of board and senior management performance in addressing material sustainability risks and opportunities should be
incorporated into performance evaluations, including KPIs and in the board remuneration committee
- The board should set up a steering committee to share the management and accountability of sustainability and identify a
designated person within management to be the focal person to manage sustainability strategically, including making strategy
recommendations at the board level.
CALL TO ACTION #4: STRENGTHEN GOVERNANCE, OVERSIGHT AND DISCLOSURE OF
SUSTAINABILITY (1/2)
#FinanceForChange – JC3 Flagship ConferencePage 121
• Adapting the three lines of defence approach to an ESG risk management framework may include establishing an understanding,
oversight and accountability for sustainability at all levels of the organization.
• In addition to strategy governance, organisations should also ensure that compliance governance is in place.
• Organizations who are looking into climate-related disclosures should: 1) embrace behavioural changes; 2) drive social and impact-
based innovations; 3) increase engagement to deepen collaboration and align public-private commitments; 4) re-examine board
governance and composition; 5) seek out new types of reporting; 6) build resilience through technology; 7) recruit or develop talent to
mitigate new risks; and 8) clarify the risk operating model.
• The following are relevant aspects that organisations should consider in sustainability risk disclosures:
- The identification, prioritization and materiality of ESG risks, including how these risks are captured by the risk management and
sustainability teams.
- The alignment between disclosures, such as how material sustainability risks are disclosed in the risk management section of
annual reports.
- The timeline for sustainability materiality and risk assessments
- Measurement of sustainability risk, including the use of tools, scenario analysis or stress testing.
• As TCFD is becoming mandatory in some regions and countries, and may soon become the norm, it is essential to become familiar with
the recommendations of the TCFD to understand sustainability and climate risks, and adopt its reporting framework for sustainability-
related disclosures.
• Based on Bursa’s review of Malaysian public listed companies’ disclosures, there are five key areas of weaknesses which need to be
addressed: 1) prioritization of material matters; 2) disclosure of performance indicators; 3) setting targets; 4) linking sustainability
performance to remuneration; and 5) integration of sustainability strategies into business. The 2021 priority is to review Bursa’s
sustainability reporting framework to enhance availability, quality, and comparability of sustainability-related disclosures.
CALL TO ACTION #4: STRENGTHEN GOVERNANCE, OVERSIGHT AND DISCLOSURE OF
SUSTAINABILITY (2/2)
#FinanceForChange – JC3 Flagship ConferencePage 122
• The financial sector in Malaysia can be more deliberate in funding sustainability initiatives and incentivising investments in low
carbon sectors, e.g. projects under (i) the National Investment Aspirations (NIA) framework, (ii) the Malaysian Climate Action
Council (MyCAC)'s plan for Malaysia to be a hub in green economy, services and technology, and (iii) the Low Carbon Mobility
Development Plan 2021-2030.
• Malaysian corporations are encouraged to ride on Malaysia’s well-developed financial market, global leadership in Islamic finance
and governmnet initiatives such as the Green Technology Financing Scheme (GTFS) 3.0 to drive sustainability and generate a
maximum positive impact to the People, Planet, Profit principle.
• We may expect an increased demand for green and sustainability funding across all types of businesses, including micro, small and
medium-sized enterprises (MSMEs). Market-based instruments such as green, social and sustainability bonds and sukuk will
provide opportunities for investors to participate in this emerging asset class. Financial institutions must take into account
different structures, terms and conditions for the financing of different projects.
• Currently, 64% of SRI sukuk issuances are for renewable energy projects. By targeting transformative technologies and industries
with high spillover benefits for the country, this base can be expanded further.
• Financial institutions can also gradually scale-down carbon emitting activities through divestment, asset sales, disposals and
decommissioning.
• There are untapped opportunities in the underrepresented markets as well. For example, there should be an increased
investment for female-founded businesses, Islamic economy and finance, halal foods, Islamic travel and e-commerce.
CALL TO ACTION #5: ENHANCE GREEN & SUSTAINABILITY FUNDING AND PRODUCTS (1/2)
#FinanceForChange – JC3 Flagship ConferencePage 123
• Another opportunity to tap is the circular economy concept such as through the implementation of an excess materials exchange
via materials passports (giving materials and resources an identity), intelligence (transparency of information in order to make a
match in materials supply and demand), and integration (information on materials input and output).
• Collaborative financing is one of the key solutions to fund sustainable transformative projects. For instance, blended finance
which strategically uses development finance and philanthropic funds can be used to support the mobilization of private capital
for emerging and frontier markets (e.g the case of Tropical Landscape Finance Facility (TLFF).
• Sustainability poses both risks and opportunities, hence insurers should include both inclusions and exclusions principles in its
underwriting process. At a time of growing expectations for incorporation of sustainability-related factors into businesses,
insurers can develop frameworks to mitigate sustainability risks and underwrite innovative products and services by building on
opportunities of new markets to drive purpose and contributions to society.
• Banks may tap into opportunities in climate solutions such as by developing sustainable mortgage products and offer green loans
to improve energy efficiency of their mortgage clients.
CALL TO ACTION #5: ENHANCE GREEN & SUSTAINABILITY FUNDING AND PRODUCTS (2/2)
#FinanceForChange – JC3 Flagship ConferencePage 124
• When integrating climate risk into enterprise risk management, financial institutions should embed it into the risk management
lifecycle, which includes:
- Risk identification and assessment, such as granular analysis of customers and clients by region and sector.
- Risk taxonomies, such as how granular components are examined in the portfolio to inform credit limits and other controls.
- Risk reporting, with a set of risk metrics which captures own and counterparty climate change risks.
- Risk mitigation, such as the use of climate risk analysis to support decision making.
• There are various available data sources, tools and methodologies which may help financial institutions in developing the
framework for their internal climate risk identification and assessment. These include:
- Risk identification and assessment, such as granular analysis of customers and clients by region and sector.
- Heat-mapping exercises and materiality maps will guide financial institutions to identify and prioritise materials issues, and
therefore formulate their risk appetites.
- Climate risk scenario and stressing as a form of quantitative risk assessment of climate risk and to augment bank systems to
better capture climate-related data.
- Accurate and comprehensive data sources to ensure timely risk assessment
• Financial institutions should also implement a framework ESG risk measurement at the client level, as well as the transaction level.
These may be in the form of an assessment form which utilizes a stop-light approach to provide a rating which can be
implemented internally or through hiring third-party consultants to provide advice, noting that there is no one-size-fits-all
approach in assessing client projects and transactions.
CALL TO ACTION #6: INTEGRATE CLIMATE IN RISK MANAGEMENT FRAMEWORKS AND
ALIGN IT WITH INTERNATIONAL STANDARD AND BEST PRACTICES
#FinanceForChange – JC3 Flagship ConferencePage 125
• Financial institutions may benefit from the existing international framework and tools such as the Principles for Responsible
Investment (PRI), Principles for Sustainable Insurance (PSI) and Principles for Responsible Banking (PRB).
• The integration of climate change, biodiversity loss and inequalities into a financial institution’s traditional business must be
supported by data and research such as through the Science-Based Targets Initiative (SBTi).
• Malaysia is part of the Green Bank Network that connects leaders in clean energy finance to share best practices and supports
investment in clean energy solutions. Financial institutions are able to access and benefit from the network through the MGTC.
• Financial institutions are encouraged to establish a list of recognised sustainability-related certifications to assess the ESG risks of
their clients.
CALL TO ACTION #6: INTEGRATE CLIMATE IN RISK MANAGEMENT FRAMEWORKS AND
ALIGN IT WITH INTERNATIONAL STANDARD AND BEST PRACTICES
#FinanceForChange – JC3 Flagship ConferencePage 126
• Regulators and financial institutions should ensure less fragmentation across taxonomies and ensure that the CCPT is applicable
for international investors at the regional and global market levels. We should build on commonalities instead of the differences
between existing taxonomies and use the CCPT as a foundation to build from. Efforts through operational alignment, client
education, and taxonomy homogeneity are key to driving their interoperability.
• Financial institutions and clients should use the CCPT as a foundation to provide critical information on climate action and for the
classification of activities in Malaysia and ASEAN through metrics and thresholds which can be supplemented by guidance from
other taxonomies.
• The CCPT encourages financial institutions to adopt a whole-of-bank approach to ensure that broader climate considerations are
implemented at all levels, including in the risk management framework, due diligence process and through staff capacity building.
• Financial institutions and clients need to be prepared for the operationalisation of the taxonomy. Clients need to be educated and
financial institutions need to gather data and manage the weightages given to qualitative and quantitative data.
• The CCPT enables financial institutions to conduct the following:
- Incorporating sustainability into products and services such as through green finance solutions which impact the tenure,
pricing and terms offered to a customer depending on their climate change classification according to the CCPT.
- Using the CCPT guiding principles to establish clear risk acceptance criteria that can be followed by producing an ESG risk
score that overlays credit and climate risk assessment. Financial institutions can integrate the CCPT classifications and VBI
sectoral guides in this process and can develop internal policies and guidelines to further guide the classification.
- Adopting a nurturing approach by recognising a customer’s remedial measures to avoid a disruptive and outright exclusion
of activities, taking into account clients’ readiness and commitment level.
CALL TO ACTION #7: BUILD ON THE TAXONOMY AND IMPROVE THE DATA
INFRASTRUCTURE FOR ESG-RELATED RISKS
#FinanceForChange – JC3 Flagship ConferencePage 127
• To enhance data collection and analysis, ESG-related data should be structured and made accessible for key actors in the financial
sector. The data should also be standardised across the industry to promote transparency and comparability. This will catalyse the
development of regional ESG products.
• Financial institutions should encourage their clients to disclose their emissions in order to help them take action. This can be
further supported by robust climate data on supply chains to help customers identify where their supply chain emissions lie. The
clients can then communicate and engage their suppliers accordingly and make well-informed sustainable procurement decisions.
• The government should provide the relevant climate data to help financial institutions and industry players in their climate
transition.
• Financial institutions should identify their exposure through risk heat mapping and determine which vulnerabilities are material.
They must also focus on identifying data based on the vulnerabilities the financial institution is most exposed to.
• Financial institutions must undertake a gap analysis, including identifying existing open source and validated data as well as
relevant industry initiatives, and begin the transition journey with their current level of capacity.
• Financial institutions and clients need to be prepared for the operationalisation of the taxonomy. Financial institutions need to
gather data, put weightages on qualitative and quantitative data, and educate the clients.
• Clarity should be provided on the cohesion of data and how to address data gaps (such as metrics for emission intensity) and
consistency of cross-border issues.
CALL TO ACTION #7: BUILD ON THE TAXONOMY AND IMPROVE THE DATA
INFRASTRUCTURE FOR ESG-RELATED RISKS
#FinanceForChange – JC3 Flagship ConferencePage 128
• Understanding clients’ needs is crucial. This can be achieved by choosing the right elicitation format and methodology (e.g. natural
language programming, investment game, focus groups), assessing the clients’ financial and sustainability objectives (e.g. impact,
exclusion, risks and opportunities), and understanding the clients’ financial and sustainability preferences (e.g. impact objectives,
exclusion criteria, SRI strategy). Financial institutions can then match their product offering according to the clients’ financing
needs and sustainability objectives.
• In engaging clients and guiding them to transition, financial institutions should consider a multitude of factors such as their
impacts during screening, the structure in integration, and performance engagement including tracking progress of engagement.
• Active ownership approaches i.e. the use of the rights and position of ownership to influence the activities or behaviour of
investee companies can be strengthened especially among Asian asset managers.
• Financial institutions may consult experts in the relevant fields to understand their customers’ business, provide advisory services,
and deliver assistance to transform the sustainability practices of their customers’ value chain. This includes guidance on how to
develop transition plans and setting net-zero commitments for clients who aim to reduce their emissions.
• Financial institutions should engage their clients in the early stages of the project and determine their area of influence. They may
require the clients to provide necessary information (such as an environmental and social impact assessment (ESIA) and engage
with consultants to identify the client’s ESG risks.
• Ensure accurate and timely information is given to clients, including client training programs and reviewing sector position
statements bi-annually.
CALL TO ACTION #8: ENGAGE CLIENTS IN SUSTAINABILITY AND TRANSITION FINANCE
(1/2)
#FinanceForChange – JC3 Flagship ConferencePage 129
• Engagement needs to be part of the investment process, with a focus on performance rather than conformance (e.g. instead of
asking whether a company has an independent board or a labour policy, ask whether the board is truly independent and how the
labour policy is implemented).
• Financial institutions may set an action plan as a requirement for granting financing to their clients and include E&S provisions in
the loan documentation for compliance and monitoring purposes. In monitoring the clients, financial institutions should evaluate
the agreed time-bound action plan (e.g. timeframe to track certification by clients) and transparency on progress (e.g. publicly
disclosing progress).
• Financial institutions should monitor their clients’ ESG performance, such as by conducting independent monitoring and requiring
their clients to provide sustainability disclosure in their reporting.
• Financial institutions are encouraged to conduct annual assessments of the sustainability performance of every client that
borrows more than a certain threshold, and set up a carbon bank to help the clients sequester carbon.
CALL TO ACTION #8: ENGAGE CLIENTS IN SUSTAINABILITY AND TRANSITION FINANCE
(2/2)
#FinanceForChange – JC3 Flagship ConferencePage 130
• Financial institutions may define the vulnerability of their customers by looking into country-specific metrics for income, location
(such as rural areas) and other characteristics including age, disabilities, gender, migrants, pensioners, refugees and
unemployment.
• Financial institutions should make a collective effort on stewardship and advocate for public policies addressing financial inclusion
and financial health.
• Takaful operators should develop solutions that meet the needs of stakeholders, such as overcoming financial illiteracy, and
providing coverage for under-represented segments such as the disabled community.
• Gender-smart climate finance can be applied through:
- Adopting a gender lens to climate finance, such as taking into consideration how a climate finance product could positively
or negatively impact the lives of women.
- Adopting a climate lens to gender finance, such as considering how gender finance could impact climate and environmental
objectives.
- Integrating gender into climate finance through gender-specific opportunities which also improves climate and business
performance.
CALL TO ACTION #9: APPLY GENDER & SOCIAL INCLUSION LENS TO CLIMATE CHANGE
ACTION
#FinanceForChange – JC3 Flagship ConferencePage 131
JC3 Flagship Conference: Organising Team Members (1/2)
Organisation Name Designation
Bank Negara Malaysia Dr. Hamim Syahrum Ahmad Mokhtar Deputy Director, Islamic Banking and Takaful Department
Liris Eliana Shamsir Manager, Islamic Banking and Takaful Department
Capital Markets Malaysia Zalina Shamsudin General Manager
Navina Balasingam Head, Stakeholder Engagement
CIMB Bank Luanne Sieh Head, CIMB Group Sustainability and Corporate Responsibility
Preetha S. Jenarthan Manager, Group Sustainability
Lee Hui Tze Intern, Group Sustainability
Chang Shao Yang Summer Associate
Daniel Loi Weijie Summer Associate
Ed Patrick Guño Summer Associate
Other Contributor Low Su Yi
Zurich Life Insurance Malaysia Berhad Charlie Chai Yueh Chian Head, Brand Marketing & Communications
SME Bank Faiiza Mohd. Mokhtar Head, Strategic Alliance
Rosmah Daud Manager, Corporate Affair
IBFIM Mohammad Khairi Saat Director, Training and Talent Development Department
Rafizah Abu Bakar Head, Digital Learning Training and Talent Development
Department
Mohd. Najib Yin Senior Executive, Digital Learning Training and Talent
Development Department
Hafizan Ahmad Executive, Digital Learning Training and Talent Development
Department
Khairulnizam Mohamed Assistant Manager, Digital Learning Training and Talent
Development Department
Safzuan Abdullah Mohd. Sahimi System Engineer, IT Unit
#FinanceForChange – JC3 Flagship ConferencePage 132
JC3 Flagship Conference: Organising Team Members (2/2)
Organisation Name Designation
British High Commission, Kuala Lumpur Elena Almeida (Former) Prosperity Fund Adviser
Ernst & Young
(Malaysia & Singapore)
Gilles Pascual Partner, EY, Programme Director, ASEAN Low Carbon Energy
Programme (LCEP)
Arina Kok Partner, EY, Malaysia Green Finance (GF) Team, ASEAN LCEP
Russel marsh Director, EY, Green Finance Lead, ASEAN LCEP
Sonal Agarwal Associate Director, EY, Malaysia GF Lead, ASEAN LCEP
Joel Khaw Manager, EY, Malaysia GF Delivery Team Manager, ASEAN
LCEP
Cheng Jo Yinn Senior Associate, EY, Malaysia GF Delivery Team, ASEAN LCEP
Foong Hui Yi Associate, EY, Malaysia GF Delivery Team, ASEAN LCEP
WWF Malaysia Thiagarajan Nadeson Head of Market and Education
Adam Ng Sustainable Finance Advisor
Shajaratuldur Hashim Senior Communications Manager
Firmansyah Shidiq Wardhana Sustainable Finance Engagement Manager
Siti Kholifatul Rizkiah Sustainable Finance Analyst
Wan Noorfatin Wan Mohd. Zani Sustainable Finance Senior Executive
Adam Farhan Salmaan Hussain Sustainable Finance Engagement Executive
Muhammad Awfa Sustainable Finance Research Assistant
#FinanceForChange – JC3 Flagship Conference
Rapporteur of the report
Page 133
REPORT BY JC3 SUB-COMMITTEE 4 ON ENGAGEMENT & CAPACITY BUILDING
:
Rapporteurs: Fatin Zani, Adam Farhan, Muhammad Awfa, Siti Kholifatul Rizkiah, Adam Ng
| Press Release |
30 Jul 2021 | Monetary and Financial Developments in June 2021 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-june-2021 | https://www.bnm.gov.my/documents/20124/4196742/i_en.pdf | null |
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Monetary and Financial Developments in June 2021
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Monetary and Financial Developments in June 2021
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Friday, 30 July 2021
30 Jul 2021
Headline inflation declined to 3.4% in June
Headline inflation declined to 3.4% in June (May: 4.4%), due mainly to lower inflation in the transport and food and non-alcoholic beverages categories.
The lower transport inflation (June y-o-y: 16.6%; May: 26%) reflected the dissipating base effect, which is expected to further subside in the near term.
Underlying inflation, as measured by core inflation, declined slightly to 0.7% (May: 0.8%).
Robust export growth in June
Export growth moderated but remained robust at 27.2% (May: 47.0%), reflecting broad-based strength across products and markets.
Moving forward, exports performance will continue to be underpinned by the rebound in external demand and continued upcycle in global technology.
In addition, strong demand for non-E&E manufactured products and higher commodity prices will provide further impetus to export growth. Nonetheless, the trade outlook remains contingent on the path of the COVID-19 pandemic.
Net financing growth moderated in June
Net financing growth moderated to 4.3% in June (May: 4.8%), reflecting the decline in both outstanding loan growth (June: 3.4%, May: 3.9%) and outstanding corporate bond growth (June: 6.9%, May: 7.2%).
Outstanding household loan growth moderated to 5.2% (May: 6.1%) as loan disbursements declined, mainly for the purchase of passenger cars, residential property and credit cards.
However, outstanding business loan growth increased to 0.9% (May: 0.4%) reflecting stronger working capital loan growth (June: 1.6%, May: 0.4%).
Domestic financial markets were affected by domestic and external factors in June
In June, domestic financial markets were affected by both domestic and external factors. Investor sentiments were affected by uncertainties surrounding the course of the pandemic in the region. The extension of stricter containment measures amid rising COVID-19 cases domestically led to further concerns over the economic outlook and increased risk aversion towards domestic financial assets.
Consequently, the FBM KLCI declined by 3.2% and the ringgit depreciated by 0.4% against the US dollar. Increased expectations of monetary policy tightening in the US also led to a broad strengthening of the US dollar.
The 10-year MGS yield increased by 4.7 basis points partly due to expectations of higher bond issuances following the announcement of additional fiscal support as domestic COVID-19 cases rose in the second quarter of 2021.
Banking system liquidity position remained strong to support financial intermediation
The banking system continued to record a healthy liquidity coverage ratio (LCR) level.
Banks’ funding profile also remained stable amid sustained growth in deposits.
Sound risk management practices by banks will support asset quality in the period ahead
Overall gross and net impaired loans ratios remain broadly unchanged at 1.6% and 1.0%, respectively, amid a marginal monthly increase in impairments.
The impaired loans ratio is expected to remain broadly stable in the immediate term as banks continue to facilitate repayment assistance for viable borrowers facing temporary financial difficulties.
Despite this, banks continue to set aside additional provisions against potential credit losses, which currently stand at 1.8% of total banking system loans.
See also:
Press release [PDF]
Related Assets
Monthly Highlights and Statistics in June 2021
Bank Negara Malaysia
30 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
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3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Jul 2021 | Detailed Disclosure of International Reserves as at end-June 2021 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-june-2021-1 | null | null |
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Detailed Disclosure of International Reserves as at end-June 2021
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Detailed Disclosure of International Reserves as at end-June 2021
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30 Jul 2021
In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD111,098.7 million, while other foreign currency assets amounted to USD732.2 million as at end-June 2021. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD5,587.8 million. The short forward positions amounted to USD7,787.9 million while long forward positions amounted to USD730 million as at end-June 2021, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,351.0 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD389.1 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-June 2021, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (30 June 2021)
Bank Negara Malaysia
30 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
23 Jul 2021 | International Reserves of Bank Negara Malaysia as at 15 July 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-15-july-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 15 July 2021
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International Reserves of Bank Negara Malaysia as at 15 July 2021
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23 Jul 2021
The international reserves of Bank Negara Malaysia amounted to USD111.1 billion as at 15 July 2021. The reserves position is sufficient to finance 8.0 months of retained imports and is 1.1 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 15 July 2021
Bank Negara Malaysia
23 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
08 Jul 2021 | Monetary Policy Statement | https://www.bnm.gov.my/-/monetary-policy-statement-08072021 | null | null |
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Monetary Policy Statement
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8 Jul 2021
At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.
The global economic recovery has strengthened further, supported by improvements in manufacturing and services activity. The pace of recovery, however, varies across countries. Economies making better progress in their vaccination programmes have been able to ease containment measures, enabling a swift recovery in domestic activity. In several advanced economies, sizeable fiscal and monetary measures are also supporting a stronger recovery momentum, although activities in some economies are disrupted by tighter containment measures to curb COVID-19 resurgences. Financial conditions remain supportive of growth. Overall, the balance of risks to the growth outlook remains tilted to the downside, due mainly to uncertainty over the path of the pandemic as well as potential risks of heightened financial market volatility.
For the Malaysian economy, better-than-expected economic activity in the first quarter of 2021 continued into April, as reflected by latest indicators, particularly on exports, retail spending and labour market conditions. The re-imposition of nation-wide containment measures to curb the resurgence in COVID-19 cases, however, will dampen the growth momentum. The degree of impact to the economy is highly dependent on the stringency and duration of containment measures. Nevertheless, continued allowances for essential economic sectors to operate, albeit at a reduced capacity, and higher adaptability to remote work, automation and digitalisation will partly mitigate the impact of restrictions. The various policy support packages will alleviate some of the financial burdens of households and businesses. Favourable external demand conditions will continue to provide a lift to growth. Going forward, the gradual relaxation of containment measures, alongside the rapid progress of the domestic vaccination programme and continued strength in external demand will provide support for the growth recovery into 2022. The growth outlook, however, remains subject to significant downside risks, due mainly to factors that could lead to a delay in the easing of containment measures or imposition of tighter containment measures, and a weaker-than-expected global growth recovery. The materialisation of these risks could undermine the growth recovery.
As expected, headline inflation spiked recently due mainly to the base effect from low fuel prices in the second quarter of last year. This spike is transitory and headline inflation is projected to moderate in the near term as this base effect dissipates. For 2021 as a whole, headline inflation is projected to average closer to the lower bound of the forecast range. Underlying inflation, as measured by core inflation, is expected to remain subdued, averaging between 0.5% and 1.5% for the year, amid continued spare capacity in the economy. The outlook, however, is subject to global commodity price developments.
The MPC considers the stance of monetary policy to be appropriate and accommodative. In addition, fiscal and financial measures will continue to cushion the economic impact on businesses and households and provide support to economic activity. Given the uncertainties surrounding the pandemic, the stance of monetary policy will continue to be determined by new data and information and their implications on the overall outlook for inflation and domestic growth. The Bank remains committed to utilise its policy levers as appropriate to foster enabling conditions for a sustainable economic recovery.
Bank Negara Malaysia
8 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
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07 Jul 2021 | International Reserves of Bank Negara Malaysia as at 30 June 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-30-june-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 30 June 2021
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International Reserves of Bank Negara Malaysia as at 30 June 2021
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7 Jul 2021
The international reserves of Bank Negara Malaysia amounted to USD111.1 billion as at 30 June 2021. The reserves level has taken into account the quarterly foreign exchange revaluation changes. The reserves position is sufficient to finance 8.2 months of retained imports and is 1.1 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 30 June 2021
Bank Negara Malaysia
7 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
06 Jul 2021 | Six-month moratorium for all individuals, microenterprises and affected SMEs begins 7 July 2021 | https://www.bnm.gov.my/-/six-mth-mora-begins-20210707 | null | null |
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Six-month moratorium for all individuals, microenterprises and affected SMEs begins 7 July 2021
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Six-month moratorium for all individuals, microenterprises and affected SMEs begins 7 July 2021
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6 Jul 2021
In line with the announcement of the Pakej Perlindungan Rakyat dan Pemulihan Ekonomi (PEMULIH), individual and microenterprise borrowers, as well as SMEs affected by the pandemic, may start applying for the six-month moratorium from 7 July 2021 onwards.
In this regard, borrowers - whether individuals, microenterprises or SMEs - should be assured that opting in for the moratorium or any other repayment packages will be easy with no need for borrowers to provide supporting documentation. Approval will be given automatically.
In addition to the moratorium, banks will also offer a reduction in instalments and other packages, including to reschedule and restructure financing to suit the specific financial circumstances of borrowers.
Borrowers can opt in online through a web form or an auto-generated email that will be available on banks’ websites to provide their personal and financing details. Borrowers may also phone their banks and guidance will be provided by the customer service officer. If borrowers are unable to use these digital channels, they may also visit their bank branches to submit their request for the moratorium. However, they are advised to check with respective banks on any changes in operating hours or arrangements for over-the-counter services due to movement restrictions.
The repayment assistance is applicable for financing approved before 1 July 2021. Borrowers must not have missed instalments by more than 90 days or be subject to bankruptcy / winding up proceedings at the time the request for repayment assistance is submitted. For clarity, borrowers that are already under a repayment assistance programme and are servicing their financing in accordance with the terms of the programme will be able to opt in for this moratorium. Individual and SME borrowers who have financing with more than 90 days of missed payments can also contact Agensi Kaunseling dan Pengurusan Kredit (AKPK) to obtain suitable repayment assistance and free financial advice (services.akpk.org.my). SMEs including microenterprises can also request for assistance through AKPK’s dedicated SME Help Desk at akpk.org.my/smehelpdesk. The virtual help desk provides free financial advice and facilitates applications for repayment assistance.
Borrowers are advised that opting for repayment assistance will increase the overall cost of borrowing, as interest/profit will continue to accrue on deferred payments. Banks are required to provide borrowers with information on how instalment amounts and the financing tenure will be impacted. Where a borrower requests to maintain lower instalments (instead of original instalments) after the moratorium, this would result in the loan tenure being extended for a longer period. Banks will not charge interest on interest, or profit on profit (i.e. compounding interest/profit), or any penalty interest/profit during the period of assistance.
Borrowers’ Central Credit Reference Information System (CCRIS) records will not be affected by any form of repayment assistance received in 2021.
The banking industry has provided its commitment and assurance to assist borrowers facing financial difficulties due to the lockdown. In this regard, BNM will closely monitor the implementation of the repayment assistance programme by the banking industry. If borrowers face any difficulties with their banks, or if instalments increase unreasonably, they may contact BNMTELELINK at bnm.my/RAsurvey to put in their complaints. Borrowers may also get more information on the enhanced repayment assistance programme by visiting bnm.gov.my/RA and BNM’s social media platforms.
Bank Negara Malaysia
6 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
02 Jul 2021 | Enhancements to Facilities under BNM’s Fund for SMEs | https://www.bnm.gov.my/-/enhancements-to-facilities-under-bnm-fund-for-smes | https://www.bnm.gov.my/documents/20124/6025157/aes_broc_en.pdf, https://www.bnm.gov.my/documents/20124/6025157/trrf_broc_en.pdf, https://www.bnm.gov.my/documents/20124/6025157/ptf_broc_en.pdf | null |
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Enhancements to Facilities under BNM’s Fund for SMEs
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Enhancements to Facilities under BNM’s Fund for SMEs
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Friday, 2 July 2021
2 Jul 2021
Bank Negara Malaysia (BNM) wishes to announce enhancements to the following facilities geared at providing relief to SMEs:
1. Additional allocation of RM4 billion for BNM’s Fund for SMEs
BNM will increase the allocation for the Targeted Relief and Recovery Facility (TRRF) by RM2 billion, bringing the total allocation to RM6 billion. The TRRF aims to provide relief for and support the recovery of SMEs in the services sector. Click here for the updated features of the TRRF.
In addition, BNM will also increase the allocation for the All Economic Sector (AES) Facility by RM2 billion, bringing the total allocation to RM6.5 billion. The AES is open to SMEs from all sectors of the economy, and aims to enhance SMEs’ access to financing and support growth. Click here for the updated features of the AES.
The above enhancements were announced by YAB Prime Minister under the PEMERKASA+ package and the PEMULIH package respectively.
2. Enhancements to features of facilities
The TRRF and PENJANA Tourism Financing (PTF) have been enhanced to allow SMEs to utilise part of financing proceeds to repay existing business loans (i.e. refinance). The maximum amount that can be used for refinancing is as follows:
TRRF: up to 30% of financing approved
PTF: up to 50% of financing approved
In addition, recipients of the Special Relief Facility and PENJANA SME Financing are now eligible to apply for the PTF (up to RM300,000 per SME). The PTF aims to support SMEs in the tourism sector by preserving their capacity and assisting them to adjust and remain viable post pandemic. Click here for the updated features of the PTF.
Interested SMEs can directly apply for these facilities from participating financial institutions. SMEs may also refer to bnm.gov.my/covid19 or contact us at bnm.my/LINK if there are any queries with respect to the BNM’s financing facilities.
Bank Negara Malaysia
2 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights
June 2021
Headline inflation declined to 3.4% in June
• Headline inflation declined to 3.4% in June
(May: 4.4%), due mainly to lower inflation in the
transport and food and non-alcoholic beverages
categories.
• The lower transport inflation (June y-o-y:16.6%;
May: 26%) reflected the dissipating base effect,
which is expected to further subside in the near
term.
• Underlying inflation, as measured by core
inflation, declined slightly to 0.7% (May: 0.8%).
1 Core inflation is computed by excluding price-volatile and price-administered
items. It also excludes the estimated direct impact of tax policy changes.
Source: Department of Statistics, Malaysia (DOSM), Bank Negara Malaysia
estimates
4.4
3.4
0.8 0.7
-4.0
-2.0
0.0
2.0
4.0
6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
J
u
l-
1
9
A
u
g
-1
9
S
e
p
-1
9
O
c
t-
1
9
N
o
v
-1
9
D
e
c
-1
9
J
a
n
-2
0
F
e
b
-2
0
M
a
r-
2
0
A
p
r-
2
0
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
A
p
r-
2
1
M
a
y
-2
1
J
u
n
-2
1
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1
3.4
0.9
5.2
0
1
2
3
4
5
6
7
8
Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
Total loans
Business loans
Household loans
Annual growth (%)
Contribution to Net Financing1 Growth and Outstanding
Loan Growth
1 Refers to outstanding loans of the banking system (excluding development
financial institutions (DFIs)).
Source: Bank Negara Malaysia
Net financing growth moderated in June
1
Contribution to growth
(percentage points)
2.8 2.8 2.5
2.1 2.0
1.9
4.9 4.8
4.3
Apr-21 May-21 Jun-21
Corporate Bonds
Banking System Loans
Net Financing
• Net financing growth moderated to 4.3% in
June (May: 4.8%), reflecting the decline in
both outstanding loan growth (June: 3.4%,
May: 3.9%) and outstanding corporate bond
growth (June: 6.9%, May: 7.2%).
• Outstanding household loan growth moderated
to 5.2% (May: 6.1%) as loan disbursements
declined, mainly for the purchase of passenger
cars, residential property and credit cards.
• However, outstanding business loan growth
increased to 0.9% May: 0.4%) reflecting
stronger working capital loan growth
(June: 1.6%, May: 0.4%).
Robust export growth in June
• Export growth moderated but remained robust
at 27.2% (May: 47.0%), reflecting broad-based
strength across products and markets.
• Moving forward, exports performance will
continue to be underpinned by the rebound in
external demand and continued upcycle in
global technology.
• In addition, strong demand for non-E&E
manufactured products and higher commodity
prices will provide further impetus to export
growth. Nonetheless, the trade outlook
remains contingent on the path of the
COVID-19 pandemic.
Malaysia’s Exports by Product
%, yoy/Ppt. Contribution
Source: Department of Statistics, Malaysia (DOSM), MATRADE
6.3
17.4
30.9
62.7
47.0
27.2
-40
-20
0
20
40
60
80
May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21
E&E Resource-based
Non-resource based Commodities
Others Gross exports (%, yoy)
Monthly Highlights
June 2021
Domestic financial markets were affected by domestic and external factors in June
• In June, domestic financial markets were
affected by both domestic and external factors.
Investor sentiments were affected by
uncertainties surrounding the course of the
pandemic in the region. The extension of stricter
containment measures amid rising COVID-19
cases domestically led to further concerns over
the economic outlook and increased risk
aversion towards domestic financial assets.
• Consequently, the FBM KLCI declined by 3.2%
and the ringgit depreciated by 0.4% against the
US dollar. Increased expectations of monetary
policy tightening in the US also led to a broad
strengthening of the US dollar.
• The 10-year MGS yield increased by 4.7 basis
points partly due to expectations of higher bond
issuances following the announcement of
additional fiscal support as domestic COVID-19
cases rose in the second quarter of 2021.Source: Bank Negara Malaysia, Bursa Malaysia
9.0
-1.1
-0.8
4.7
-3.2
-0.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-8 -4 0 4 8 12
Jun-21 May-21
Financial Markets Performance in June
2
Banking system liquidity position remained strong to support financial intermediation
Banking System Liquidity and Funding Ratios
81.6
71.0
149.1
0
40
80
120
160
70
75
80
85
90
95
J
u
n
2
0
J
u
l
2
0
A
u
g
2
0
S
e
p
2
0
O
c
t
2
0
N
o
v
2
0
D
e
c
2
0
J
a
n
2
1
F
e
b
2
1
M
a
r
2
1
A
p
r
2
1
M
a
y
2
1
J
u
n
2
1
% %
Liquidity Coverage Ratio (RHS)
Loan to Fund Ratio
Loan to Fund and Equity Ratio
• The banking system continued to record a
healthy liquidity coverage ratio (LCR) level.
• Banks’ funding profile also remained stable amid
sustained growth in deposits.
Source: Bank Negara Malaysia
Sound risk management practices by banks will support asset quality in the period ahead
• Overall gross and net impaired loans ratios
remain broadly unchanged at 1.6% and 1.0%,
respectively, amid a marginal monthly increase
in impairments.
• The impaired loans ratio is expected to remain
broadly stable in the immediate term as banks
continue to facilitate repayment assistance for
viable borrowers facing temporary financial
difficulties.
• Despite this, banks continue to set aside
additional provisions against potential credit
losses, which currently stand at 1.8% of total
banking system loans.
1.0
1.6
1.8
0.7
0.9
1.1
1.3
1.5
1.7
1.9
J
u
n
2
0
J
u
l
2
0
A
u
g
2
0
S
e
p
2
0
O
c
t
2
0
N
o
v
2
0
D
e
c
2
0
J
a
n
2
1
F
e
b
2
1
M
a
r
2
1
A
p
r
2
1
M
a
y
2
1
J
u
n
2
1
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Banking System Asset Quality
Source: Bank Negara Malaysia
%
Net Impaired Loans Ratio
PRESS RELEASE
Ref. No.: 07/21/10 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 30 July 2021
MONTHLY HIGHLIGHTS – JUNE 2021
Headline inflation declined to 3.4% in June
• Headline inflation declined to 3.4% in June (May: 4.4%), due mainly to
lower inflation in the transport and food and non-alcoholic beverages
categories.
• The lower transport inflation (June y-o-y: 16.6%; May: 26%) reflected the
dissipating base effect, which is expected to further subside in the near
term.
• Underlying inflation, as measured by core inflation, declined slightly to
0.7% (May: 0.8%).
Robust export growth in June
• Export growth moderated but remained robust at 27.2% (May: 47.0%),
reflecting broad-based strength across products and markets.
• Moving forward, exports performance will continue to be underpinned by
the rebound in external demand and continued upcycle in global
technology.
• In addition, strong demand for non-E&E manufactured products and higher
commodity prices will provide further impetus to export growth.
Nonetheless, the trade outlook remains contingent on the path of the
COVID-19 pandemic.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Net financing growth moderated in June
• Net financing growth moderated to 4.3% in June (May: 4.8%), reflecting
the decline in both outstanding loan growth (June: 3.4%, May: 3.9%) and
outstanding corporate bond growth (June: 6.9%, May: 7.2%).
• Outstanding household loan growth moderated to 5.2% (May: 6.1%) as
loan disbursements declined, mainly for the purchase of passenger cars,
residential property and credit cards.
• However, outstanding business loan growth increased to 0.9%
(May: 0.4%) reflecting stronger working capital loan growth (June: 1.6%,
May: 0.4%).
Domestic financial markets were affected by domestic and external
factors in June
• In June, domestic financial markets were affected by both domestic and
external factors. Investor sentiments were affected by uncertainties
surrounding the course of the pandemic in the region. The extension of
stricter containment measures amid rising COVID-19 cases domestically
led to further concerns over the economic outlook and increased risk
aversion towards domestic financial assets.
• Consequently, the FBM KLCI declined by 3.2% and the ringgit depreciated
by 0.4% against the US dollar. Increased expectations of monetary policy
tightening in the US also led to a broad strengthening of the US dollar.
• The 10-year MGS yield increased by 4.7 basis points partly due to
expectations of higher bond issuances following the announcement of
additional fiscal support as domestic COVID-19 cases rose in the second
quarter of 2021.
Banking system liquidity position remained strong to support financial
intermediation
• The banking system continued to record a healthy liquidity coverage ratio
(LCR) level.
• Banks’ funding profile also remained stable amid sustained growth in
deposits.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Sound risk management practices by banks will support asset quality in
the period ahead
• Overall gross and net impaired loans ratios remain broadly unchanged at
1.6% and 1.0%, respectively, amid a marginal monthly increase in
impairments.
• The impaired loans ratio is expected to remain broadly stable in the
immediate term as banks continue to facilitate repayment assistance for
viable borrowers facing temporary financial difficulties.
• Despite this, banks continue to set aside additional provisions against
potential credit losses, which currently stand at 1.8% of total banking
system loans.
Bank Negara Malaysia
30 July 2021
20210730_Monthly Highlights_June 2021_EN
20210730_Monthly Highlights – June 2021_EN pr
MONTHLY HIGHLIGHTS – JUNE 2021
Targeted Relief and Recovery Facility (TRRF)
Eligibility criteria • Malaysian SMEs* in services sector affected by the reintroduction of COVID-19 containment
measures (except tourism-related subsectors), such as:
a) Personal services (e.g. repair of computers / household goods, laundry, hairdressing, beauty)
b) Food and beverage service activities
c) Human health and social work activities
d) Arts, entertainment and recreation
e) Wholesale and retail trade
f) Business services (e.g. Professional, scientific and technical activities; administrative and
support service activities)
Note: Recipients of the Special Relief Facility and the PENJANA SME Financing are eligible for the
TRRF up to an aggregate limit of RM500,000 per SME
Purpose of financing • Working capital
• 30% of financing approved can be used to refinance existing financing
Note: Refinancing of existing business financing under BNM’s Fund for SMEs is not allowed
Financing size • SME: Up to RM500,000 per SME
• Micro enterprise: Up to RM75,000 per micro enterprise
Note: The above is applicable for SMEs with common shareholder(s) of equal to or more than 20%
shareholding
Financing rate to SMEs Up to 3.5% per annum, inclusive of guarantee fee
Tenure Up to 7 years, with a moratorium on monthly instalments of at least 6 months
Guarantee coverage • SMEs: 80% (0.5% per annum, guarantee fee);
• Optional for Participating Financial Institutions (PFIs) - Micro enterprises: 90% (0.5% per annum,
guarantee fee).
PFIs can obtain guarantee coverage from the Credit Guarantee Corporation Malaysia Berhad (CGC) /
Syarikat Jaminan Pembiayaan Perniagaan (SJPP).
Application procedure Application to be submitted directly to the PFIs and approval will be subject to the credit assessment
of PFIs
Availability Until full utilisation
* At least 51% shares held by Malaysians and as defined by SME Corp (as per Guidelines on National SME Definition issued by SME Corp), accessible at:
https://www.smecorp.gov.my/images/pdf/2021/Guideline_on_SMEDefinition_Updated_Sept2020_Final.pdf
BNM’s Fund for SMEs :
Targeted Relief and
Recovery Facility (TRRF)
Features of Targeted Relief and Recovery Facility (TRRF)
For more
information
Contact the PFI’s customer service centre
Log on to PFI’s website
Objective
Provide relief and support recovery for SMEs in the services
sector affected by reintroduction of containment measures
Credit Guarantee Providers:An initiative by:
www.bnm.gov.my/covid19
BNM eLINK: bnm.my/LINK
PENJANA Tourism Fund EN
RM500,000
KEMENTERIAN PELANCONGAN,
SENI DAN BUDAYA MALAYSIA
ELIGIBLE SECTORS
FOR SMEs
UP TO
FOR MICROENTERPRISES
UP TO
*Existing business �nancing excludes �nancing obtained under BNM’s Fund for SMEs.
SMEs can now utilise up to 50% of the PTF �nancing amount obtained to re�nance
existing business �nancing* from �nancial institutions and other sources including credit/
leasing companies.
Recipients of Special Relief Facility (SRF) or PENJANA SME Financing (PSF) are eligible to apply.
FINANCING TENURE UP TO
REPAYMENT DEFERMENT
FINANCING RATE UP TO
Option: SMEs can make interest/pro�t-only payments
for an additional period of 12 months
Support SMEs in the TOURISM SECTORS by preserving
capacity and assisting SMEs to undertake the necessary
investments to adjust and remain viable during COVID-19
pandemic.
●●
●●
●●
●●
●●
● CORE TOURISM TOURISM-RELATED SECTORS
●●
●●
●●
●●
●●
●
●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
FINANCING AMOUNT
Travel agencies & tour operators
Transportation for tourists (e.g. bus, boat
and car rental operators)
Tourism accommodation premises (e.g.
budget hotels, registered homestays,
chalets and resorts)
MICE (Meetings, Incentives, Conferences,
Exhibitions) ecosystem
Money services businesses – applicable to money
changing operators who mainly serve inbound and
outbound tourists
Medical tourism
Capacity building institutions which are primarily
set up to provide tourism related courses/training
Tourism-related retail, recreation and wellness
which can justify signi�cant reliance on tourists
mymotac https://penjana.treasury.gov.my
*Note: A collective �nancing limit is applicable for SMEs with common
shareholder(s) of equal to or more than 20% shareholding.
| Press Release |
02 Jul 2021 | Bank Negara Malaysia receives 29 applications for digital bank licences | https://www.bnm.gov.my/-/bnm-receives-29-applications-for-digital-bank-licenses | null | null |
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Bank Negara Malaysia receives 29 applications for digital bank licences
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Bank Negara Malaysia receives 29 applications for digital bank licences
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2 Jul 2021
Bank Negara Malaysia announced today that it has received 29 applications for a digital bank licence under the Financial Services Act 2013 and the Islamic Financial Services Act 2013, following a 6-month application period, which ended on 30 June 2021.
A diverse range of parties have submitted applications for the digital bank licence, ranging from banks, industry conglomerates, technology firms, e-commerce operators, FinTech players, cooperatives and state governments.
Successful applicants that meet all prudential criteria will be expected to contribute towards greater financial inclusion by offering products and services to address market gaps in the underserved and unserved segments. This includes promoting suitable and affordable financial solutions by leveraging on innovative application of technology.
Up to five licences may be issued and notification of successful applications will be made in the first quarter of 2022.
Bank Negara Malaysia
2 July 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
30 Jun 2021 | Monetary and Financial Developments in May 2021 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-may-2021 | https://www.bnm.gov.my/documents/20124/3914355/i_en.pdf | null |
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Monetary and Financial Developments in May 2021
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Monetary and Financial Developments in May 2021
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30 Jun 2021
Headline inflation declined to 4.4% in May
Headline inflation declined to 4.4% in May (April: 4.7%), due mainly to lower inflation in food and non-alcoholic beverages, and transport categories.
Headline inflation remained relatively elevated during the month, reflecting the low base from fuel prices last year (RON95 petrol prices in May 2021: RM 2.05/litre; May 2020: RM 1.30/litre). In the near term, as this base effect subsides, headline inflation is expected to moderate further.
Underlying inflation, as measured by core inflation[1], was relatively stable at 0.8% (April: 0.7%).
IOWRT growth rose sharply in April
The Index of Wholesale and Retail Trade (IOWRT) rose sharply by 5% in April 2021 (March: 9.0%), reflecting mainly the low base from implementation of MCO 1.0 in the corresponding period in 2020.
There was also continued broad-based recovery in activities from March 2021. On a month-on-month seasonally adjusted basis, the growth momentum accelerated by 5.1% (Mar: -1.7%).
Broadly sustained net financing growth
Net financing[2] growth was broadly sustained (May: 4.8%, April: 4.9%) reflecting the stable outstanding loan growth (May, April: 3.9%) amid a moderation in outstanding corporate bond growth (May: 7.2%, April: 7.7%).
Outstanding household loan growth was 6.1% (April: 6.2%). However, both loan disbursements and repayments declined across most purposes, partly reflecting the implementation of MCO 3.0.
For businesses, outstanding loan growth was sustained at 0.4% (April: 0.4%) amid subdued working capital loan growth.
Domestic financial markets were affected by domestic and external factors in May
In May, domestic financial markets were affected by both domestic and external factors. Investor sentiments were affected by uncertainties surrounding the course of the pandemic in the region. The imposition of stricter containment measures amid rising COVID-19 cases domestically led to further concerns over the economic outlook and increased risk aversion towards domestic financial assets.
Consequently, the FBM KLCI declined by 1.1% and the ringgit depreciated by 0.8% against the US dollar.
The 10-year MGS yield increased by 9.0 basis points driven by expectations of increased domestic fiscal stimulus to support economic activity. In addition, signs of higher inflation and forthcoming discussions by the US Federal Reserve to taper asset purchases led to bouts of increases in long-term US Treasury yields, which spilled over to yields in emerging market economies, including Malaysia.
Banking system capitalisation remained strong
Banks remained well-capitalised to withstand potential stress and sustain credit intermediation in the economy.
Despite a marginal decline in capital ratios, banks’ excess capital buffers[3] remained strong at RM119.9 billion as at May 2021.
Asset quality in the banking system remained intact
Banks continued to facilitate repayment assistance to viable borrowers facing temporary financial difficulties.
Overall, gross and net impaired loans ratios remained broadly stable at 1.6% and 1.0% respectively.
Total provisions set aside against potential credit losses stood at 1.8% of total banking system loans.
See also:
Press release [PDF]
[1] Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of tax policy changes. Source: Department of Statistics Malaysia (DOSM), Bank Negara Malaysia estimates
[2] Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)). Source: Bank Negara Malaysia
[3] Refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5%) and bank-specific higher minimum requirements Related Assets
Monthly Highlights and Statistics in May 2021
Bank Negara Malaysia
30 June 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
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2
2
A
p
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2
2
M
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-2
2
J
u
n
-2
2
J
u
l-
2
2
A
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-2
2
S
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-2
2
O
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2
2
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-2
2
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-2
2
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-2
3
F
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-2
3
M
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2
3
A
p
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2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
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2
2
J
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2
2
A
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2
2
S
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2
2
O
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2
2
N
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2
2
D
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2
J
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3
F
e
b
2
3
M
a
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2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
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2
2
J
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2
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A
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3
M
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2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Jun 2021 | Detailed Disclosure of International Reserves as at end-May 2021 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-may-2021-1 | null | null |
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Detailed Disclosure of International Reserves as at end-May 2021
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Detailed Disclosure of International Reserves as at end-May 2021
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In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD110,944.2 million, while other foreign currency assets amounted to USD882.8 million as at end-May 2021. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD6,077.7 million. The short forward positions amounted to USD8,345.4 million while long forward positions amounted to USD880 million as at end-May 2021, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,375.6 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD389.1 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-May 2021, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (31 May 2021)
Bank Negara Malaysia
30 June 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
22 Jun 2021 | International Reserves of Bank Negara Malaysia as at 15 June 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-15-june-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 15 June 2021
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International Reserves of Bank Negara Malaysia as at 15 June 2021
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22 Jun 2021
The international reserves of Bank Negara Malaysia amounted to USD111.0 billion as at 15 June 2021. The reserves position is sufficient to finance 8.2 months of retained imports and is 1.1 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 15 June 2021
Bank Negara Malaysia
22 June 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
18 Jun 2021 | Launch of the Cross-Border QR Payment Linkage between Malaysia and Thailand | https://www.bnm.gov.my/-/cross-border-qr-payment-linkage-between-malaysia-and-thailand | null | null |
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Launch of the Cross-Border QR Payment Linkage between Malaysia and Thailand
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18 Jun 2021
Bank Negara Malaysia (BNM) and the Bank of Thailand (BOT) today launched a cross-border QR payment linkage between Malaysia and Thailand. Under this linkage, consumers and merchants in both countries will be able to make and receive instant cross-border QR code payments. The project that commenced in June 2020 will be completed in three phases. Today marks the completion of the first phase in linking the real-time retail payment systems of RPP/ DuitNow in Malaysia and PromptPay in Thailand1 .
Under the first phase, users in Thailand are now able to use their mobile payment applications to scan DuitNow QR codes2 to make payment to merchants in Malaysia including for online cross-border e-commerce transactions. This service is expected to benefit more users in both countries when international travel resumes, as they can make payment using their mobile payment applications instead of using cash.
Under phase two, users in Malaysia will be able to use their mobile payment applications to scan Thai QR codes3 to make payment to merchants in Thailand. This phase is expected to go live in the fourth quarter of 2021. The last phase of the linkage will be expanded to include cross-border remittance. Users in both countries will be able to make real-time fund transfers conveniently by referencing the mobile phone number of the recipient. This functionality is expected to go live in the fourth quarter of 2022.
This collaboration represents a key milestone in the ASEAN Payment Connectivity initiative that promotes financial integration in the region through increased efficiency, reduced costs and improved user experience for cross-border payments. The retail payment linkage will serve as an important enabler to support post-pandemic economic recovery by further strengthening economic ties between participating countries.
Datuk Abdul Rasheed Ghaffour, Deputy Governor of BNM, said on this occasion, “The retail payment linkage will enhance the efficiency and convenience of cross-border payments by providing users with faster, cheaper, and more inclusive payment arrangements. This will give more options for consumers and merchants in the cross-border payment space and serve as a key enabler to strengthen regional connectivity and financial integration.”
In addition, Mr. Ronadol Numnonda, Deputy Governor of the BOT said, “The BOT recognises the significance of cross-border payment system linkages and has continuously pursued such initiatives. This connectivity builds on our domestic payment infrastructure which will facilitate cross-border retail payment activities between the two countries during and after the pandemic. More importantly, it will also facilitate the cross-border trade and e-commerce, thus contributing to economic growth and digitalisation.”
CIMB Thai Bank and Public Bank Berhad are the first two banks that have participated in the linkage and started offering the instant cross-border QR code payment service to their customers. More payment service providers are expected to participate in offering such service, thus broadening the network of users and merchants.
This project is made possible with the collaboration from various stakeholders from both countries. These include the Payments Network Malaysia (PayNet) and the National ITMX (NITMX) as payment system operators, as well as banks in the CIMB Group as the settlement banks that are responsible for the settlement of cross-border transactions performed via the QR payment linkage between Malaysia and Thailand.
Bank Negara Malaysia
Bank of Thailand
18 June 2021
1 Real-time Retail Payments Platform (RPP) and PromptPay are fast payment systems that facilitate payment to be credited into a recipient’s account instantly.
2 DuitNow QR is Malaysia’s national QR code solution that allows merchants to accept payments from customers of different participating banks and e-wallets operators using a unified QR code.
3 Thai QR code is a standardised QR code in Thailand, akin to DuitNow QR in Malaysia.
Bank Negara Malaysia
18 June 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
10 Jun 2021 | JC3 to host Flagship Event on Climate Change - FinanceforChange Virtual Conference from 23-25 June 2021 | https://www.bnm.gov.my/-/jc3-to-host-flagship-event-on-climate-change-financeforchange-virtual-conference-from-23-25-june-2021 | null | null |
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JC3 to host Flagship Event on Climate Change - FinanceforChange Virtual Conference from 23-25 June 2021
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JC3 to host Flagship Event on Climate Change - FinanceforChange Virtual Conference from 23-25 June 2021
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10 Jun 2021
The Joint Committee on Climate Change (JC3) is pleased to announce that it will host its flagship event on climate change, FinanceforChange Virtual Conference, from 23 to 25 June 2021. The conference aims to share knowledge, best practices and solutions in tackling climate change. Local, regional and global leaders in their fields, including financial practitioners, policymakers and advocates, will discuss a broad range of topics to inform and encourage actions by the financial sector in leading and supporting the transition to a greener economy.
“The financial sector is uniquely placed to play a catalytic role in enabling the transition towards a low-carbon economy. Given the central role of the financial sector in the economy, financial institutions need to take more concrete actions to scale up sustainable finance, and to advance climate risk management and adaptation, as well as climate-related disclosures,” said Jessica Chew, Deputy Governor, Bank Negara Malaysia and Co-Chair of JC3.
The conference is another key initiative towards reinforcing the importance of a sustainable future for Malaysia. According to Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive, Securities Commission Malaysia and Co-Chair of JC3, "By bringing various financial players onto one platform, FinanceforChange encourages inter-industry collaborations and public-private partnerships. The responsibility for tackling climate change rests with all of us, thus we must give this critical issue our collective attention and effort."
The conference will feature more than 70 notable speakers including Tengku Datuk Seri Utama Zafrul Tengku Abdul Aziz, Minister of Finance; Tan Sri Dr. Jemilah Mahmood, Special Advisor on Public Health to Prime Minister of Malaysia; Datuk Nor Shamsiah Mohd Yunus, Governor BNM; Datuk Syed Zaid Albar, Executive Chairman SC; Sir David Attenborough, Broadcaster and Naturalist; and Lewis Pugh, United Nations Ocean Advocate.
The first two days of the conference will focus on the financial sector, and how sustainability can be integrated into business decision-making at the board and management levels. The agenda includes practical workshops and case studies, with parallel technical tracks for financial practitioners in institutional banking, consumer banking, asset management, insurance and takaful, as well as key support functions such as human resources, procurement and facilities management.
The agenda for the third day of the conference is curated for the private sector, including clients and investees of Malaysian financial institutions. Participants will benefit from a better understanding of how changing regulations and requirements, such as the recently launched Climate Change and Principle-based Taxonomy, will impact them as borrowers and investees. Participants will also learn more about the significant opportunities presented by the green agenda and sustainable finance.
Businesses and the public are invited to be part of the climate change conversation by signing up for the FinanceForChange Virtual Conference. Registrations and event details can be found at https://jc3conference.msfi.com.my/.
Bank Negara Malaysia
Securities Commision Malaysia
10 June 2021
About JC3
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysia financial sector. The JC3 is co-chaired by Jessica Chew Cheng Lian, Deputy Governor Bank Negara Malaysia and Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive Securities Commission Malaysia with members comprising senior officials from Bursa Malaysia and 19 financial industry players as well as relevant experts. The JC3’s initiatives and priorities are anchored by its four sub-committees, namely Risk Management; Governance and Disclosure; Product and Innovation; and Engagement and Capacity Building.
Bank Negara Malaysia
10 June 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
08 Jun 2021 | International Reserve of Bank Negara Malaysia as at 31 May 2021 | https://www.bnm.gov.my/-/international-reserve-of-bank-negara-malaysia-as-at-31-may-2021 | null | null |
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International Reserve of Bank Negara Malaysia as at 31 May 2021
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International Reserve of Bank Negara Malaysia as at 31 May 2021
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The international reserves of Bank Negara Malaysia amounted to USD110.9 billion as at 31 May 2021. The reserves position is sufficient to finance 8.4 months of retained imports and is 1.1 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 31 May 2021
Bank Negara Malaysia
8 June 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
31 May 2021 | Monetary and Financial Developments in April 2021 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-april-2021 | https://www.bnm.gov.my/documents/20124/3628704/i_en.pdf | null |
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Monetary and Financial Developments in April 2021
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Monetary and Financial Developments in April 2021
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Headline inflation increased to 4.7% in April
Headline inflation increased to 4.7% in April (1.7% in March).
The main contribution to headline inflation was from higher domestic fuel prices, following the low base last year (RON95 petrol prices April 2021: RM 2.05/litre; April 2020: RM 1.27/litre).
Headline inflation is expected to temporarily spike in the second quarter, and moderate thereafter as the base effect subsides.
Underlying inflation, as measured by core inflation, remained stable at 0.7%.
Exports grew at a faster pace in March
Exports expanded further by 31.0% in March 2021 (February 2021: 17.6%), driven primarily by robust manufactured exports. By destination, the expansion was supported by exports to China, the US and Singapore.
Looking ahead, exports are expected to be supported by the rebound in global growth, continued demand for electronics exports and higher commodity prices. Nonetheless, the trade outlook remains contingent on the path of the COVID-19 pandemic.
Continued expansion in net financing
Net financing expanded by 4.9%. This reflected an increase in outstanding corporate bond growth (April: 7.7%, March: 5.9%) while outstanding loan growth was sustained (April: 3.9%, March: 3.9%).
Outstanding household loan growth increased to 6.2% (March: 5.7%) as loan disbursements grew at a higher pace compared to loan repayments across most purposes.
For businesses, outstanding loan growth moderated to 0.4%
(March: 1.1%) mainly reflecting lower growth in loans for working capital purpose.
Conditions in domestic financial markets improved in April
In April, domestic financial market conditions improved amid a confluence of external and domestic factors.
Domestic bond yields moderated amid positive investor sentiments driven by Malaysia’s retention in the FTSE Russell World Government Bond Index and the decline in longer-term sovereign bond yields in most advanced economies after the sharp increase earlier in the year. Specifically, the 10-year MGS yield declined by 12.2 basis points during the month.
The ringgit appreciated by 1.3% against the US dollar supported by portfolio inflows to the domestic bond market and broad weakening in the US dollar.
The FBM KLCI increased by 1.8%, supported mainly by the healthcare sector amid concerns surrounding the global and domestic resurgence of COVID-19 cases.
Banks continued to maintain strong capitalisation levels
All banks remained well-capitalised to withstand potential shocks and to continue supporting credit flows to the economy.
Banks’ excess capital buffers1 currently amount to RM124.2 billion as at April 2021.
Banking system asset quality remained sound
Overall gross and net impaired loans ratios were sustained at 1.6% and 1.0%, as impairments moderated slightly during the month.
However, banks continued to set aside additional provisions against potential credit losses, which currently stand at 1.7% of total banking system loans.
See also:
Press release [PDF]
1 Refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5%) and bank-specific higher minimum requirements
Related Assets
Monthly Highlights and Statistics in April 2021
Bank Negara Malaysia
31 May 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
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-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
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2
2
S
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2
2
O
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2
2
N
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2
2
D
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2
2
J
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3
F
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b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
31 May 2021 | Detailed Disclosure of International Reserves as at end-April 2021 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-april-2021 | null | null |
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Detailed Disclosure of International Reserves as at end-April 2021
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In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD110,759.5 million, while other foreign currency assets amounted to USD843.9 million as at end-April 2021. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD5,722.5 million. The short forward positions amounted to USD8,987.9 million while long forward positions amounted to USD830 million as at end-April 2021, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,344.8 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD389.1 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-April 2021, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (30 April 2021)
Bank Negara Malaysia
31 May 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
21 May 2021 | International Reserves of Bank Negara Malaysia as at 12 May 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-12-may-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 12 May 2021
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International Reserves of Bank Negara Malaysia as at 12 May 2021
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The international reserves of Bank Negara Malaysia amounted to USD110.6 billion as at 12 May 2021. The reserves position is sufficient to finance 8.4 months of retained imports and is 1.1 times total short-term external debt.
Related Assets
BNM Statement of Assets & Liabilities - 12 May 2021
Bank Negara Malaysia
21 May 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
11 May 2021 | Economic and Financial Developments in Malaysia in the First Quarter of 2021 | https://www.bnm.gov.my/-/economic-and-financial-developments-in-malaysia-in-the-first-quarter-of-2021 | https://www.bnm.gov.my/documents/20124/3434930/1Q2021_GDP_Slides.pdf, https://www.bnm.gov.my/documents/20124/3434930/1Q_table_en.pdf | null |
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Economic and Financial Developments in Malaysia in the First Quarter of 2021
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Economic and Financial Developments in Malaysia in the First Quarter of 2021
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Better economic performance, with smaller GDP decline of 0.5% in the first quarter (4Q 2020: -3.4%)
The Malaysian economy registered a smaller decline of 0.5% in the first quarter (4Q 2020: -3.4%). The growth performance was supported mainly by the improvement in domestic demand and robust exports performance, particularly for E&E products. Growth was also supported by the continued policy measures. The imposition of the Second Movement Control Order (MCO 2.0) and the continued closure of international borders and restrictions on inter-state travel, however, weighed on economic activity. Nevertheless, as restrictions were eased in February and March, economic activity gradually picked up. Governor Datuk Nor Shamsiah said “The better overall performance reflects the improvement in domestic demand and the strength in our exports.”
All economic sectors registered an improvement, particularly in the manufacturing sector. On the expenditure side, growth was driven by better private sector expenditure and strong exports. On a quarter-on-quarter seasonally-adjusted basis, the economy registered a growth of 2.7% (4Q 2020: -1.5%).
Headline inflation turned positive to 0.5% during the quarter (4Q 2020: -1.5%). This was attributable to the positive albeit low fuel inflation following the base effect, as well as the lapse in the effect from the tiered electricity tariff rebate which was implemented between April to December 2020. Core inflation moderated to 0.7%, mainly reflecting the lower inflation for rental and jewelleries.
Exchange rate developments
The ringgit depreciated by 3.5% against the US dollar in the first quarter of 2021. This was due mainly to the strengthening of the US dollar, which also resulted in a broad-based weakening of other advanced and emerging market currencies. This was amid the rebalancing of portfolio investments by global investors following the rise in US Treasury yields, driven by anticipation of a stronger US economic recovery and higher inflation expectations. Since 1 April, the ringgit has appreciated by 1.0% against the US dollar (as at 7 May). This appreciation was in line with US dollar strength subsiding as US Treasury yields have started to trend lower from its peak in March. The increase in global oil prices in early April also provided some support to overall investor sentiments. Going forward, as uncertainties remain on the momentum of the global and domestic economic recovery, the ringgit is expected to remain exposed to periods of heightened volatility.
Financing conditions
Net financing to the private sector recorded an annual growth of 4.7%1 during the quarter, supported mainly by higher total outstanding loan growth of 4.3% (4Q 2020: 3.7%). Business loan disbursements and repayments remained above their 2017-2019 quarterly average levels. Household loan demand also remained forthcoming amid the accommodative monetary policy environment and implementation of various stimulus measures.
The Malaysian economy remains on track for a recovery in 2021, supported by better external and domestic demand
Despite the recent re-imposition of containment measures, the impact on growth is expected to be less severe than that experienced in 2020, as almost all economic sectors are allowed to operate. Overall, the growth recovery will benefit from better global demand, increased public and private sector expenditure as well as continued policy support. This will also be reflected in the recovery in labour market conditions, especially in the gradual improvement in hiring activity. Higher production from existing and new manufacturing facilities, particularly in the E&E and primary-related sub-sectors, as well as oil and gas facilities will provide a further impetus to growth. The roll-out of the domestic COVID-19 vaccine programme will also lift sentiments and contribute towards recovery in economic activity. Nevertheless, the pace of recovery will be uneven across economic sectors. Datuk Nor Shamsiah cited “Going forward, Malaysia is well positioned to continue benefitting from stronger global economic and trade activities. While the growth outlook continues to be shaped by developments surrounding the pandemic, the implementation of containment measures which are mainly aimed at curbing social activities and allow almost all economic sectors to operate, would minimise the impact on economic activity.”
In 2021, headline inflation is expected to average higher between 2.5% and 4.0%, primarily due to the cost-push factor of higher global oil prices. In terms of trajectory, headline inflation is projected to temporarily spike in the second quarter of 2021, driven by the lower base from the low domestic retail fuel prices in the corresponding quarter of 2020. Headline inflation in April and May may rise to approximately between 6.5% and 7.0%. However, this will be transitory as headline inflation is expected to return to below 5.0% in June, and continue to moderate thereafter as the base effect dissipates. Underlying inflation, as measured by core inflation, is expected to remain subdued, averaging between 0.5% and 1.5% for the year, amid continued spare capacity in the economy. The outlook, however, is subject to global oil and commodity price developments.
See also:
Table 1: GDP by Expenditure Components and Economic Activity
Presentation Slides (PDF)
Press Conference Video
Publication: Quarterly Bulletin First Quarter 2021
1 Comprises outstanding loans from the banking system and development financial institutions (DFIs), and outstanding corporate bonds.
Bank Negara Malaysia
11 May 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Malaysia GDP 1Q 2021
Sidang Akhbar
Prestasi Ekonomi Suku
11 Mei 2021
Pertama Tahun 2021
Global growth improved further in 1Q 2021
Source: CEIC, national authorities
Global Growth Developments
• Labour market improvement
supporting private consumption
• Continued recovery in manufacturing
activity
• Goods trade improved, particularly
regional exports
• However, reintroduction of
containment measures in some
economies weighed on services
activity, contributing to an uneven
pace of global recovery
1
-4.9
-2.4 -2.4 -2.2
-1.2
5.1
6.5
-1.8
0.2 0.4
-0.7
1.8
8.2
18.3
Euro area Singapore US Indonesia Korea Chinese Taipei PR
China
4Q20 1Q21
Real GDP Growth
Annual change (%)
Malaysia’s GDP recorded a better-than-expected performance of -0.5% in 1Q 2021, despite
imposition of MCO 2.0 during the quarter
Source: Department of Statistics Malaysia
4.7 5.0 4.5 3.7
0.7
-17.2
-2.7 -3.4
-0.5
1Q-19 2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 1Q-21
Real GDP Growth (Quarterly)
Annual change (%)
Annual growth
2020: -5.6%
2019: 4.4%
Key Factors:
Less stringent
containment measures
2
Better external
demand
weighed by…
Growth supported by expansion in exports and improvement in domestic demand
-3.5 -3.6
6.0
Jan-21 Feb-21 Mar-21
Real GDP Growth (Monthly)
Annual change (%)
Dec-20
-2.1%
Labour shortages and
site shutdowns due to
COVID-19 outbreaks
Improvement in all economic sectors, led by manufacturing
Source: Department of Statistics Malaysia
3
3.0
6.6
4Q-20 1Q-21
GDP, Annual change (%)
-1.0
0.4
4Q-20 1Q-21
GDP, Annual change (%)
-4.8
-2.3
-6
-5
-4
-3
-2
-1
0
4Q-20 1Q-21
GDP, Annual change (%)
-10.4
-5.0
4Q-20 1Q-21
GDP, Annual change (%)
Manufacturing AgricultureServices Mining Construction
Continued robust
external demand for
E&E production
Expansion in livestock,
forestry & logging, and
other agriculture
subsectors
Improved consumer-
related activities despite
containment measures
Crude oil and natural gas
production improved
Ramp up in commercial
projects nearing completion
and implementation of small-
scale projects
Updated
-13.9
-10.4
4Q-20 1Q-21
GDP, Annual change (%)
2.4
5.9
4Q-20 1Q-21
GDP, Annual change (%)
Private Consumption
Source: Department of Statistics Malaysia
Private Investment Public Investment Public Consumption Net exports
Household spending
affected by movement
restrictions albeit to a
smaller extent
Higher capital
expenditure particularly in
the services and
manufacturing sectors
Higher spending on fixed
assets by Federal
Government
Higher spending on
emoluments and supplies
and services
Strong exports and
imports driven by higher
external and domestic
demand
4
-3.5
-1.5
4Q-20 1Q-21
GDP, Annual change (%)
-6.6
1.3
4Q-21 1Q-21
GDP, Annual change (%)
-20.4
-18.6
4Q-20 1Q-21
GDP, Annual change (%)
10.0
0.8
4Q-20 1Q-21
GDP, Annual change (%)
Updated
Improvement in domestic demand, particularly private sector expenditure
Current account of the balance of payments registered a surplus of RM12.3 billion or
3.3% of GDP
Goods
Source: Department of Statistics Malaysia
Services Primary Income Secondary Income
5
Updated
42.6
36.6
4Q-20 1Q-21
-7.2
-5.7
4Q-20 1Q-21
-14.0 -15.0
4Q-21 1Q-21
-2.7 -3.6
4Q-20 1Q-21
Lower Goods Surplus
Larger Secondary
Income Deficit
• Larger improvement in
in imports amid
pick-up in domestic
demand
• Higher outward
remittances by foreign
workers
RM billon RM billon RM billon RM billon
Larger Services Deficit
• Larger imports of
transport and
construction services
Continued targeted policy support
(e.g. PENJANA, 2021 Budget, PERMAI and PEMERKASA)
Stronger external demand driving
improvement in production activities
Malaysia’s economy to continue to benefit from strong external demand and recovery in
domestic conditions
Source: Bank Negara Malaysia
6
Continuation of large infrastructure projects
(e.g. ECRL, LRT3, Pan-Borneo Highway and JENDELA)
Recovery in labour market conditions
…supported by stronger external demand and recovery in
domestic conditions
Malaysia remains on track to achieve projected growth of
6.0% – 7.5% in 2021…
-8
-6
-4
-2
0
2
4
6
8
10
2018 2019 2020 2021f
Malaysia’s Real GDP Growth
6.04.3
-5.6
4.8
7.5
Annual change (%)
Pick-up in economic activity, as most sectors
are allowed to operate
Expansion of gross exports is expected to support the overall recovery
The recovery in gross exports growth is
expected to persist…
… in line with the rebound in major trade
partners’ growth…
* Share of 2020 Malaysia’s exports
Source: International Monetary Fund, World Semiconductor Trade Statistics, IC Insights, Department of Statistics Malaysia
… and rising demand for semiconductors
for work-from-home & medical devices
-0.4
-15.1
4.4 5.1
18.2
1Q20 2Q20 3Q20 4Q20 1Q21
Gross Exports Growth
%yoy
NEW
7
6.8
13.0
10.9
19.0
WSTS Semiconductor
Sales
IC Insights Integrated Circuit
Sales
2020 2021f
%yoy
Industry Forecasts for Global Semiconductor Sales
2.3
-5.4
-3.5
8.4
5.2
6.4
PR China
(16.2%* of Malaysia's
exports)
Singapore
(14.5%* of Malaysia's
exports)
US
(11.1%* of Malaysia's
exports)
2020 2021f
Growth in Malaysia’s Key Trade Partners
%yoy
5
10
11
17
18
Personal computing
Medical devices
Automotive
Other industrial
electronics
applications
Communication &
consumer electronics
Stronger production activity in the manufacturing industry
Source: Department of Statistics Malaysia
NEW
8
Higher overall manufacturing production,
driven by the E&E subsector
Malaysia’s E&E subsector is plugged into
key products* in the global value chain
* Non-exhaustive list
Source: AMCHAM survey
4.0
15.0
81.0
Lower
Same
Higher
E&E exports outlook for 2H 2021 versus 2H 2020
% of respondents
Survey: Demand for E&E products to
remain robust throughout 2021
Note: Survey of major E&E firms in Malaysia in March – April 2021
Source: BNM RES
E&E products made in Malaysia
% breakdown
Industrial production index (IPI)
%yoy
2.4 2.0
4.1
3.5
4.5
12.7
8.1 8.3
7.6 7.9
10.3
13.8
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
E&E subsector IPI
Manufacturing IPI
Similar MCO 2.0 and 3.0 restrictions allow most economic activity to continue
* The list of prohibited activities is not exhaustive.
Note: Available information as at 10 May 2021.
Source: MKN
9
MCO 2.0 MCO 3.0
Economic activity
Most economic sectors allowed to operate with
the exception of*:
• Spas, reflexology and gyms
• Classes (e.g. tuition, music, dance)
• Pubs and nightclubs
• Theme parks, karaoke and cinemas
Most economic sectors allowed to operate with
the exception of*:
• Spas, reflexology and massage centres
• Sports facilities (e.g. gyms)
• Pubs and nightclubs
• Theme parks, karaoke and cinemas
Labour restrictions 30% capacity for managerial and supervisory positions
Movement restrictions
Interstate and interdistrict travel prohibited with
limits of 2 passengers per car
Interstate and interdistrict travel prohibited with
limits of 3 passengers per car
Operating hours
• Restaurants and food stalls: 6am – 8pm
• Convenience stores and pharmacies:
6am – 8pm
• Restaurants and food stalls: 6am – 10pm
• Convenience stores: 6am – 12am
• Pharmacies: 6am – 10pm
Dine-ins Prohibited
Social activities (weddings,
reunions, kenduri)
Prohibited
Most economic activity allowed to continue during MCO 3.0, similar with MCO 2.0
Actual data indicates impact due to imposition of MCO 2.0 was much less significant
compared to the MCO 1.0 in 2020
Similar factors are in place in MCO 3.0 to
cushion the impact to economic activities
1 MCO 2.0 data for GDP, IOWRT and Manufacturing IPI refers to the Jan-Feb 2021 average, and 13 Jan – 4 Mar 2021 for Google Mobility. MCO 1.0 data for GDP, IOWRT and Manufacturing IPI refers to the Mar-Apr 2020
average, and 18 Mar – 3 May 2020 for Google Mobility
Source: Department of Statistics Malaysia, Google Mobility Community Reports
Most economic sectors allowed to
operate, subject to SOPs
10
-17
-22 -21
-59 -61
-4 -2
4
-20
-26
-70
-60
-50
-40
-30
-20
-10
0
10
Average monthly
GDP
Index of Wholesale &
Retail Trade Manufacturing IPI
Google Mobility*
(Retail & Grocery)
Google Mobility*
(Workplaces)
MCO 1.0
MCO 2.0
Economic and Mobility Indicators during Containment Measures1
% yoy, % change from pre-COVID baseline*
Continued economic activities
through online platforms
The nation is more accustomed
to SOPs
Early signs of recovery in the labour market despite imposition of containment measures
Source: Department of Statistics Malaysia
* Tourism-related industries include wholesale retail, administrative and support services,
accommodation and F&B, transportation and storage, entertainment and recreation
Source: Employment Insurance System, Social Security Organisation
Continued decline in jobless claims and increase in job
placement rate indicate better employment conditions
5.0
5.3
4.9
4.7 4.7
4.6
4.7
4.8 4.8
4.9
4.8
4.7
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Unemployment rate
3.0 4.8
8.2 7.5
3.6 2.8 2.8 4.6 3.3 3.2 2.8 2.5 1.8
3.2
5.2
10.4
9.2
5.6
4.6 4.6
4.5
3.5 5.2
3.5 3.3 3.2
Apr-20 May-20Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21
Tourism-related*
Non tourism-related
Jobless claims
Thousands of persons
20
8 6 11
25
43
55
37
40
30 33
37 40
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21
Placement rates
40 new job placements
for every 100 jobs lost
11
Employment and unemployment rate improved despite
temporary disruption caused by MCO 2.0 in Jan-21
Share of labour force (%) Number of new job placements for every 100 job losses
14,933
14,888
14,990
15,073
15,154
15,193 15,207 15,196 15,215 15,237
15,271
15,329
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21
Employment levels
Thousands of persons
Households
Fiscal and financial measures mainly benefitting households and businesses in 2021
Targeted policy support remains in place for affected segments to alleviate the economic
impact of the pandemic
BNM’s Fund for SMEs
Danajamin PRIHATIN Guarantee SchemeRM39 bn
available8
Businesses
Additional Prihatin Special Grant (GKP) RM 0.9 bn
disbursed7
1 As at 16 April 2021 (Source: 52nd LAKSANA report)
2 As at 4 May 2021 (Source: 52nd LAKSANA report)
3 Cumulative up to end-March 2021
(Source: 48th LAKSANA report)
4 Total beneficiaries and applications as at 30 April 2021
(Source: EIS, SOCSO)
12
95%
approval rate5
1.6 mn
applications5
Targeted Repayment Assistance (TRA) Targeted Repayment Assistance (TRA)
EPF Account 1 Withdrawal (i-Sinar) RM 55.9 bn
approved1
Bantuan Prihatin Rakyat (BPR) RM 4.68 bn
allocation2
137,290
persons3
Skills & Talent Enhancement
RM 5.2 bn
available6
5 From 7 August 2020 to 26 March 2021 (Source: BNM)
6 As at 23 April (Source: BNM)
7 As at February 2021 (Source: 52nd LAKSANA report)
8 As at 6 May 2021 (Source: Danajamin)
9 Since inception in 2019
12
2,857,644
employees4Wage Subsidy
345,965
employers4 Wage Subsidy
Repayment assistance, debt advisory
& resolution
> 20,000
SMEs advised9
MyDigital (e.g. RM21 billion under JENDELA)
• RM70.0 billion
• Duration: 2021-2030
• Microsoft: US$1 billion investment over the next five years in
Malaysia to set up data centres (The Edge, 19 Apr 2021)
Investment activity will be supported by key strategic projects
Source: Newsflows
Progress based on work doneKey infrastructure projects
• Infineon Technologies: RM3.25 billion investment in the country
over a span of 10 years until 2029. (NST, 19 Sep 2020)
• Western Digital: Higher investments by RM2.3 billion to
upgrade the hard disc drive manufacturer's production capacity.
(Channel News Asia, 5 Nov 2020)
• SK Nexilis: RM2.3 billion investment to set up its first overseas
production base in Malaysia. (The Star, 26 Jan 2021)
Recent announcements by MNCs to invest in Malaysia
13
ECRL
• RM50.0 billion
• Duration: 2018-2027
LRT3
• RM16.6 billion
• Duration: 2018-2024
MRT2
• RM30.5 billion
• Duration: 2016-2023
51%
89%
21%
Manufacturing: E&E
Manufacturing: Resource-based
Services: Digital-related sector
2021 and beyond: Continued capital spending in major infrastructure projects and investment
intentions by the private sector
Digitalisation continues to gain traction to support the growth of the digital economy
Source: Bank Negara Malaysia,
Malaysia Digital Economy Corporation
14
Updated
Online banking1
transaction volume
1 Financial and non-financial transactions
2 Network-based e-money
3 Non-exhaustive
4 Investment Promotion Agencies
Merchants adopting
e-commerce
E-wallet2
transaction volume
Merchant registrations
for QR payments
209
million
773k
490k
Q1’ 21
3.9
billion
+56%
142
million
+48%
293k
+164%
244k
+101%
Q1’ 20
20202019
...with roll-out of strategic initiatives to catalyse the nation’s
digitalisation agenda3
National
E-Commerce
Strategic
Roadmap 2.0
Digital
Investment
Office
• Targets 875k MSMEs adopting e-
commerce and 84k SMEs exporting
overseas by 2025 (2020: 490k, 27k)
• Fully-digital platform to strengthen
coordination across all IPAs4
• Facilitate digital investments to position
Malaysia as a Digital Hub for ASEAN
Malaysia
Digital Economy
Blueprint
• A strategic roadmap of policy priorities
and initiatives to advance the nation’s
digital economy
Jalinan Digital
Negara
• Upgrades to fixed and mobile broadband
on track and exceeded quarterly targets
• 5G planning and implementation to begin
in 2021 instead of 2023 previously
6.1
billion
Greater adoption of digital solutions by individuals and
businesses…
Source: Economic Planning Unit, Malaysian Communications and Multimedia Commission,
Malaysia Digital Economy Corporation
Risk to 2021 growth remains tilted to the downside, arising primarily from
pandemic-related challenges
▼ Escalation in COVID-19 cases leading to stricter containment measures globally and domestically
▼ Slower-than-expected rollout of vaccines
▼ Uncertainty arising from global oil and commodity price developments
▼ Slower-than-expected progress of major infrastructure projects
▼ Greater financial market volatility
▲ Higher-than-expected global growth
▲ Higher-than-expected production from existing and new manufacturing facilities
▲ Stronger-than-expected impact from policy support
15
Downside
risks
Upside
risks
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
4Q 2020 1Q 2021
Other price-administered items (ppt)
Fuel (ppt)
Price-volatile items (ppt)
Core inflation¹ (ppt)
Annual change in inflation and contribution to headline inflation
Contribution to headline inflation (ppt)
Headline inflation turned positive in 1Q 2021 and is expected to average 2.5% – 4.0% for the year
Higher headline inflation in 2021 due to the cost-push factor of
higher global oil prices, while core inflation to remain subdued
1Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the
estimated direct impact of consumption tax policy changes.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
Temporary spike in 2Q 2021 due to the base effect
from domestic retail fuel prices, and expected to
moderate thereafter as this base effect dissipates
Core inflation to remain subdued, averaging 0.5% -
1.5%, amid continued spare capacity in the economy
Headline inflation increased to 0.5% in 1Q 2021, mainly due to
base effect from fuel prices and lapse in impact from electricity
tariff rebates
0.9
-2.6
-1.4 -1.5
0.5
1.3 1.2
1.0
0.8
0.7
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
2
1Q
2020
2Q
2020
3Q
2020
4Q
2020
1Q
2021
Headline inflation (%)
Core inflation¹ (%)
Annual change (%)
16
Assessments for 2021
2
1
Apr-May
~6.5% – 7.0%e
Q1 Q2 Q3 Q4
June
Below 5%e
e Bank Negara Malaysia estimates
Updated
Monetary policy remains accommodative
Source: Bank Negara Malaysia
• Overnight Policy Rate (OPR) was
maintained at 1.75% at the May MPC
meeting
• Monetary policy in 2021 will remain
accommodative to support the economic
recovery, while ensuring price pressures
remain manageable. The Bank also
remains vigilant against a build-up of
financial imbalances
• Given ongoing uncertainties surrounding
pandemic, monetary policy going forward
will continue to be determined by new
data and information
May-21 1.75%
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Overnight Policy Rate (OPR)
%
17
Domestic financial markets were affected by external and domestic factors
*Change in exchange rate against the US dollar from 1 April to 7 May 2021
Source: Bank Negara Malaysia, Reuters
*Regional countries include Indonesia, the Philippines, PR China, Singapore, South Korea and
Thailand. YTD as at 7 May 2021.
Source: Bank Negara Malaysia, Bloomberg
Broad USD strengthening amid the rise in US Treasury yields MGS yields increased amid the rise in US Treasury yields,
while equities declined due mainly to domestic uncertainties
surrounding COVID-19 developments
-66.2
61.9
-18.9
-60.8
70.3
-17.5
-100.0
-40.0
20.0
80.0
2020 1Q21 Since 1 April
Malaysia Regional Avg
Movement of 10-Year Sovereign Bond Yields
bps
2.4
-3.3
0.91.8
2.8
0.2
-5
5
2020 1Q21 Since 1 April
Malaysia Regional Avg
Movement of Equity Prices
%
18
Updated
Movement of Exchange Rate against the US dollar
0.5
1.0
2.0
1.0
1.1
2.2
1.3
1.6
-4.6
-4.1
-3.5
-3.5
-1.9
-1.6
-1.1
-0.5
-6.0 -3.0 0.0 3.0
THB
KRW
IDR
MYR
SGD
TWD
PHP
CNY
1Q 21 Since 1 April*
Continued expansion in net financing
Net financing expanded by 4.7% during
the quarter, supported mainly by loans
Higher business loan disbursements
and repayments, including in the SME
segment
Note: Data refers to loans from banking system and development financial institutions (DFIs), *Excludes issuances by Cagamas and non-residents
Numbers may not add up due to rounding
Source: Bank Negara Malaysia
Demand for household loan demand
remained forthcoming
2.7
3.2
1.7
1.5
4.4
4.7
4Q 2020 1Q 2021
Outstanding corporate bonds*
Outstanding loans
Net financing
Net Financing*
Annual change, % / Cont. to growth, ppt
Household Loan Application for Residential
Property and Passenger Car
RM bn
19
197 204
228
196 207
221
2017 - 19
Quarterly average
4Q 2020 1Q 2021
Disbursements Repayments
Business Loan Disbursements and Repayments
RM bn
SME Loan Disbursements and Repayments
52
42
87
80 81
16
10
24
22 21
1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021
Passenger Car
2017-19 quarterly average: RM60bn
2017-19 quarterly average: RM17bn
Residential Property
75 73
78
74 72 74
2017 - 19
Quarterly average
4Q 2020 1Q 2021
Disbursements Repayments
Financing to SME expanded by 10%1, complemented by other schemes and a supportive
financing ecosystem
SME financing disbursements remained conducive in 1Q
2021, with steady repayments
Comprehensive financing ecosystem will continue to provide
support to SMEs in all economic sectors
1 Refers to the annual growth of outstanding loans in 1Q 2021
Note: Banking system and development financial institutions (DFI)
Source: Bank Negara Malaysia
2 As at 28 April 2021
3 Since inception in 2018
4 Since inception in 2019
RM bn
20
RM5.2 bil2 available
BNM’s Fund
for SMEs
Guarantee schemes
Financing referral
Repayment assistance,
debt advisory &
resolution
Capacity building
& advisory
Financing schemes
RM340 mil approved
for 3.5k SMEs3
CGC o/s guarantee
+25% in 2020
> 20k SMEs advised
by MyKNP4
RM1.0 bil disbursed in 1Q21
SME Financing Indicators
77.6
(+22% yoy) 73.7
(+12% yoy)
0
10
20
30
40
50
60
70
80
90
Disbursements Repayments
3Q 2020 4Q 2020 1Q 2021 2017-19 Qtrly Average
Banks continue to build up loan loss
provisions albeit at a slower pace…
Provisions
(RM billion)
1.6
2.4
3.5
2.1
1.4
1.5
1.7
1.8
0
2
3
5
6
Jun-20 Sep-20 Dec-20 Mar-21
QoQ Change Total (as % of total loans)
Banking system remains resilient and well-positioned to support ongoing economic
recovery
…amid higher impairments and elevated
loans with increased credit risk…
Note:
1. Refers to loans that have exhibited deterioration in credit risk, for which banks are required to set aside provisions based on lifetime expected losses
Source: Bank Negara Malaysia
Healthy capital and liquidity buffers will
continue to support financial
intermediation activities
Gross Impaired Loans and Stage 2 Loans1 Ratios
(%)
Total Capital Ratio and Liquidity Coverage Ratio
(%)
1.44
1.37
1.56
1.588.4 7.9
10.2 10.0
5
6
7
8
9
10
11
1.3
1.4
1.5
1.6
1.7
Jun-20 Sep-20 Dec-20 Mar-21
Impaired Loans MFRS 9* Stage 2 Loans
* MFRS 9 - Malaysian Financial Reporting Standard 9
Total Capital Ratio
Dec-20: 18.8
Sep-20: 18.5
18.1
Liquidity Coverage Ratio
Dec-20: 148.2
Sep-20: 151.5
145.1
21
Malaysia’s GDP recorded better growth in 1Q 2021, with a smaller
decline of 0.5%
Most economic activity allowed to continue during MCO 3.0, similar with MCO 2.0
Targeted policy support and continuation of large public projects to mitigate impact of
re-imposition of containment measures
Strong external demand to provide main support to growth, amidst improving
domestic conditions
In a nutshell…
22
UpdatedUpdated
Malaysia remains on track to register growth within the range of 6.0 – 7.5% for 2021
End of Presentation
Additional Information
Malaysian GDP growth improved to -0.5% in 1Q 2021
Annual change in GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics Malaysia
Add. Info
Real GDP
(% YoY)
Share1 %
(2020)
2020 2021
1Q 4Q 1Q
Services 57.7 3.1 -4.8 -2.3
Manufacturing 22.9 1.4 3.0 6.6
Agriculture 7.4 -8.6 -1.0 0.4
Mining and Quarrying 6.8 -2.9 -10.4 -5.0
Construction 4.0 -7.9 -13.9 -10.4
Real GDP 100.0 0.7 -3.4 -0.5
Real GDP
(% YoY)
Share, %
(2020)
2020 2021
1Q 4Q 1Q
Domestic demand
(excluding stocks)
93.8 3.7 -4.5 -1.0
Private Sector 75.1 4.9 -4.0 -0.9
Consumption 59.5 6.7 -3.5 -1.5
Investment 15.7 -1.1 -6.6 1.3
Public Sector 18.6 -1.8 -5.7 -1.5
Consumption 13.4 4.9 2.4 5.9
Investment 5.2 -14.4 -20.4 -18.6
Net exports of goods and
services
6.5 -36.8 10.0 0.8
Exports 61.5 -7.2 -2.1 11.9
Imports 55.0 -2.7 -3.3 13.0
Change in stocks, RM bn -0.3 -3.0 -0.9 -1.6
Real GDP 100.0 0.7 -3.4 -0.5
23
Malaysian GDP growth improved to -0.5% in 1Q 2021
Percentage point contribution to GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics Malaysia
Add. Info
Real GDP
(Ppt contribution, %)
Share1 %
(2020)
2020 2021
1Q 4Q 1Q
Services 57.7 1.8 -2.8 -1.3
Manufacturing 22.9 0.3 0.7 1.5
Agriculture 7.4 -0.6 -0.1 0.0
Mining and Quarrying 6.8 -0.2 -0.7 -0.4
Construction 4.0 -0.4 -0.6 -0.5
Real GDP 100.0 0.7 -3.4 -0.5
24
Real GDP
(Ppt contribution, %)
Share, %
(2020)
2020 2021
1Q 4Q 1Q
Domestic demand
(excluding stocks)
93.8 3.4 -4.2 -0.9
Private Sector 75.1 3.7 -2.9 -0.7
Consumption 59.5 3.9 -2.0 -0.9
Investment 15.7 -0.2 -0.9 0.2
Public Sector 18.6 -0.3 -1.3 -0.2
Consumption 13.4 0.6 0.4 0.7
Investment 5.2 -0.9 -1.7 -0.9
Net exports of goods and
services
6.5 -3.2 0.6 0.0
Exports 61.5 -4.7 -1.3 7.2
Imports 55.0 -1.5 -1.9 7.1
Change in stocks -0.3 0.5 0.2 0.4
Real GDP 100.0 0.7 -3.4 -0.5
Add. Info
25
Financial account registered a net inflow in 1Q 2021
This was driven by inflows in all major accounts
*As per the IMF’s BPM5 classifications (i.e. directional basis)
Note: Numbers may not add up due to rounding
Source: Department of Statistics Malaysia; and Bank Negara Malaysia
RM billion
2019 2020 2021
Year 3Q 4Q Year 1Q
Direct Investment 6.6 -2.2 1.6 2.8 1.4
Direct Investment Abroad (DIA)* -25.8 -1.8 -5.2 -11.9 -7.8
Foreign Direct Investment (FDI)* 32.4 -0.3 6.8 14.6 9.1
Portfolio Investment -32.4 -20.3 -7.1 -48.2 0.4
Residents -46.9 -20.8 -19.9 -59.3 -14.2
Non-residents 14.5 0.5 12.8 11.1 14.6
Financial Derivatives -0.5 -0.5 -0.9 0.4 0.3
Other Investment -11.7 -8.1 -3.7 -31.1 13.9
Financial Account Balance -38.0 -31.1 -10.2 -76.2 16.0
Higher FDI inflows amid larger DIA
outflows
Turnaround in portfolio investment
Significant other investment inflows
Financial Account by Component
Add. Info
26
Higher FDI net inflows in 1Q 2021
This was driven by larger reinvestment of earnings and sustained equity injections into Malaysia
Larger reinvestment of earnings
+RM4.1 billion in 1Q-21 (4Q-20: -RM1.9 billion)
Continued equity injections
+RM4.4 billion in 1Q-21 (4Q-20: +RM4.3 billion)
Lower debt inflows
+RM0.7 billion in 1Q-21 (4Q-20: +RM4.3 billion)
Source: Department of Statistics Malaysia, Bank Negara Malaysia
3.8
2.7
6.4 5.7
2.5
-0.3
6.8
9.1
-15
-10
-5
0
5
10
15
2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 1Q-21
Equity and investment fund shares Reinvestment of earnings
Debt instruments FDI
Quarterly Net Foreign Direct Investment (FDI)
RM billion
Malaysia’s external debt remains manageable
* Consist of currency and deposit placements, and portfolio investments
** Consist of short-term financial institutions’ deposits, interbank borrowings and loans from unrelated counterparties
Source: Bank Negara Malaysia
Banks are resilient to face potential
external shocks…
…while corporates’ external debt is
mainly subject to prudential requirements
64.0
111.0
125.9
60.2
19.6
13.0
Corporate External Debt Breakdown by Instrument
(as at end-1Q 2021)
RM billion
Total: RM393.8 billion
Bonds and
notes
Loans
Other debt liabilities
Intragroup
loans
Trade
credits
On
concessionary
and flexible
terms
Subject to
prudential
requirements
NR holdings of domestic
debt securities
Backed by
export earnings
140.8
74.2
Liquid external
assets
External
debt-at-risk
Banks’ Liquid External Assets* and External Debt-
at-Risk**
RM billion
4.6
3.5
0
2
4
6
J
a
n
F
e
b
M
a
r
A
p
r
M
a
y
J
u
n
J
u
l
A
u
g
S
e
p
O
c
t
N
o
v
D
e
c
J
a
n
F
e
b
M
a
r
2020 2021
FX USD
Banks’ FX and USD Net Open Positions as
Percentage of Capital
% of total capital
Add. Info
…and Government’s external debt mainly
in ringgit
23.4
222.2
Government External Debt Breakdown by
Currency (as at end-1Q 2021)
RM billion
Total: RM245.6 billion
Foreign currency-denominated
Ringgit-denominated
Not affected by ringgit exchange rate
fluctuations
Comprise medium- and long-term loans and
bonds and notes, suggesting limited rollover risks
27
Banks continue to extend support to borrowers in need of repayment assistance
While impact of MCO 2.0 is less severe, distressed borrowers
continue to approach banks for repayment assistance albeit at
a more moderate pace
Note:
1. Data from April 2020 to 11 April 2021
2. Refers to individual repayments excluding credit cards
Source: Bank Negara Malaysia
Repayments remained close to 1Q 2020
levels, indicating most borrowers able to
sustain resumption of payments
1.6 million
R&R applications received
to date
with 95% approval rate
101,326
29,250
for AKPK’s Debt
Management
Programme
Applications for AKPK
counselling
Loan Repayments
(RM billion)
Households2
18.3
19.0
1Q20
monthly
average
Mar-21 104%
Of levels seen in
1Q 2020
Statistics on Assistance Measures1
(Year-to-date)
Loans under Repayment Assistance
(%)
SMEs
21.5
26.0
0.0 10.0 20.0 30.0
1Q20
monthly
average
Mar-21 121%
Of levels seen in
1Q 2020
8.9
11.4
Dec-20 Mar-21
9.5 10.5
Dec-20 Mar-21
11.1
13.9
1
6
11
16
21
Dec-20 Mar-21
16.8 16.6
Dec-20 Mar-21
Share of accounts
Share of loan value
Households Businesses
Add. Info
28
No
Monthly Highlights
May 2021
Headline inflation declined to 4.4% in May
• Headline inflation declined to 4.4% in May
(April: 4.7%), due mainly to lower inflation in
food and non-alcoholic beverages, and
transport categories.
• Headline inflation remained relatively elevated
during the month, reflecting the low base from
fuel prices last year (RON95 petrol prices in
May 2021: RM 2.05/litre; May 2020:
RM 1.30/litre). In the near term, as this base
effect subsides, headline inflation is expected to
moderate further.
• Underlying inflation, as measured by core
inflation, was relatively stable at 0.8%
(April: 0.7%).
1 Core inflation is computed by excluding price-volatile and price-administered
items. It also excludes the estimated direct impact of tax policy changes.
Source: Department of Statistics Malaysia (DOSM), Bank Negara Malaysia
estimates
4.7 4.4
0.7 0.8
-4.0
-2.0
0.0
2.0
4.0
6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
J
u
n
-1
9
J
u
l-
1
9
A
u
g
-1
9
S
e
p
-1
9
O
c
t-
1
9
N
o
v
-1
9
D
e
c
-1
9
J
a
n
-2
0
F
e
b
-2
0
M
a
r-
2
0
A
p
r-
2
0
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
A
p
r-
2
1
M
a
y
-2
1
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
IOWRT growth rose sharply in April
• The Index of Wholesale and Retail Trade
(IOWRT) rose sharply by 71.5% in April 2021
(March: 9.0%), reflecting mainly the low base
from implementation of MCO 1.0 in the
corresponding period in 2020.
• There was also continued broad-based
recovery in activities from March 2021. On a
month-on-month seasonally adjusted basis, the
growth momentum accelerated by
5.1% (Mar: -1.7%).
IOWRT
%, yoy
9.0
71.5
-40
-20
0
20
40
60
80
F
e
b
-2
0
M
a
r-
2
0
A
p
r-
2
0
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
A
p
r-
2
1
Motor vehicles Retail Wholesale
Source: Department of Statistics Malaysia (DOSM)
3.9
0.4
6.1
0
1
2
3
4
5
6
7
May-
20
Jul-
20
Sep-
20
Nov-
20
Jan-
21
Mar-
21
May-
21
Total loans
Business loans
Household loans
% yoy
Contribution to Net Financing1 Growth and Outstanding
Loan Growth
1 Refers to outstanding loans of the banking system (excluding development
financial institutions (DFIs)).
Source: Bank Negara Malaysia
Broadly sustained net financing growth
1
% yoy
2.9 2.8 2.8
1.6 2.1 2.0
4.5
4.9 4.8
Mar-21 Apr-21 May-21
Corporate Bonds
Banking System Loans
Net Financing
• Net financing growth was broadly sustained
(May: 4.8%, April: 4.9%) reflecting the stable
outstanding loan growth (May, April: 3.9%) amid
a moderation in outstanding corporate bond
growth (May: 7.2%, April: 7.7%).
• Outstanding household loan growth was 6.1%
(April: 6.2%). However, both loan disbursements
and repayments declined across most purposes,
partly reflecting the implementation of MCO 3.0.
• For businesses, outstanding loan growth was
sustained at 0.4% (April: 0.4%) amid subdued
working capital loan growth.
Monthly Highlights
May 2021
Domestic financial markets were affected by domestic and external factors in May
• In May, domestic financial markets were
affected by both domestic and external factors.
Investor sentiments were affected by
uncertainties surrounding the course of the
pandemic in the region. The imposition of
stricter containment measures amid rising
COVID-19 cases domestically led to further
concerns over the economic outlook and
increased risk aversion towards domestic
financial assets.
• Consequently, the FBM KLCI declined by 1.1%
and the ringgit depreciated by 0.8% against the
US dollar.
• The 10-year MGS yield increased by 9.0 basis
points driven by expectations of increased
domestic fiscal stimulus to support economic
activity. In addition, signs of higher inflation and
forthcoming discussions by the US Federal
Reserve to taper asset purchases led to bouts
of increases in long-term US Treasury yields,
which spilled over to yields in emerging market
economies, including Malaysia.
Source: Bank Negara Malaysia, Bursa Malaysia
-12.2
1.8
1.3
9.0
-1.1
-0.8
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-15 -5 5 15
May-21 Apr-21
Financial Markets Performance
Banking system capitalisation remained strong
• Banks remained well-capitalised to
withstand potential stress and sustain
credit intermediation in the economy.
• Despite a marginal decline in capital
ratios, banks’ excess capital buffers1
remained strong at RM119.9 billion as at
May 2021.
Banking System Capital Adequacy
14.3
14.8
18.0
8
10
12
14
16
18
20
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
A
p
r-
2
1
M
a
y
-2
1
Common Equity Tier 1 (CET1) Capital Ratio
Tier 1 Capital Ratio
Total Capital Ratio
%
Source: Bank Negara Malaysia
1 Refers to total capital above the regulatory minimum, which
includes the capital conservation buffer (2.5%) and bank-
specific higher minimum requirements
Asset quality in the banking system remained intact
1.0
1.6
1.8
0.7
0.9
1.1
1.3
1.5
1.7
1.9
M
a
y
2
0
J
u
n
2
0
J
u
l
2
0
A
u
g
2
0
S
e
p
2
0
O
c
t
2
0
N
o
v
2
0
D
e
c
2
0
J
a
n
2
1
F
e
b
2
1
M
a
r
2
1
A
p
r
2
1
M
a
y
2
1
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
Banking System Asset Quality
Source: Bank Negara Malaysia
• Banks continued to facilitate repayment
assistance to viable borrowers facing
temporary financial difficulties.
• Overall gross and net impaired loans
ratios remained broadly stable at 1.6% and
1.0% respectively.
• Total provisions set aside against potential
credit losses stood at 1.8% of total banking
system loans.
%
2
PRESS RELEASE
Ref. No.: 06/21/09 EMBARGO: Not for publication or
broadcast before 1500 hours on
Wednesday, 30 June 2021
MONTHLY HIGHLIGHTS – MAY 2021
Headline inflation declined to 4.4% in May
• Headline inflation declined to 4.4% in May (April: 4.7%), due mainly to
lower inflation in food and non-alcoholic beverages, and transport
categories.
• Headline inflation remained relatively elevated during the month, reflecting
the low base from fuel prices last year (RON95 petrol prices in
May 2021: RM 2.05/litre; May 2020: RM 1.30/litre). In the near term, as
this base effect subsides, headline inflation is expected to moderate
further.
• Underlying inflation, as measured by core inflation1, was relatively stable
at 0.8% (April: 0.7%).
IOWRT growth rose sharply in April
• The Index of Wholesale and Retail Trade (IOWRT) rose sharply by
71.5% in April 2021 (March: 9.0%), reflecting mainly the low base from
implementation of MCO 1.0 in the corresponding period in 2020.
• There was also continued broad-based recovery in activities from
March 2021. On a month-on-month seasonally adjusted basis, the growth
momentum accelerated by 5.1% (Mar: -1.7%).
1 Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated
direct impact of tax policy changes. Source: Department of Statistics Malaysia (DOSM), Bank Negara Malaysia
estimates
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Broadly sustained net financing growth
• Net financing2 growth was broadly sustained (May: 4.8%, April: 4.9%)
reflecting the stable outstanding loan growth (May, April: 3.9%) amid a
moderation in outstanding corporate bond growth (May: 7.2%,
April: 7.7%).
• Outstanding household loan growth was 6.1% (April: 6.2%). However,
both loan disbursements and repayments declined across most purposes,
partly reflecting the implementation of MCO 3.0.
• For businesses, outstanding loan growth was sustained at 0.4%
(April: 0.4%) amid subdued working capital loan growth.
Domestic financial markets were affected by domestic and external
factors in May
• In May, domestic financial markets were affected by both domestic and
external factors. Investor sentiments were affected by uncertainties
surrounding the course of the pandemic in the region. The imposition of
stricter containment measures amid rising COVID-19 cases domestically
led to further concerns over the economic outlook and increased risk
aversion towards domestic financial assets.
• Consequently, the FBM KLCI declined by 1.1% and the ringgit depreciated
by 0.8% against the US dollar.
• The 10-year MGS yield increased by 9.0 basis points driven by
expectations of increased domestic fiscal stimulus to support economic
activity. In addition, signs of higher inflation and forthcoming discussions
by the US Federal Reserve to taper asset purchases led to bouts of
increases in long-term US Treasury yields, which spilled over to yields in
emerging market economies, including Malaysia.
2 Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)). Source:
Bank Negara Malaysia
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Banking system capitalisation remained strong
• Banks remained well-capitalised to withstand potential stress and sustain
credit intermediation in the economy.
• Despite a marginal decline in capital ratios, banks’ excess capital buffers3
remained strong at RM119.9 billion as at May 2021.
Asset quality in the banking system remained intact
• Banks continued to facilitate repayment assistance to viable borrowers
facing temporary financial difficulties.
• Overall, gross and net impaired loans ratios remained broadly stable at
1.6% and 1.0% respectively.
• Total provisions set aside against potential credit losses stood at 1.8% of
total banking system loans.
Bank Negara Malaysia
30 June 2021
3 Refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5%) and
bank-specific higher minimum requirements
MONTHLY HIGHLIGHTS – MAY 2021
| Press Release |
07 May 2021 | International Reserves of Bank Negara Malaysia as at 30 April 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-30-april-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 30 April 2021
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International Reserves of Bank Negara Malaysia as at 30 April 2021
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Friday, 7 May 2021
7 May 2021
The international reserves of Bank Negara Malaysia amounted to USD110.8 billion as at 30 April 2021. The reserves position is sufficient to finance 8.7 months of retained imports and is 1.3 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 30 April 2021
Bank Negara Malaysia
7 May 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
06 May 2021 | Monetary Policy Statement | https://www.bnm.gov.my/-/monetary-policy-statement-06052021 | null | null |
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Monetary Policy Statement
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Monetary Policy Statement
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Thursday, 6 May 2021
6 May 2021
At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.
The global economic recovery continues to strengthen, particularly in the major economies, supported by improvements in manufacturing and trade activity, although the pace may vary across countries. The ongoing roll-out of vaccination programmes and sizeable fiscal stimulus measures in the US as well as policy support in other major economies will further facilitate an improvement in domestic demand. However, the recovery trajectory in some economies could be disrupted by a re-tightening of containment measures to curb COVID-19 resurgences. Recent financial market volatility has somewhat receded, and financial conditions remain supportive of growth. The balance of risks to the growth outlook remains tilted to the downside, due mainly to uncertainty over the path of the pandemic as well as potential risks of heightened financial market volatility.
For Malaysia, latest indicators point to continued improvements in economic activity in the first quarter and into April. While the recent re-imposition of containment measures in select locations will affect economic activity in the short term, the impact will be less severe as almost all economic sectors are allowed to operate. The growth trajectory is projected to improve, driven by the stronger recovery in global demand and increased public and private sector expenditure amid continued support from policy measures. Growth will also be supported by higher production from existing and new manufacturing facilities, particularly in the E&E and primary-related sub-sectors, as well as oil and gas facilities. The progress of the domestic COVID-19 vaccine programme will also lift sentiments and contribute towards recovery in economic activity. The growth outlook, however, remains subject to downside risks, stemming mainly from ongoing uncertainties in developments related to the pandemic, and potential challenges that might affect the roll-out of vaccines both globally and domestically.
Headline inflation in 2021 is projected to average higher between 2.5% and 4.0%, primarily due to the cost-push factor of higher global oil prices. In terms of trajectory, headline inflation is anticipated to temporarily spike in the second quarter of 2021, due particularly to the lower base from the low domestic retail fuel prices in the corresponding quarter of 2020. However, this will be transitory as headline inflation is projected to moderate thereafter as this base effect dissipates. Underlying inflation, as measured by core inflation, is expected to remain subdued, averaging between 0.5% and 1.5% for the year, amid continued spare capacity in the economy. The outlook, however, is subject to global oil and commodity price developments.
The MPC considers the stance of monetary policy to be appropriate and accommodative. Given the uncertainties surrounding the pandemic, the stance of monetary policy going forward will continue to be determined by new data and information, and their implications on the overall outlook for inflation and domestic growth. The Bank remains committed to utilise its policy levers as appropriate to foster enabling conditions for a sustainable economic recovery.
Bank Negara Malaysia
6 May 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
30 Apr 2021 | Appointment of Abd. Rahman Abu Bakar as Assistant Governor | https://www.bnm.gov.my/-/appointment-of-ag-abd-rahman | null | null |
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Appointment of Abd. Rahman Abu Bakar as Assistant Governor
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Appointment of Abd. Rahman Abu Bakar as Assistant Governor
Embargo :
For immediate release
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1705 on
Friday, 30 April 2021
30 Apr 2021
Bank Negara Malaysia wishes to announce the appointment of Encik Abd. Rahman Abu Bakar as Assistant Governor effective 1 May 2021. As Assistant Governor, Encik Abd. Rahman will oversee the areas of human capital which include Strategic Human Capital, Human Capital Development and Human Capital Services.
Encik Abd. Rahman joined the Bank in 1992. He has served various departments in the Bank, including Financial Intelligence and Enforcement, Special Investigation, Insurance Regulation, Strategic Planning, Human Resource Management and Economics. He holds a Bachelor’s degree in Economics from the International Islamic University Malaysia.
Encik Abd. Rahman takes over from Encik Mohd Adhari Belal Din, who is leaving the Bank on 11 May 2021 following 14 years of service.
On behalf of the Bank, Governor Datuk Nor Shamsiah Mohd Yunus thanked Encik Adhari for his service. Datuk Nor Shamsiah added, “I would like to express my utmost appreciation to Encik Adhari for his contributions and wish him all the best in his future endeavours. He has played an instrumental role in driving human capital initiatives for the Bank and our affiliates for more than a decade. The Bank is confident that Encik Abd. Rahman will build on the excellent work and HR initiatives that Encik Adhari has put in place."
Bank Negara Malaysia
30 April 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
30 Apr 2021 | Monetary and Financial Developments in March 2021 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-march-2021 | https://www.bnm.gov.my/documents/20124/3324441/i_en.pdf | null |
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Monetary and Financial Developments in March 2021
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Monetary and Financial Developments in March 2021
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Friday, 30 April 2021
30 Apr 2021
Headline inflation increased to 1.7% in March
Headline inflation increased to 1.7% in March (February: 0.1%).
The main contribution to the higher headline inflation was the base effect from low domestic retail fuel prices in the corresponding period last year
(RON95 petrol prices: March 2021: RM 2.05/ litre; March 2020: RM 1.74/litre). This base effect is expected to remain in the second quarter of 2021 and dissipate thereafter.
Underlying inflation, as measured by core inflation, remained stable at 0.7%.
Higher IPI in February driven by manufacturing
Overall IPI improved slightly in February to 1.5% (January: 1.2%), as higher manufacturing production more than offset further contraction in the mining production and electricity generation.
The E&E industry recorded double-digit growth of 10.3% (January: 7.9%) driven by global demand from the tech-upcycle. Manufacturing activity was also supported by the healthcare segment, namely from rubber-based and pharmaceutical products.
Continued growth in net financing
Net financing expanded at 4.5% reflecting the increase in outstanding corporate bond growth (March: 5.9%, February: 4.5%) and outstanding loan growth (March: 3.9%, February: 3.7%).
Outstanding household loan growth increased to 5.7% (February: 5.1%). Higher loan disbursements were recorded for the purchase of cars and residential properties.
For businesses, outstanding loans grew at 1.1% (February: 1.0%). During the month, higher loan disbursements and repayments were observed across most sectors and purposes.
Domestic financial markets were affected mainly by external developments
In March, domestic financial markets were affected by external factors, particularly the rise in long-term US Treasury yields, which reached its highest level for the year at the end of the month amid higher growth and inflation expectations in the US.
Consequently, the US dollar also strengthened which led to a broad-based weakening of other advanced and emerging market currencies against the US dollar. During the month, the ringgit depreciated by 2.6% against the US dollar while the 10-year MGS yield increased by 18.3 basis points.
The FBM KLCI declined marginally by 0.3% as bond yields surged and investor sentiments were affected by lingering uncertainties surrounding the path of the pandemic globally and expectations for a faster US monetary policy tightening.
Ample liquidity in the banking system amid stable funding conditions
Banking system continued to maintain healthy liquidity buffers with the liquidity coverage ratio (LCR) remaining strong in March 2021 (February: 147.1%).
Banks’ funding profile also remained stable amid sustained strong growth in retail deposits.
Sound risk management practices by banks will support asset quality in the period ahead
Overall gross and net impaired loans ratios were broadly sustained at 1.6% and 1.0%, respectively.
Banks continued to set aside additional provisions against potential credit losses, which currently stand at 1.8% of total banking system loans.
See also:
Press release [PDF]
Related Assets
Monthly Highlights and Statistics in March 2021
Bank Negara Malaysia
30 April 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Apr 2021 | Detailed Disclosure of International Reserves as at end-March 2021 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-march-2021 | null | null |
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Detailed Disclosure of International Reserves as at end-March 2021
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Detailed Disclosure of International Reserves as at end-March 2021
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30 Apr 2021
In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD108,618.2 million, while other foreign currency assets amounted to USD409 million as at end-March 2021. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD5,584.4 million. The short forward positions amounted to USD8,931.4 million while long forward positions amounted to USD385 million as at end-March 2021, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,376.8 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD389.1 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-March 2021, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (31 March 2021)
Bank Negara Malaysia
30 April 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
22 Apr 2021 | International Reserves of Bank Negara Malaysia as at 15 April 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-15-april-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 15 April 2021
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International Reserves of Bank Negara Malaysia as at 15 April 2021
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22 Apr 2021
The international reserves of Bank Negara Malaysia amounted to USD109.3 billion as at 15 April 2021. The reserves position is sufficient to finance 8.8 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 15 April 2021
Bank Negara Malaysia
22 April 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
07 Apr 2021 | International Reserves of Bank Negara Malaysia as at 31 March 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-31-march-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 31 March 2021
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International Reserves of Bank Negara Malaysia as at 31 March 2021
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7 Apr 2021
The international reserves of Bank Negara Malaysia amounted to USD108.6 billion as at 31 March 2021. The reserves level has taken into account the quarterly foreign exchange revaluation changes. The reserves position is sufficient to finance 8.8 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 31 March 2021
Bank Negara Malaysia
7 April 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
01 Apr 2021 | The Amended Chiang Mai Initiative Multilateralisation Agreement | https://www.bnm.gov.my/-/the-amended-chiang-mai-initiative-multilateralisation-agreement | null | null |
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The Amended Chiang Mai Initiative Multilateralisation Agreement
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1 Apr 2021
The amended Chiang Mai Initiative Multilateralisation (CMIM) Agreement, which is a regional financing arrangement among the Finance Ministers and Central Bank Governors of the ASEAN member states, China, Japan and Korea (ASEAN+3) and the Monetary Authority of Hong Kong, China, came into effect on 31 March 2021.
The key features of the amendment to the CMIM Agreement are as follows:
To increase the International Monetary Fund (IMF) De-linked Portion from 30% to 40% of each member’s maximum arrangement amount.
The IMF De-linked Portion is the amount each member may request from the CMIM when there is no matching IMF supported programme. The increase in the IMF De-linked Portion to 40% of each member’s maximum arrangement amount makes the CMIM more readily available to the countries in need;
To institutionalise the use of member countries’ local currencies, in addition to the U.S. dollar, for CMIM financing on a voluntary and demand-driven basis.
The amendment makes member countries’ local currencies available for the provision of liquidity support under any CMIM arrangement within the CMIM’s total financing capacity of USD240 billion. Local currency financing under the CMIM will be on a voluntary and demand-driven basis; and
To address other technical issues, including revisions related to the London Inter-bank Offered Rate (LIBOR) reform.
It also addresses other technical adjustments, such as information sources for foreign exchange rate determination and the meeting format for the CMIM decision-making body to include flexibility of organising virtual meetings.The amendment serves to further enhance the CMIM, which stands at the center of the regional financial safety net of the ASEAN+3, making it more effective and operationally ready for member economies.
Bank Negara Malaysia
1 April 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
31 Mar 2021 | Monetary and Financial Developments in February 2021 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-february-2021 | https://www.bnm.gov.my/documents/20124/3031054/i_en.pdf | null |
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Monetary and Financial Developments in February 2021
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Monetary and Financial Developments in February 2021
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31 Mar 2021
Headline inflation turned slightly positive in February, rising to 0.1% (January: -0.2%)
The higher headline inflation was driven almost entirely by the higher domestic retail fuel prices during the month (RON95 petrol prices: February: RM1.95/litre; January: RM1.87/litre).
Underlying inflation, as measured by core inflation, remained stable at 0.7%.
Exports continued to expand in January
Exports grew by 6.6% in January 2021 (December 2020: 10.8%), driven primarily by robust manufactured exports. By destination, the expansion was supported by exports to Singapore, US, China and Vietnam.
Looking ahead, exports are expected to be supported by the rebound in global growth, continued demand for electronics exports and higher commodity prices. Nonetheless, the trade outlook remains contingent on the path of the COVID-19 pandemic.
Net financing continued to expand
Net financing expanded at 3.9% amid lower outstanding corporate bond growth (February: 4.5%, January: 6.3%), while outstanding loan growth was sustained (February: 3.7%, January: 3.8%).
Outstanding household loans grew by 5.1% (January: 4.9%) supported by loans for the purchase of cars and residential properties.
Outstanding business loans rose by 1.0% (January: 1.5%) as loan repayment growth outpaced that of disbursements. In level terms, both disbursements (February: RM64.9 bn, January: RM70.0 bn) and repayments (February: RM66.0 bn, January: RM69.1 bn) were lower in February, reflecting the fewer business days.
Domestic financial markets were affected by rising long-term government bond yields globally during the month
In February, the performance of domestic financial markets was mainly affected by the rising long-term government bond yields globally during the second half of the month.
During the first half of the month, the FBM KLCI and ringgit were supported by continued optimism over the vaccination-led global recovery.
However, during the second half of the month, US Treasury yields, particularly at the longer end, started increasing at a faster pace as expectations of higher inflation in anticipation of faster economic recovery in the US became more entrenched. This led to a stronger US dollar and triggered a sell-off in global equities. As a result, the ringgit depreciated while the FBM KLCI declined during the second half of the month.
For the month as a whole, the ringgit and FBM KLCI remained relatively unchanged, increasing by 0.1% and 0.7%, respectively. 10-year MGS yields, however, increased by 38.2 basis points following the steepening in US Treasury yield curve during the month.
Banks continued to maintain strong capitalisation levels
All banks remained well-capitalised to withstand potential shocks and to continue supporting credit flows to the economy.
Capital ratios declined marginally from the previous month, mainly due to valuation adjustments on available-for-sale financial instruments and dividend payments.
Banks’ excess capital buffers [1] amounted to RM126.3 billion as at February 2021.
Banking system asset quality remained sound
Overall gross and net impaired loans ratios were sustained at 1.6% and 1.0%, respectively, as banks continued to facilitate repayment assistance to borrowers facing temporary financial difficulties.
Banks continued to build up provisions against potential credit losses, which currently stand at 1.7% of total banking system loans.
See also:
Press release [PDF]
[1] Refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5%) and bank-specific higher minimum requirements.
Related Assets
Monthly Highlights and Statistics February 2021
Bank Negara Malaysia
31 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
31 Mar 2021 | Detailed Disclosure of International Reserves as at end-February 2021 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-february-2021 | null | null |
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Detailed Disclosure of International Reserves as at end-February 2021
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Detailed Disclosure of International Reserves as at end-February 2021
Embargo :
For immediate release
Not for publication or broadcast before
1200 on
Wednesday, 31 March 2021
31 Mar 2021
In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD108,956.4 million, while other foreign currency assets amounted to USD561.2 million as at end-February 2021. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD6,241.5 million. The short forward positions amounted to USD7,765.3 million while long forward positions amounted to USD535 million as at end-February 2021, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,386.3 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD389.3 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-February 2021, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (28 February 2021)
Bank Negara Malaysia
31 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
31 Mar 2021 | Bank Negara Malaysia Publishes Annual Report 2020, Economic and Monetary Review 2020 and Financial Stability Review for Second Half 2020 | https://www.bnm.gov.my/-/ar2020_en_pr | https://www.bnm.gov.my/documents/20124/2294076/ar2020_slides.pdf | null |
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Bank Negara Malaysia Publishes Annual Report 2020, Economic and Monetary Review 2020 and Financial Stability Review for Second Half 2020
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Bank Negara Malaysia Publishes Annual Report 2020, Economic and Monetary Review 2020 and Financial Stability Review for Second Half 2020
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Wednesday, 31 March 2021
31 Mar 2021
Bank Negara Malaysia today released three reports, Annual Report 2020 (AR 2020), Economic and Monetary Review 2020 (EMR 2020) and Financial Stability Review for Second Half 2020 (FSR 2H2020).
Annual Report 2020
The AR 2020 details the initiatives and workings of the Bank in 2020 in fulfilling its mandates to promote monetary stability and financial stability conducive to the sustainable growth of the Malaysian economy.
In particular, it sets out how the Bank took swift and broad-ranging measures to cushion shocks to the financial system and the economy arising from the pandemic. These include reducing the Overnight Policy Rate (OPR), ensuring adequate liquidity and orderly market conditions. The Bank worked with the financial industry to introduce relief measures for eligible individuals and Small and Medium Enterprises (SMEs) to enable immediate cash flow relief for households and businesses. To provide immediate cash relief to SMEs in hard-hit economic sectors and enhanced the innovative capacity of high-tech SMEs, the Bank channelled financing facilities under BNM’s Fund for SMEs through the financial institutions to support their recovery. It also highlights developmental initiatives undertaken to shape the capacity and capability of the Malaysian financial sector to meet the evolving needs of the economy. These include to support the nation’s move towards becoming a digital economy, as well as those to accelerate efforts to build a more climate resilient economy.
AR2020 also provides an account of the Bank’s operations and resources that enable it to function effectively and efficiently. The report describes how the Bank pivoted its operations in light of the pandemic, including of the steps taken to keep the Bank’s employees safe and healthy.
Four box articles are featured in AR 2020, covering topics of general interest:
The Bank’s currency operations in weathering the pandemic.
The Bank’s international reserves.
Central Bank Digital Currency in Malaysia’s context.
Personal financial management.
The Bank’s Audited Financial Statements for 2020 are also set out in the report. As audited and certified by the Auditor General, the financial position of Bank Negara Malaysia remained strong in 2020. Bank Negara Malaysia’s total assets amounted to RM488 billion, with a net profit of RM10.2 billion for the financial year ending 31 December 2020. Of this RM10.2 billion, RM6.2 billion will be transferred into the General Reserve Fund. Bank Negara Malaysia will declare a dividend of RM4 billion to the Government for the year 2020.
Economic and Monetary Review 2020
The EMR 2020 is a technical publication focusing on the Bank’s economic assessments and forecasts.
The global economic recovery is gaining momentum. There has been considerable progress in containing the COVID-19 pandemic, underpinned by rollouts of vaccination programmes in many countries, which are lifting confidence and signalling a gradual return to normalcy. Policy stimulus continues to provide support to economic activity. International trade has also recorded significant improvements.
For Malaysia, the expectation is for the economy to recover in 2021, with growth ranging from 6.0 - 7.5%. Growth will be underpinned by stronger external demand and higher private and public expenditure.
The rollout of the National COVID-19 Immunisation Programme will improve confidence and support the economic recovery. Malaysia's integration in fast-growing segments of global value chains and diversified external trade structure, as well as continued policy support would be key factors in driving the rebound in economic growth in 2021.
While heightened downside risks to growth remain, the immediate policy focus of the Bank is to facilitate a strong and sustainable recovery and minimise permanent output losses. Monetary policy in 2021 will therefore remain accommodative to support an enhanced and sustained economic growth. Although headline inflation is expected to rise, it will be driven mainly by supply side factors. Underlying price pressures, on the other hand, will remain subdued with core inflation projected to be between 0.5 – 1.5% amid spare capacity in the economy.
The Bank will continue to utilise its policy levers as appropriate. Even with the OPR at its current historical low of 1.75%, monetary policy space remains adequate to provide additional support to the economy if needed. The Bank will be mindful to avoid a premature withdrawal of monetary policy support. This is complemented by the availability of the Bank’s various liquidity management tools, targeted financial policies and regulatory flexibilities. All these afforded the Bank with sufficient flexibility to respond to risks using the most appropriate policy tool.
Beyond its cyclical impact on growth, the pandemic has fundamentally reshaped the economy and the way we conduct our businesses and daily affairs. It has sharpened the focus on critical areas of structural policy that call for renewed urgency. On the one hand, it has accelerated the shift towards the adoption of technology and sustainability agendas. On the other hand, it has accentuated gaps in our labour market and social protection system. As a nation, this is an opportunity to accelerate the execution of long-term structural reforms and pivot towards a more sustainable, resilient and agile economy.
The EMR 2020 includes four box articles covering issues critical and relevant in the post-pandemic period:
Structural issues in the labour market post-pandemic.
Innovation towards higher quality growth.
The social protection system in Malaysia.
Asset purchases by the Bank.
Financial Stability Review for Second Half 2020
The biannual FSR 2H2020 is similarly a technical publication detailing the Bank’s analysis of risk assessment and outlook on financial stability.
The financial system continues to be in a strong position to support the economic recovery, with strong capitalisation levels to absorb potential credit losses and ample liquidity to facilitate financial intermediation activity. The Bank’s updated stress tests, which also includes a hypothetical adverse scenario that assumes an L-shaped recovery, with GDP recording negative growth in 2021 and remaining below pre-pandemic levels even by end-2022, affirm the resilience of the financial system, with the banking system and insurance sector expected to maintain capital ratios above the regulatory minimum even under simulated scenarios.
Financial institutions also remain operationally resilient and continue to take steps to further strengthen their crisis response arrangements in light of operational challenges presented by the pandemic. This in turn will provide greater assurance of their ability to maintain critical operations and increase the speed with which financial institutions are able to adapt to changing operating conditions going forward.
While downward pressure on banks’ earnings is likely to persist going into 2021 amid higher credit cost, the impact is expected to be less severe than in 2020 partly owing to the front-loading of provisions by banks. Improvements in the domestic and global economy, coupled with continued support measures, including ongoing measures by banks to engage and assist borrowers in distress, will further help sustain debt serviceability and support bank earnings. The sustained earnings performance of banks will serve to preserve uninterrupted credit flows to support the recovery of the economy. In the insurance and takaful sector, the impact of temporary relief measures and recent floods on the profitability of insurers and takaful operators has also remained limited to date.
See also:
Publication website
Press conference slides
Bank Negara Malaysia
31 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Sorotan Bulanan
3.9
1.1
5.7
0
1
2
3
4
5
6
7
Mac-
20
Mei-
20
Jul-20 Sep-
20
Nov-
20
Jan-
21
Mac-
21
Jumlah pinjaman
Pinjaman perniagaan
Pinjaman isi rumah
Sumbangan kepada Pertumbuhan Pembiayaan1 Bersih
dan Pertumbuhan Pinjaman Terkumpul
Mac 2021
1 Merujuk pinjaman terkumpul sistem perbankan (tidak termasuk institusi
kewangan pembangunan (IKP)).
Sumber: Bank Negara Malaysia
Pertumbuhan pembiayaan bersih berterusan
1
%, tahun
ke tahun
2.8 2.7 2.9
1.7
1.2
1.6
4.5
3.9
4.5
Jan-21 Feb-21 Mac-21
Bon korporat
Pinjaman sistem perbankan
Pembiayaan bersih
• Pembiayaan bersih berkembang sebanyak 4.5%
mencerminkan peningkatan pertumbuhan bon
korporat terkumpul (Mac: 5.9%, Februari: 4.5%) dan
pertumbuhan pinjaman terkumpul (Mac: 3.9%,
Februari: 3.7%).
• Pertumbuhan pinjaman isi rumah terkumpul
meningkat kepada 5.7% (Februari: 5.1%).
Pengeluaran pinjaman yang lebih tinggi dicatatkan
oleh pembelian kereta dan harga tanah kediaman.
• Bagi sektor perniagaan, pinjaman terkumpul
meningkat sebanyak 1.1% (Februari: 1.0%). Pada
bulan Mac, pengeluaran pinjaman dan pembayaran
balik pinjaman yang lebih tinggi dicatatkan merentas
kebanyakan sektor dan tujuan.
IPI yang lebih tinggi pada bulan Februari didorong oleh perkilangan
-21.8
-0.4
1.3
-0.2 0.9
-0.6
-2.4
1.7 1.2
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
S
e
p
-1
9
O
k
t-
1
9
N
o
v
-1
9
D
is
-1
9
J
a
n
-2
0
F
e
b
-2
0
M
a
c
-2
0
A
p
r-
2
0
M
e
i-
2
0
J
u
n
-2
0
J
u
l-
2
0
O
g
o
-2
0
S
e
p
-2
0
O
k
t-
2
0
N
o
v
-2
0
D
is
-2
0
J
a
n
-2
1
F
e
b
-2
1
Perkilangan Perlombongan
Elektrik Keseluruhan
Sumbangan kepada IPI keseluruhan
% sumbangan mata peratusan, tahun ke tahun
Sumber: Jabatan Perangkaan Malaysia
Inflasi keseluruhan meningkat kepada 1.7% pada bulan Mac
Sumbangan kepada inflasi
1 Pengiraan inflasi teras tidak termasuk barangan yang harganya tidak menentu dan
barangan yang harganya ditadbir.
Pengiraan juga tidak termasuk anggaran kesan langsung perubahan dasar cukai.
Sumber: Jabatan Perangkaan Malaysia, anggaran Bank Negara Malaysia
-1.4
-0.2
0.1
1.7
0.7 0.7
0.7
0.7
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
J
a
n
-1
9
F
e
b
-1
9
M
a
c
-1
9
A
p
r-
1
9
M
e
i-
1
9
J
u
n
-1
9
J
u
l-
1
9
O
g
o
-1
9
S
e
p
-1
9
O
k
t-
1
9
N
o
v
-1
9
D
is
-1
9
J
a
n
-2
0
F
e
b
-2
0
M
a
c
-2
0
A
p
r-
2
0
M
e
i-
2
0
J
u
n
-2
0
J
u
l-
2
0
O
g
o
-2
0
S
e
p
-2
0
O
k
t-
2
0
N
o
v
-2
0
D
is
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
c
-2
1
Makanan & minuman bukan alkohol (29.5%) Perumahan & utiliti (23.8%)
Pengangkutan (14.6%) Lain-lain (32.1%)
Inflasi keseluruhan (skala kanan) Inflasi teras¹ (skala kanan)
sumbangan mata peratusan %, tahun ke tahun
• Inflasi keseluruhan meningkat kepada 1.7%
pada bulan Mac (Februari: 0.1%).
• Penyumbang utama kepada inflasi
keseluruhan yang lebih tinggi ini ialah
kesan asas daripada harga bahan api runcit
dalam negeri yang rendah pada tempoh
yang sama tahun lepas (harga petrol
RON95: Mac 2021: RM2.05/liter; Mac
2020: RM1.74/liter). Kesan asas ini
dijangka kekal pada suku kedua tahun 2021
dan mereda selepas itu.
• Inflasi asas seperti yang diukur oleh inflasi
teras kekal stabil pada 0.7%.
• IPI keseluruhan meningkat sedikit pada bulan
Februari kepada 1.5% (Januari: 1.2%), apabila
peningkatan pengeluaran perkilangan lebih
daripada mengimbangi penguncupan seterusnya
dalam pengeluaran perlombongan dan penjanaan
elektrik.
• Industri E&E mencatatkan pertumbuhan dua angka
sebanyak 10.3% (Januari: 7.9%) dipacu oleh
permintaan global daripada peningkatan kitaran
teknologi. Aktiviti perkilangan juga disokong oleh
segmen penjagaan kesihatan, iaitu keluaran
berasaskan getah dan farmaseutikal.
%, tahun
ke tahun
Sorotan Bulanan
81.9
71.2
145.1
0
40
80
120
160
70
75
80
85
90
95
M
a
c
-2
0
A
p
r-
2
0
M
e
i-
2
0
J
u
n
-2
0
J
u
l-
2
0
O
g
o
-2
0
S
e
p
-2
0
O
k
t-
2
0
N
o
v
-2
0
D
is
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
c
-2
1
% %
Nisbah Perlindungan Mudah Tunai (skala kanan)
Nisbah Pinjaman kepada Dana
Nisbah kepada Dana dan Ekuiti
Mac 2021
• Pada bulan Mac, pasaran kewangan domestik terjejas
akibat faktor luaran disebabkan terutamanya oleh
peningkatan dalam kadar hasil perbendaharaan AS
jangka panjang. Kadar hasil ini mencecah paras
tertinggi bagi tahun 2021 pada akhir bulan Mac
berikutan jangkaan pertumbuhan dan inflasi yang lebih
tinggi di AS.
• Kesannya, dolar AS turut bertambah kukuh. Hal ini
menyebabkan mata wang negara maju dan pasaran
sedang pesat membangun lain secara keseluruhan
menjadi lemah berbanding dengan dolar AS. Pada
bulan tersebut, ringgit menyusut nilai sebanyak 2.6%
berbanding dengan dolar AS sementara kadar hasil
MGS 10 tahun meningkat sebanyak 18.3 mata asas.
• FBM KLCI merosot sebanyak 0.3% apabila kadar hasil
bon meningkat dengan ketara dan sentimen pelabur
terjejas akibat ketidakpastian yang berlarutan
berhubung dengan perkembangan pandemik pada
peringkat global dan jangkaan bahawa dasar monetari
AS akan bertambah ketat dengan lebih pantas.
Sumber: Bank Negara Malaysia, Bursa Malaysia
2
38.2
0.7
0.1
18.3
-0.3
-2.6
MGS 10 tahun
(mata asas)
Ekuiti
(% perubahan)
Ringgit
(% perubahan)
-10 0 10 20 30 40
Mac-21 Feb-21
Prestasi Pasaran Kewangan pada Bulan Mac
Pasaran kewangan domestik terjejas terutamanya oleh perkembangan luaran
Mudah tunai sistem perbankan lebih daripada mencukupi berikutan keadaan pendanaan yang stabil
• Sistem perbankan terus mengekalkan penampan
mudah tunai yang kukuh dengan nisbah perlindungan
mudah tunai (liquidity coverage ratio, LCR) kekal teguh
pada bulan Mac 2021 (Februari: 147.1%).
• Profil pendanaan institusi perbankan juga kekal stabil
berikutan pertumbuhan deposit runcit yang terus
kukuh.
Sumber: Bank Negara Malaysia
• Nisbah pinjaman terjejas kasar dan bersih keseluruhan
secara umumnya mampan masing-masing pada 1.6%
dan 1.0%.
• Institusi perbankan terus menyediakan peruntukan
tambahan bagi menghadapi potensi kerugian kredit,
yang kini berada pada kadar 1.8% daripada jumlah
pinjaman sistem perbankan.
Amalan pengurusan risiko yang mantap oleh institusi perbankan akan menyokong kualiti aset pada
tempoh yang akan datang
Sumber: Bank Negara Malaysia
Nisbah Mudah Tunai dan Pendanaan Sistem Perbankan
1.0
1.6
1.8
0.7
0.9
1.1
1.3
1.5
1.7
1.9
M
a
c
-2
0
A
p
r-
2
0
M
e
i-
2
0
J
u
n
-2
0
J
u
l-
2
0
O
g
o
-2
0
S
e
p
-2
0
O
k
t-
2
0
N
o
v
-2
0
D
is
-2
0
J
a
n
-
2
1
F
e
b
-2
1
M
a
c
-2
1
Nisbah Pinjaman Terjejas Kasar
Nisbah Jumlah Peruntukan kepada Jumlah Pinjaman
Kualiti Aset Sistem Perbankan
%
Nisbah Pinjaman Terjejas Bersih
SIARAN AKHBAR
No. Ruj.: 04/21/05 EMBARGO: Tidak boleh dicetak
atau disiarkan sebelum pukul 1500
hari Jumaat, 30 April 2021
SOROTAN BULANAN – MAC 2021
Inflasi keseluruhan meningkat kepada 1.7% pada bulan Mac
• Inflasi keseluruhan meningkat kepada 1.7% pada bulan Mac (Februari: 0.1%).
• Penyumbang utama kepada inflasi keseluruhan yang lebih tinggi ini ialah kesan
asas daripada harga bahan api runcit dalam negeri yang rendah pada tempoh
yang sama tahun lepas (harga petrol RON95: Mac 2021: RM2.05/liter;
Mac 2020: RM1.74/liter). Kesan asas ini dijangka kekal pada suku kedua tahun
2021 dan mereda selepas itu.
• Inflasi asas seperti yang diukur oleh inflasi teras kekal stabil pada 0.7%.
IPI yang lebih tinggi pada bulan Februari didorong oleh perkilangan
• IPI keseluruhan meningkat sedikit pada bulan Februari kepada 1.5%
(Januari: 1.2%), apabila peningkatan pengeluaran perkilangan lebih daripada
mengimbangi penguncupan seterusnya dalam pengeluaran perlombongan dan
penjanaan elektrik.
• Industri E&E mencatatkan pertumbuhan dua angka sebanyak 10.3%
(Januari: 7.9%) dipacu oleh permintaan global daripada peningkatan kitaran
teknologi. Aktiviti perkilangan juga disokong oleh segmen penjagaan kesihatan,
iaitu keluaran berasaskan getah dan farmaseutikal.
Pertumbuhan pembiayaan bersih berterusan
• Pembiayaan bersih berkembang sebanyak 4.5% mencerminkan peningkatan
pertumbuhan bon korporat terkumpul (Mac: 5.9%, Februari: 4.5%) dan
pertumbuhan pinjaman terkumpul (Mac: 3.9%, Februari: 3.7%).
D i t e r b i t k a n o l e h :
J a b a t a n K o m u n i k a s i S t r a t e g i k , T i n g k a t 1 4 , B l o k B , B a n g u n a n B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
T e l e f o n : + 6 0 ( 3 ) 2 6 9 8 8 0 4 4 F a k s i m i l i : + 6 0 ( 3 ) 2 6 9 3 6 9 1 9
W e b : w w w . b n m . g o v . m y
• Pertumbuhan pinjaman isi rumah terkumpul meningkat kepada 5.7%
(Februari: 5.1%). Pengeluaran pinjaman yang lebih tinggi dicatatkan oleh
pembelian kereta dan harga tanah kediaman.
• Bagi sektor perniagaan, pinjaman terkumpul meningkat sebanyak 1.1%
(Februari: 1.0%). Pada bulan Mac, pengeluaran pinjaman dan pembayaran balik
pinjaman yang lebih tinggi dicatatkan merentas kebanyakan sektor dan tujuan.
Pasaran kewangan domestik terjejas terutamanya oleh perkembangan luaran
• Pada bulan Mac, pasaran kewangan domestik terjejas akibat faktor luaran
disebabkan terutamanya oleh peningkatan dalam kadar hasil perbendaharaan
AS jangka panjang. Kadar hasil ini mencecah paras tertinggi bagi tahun 2021
pada akhir bulan Mac berikutan jangkaan pertumbuhan dan inflasi yang lebih
tinggi di AS.
• Kesannya, dolar AS turut bertambah kukuh. Hal ini menyebabkan mata wang
negara maju dan pasaran sedang pesat membangun lain secara keseluruhan
menjadi lemah berbanding dengan dolar AS. Pada bulan tersebut, ringgit
menyusut nilai sebanyak 2.6% berbanding dengan dolar AS sementara kadar
hasil MGS 10 tahun meningkat sebanyak 18.3 mata asas.
• FBM KLCI merosot sebanyak 0.3% apabila kadar hasil bon meningkat dengan
ketara dan sentimen pelabur terjejas akibat ketidakpastian yang berlarutan
berhubung dengan perkembangan pandemik pada peringkat global dan
jangkaan bahawa dasar monetari AS akan bertambah ketat dengan lebih
pantas.
Mudah tunai sistem perbankan lebih daripada mencukupi berikutan keadaan
pendanaan yang stabil
• Sistem perbankan terus mengekalkan penampan mudah tunai yang kukuh
dengan nisbah perlindungan mudah tunai (liquidity coverage ratio, LCR) kekal
teguh pada bulan Mac 2021 (Februari: 147.1%).
• Profil pendanaan institusi perbankan juga kekal stabil berikutan pertumbuhan
deposit runcit yang terus kukuh.
Amalan pengurusan risiko yang mantap oleh institusi perbankan akan
menyokong kualiti aset pada tempoh yang akan datang
• Nisbah pinjaman terjejas kasar dan bersih keseluruhan secara umumnya
mampan masing-masing pada 1.6% dan 1.0%.
D i t e r b i t k a n o l e h :
J a b a t a n K o m u n i k a s i S t r a t e g i k , T i n g k a t 1 4 , B l o k B , B a n g u n a n B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
T e l e f o n : + 6 0 ( 3 ) 2 6 9 8 8 0 4 4 F a k s i m i l i : + 6 0 ( 3 ) 2 6 9 3 6 9 1 9
W e b : w w w . b n m . g o v . m y
• Institusi perbankan terus menyediakan peruntukan tambahan bagi menghadapi
potensi kerugian kredit, yang kini berada pada kadar 1.8% daripada jumlah
pinjaman sistem perbankan.
Bank Negara Malaysia
30 April 2021
210430 MSB - Sorotan Bulanan Mac 2021- BM
210430 PR - Sorotan Bulanan Mac 2021- BM
| Press Release |
31 Mar 2021 | Liberalisation of Foreign Exchange Policy | https://www.bnm.gov.my/-/liberalisation-of-foreign-exchange-policy-2021 | https://www.bnm.gov.my/documents/20124/2294076/2021-03-30+FAQ+on+FEP+Liberalisation.pdf | null |
Reading:
Liberalisation of Foreign Exchange Policy
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275
Liberalisation of Foreign Exchange Policy
Embargo :
For immediate release
Not for publication or broadcast before
1030 on
Wednesday, 31 March 2021
31 Mar 2021
Bank Negara Malaysia (BNM) is pleased to announce further liberalisation of foreign exchange policy (FEP) which provides greater flexibilities to businesses as part of our continued efforts to strengthen Malaysia’s position in the global supply chain and to foster a conducive environment in attracting foreign direct investment (FDI) into Malaysia.
The gradual liberalisation process over the recent years has been consistent with Malaysia’s stronger external position and a more resilient financial market. Therefore, these measures will provide greater flexibilities to the export-oriented industries to better support the economic recovery.
Removal of export conversion rule
Resident exporters may now manage the conversion of export proceeds according to their foreign currency cash flow needs.
Resident exporters can settle domestic trade in foreign currency with other residents involved in the global supply chain[1]
Recognising Malaysian exporters’ vital position in the global supply chain, this measure will facilitate natural hedge for resident exporters and their business partners along the supply chain to better manage the foreign exchange risk.
Resident exporters can extend the period for repatriation of export proceeds beyond six months under exceptional circumstances[2]
While the 6-month rule remains in place, this flexibility eliminates the need for exporters to seek BNM’s approval in repatriating their export proceeds beyond the 6-month period for reasons beyond the exporters’ control. For other purposes, approval from BNM is still required.
Resident exporters can net-off export proceeds against permitted foreign currency obligations[3]
With this flexibility, exporters no longer need to seek approval from BNM for netting arrangements involving export proceeds. This would enhance business efficiency and cash flow management for exporters.
Resident corporates can undertake commodity derivatives hedging directly with non-resident counterparties
In addition to the current access to resident futures brokers for their commodity hedging needs, resident corporates are allowed to transact commodity derivatives with non-resident futures brokers directly. This provides greater risk management avenue and choice for resident corporates to hedge their commodity price risk.
The above measures are effective 15 April 2021. Further details of the measures will be provided in the revised Foreign Exchange Notices[4] issued by BNM on the same date.
See also: Frequently Asked Questions (FAQ)
[1] Global supply chain is defined as a business activity where resident importers purchase goods or services from overseas to support production and distribution of goods or services by resident exporters for their export activities. This includes domestic trade transactions between the resident importer and the resident exporter undertaken through resident intermediaries.
[2] Exceptional circumstances are defined as a situation where exporters have no control over the delay in receiving the export proceeds e.g. their buyers are in financial difficulties (see FAQs for more details)
[3] Such as netting of export receivables against import payables with the same overseas buyer and supplier (see FAQs for more details).
[4] Refer to BNM’s website at https://bnm.my/fep.
Bank Negara Malaysia
31 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights
3.9
1.1
5.7
0
1
2
3
4
5
6
7
Mar-
20
May-
20
Jul-
20
Sep-
20
Nov-
20
Jan-
21
Mar-
21
Total loans
Business loans
Household loans
% yoy
Contribution to Net Financing1 Growth and Outstanding
Loan Growth
March 2021
1 Refers to outstanding loans of the banking system (excluding development
financial institutions (DFIs)).
Source: Bank Negara Malaysia
Continued growth in net financing
1
% yoy
2.8 2.7 2.9
1.7
1.2
1.6
4.5
3.9
4.5
Jan-21 Feb-21 Mar-21
Corporate bonds
Banking system loans
Net financing
• Net financing expanded at 4.5% reflecting the
increase in outstanding corporate bond growth
(March: 5.9%, February: 4.5%) and outstanding
loan growth (March: 3.9%, February: 3.7%).
• Outstanding household loan growth increased to
5.7% (February: 5.1%). Higher loan
disbursements were recorded for the purchase of
cars and residential properties.
• For businesses, outstanding loans grew at 1.1%
(February: 1.0%). During the month, higher loan
disbursements and repayments were observed
across most sectors and purposes.
Higher IPI in February driven by manufacturing
• Overall IPI improved slightly in February to 1.5%
(January: 1.2%), as higher manufacturing
production more than offset further contraction in
the mining production and electricity generation.
• The E&E industry recorded double-digit growth of
10.3% (January: 7.9%) driven by global demand
from the tech-upcycle. Manufacturing activity was
also supported by the healthcare segment,
namely from rubber-based and pharmaceutical
products.
1.5
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
S
e
p
-1
9
O
c
t-
1
9
N
o
v
-1
9
D
e
c
-1
9
J
a
n
-2
0
F
e
b
-2
0
M
a
r-
2
0
A
p
r-
2
0
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
Manufacturing Mining Electricity Overall
Contribution to Overall IPI
% ppt, yoy
Source: Department of Statistics, Malaysia (DOSM)
Headline inflation increased to 1.7% in March
• Headline inflation increased to 1.7% in March
(February: 0.1%).
• The main contribution to the higher headline
inflation was the base effect from low domestic
retail fuel prices in the corresponding period last
year (RON95 petrol prices: March 2021:
RM 2.05/ litre; March 2020: RM 1.74/litre). This
base effect is expected to remain in the second
quarter of 2021 and dissipate thereafter.
• Underlying inflation, as measured by core
inflation, remained stable at 0.7%.
Contribution to Inflation
1 Core inflation is computed by excluding price-volatile and price-administered items.
It also excludes the estimated direct impact of tax policy changes.
Source: Department of Statistics Malaysia (DOSM), Bank Negara Malaysia estimates
-1.4
-0.2
0.1
1.7
0.7 0.7
0.7
0.7
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
J
a
n
-1
9
F
e
b
-1
9
M
a
r-
1
9
A
p
r-
1
9
M
a
y
-1
9
J
u
n
-1
9
J
u
l-
1
9
A
u
g
-1
9
S
e
p
-1
9
O
c
t-
1
9
N
o
v
-1
9
D
e
c
-1
9
J
a
n
-2
0
F
e
b
-2
0
M
a
r-
2
0
A
p
r-
2
0
M
a
y
-2
0
J
u
n
-2
0
J
u
l-
2
0
A
u
g
-2
0
S
e
p
-2
0
O
c
t-
2
0
N
o
v
-2
0
D
e
c
-2
0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
ppt. contribution %, yoy
Monthly Highlights
81.9
71.2
145.1
0
40
80
120
160
70
75
80
85
90
95
M
a
r
2
0
A
p
r
2
0
M
a
y
2
0
J
u
n
2
0
J
u
l
2
0
A
u
g
2
0
S
e
p
2
0
O
c
t
2
0
N
o
v
2
0
D
e
c
2
0
J
a
n
2
1
F
e
b
2
1
M
a
r
2
1
% %
Liquidity Coverage Ratio (RHS)
Loan to Fund Ratio
Loan to Fund and Equity Ratio
March 2021
• In March, domestic financial markets were
affected by external factors, particularly the rise in
long-term US Treasury yields, which reached its
highest level for the year at the end of the month
amid higher growth and inflation expectations in
the US.
• Consequently, the US dollar also strengthened
which led to a broad-based weakening of other
advanced and emerging market currencies
against the US dollar. During the month, the
ringgit depreciated by 2.6% against the US dollar
while the 10-year MGS yield increased by 18.3
basis points.
• The FBM KLCI declined marginally by 0.3% as
bond yields surged and investor sentiments were
affected by lingering uncertainties surrounding the
path of the pandemic globally and expectations for
a faster US monetary policy tightening.
Source: Bank Negara Malaysia, Bursa Malaysia
2
38.2
0.7
0.1
18.3
-0.3
-2.6
10-year MGS
(bps)
Equity
(% change)
Ringgit
(% change)
-10 0 10 20 30 40
Mar-21 Feb-21
Financial Markets Performance in March
Domestic financial markets were affected mainly by external developments
Ample liquidity in the banking system amid stable funding conditions
• Banking system continued to maintain healthy
liquidity buffers with the liquidity coverage ratio
(LCR) remaining strong in March 2021 (February:
147.1%).
• Banks’ funding profile also remained stable amid
sustained strong growth in retail deposits.
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios were
broadly sustained at 1.6% and 1.0%, respectively.
• Banks continued to set aside additional provisions
against potential credit losses, which currently
stand at 1.8% of total banking system loans.
Sound risk management practices by banks will support asset quality in the period ahead
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
1.0
1.6
1.8
0.7
0.9
1.1
1.3
1.5
1.7
1.9
M
a
r
2
0
A
p
r
2
0
M
a
y
2
0
J
u
n
2
0
J
u
l
2
0
A
u
g
2
0
S
e
p
2
0
O
c
t
2
0
N
o
v
2
0
D
e
c
2
0
J
a
n
2
1
F
e
b
2
1
M
a
r
2
1
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Banking System Asset Quality
%
Net Impaired Loans Ratio
SIARAN AKHBAR
Ref. No.: 04/21/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 30 April 2021
MONTHLY HIGHLIGHTS – MARCH 2021
Headline inflation increased to 1.7% in March
• Headline inflation increased to 1.7% in March (February: 0.1%).
• The main contribution to the higher headline inflation was the base effect from
low domestic retail fuel prices in the corresponding period last year
(RON95 petrol prices: March 2021: RM 2.05/ litre; March 2020: RM 1.74/litre).
This base effect is expected to remain in the second quarter of 2021 and
dissipate thereafter.
• Underlying inflation, as measured by core inflation, remained stable at 0.7%.
Higher IPI in February driven by manufacturing
• Overall IPI improved slightly in February to 1.5% (January: 1.2%), as higher
manufacturing production more than offset further contraction in the mining
production and electricity generation.
• The E&E industry recorded double-digit growth of 10.3% (January: 7.9%)
driven by global demand from the tech-upcycle. Manufacturing activity was also
supported by the healthcare segment, namely from rubber-based and
pharmaceutical products.
Continued growth in net financing
• Net financing expanded at 4.5% reflecting the increase in outstanding
corporate bond growth (March: 5.9%, February: 4.5%) and outstanding loan
growth (March: 3.9%, February: 3.7%).
D i t e r b i t k a n o l e h :
J a b a t a n K o m u n i k a s i S t r a t e g i k , T i n g k a t 1 4 , B l o k B , B a n g u n a n B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
T e l e f o n : + 6 0 ( 3 ) 2 6 9 8 8 0 4 4 F a k s i m i l i : + 6 0 ( 3 ) 2 6 9 3 6 9 1 9
W e b : w w w . b n m . g o v . m y
• Outstanding household loan growth increased to 5.7% (February: 5.1%).
Higher loan disbursements were recorded for the purchase of cars and
residential properties.
• For businesses, outstanding loans grew at 1.1% (February: 1.0%). During the
month, higher loan disbursements and repayments were observed across most
sectors and purposes.
Domestic financial markets were affected mainly by external developments
• In March, domestic financial markets were affected by external factors,
particularly the rise in long-term US Treasury yields, which reached its highest
level for the year at the end of the month amid higher growth and inflation
expectations in the US.
• Consequently, the US dollar also strengthened which led to a broad-based
weakening of other advanced and emerging market currencies against the US
dollar. During the month, the ringgit depreciated by 2.6% against the US dollar
while the 10-year MGS yield increased by 18.3 basis points.
• The FBM KLCI declined marginally by 0.3% as bond yields surged and investor
sentiments were affected by lingering uncertainties surrounding the path of the
pandemic globally and expectations for a faster US monetary policy tightening.
Ample liquidity in the banking system amid stable funding conditions
• Banking system continued to maintain healthy liquidity buffers with the liquidity
coverage ratio (LCR) remaining strong in March 2021 (February: 147.1%).
• Banks’ funding profile also remained stable amid sustained strong growth in
retail deposits.
Sound risk management practices by banks will support asset quality in the
period ahead
• Overall gross and net impaired loans ratios were broadly sustained at 1.6% and
1.0%, respectively.
• Banks continued to set aside additional provisions against potential credit
losses, which currently stand at 1.8% of total banking system loans.
Bank Negara Malaysia
30 April 2021
210430 MSB - Monthly Highlights March 2021 - EN
210430 PR - Monthly Highlights March 2021 - EN
| Press Release |
22 Mar 2021 | International Reserves of Bank Negara Malaysia as at 15 March 2021 | https://www.bnm.gov.my/-/international-reserves-of-bnm-as-at-15-march-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 15 March 2021
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International Reserves of Bank Negara Malaysia as at 15 March 2021
Embargo :
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1500 on
Monday, 22 March 2021
22 Mar 2021
The international reserves of Bank Negara Malaysia amounted to USD109.2 billion as at 15 March 2021. The reserves position is sufficient to finance 8.5 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 15 March 2021
Bank Negara Malaysia
22 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
17 Mar 2021 | Additional Allocation of RM700 million for the SME Automation and Digitalisation Facility | https://www.bnm.gov.my/-/additional-allocation-rm700-million-sme-adf | https://www.bnm.gov.my/documents/20124/6025157/adf_faq_en.pdf, https://www.bnm.gov.my/documents/20124/6025157/adf_broc_en.pdf | null |
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Additional Allocation of RM700 million for the SME Automation and Digitalisation Facility
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Additional Allocation of RM700 million for the SME Automation and Digitalisation Facility
Embargo :
For immediate release
Not for publication or broadcast before
2045 on
Wednesday, 17 March 2021
17 Mar 2021
Bank Negara Malaysia is pleased to inform that an additional allocation of RM700 million has been provided for the SME Automation and Digitalisation Facility (ADF), bringing the facility’s total size to RM1 billion.
The ADF, which was established in March 2020, aims to encourage SMEs across sectors to automate processes and digitalise operations to increase productivity and efficiency.
The ADF is open to all Malaysian SMEs, with a maximum financing amount of up to RM3 million per SME and financing tenure of up to 10 years. The financing rate is up to 4% per annum, inclusive of guarantee fee. Guarantee coverage is provided by Syarikat Jaminan Pembiayaan Perniagaan (SJPP). The facility will be available until 31 December 2021 or full utilisation, whichever is earlier. Features of the ADF are provided in Appendix 1.
SMEs may also avail themselves of other financing facilities under BNM’s Fund for SMEs. Interested SMEs may refer to bnm.gov.my/covid19/ or contact us at bnm.my/LINK if they have any queries with respect to the Bank’s financing facilities.
See also: Frequently Asked Questions
Bank Negara Malaysia
17 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
FAQ SME Automation and Digitalisation Facility
1
BNM’s Fund for SMEs:
SME Automation and Digitalisation Facility
General Frequently Asked Questions (FAQ)
SME Automation and Digitalisation Facility (ADF)
No. Question Answer
1. What is the SME Automation
and Digitalisation Facility
(ADF)?
ADF is a financing facility established by BNM to incentivise
SMEs to automate processes and digitalise operations to
increase productivity and efficiency.
2. Who is eligible to apply for
ADF?
All Malaysian SMEs1.
3. What is the maximum
financing amount and tenure
for SMEs under the ADF?
Up to RM3 million per SME and financing tenure of up to 10
years.
4. When will the ADF be made
available?
Until full utilisation.
5. How can SMEs know that
they are eligible to apply for
financing under the ADF?
Eligible SMEs are advised to contact the PFIs to ascertain
their eligibility under the ADF. All applications for financing will
be subject to assessments by the PFIs.
6. Is ADF open to existing
customers of the PFIs only?
No, ADF is open to both new and existing SME customers of
the PFIs as long as they are Malaysian SMEs that fulfil the
eligibility criteria set out by BNM and meet the FIs’ credit
assessments.
7. Can SMEs obtain the ADF to
re-finance existing loans?
No. The ADF must not be used for re-financing of existing
credit/financing facilities.
8. Do SMEs need to provide
collateral to obtain financing
under the ADF?
No. Collateral is NOT required under the ADF.
9. If my business is not eligible
for the ADF, what other
support is available to me?
• SMEs that are not eligible for the ADF may apply for
financing from other facilities under BNM’s fund for SMEs
(e.g. All Economic Sector Facility, Agrofood Facility, Micro
Enterprise Facility, PENJANA Tourism Financing, Targeted
Relief and Recovery Facility or High-Tech Facility – National
Investment Aspirations), or other financing products for
SMEs offered by the financial institutions.
• SMEs can also apply via the imSME2 platform. Approval for
financing under the above schemes are subject to the
specific scheme’s eligibility criteria and assessment by the
PFIs.
10. What are the projects/
activities eligible for financing
under the ADF?
ADF can be used to finance the purchase of equipment,
machinery, ICT hardware and software, ICT solutions and
services, technology support services and other intangible
assets, to enhance the SMEs’ productivity and efficiency.
1 At least 51% shares held by Malaysians and as defined by SME Corporation Malaysia’s Guideline for SME Definition,
accessible at https://www.smecorp.gov.my/images/pdf/2021/Guideline_on_SMEDefinition_Updated_Sept2020_Final.pdf
2 Online SME financing/loan referral platform managed by Credit Guarantee Corporation Malaysia Berhad (CGC).
Accessible at https://imsme.com.my
2
SME Automation and Digitalisation Facility (ADF)
No. Question Answer
11. What can an SME do if its
application for financing
under any of the facilities is
rejected by the PFI?
If an application is rejected, the SME is advised to do the
following:
a) Obtain clarification from the PFI on the reason(s) of
rejection
b) Consider re-submitting the application via the ImSME
platform, if the SME has not done so earlier
c) Obtain financing advisory services through MyKNP@CGC
(Financing Advisory Services) that provides advisory
assistance and tips to improve eligibility for future financing
and alternative sources of finance
(https://imsme.com.my/portal/myknp-cgc-faq/); or
d) Channel enquiries or complaint to BNM via
BNMLINK:
Customer Contact Centre (BNMLINK)
Bank Negara Malaysia
P.O. Box 10922
50929 Kuala Lumpur
• Tel: 1-300-88-5465
• Web form: https://bnmlink.bnm.gov.my
Bank Negara Malaysia
Updated as at 17 July 2023
https://imsme.com.my/portal/myknp-cgc-faq/
https://telelink.bnm.gov.my/
SME Automation and Digitalisation Facility (ADF)
Objective
Incentivise SMEs to automate processes and
digitalise operations to increase productivity and
efficiency.
Purpose of financing Purchase of equipment, machinery, computer hardware and
software, IT solutions and services, technology support services and
other intangible assets to enhance productivity and efficiency.
(Not for refinancing of existing financing facilities)
Eligibility criteria Malaysian SMEs*
Guarantee coverage 80% (0.5% per annum, guarantee fee)
Note: PFIs can obtain guarantee coverage from Syarikat Jaminan
Pembiayaan Perniagaan Berhad (SJPP)
Participating Financial
Institutions (PFIs)
• Commercial banks
• Islamic banks
• Development financial institutions regulated by BNM
Application procedure Submit application directly to PFIs and approval will be subjected to
the credit assessment of the PFIs.
* At least 51% shares held by Malaysians and as defined by SME Corp (as per Guidelines on National SME Definition
issued by SME Corp), accessible at: https://www.smecorp.gov.my/images/pdf/2021/Guideline_on_SMEDefinition_Up-
dated_Sept2020_Final.pdf
BNM’s Fund for SMEs :
SME Automation and
Digitalisation Facility (ADF)
Features of SME Automation and Digitalisation Facility (ADF)RM3 million
Up to
4% p.a.
(inclusive of any
guarantee fee)
Up to
10 years
Maximum Financing
Amount
Financing Rate
Maximum Tenure
Availability Until full utilisation
For more
information
Contact the PFI’s customer service centre
Log on to PFI’s website
Credit Guarantee Providers:An initiative by:
www.bnm.gov.my/funds4sme
BNM eLINK: https://bnmlink.bnm.gov.my
| Press Release |
05 Mar 2021 | International Reserves of Bank Negara Malaysia as at 26 February 2021 | https://www.bnm.gov.my/-/international-reserves-of-bnm-as-at-26-february-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 26 February 2021
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International Reserves of Bank Negara Malaysia as at 26 February 2021
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Friday, 5 March 2021
5 Mar 2021
The international reserves of Bank Negara Malaysia amounted to USD109.0 billion as at 26 February 2021. The reserves position is sufficient to finance 8.6 months of retained imports and is 1.2 times total short-term external debt.
Related Assets
BNM Statement of Assets & Liabilities - 26 February 2021
Bank Negara Malaysia
5 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
03 Mar 2021 | Information received from foreign Financial Intelligence Units | https://www.bnm.gov.my/-/information-received-from-foreign-financial-intelligence-units | null | null |
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Information received from foreign Financial Intelligence Units
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Information received from foreign Financial Intelligence Units
Embargo :
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Not for publication or broadcast before
1900 on
Wednesday, 3 March 2021
3 Mar 2021
In its role as the Financial Intelligence Unit (FIU) under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001, Bank Negara Malaysia discloses all information received from foreign FIUs to the relevant domestic law enforcement agencies.
As a member of Egmont Group1 of Financial Intelligence Units, Bank Negara Malaysia is bound by The Egmont Group Principles for Information Exchange between the FIUs to protect the confidentiality of information in accordance to international standards and protocols.
BNM has in place mechanisms to protect the operational independence of the FIU, which are in full compliance with the Financial Action Task Force (FATF)2 international standards. These mechanisms ensure that there is no restriction on the flow of information to the enforcement agencies.
1 The Egmont Group is a united body of 166 Financial Intelligence Units (FIUs). The Egmont Group provides a platform for the secure exchange of expertise and financial intelligence to combat money laundering and terrorist financing (ML/TF). This is especially relevant as FIUs are uniquely positioned to cooperate and support national and international efforts to counter terrorist financing and are the trusted gateway for sharing financial information domestically and internationally in accordance with global Anti Money Laundering and Counter Financing of Terrorism (AML/CFT) standards. https://egmontgroup.org/en/content/about
2 The FATF Recommendation 29 sets out that countries should establish a financial intelligence unit (FIU) that serves as a national centre for the receipt and analysis of: (a) suspicious transaction reports; and (b) other information relevant to money laundering, associated predicate offences and financing of terrorism, and for the dissemination of the results of that analysis. The FIU should be able to obtain additional information from reporting entities, and should have access on a timely basis to the financial, administrative and law enforcement information that it requires to undertake its functions properly. The FATF Interpretive Note to Recommendation 29 determines that countries should ensure that the FIU has regard to the Egmont Group statement of purpose and its Principles for Information Exchange Between Financial Intelligence Units for Money Laundering and Financing of Terrorism Cases (these documents set out important guidance concerning the role and functions of FIUs, and the mechanisms for exchanging information between FIUs). The FIU should be operationally independent and autonomous, meaning that the FIU should have the authority and capacity to carry out its functions freely, including the autonomous decision to analyse, request and/or disseminate specific information. In all cases, this means that the FIU has the independent right to forward or disseminate information to competent authorities.
https://egmontgroup.org/en/content/financial-intelligence-units-fius https://egmontgroup.org/sites/default/files/filedepot/FIU_Independence_and_Autonomy/20181019%20Understanding%20FIU%20Operational%20Independence%20and%20Autonomy_FINAL%20VERSION.pdf
Bank Negara Malaysia
3 March 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
26 Feb 2021 | Monetary and Financial Developments in January 2021 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-january-2021 | https://www.bnm.gov.my/documents/20124/2715936/i_en.pdf | null |
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Monetary and Financial Developments in January 2021
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Monetary and Financial Developments in January 2021
Embargo :
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1500 on
Friday, 26 February 2021
26 Feb 2021
Headline inflation was less negative at -0.2%
The less negative headline inflation in January (December 2020: -1.4%) was driven mainly by the increase in electricity inflation and higher domestic retail fuel prices during the month.
These increases reflected the lapse in the effect from the tiered electricity tariff rebate and the rise in global oil prices respectively.
Underlying inflation, as measured by core inflation , remained stable at 0.7%.
IOWRT improved in December, with a smaller contraction
The Index of Wholesale and Retail Trade (IOWRT) improved in December 2020, recording a smaller annual contraction of 0.7% in December 2020 (November: -1.6%), due to the relaxation of CMCO, including the removal of restrictions on interstate travel and mobility on 9 December.
The improvement was seen in wholesale trade, which declined marginally by 0.02% (November: -0.5%), while motor vehicles rose by 6.0% (November: 0.5%).
Meanwhile, retail trade declined at a smaller rate (-2.9%; November: -3.2%).
Higher expansion in net financing
Net financing expanded at 4.5% amid higher outstanding loan growth (January: 3.8%, December: 3.4%) while outstanding corporate bond growth moderated slightly to 6.3% (December: 6.5%).
Outstanding household loan growth was sustained at 4.9% (December: 5.0%) with disbursements remaining above historical average (January: RM28.8bn, 2017-19 monthly average: RM27.8bn).
Outstanding business loan grew at 1.5% after a slower growth in December 2020 . The growth was contributed mainly by the SME segment.
Performance of domestic financial markets declined during the month
In January, the performance of domestic financial markets was affected by a confluence of global and domestic factors.
Globally, an uptick in US Treasury yields amid rising US inflation expectations pushed global bond yields higher, while supporting a broad strengthening of the US dollar. As a result, the 10-year MGS yield increased by 5.4 basis points and the ringgit depreciated by 1.0% against the US dollar, in line with regional trends.
Domestically, investor sentiments were affected by the re-imposition of stricter containment measures to address rising COVID-19 infections. In particular, concerns on the impact of these restrictions to domestic corporate earnings weighed on equity market sentiments. As a result, the FBM KLCI declined by 3.7% during the month.
Banking system liquidity remained supportive of financial intermediation
Banking system liquidity coverage ratio (LCR) remained at a healthy level, despite a slight decline in January 2021 (December-20: 148.2%).
This was supported by higher holdings of marketable securities and placements with central banks.
Banks’ funding profile also remained stable amid sustained growth in deposits.
Banking system asset quality remains healthy
Gross impaired loans ratio increased marginally to 1.60% in January 2021 (December 2020: 1.56%).
Banks continued to pre-emptively identify loans with higher credit risks and set aside additional provisions against future potential losses to ensure their continued resilience.
See also:
Press release [PDF]
-------------------
1 Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of tax policy changes.
2 Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)).
3 High base effect due to disbursements of large-value loans in the manufacturing sector in December 2019.
Related Assets
Monthly Highlights and Statistics in January 2021
Bank Negara Malaysia
26 February 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
26 Feb 2021 | Detailed Disclosure of International Reserves as at end-January 2021 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-january-2021 | null | null |
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Detailed Disclosure of International Reserves as at end-January 2021
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In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD108,633.8 million, while other foreign currency assets amounted to USD560.5 million as at end-January 2021. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD7,254.7 million. The short forward positions amounted to USD6,576.1 million while long forward positions amounted to USD535 million as at end-January 2021, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,359.5 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD389.3 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-January 2021, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (31 January 2021)
Bank Negara Malaysia
26 February 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
25 Feb 2021 | Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Towards Greening the Financial Sector | https://www.bnm.gov.my/-/joint-statement-bnm-sc-greening-the-financial-sector | null | null |
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Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Towards Greening the Financial Sector
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25 Feb 2021
The Joint Committee on Climate Change (JC3) held its fourth meeting on 24 February 2021 to discuss its priorities for 2021 in supporting the financial industry’s response to climate-related risks. JC3 recognises the urgency for the financial institutions in Malaysia to accelerate efforts to manage these risks.
In 2020, the JC3 sub-committees completed a number of key initiatives, including the broad-based consultation and pilot implementation of the Climate Change and Principles-Based Taxonomy (CCPT) developed for the financial institutions, a stock-take on disclosure practices of selected financial institutions in Malaysia against recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and a gap analysis on the green finance landscape. Financial institutions licensed by BNM will begin capturing exposures based on the CCPT for internal risk management and supervisory purposes over the course of 2021.
The JC3, together with its knowledge partners also developed and organised several foundational and outreach programmes in 2020, as part of its holistic approach in building the industry’s capacity and raising awareness of relevant stakeholders on climate change, its impact and need for climate actions.
For 2021, JC3 will build on these initiatives to further strengthen the financial industry’s capacity in managing climate-related risks, and enhance its role in scaling up green finance. The Committee’s priorities include:
Developing guidance documents on risk management and scenario analysis. This will complement the CCPT and advance climate risk management and stress testing practices in the financial sector;
Supporting the voluntary implementation of climate-related disclosures that are aligned with TCFD recommendations. This includes working with the industry to contextualise the recommendations to the Malaysian economy and financial system, and develop practical resources to help firms that interact with financial institutions improve their disclosures;
Broadening engagements with relevant stakeholders, including Government agencies, institutional investors and market intermediaries to identify and address enabling conditions for the structuring of green financial products and solutions; and
Deepening technical capacity building programmes, focusing in particular on strengthening the practical knowledge and tools to support climate-related disclosures, climate risk management and climate scenario analysis. JC3 will also organise a follow-up flagship event to the 2019 Regional Conference on Climate Change (the inaugural event that launched JC3) in the second half of the year.
JC3 further agreed to establish a dedicated data workstream to identify crucial climate and environmental-related data and the relevant data sources, as well as solutions to bridge the data gaps. The work of the data workstream will also contribute towards more consistent implementation of the CCPT.
Further to earlier commitments made to work towards wider adoption of TCFD recommendations, JC3 members are stepping up efforts to implement TCFD disclosures in phases beginning this year. Members also agreed to identify specific business initiatives that support sustainable activities and pursue the adoption of internal financial targets for sustainability-related loans and financing, and assets under management.
Bank Negara Malaysia
Securities Commission Malaysia
25 February 2021
About the JC3
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysia financial sector. The JC3 is co-chaired by Jessica Chew Cheng Lian, Deputy Governor Bank Negara Malaysia and Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive Securities Commission Malaysia with members comprising senior officials from Bursa Malaysia and 19 financial industry players as well as relevant experts. The JC3’s initiatives and priorities are undertaken by its four sub-committees, namely Risk Management; Governance and Disclosure; Product and Innovation; and Engagement and Capacity Building.
Bank Negara Malaysia
25 February 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
22 Feb 2021 | International Reserves of Bank Negara Malaysia as at 15 February 2021 | https://www.bnm.gov.my/-/bnm-international-reserves-15-feb-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 15 February 2021
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International Reserves of Bank Negara Malaysia as at 15 February 2021
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22 Feb 2021
The international reserves of Bank Negara Malaysia amounted to USD109.7 billion as at 15 February 2021. The reserves position is sufficient to finance 8.6 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 15 February 2021
Bank Negara Malaysia
22 February 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
11 Feb 2021 | Economic and Financial Developments in Malaysia in the 4th Quarter of 2020 | https://www.bnm.gov.my/-/quarterly-developments-q4-2020 | https://www.bnm.gov.my/documents/20124/2294076/4Q_table_en.pdf, https://www.bnm.gov.my/documents/20124/2294076/4Q2020_GDP_Slides.pdf | null |
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Economic and Financial Developments in Malaysia in the 4th Quarter of 2020
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Economic and Financial Developments in Malaysia in the 4th Quarter of 2020
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11 Feb 2021
The Malaysian economy contracted by 3.4% in the fourth quarter (3Q 2020: -2.6%)
The economy registered a negative growth of 3.4% in the fourth quarter (3Q 2020: -2.6%), largely attributable to the imposition of the Conditional Movement Control Order (CMCO) on a number of states since mid-October. For 2020 as a whole, the economy contracted by 5.6%. The restrictions on mobility, especially on inter-district and inter-state travel, weighed on economic activity during the fourth quarter. Nevertheless, the continued improvement in external demand provided support to growth. Consequently, except for manufacturing, all economic sectors continued to record negative growth. On the expenditure side, moderating private consumption and public investment activities weighed on domestic demand. On a quarter-on-quarter seasonally-adjusted basis, the economy registered a decline of 0.3% (3Q 2020: 18.2%).
For the quarter, headline inflation declined to -1.5% in part reflecting the larger decline in retail fuel prices as compared to the corresponding period last year. Core inflation moderated to 0.8% due mainly to lower inflation for communication services and rental.
Exchange rate developments
The ringgit appreciated by 3.6% against the US dollar during the fourth quarter of 2020, driven mainly by non-resident portfolio inflows as investors’ risk appetite continued to improve. Positive investor sentiment during the quarter was driven by news of successful vaccine trials and the rollout of vaccination programmes in major economies, as well as greater clarity on US policy direction following the outcome of the US presidential election. Taken together, these factors formed the basis of a more positive investor outlook for the recovery of the global health crisis, which strengthened expectations for the eventual normalisation of economic activity. From 1 January to 8 February 2021, the ringgit has depreciated by 1.2% against the US dollar, in line with broad-based weakening in major and regional currencies, following the strengthening of US dollar amidst enhanced prospects for an economic rebound in the US. Concerns over the rise in COVID-19 infections and its implications for domestic economic activity also weighed on investor sentiments. Portfolio investments recorded a smaller net outflow of RM6.9 billion in the fourth quarter (3Q 2020: -RM23.1 billion), while net FDI recorded an inflow of RM6.1 billion (3Q 2020: -RM0.8 billion). In the near term, the risk of heightened exchange rate volatility remains as lingering uncertainties surrounding the momentum of the global economic recovery will continue to have a bearing on investor sentiments.
Financing conditions
Net financing to the private sector continued to expand at 4.4% on an annual basis. Total outstanding loans grew by 3.7% (3Q 2020: 4.7%) supported by continued growth in the household and business segments. Total loan disbursements to both businesses and household increased during the quarter. Business loan repayments were also higher, with its growth outpacing that of disbursements. Loan demand remained forthcoming especially in the household segment.
The Malaysian economy to recover supported by better external demand and the 2021 Budget measures
While near-term growth in 2021 will be affected by the re-introduction of stricter containment measures, the impact, however, will be less severe than that experienced in 2020. The growth trajectory is projected to improve from the second quarter onwards. The improvement will be driven by the recovery in global demand, where the International Monetary Fund (IMF) has revised upwards their 2021 global growth forecast by 0.3 percentage points to 5.5%. Growth will also be supported by a turnaround in public and private sector expenditure amid continued support from policy measures including PENJANA, KITA PRIHATIN, 2021 Budget and PERMAI, and higher production from existing and new facilities in the manufacturing and mining sectors. The vaccine roll-out which will commence this month is also expected to lift sentiments.
In line with earlier assessments, the average headline inflation was at -1.2% in 2020 due mainly to the substantially lower global oil prices. For 2021, headline inflation is projected to average higher, primarily due to higher global oil prices. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy. The outlook, however, is subject to global oil and commodity price developments.
See also:
Table 1: GDP by Expenditure Components and Economic Activity
Publication: Quarterly Bulletin Fourth Quarter 2020
Presentation slides [PDF]Bank Negara Malaysia
11 February 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights
January 2021
1
Headline inflation was less negative at -0.2%
• The less negative headline inflation in January
(December 2020: -1.4%) was driven mainly by
the increase in electricity inflation and higher
domestic retail fuel prices during the month.
• These increases reflected the lapse in the effect
from the tiered electricity tariff rebate and the
rise in global oil prices respectively.
• Underlying inflation, as measured by core
inflation, remained stable at 0.7%.
-1.7
-1.4
-0.2
0.70.70.7
-4.0
-2.0
0.0
2.0
-4.0
-2.0
0.0
2.0
Ja
n-
19
Fe
b-
19
M
ar
-1
9
A
pr
-1
9
M
ay
-1
9
Ju
n-
19
Ju
l-1
9
A
ug
-1
9
S
ep
-1
9
O
ct
-1
9
N
ov
-1
9
D
ec
-1
9
Ja
n-
20
Fe
b-
20
M
ar
-2
0
A
pr
-2
0
M
ay
-2
0
Ju
n-
20
Ju
l-2
0
A
ug
-2
0
S
ep
-2
0
O
ct
-2
0
N
ov
-2
0
D
ec
-2
0
Ja
n-
21
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1 Core inflation is computed by excluding price-volatile and price-administered items.
It also excludes the estimated direct impact of tax policy changes.
Source: Department of Statistics Malaysia (DOSM), Bank Negara Malaysia estimates
Contribution to Inflation
ppt. contribution %, yoy
IOWRT improved in December, with a smaller contraction
Source: Department of Statistics, Malaysia
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
Ja
n-
20
Fe
b-
20
M
ar
-2
0
A
pr
-2
0
M
ay
-2
0
Ju
n-
20
Ju
l-2
0
A
ug
-2
0
S
ep
-2
0
O
ct
-2
0
N
ov
-2
0
D
ec
-2
0
Motor vehicles Retail Wholesale
ppt, yoy
IOWRT: Contribution to growth • The Index of Wholesale and Retail Trade
(IOWRT) improved in December 2020,
recording a smaller annual contraction of 0.7%
in December 2020 (November: -1.6%), due to
the relaxation of CMCO, including the removal
of restrictions on interstate travel and mobility
on 9 December.
• The improvement was seen in wholesale trade,
which declined marginally by 0.02% (Nov:
-0.5%), while motor vehicles rose by 6.0%
(Nov: 0.5%).
• Meanwhile, retail trade declined at a smaller
rate (-2.9%; November: -3.2%).
-0.7
3.8
1.5
4.9
0
1
2
3
4
5
6
7
Jan-
20
Mar-
20
May-
20
Jul -
20
Sep-
20
Nov-
20
Jan-
21
Total loans
Business loans
Household loans
% yoy
Contribution to Net Financing1 Growth and Outstanding
Loan Growth
1 Refers to outstanding loans of the banking system (excluding development
financial institutions (DFIs)).
2 High base effect due to disbursements of large-value loans in the
manufacturing sector in December 2019
Source: Bank Negara Malaysia
Higher expansion in net financing
1
% yoy
2.7 2.5 2.8
1.8 1.8 1.7
4.5 4.2 4.5
Nov-20 Dec-20 Jan-21
Corporate Bonds
Banking System Loans
Net Financing
• Net financing expanded at 4.5% amid higher
outstanding loan growth (January: 3.8%,
December: 3.4%) while outstanding corporate bond
growth moderated slightly to 6.3% (December:
6.5%).
• Outstanding household loan growth was sustained
at 4.9% (December: 5.0%) with disbursements
remaining above historical average (January:
RM28.8bn, 2017-19 monthly average: RM27.8bn).
• Outstanding business loan grew at 1.5% after a
slower growth in December 20202. The growth was
contributed mainly by the SME segment.
Monthly Highlights
January 2021
Performance of domestic financial markets declined during the month
• In January, the performance of domestic
financial markets was affected by a confluence
of global and domestic factors.
• Globally, an uptick in US Treasury yields amid
rising US inflation expectations pushed global
bond yields higher, while supporting a broad
strengthening of the US dollar. As a result, the
10-year MGS yield increased by 5.4 basis
points and the ringgit depreciated by 1.0%
against the US dollar, in line with regional
trends.
• Domestically, investor sentiments were
affected by the re-imposition of stricter
containment measures to address rising
COVID-19 infections. In particular, concerns on
the impact of these restrictions to domestic
corporate earnings weighed on equity market
sentiments. As a result, the FBM KLCI declined
by 3.7% during the month.Source: Bank Negara Malaysia, Bursa Malaysia
-9.0
4.1
1.4
5.4
-3.7
-1.0
10-year MGS
(bps)
Equity
(% change)
Ringgit
(% change)
-10 -8 -6 -4 -2 0 2 4 6 8
Jan-21 Dec-20
-30.5
Financial Markets Performance in January
2
Banking system liquidity remained supportive of financial intermediation
Banking System Liquidity and Funding Ratios
82.7
71.8
147.6
0
40
80
120
160
70
75
80
85
90
95
Ja
n
20
Fe
b
20
M
ar
2
0
Ap
r 2
0
M
ay
2
0
Ju
n
20
Ju
l 2
0
Au
g
20
Se
p
20
O
ct
2
0
N
ov
2
0
D
ec
2
0
Ja
n
21
% %
Liquidity Coverage Ratio (RHS)
Loan to Fund Ratio
Loan to Fund and Equity Ratio
• Banking system liquidity coverage ratio (LCR)
remained at a healthy level, despite a slight
decline in January 2021 (Dec-20: 148.2%).
– This was supported by higher holdings of
marketable securities and placements with
central banks.
• Banks’ funding profile also remained stable
amid sustained growth in deposits.
Source: Bank Negara Malaysia
Banking system asset quality remains healthy
• Gross impaired loans ratio increased
marginally to 1.60% in January 2021
(December 2020: 1.56%).
• Banks continued to pre-emptively identify
loans with higher credit risks and set aside
additional provisions against future potential
losses to ensure their continued resilience.
1.0
1.6
1.7
0.7
0.9
1.1
1.3
1.5
1.7
1.9
Ja
n
20
Fe
b
20
M
ar
2
0
Ap
r 2
0
M
ay
2
0
Ju
n
20
Ju
l 2
0
Au
g
20
Se
p
20
O
ct
2
0
N
ov
2
0
D
ec
2
0
Ja
n
21
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Banking System Asset Quality
Source: Bank Negara Malaysia
%
Net Impaired Loans Ratio
SIARAN AKHBAR
Ref. No.: 02/21/06 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 26 February 2021
MONTHLY HIGHLIGHTS – JANUARY 2021
Headline inflation was less negative at -0.2%
• The less negative headline inflation in January (December 2020: -1.4%) was
driven mainly by the increase in electricity inflation and higher domestic retail fuel
prices during the month.
• These increases reflected the lapse in the effect from the tiered electricity tariff
rebate and the rise in global oil prices respectively.
• Underlying inflation, as measured by core inflation1, remained stable at 0.7%.
IOWRT improved in December, with a smaller contraction
• The Index of Wholesale and Retail Trade (IOWRT) improved in December 2020,
recording a smaller annual contraction of 0.7% in December 2020
(November: -1.6%), due to the relaxation of CMCO, including the removal of
restrictions on interstate travel and mobility on 9 December.
• The improvement was seen in wholesale trade, which declined marginally by
0.02% (November: -0.5%), while motor vehicles rose by 6.0% (November: 0.5%).
• Meanwhile, retail trade declined at a smaller rate (-2.9%; November: -3.2%).
Higher expansion in net financing
• Net financing2 expanded at 4.5% amid higher outstanding loan growth
(January: 3.8%, December: 3.4%) while outstanding corporate bond growth
moderated slightly to 6.3% (December: 6.5%).
• Outstanding household loan growth was sustained at 4.9% (December: 5.0%)
with disbursements remaining above historical average (January: RM28.8bn,
2017-19 monthly average: RM27.8bn).
1 Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated
direct impact of tax policy changes.
2 Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)).
D i t e r b i t k a n o l e h :
J a b a t a n K o m u n i k a s i S t r a t e g i k , T i n g k a t 1 4 , B l o k B , B a n g u n a n B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
T e l e f o n : + 6 0 ( 3 ) 2 6 9 8 8 0 4 4 F a k s i m i l i : + 6 0 ( 3 ) 2 6 9 3 6 9 1 9
W e b : w w w . b n m . g o v . m y
• Outstanding business loan grew at 1.5% after a slower growth in December
20203. The growth was contributed mainly by the SME segment.
Performance of domestic financial markets declined during the month
• In January, the performance of domestic financial markets was affected by a
confluence of global and domestic factors.
• Globally, an uptick in US Treasury yields amid rising US inflation expectations
pushed global bond yields higher, while supporting a broad strengthening of the
US dollar. As a result, the 10-year MGS yield increased by 5.4 basis points and
the ringgit depreciated by 1.0% against the US dollar, in line with regional trends.
• Domestically, investor sentiments were affected by the re-imposition of stricter
containment measures to address rising COVID-19 infections. In particular,
concerns on the impact of these restrictions to domestic corporate earnings
weighed on equity market sentiments. As a result, the FBM KLCI declined by
3.7% during the month.
Banking system liquidity remained supportive of financial intermediation
• Banking system liquidity coverage ratio (LCR) remained at a healthy level,
despite a slight decline in January 2021 (December-20: 148.2%).
− This was supported by higher holdings of marketable securities and
placements with central banks.
• Banks’ funding profile also remained stable amid sustained growth in deposits.
Banking system asset quality remains healthy
• Gross impaired loans ratio increased marginally to 1.60% in January 2021
(December 2020: 1.56%).
• Banks continued to pre-emptively identify loans with higher credit risks and set
aside additional provisions against future potential losses to ensure their
continued resilience.
Bank Negara Malaysia
26 February 2021
3 High base effect due to disbursements of large-value loans in the manufacturing sector in December 2019.
26022021_MSB January 2021 EN
26022021_Monthly Highlights January 2021_ EN
MONTHLY HIGHLIGHTS – JANUARY 2021
Economic & Financial Developments in Malaysia Q4 2020
Sidang Akhbar
Prestasi Ekonomi Suku
11 Februari 2021
Keempat Tahun 2020
EMBARGO: NOT FOR DISSEMINATION BEFORE 12 NOON
ON THURSDAY 11 FEBRUARY 2021
Global growth improved in 4Q 2020, but remained negative for many countries
Source: CEIC, national authorities
Global Growth
• Some economies were affected by the
reimposition of containment measures
• Goods trade remained resilient, with
services activity still affected by
international travel restrictions
• Exports continued to support growth in
the region
1
-11.4
-5.6
-2.8 -3.5
3.9 4.9
-1.1
-4.3
-8.3
-3.8
-2.5 -2.2
4.9
6.5
-1.4
-5.1
Philippines Singapore US Indonesia Chinese
Taipei
PR
China
Korea Euro
Area
3Q20 4Q20
Real GDP Growth
Annual change (%)
Malaysia’s GDP declined by 3.4% in 4Q 2020
Source: Department of Statistics, Malaysia
4.5 4.8 4.4 3.6
0.7
-17.1
-2.6 -3.4
0.9 1.3 0.8 0.6
-2.0
-16.5
18.2
-0.3
1Q-19 2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20
yoy
qoq SA
Real GDP Growth (Quarterly)
Period-on-period change
(%)
Annual growth
2020: -5.6%
2019: 4.3%
Key Factors:
Tightening of movement
restrictions
2
Continued growth in
external demand
more than offset
Commodity supply
disruptions due to labour
shortages and facility
closures
Overall, for 2020, the Malaysian economy contracted by 5.6%
-4.7
-4.0
-1.7
Oct-20 Nov-20 Dec-20
yoy
Real GDP Growth (Monthly)
Period-on-period change
(%)
Sep-20
-1.6%
Most economic sectors continued to contract
Source: Department of Statistics Malaysia
3
3.3
3.0
3Q-20 4Q-20
GDP, Annual change (%)
-0.5
-0.7
3Q-20 4Q-20
GDP, Annual change (%)
-4.0
-4.9
3Q-20 4Q-20
GDP, Annual change (%)
-6.8
-10.6
3Q-20 4Q-20
GDP, Annual change (%)
-12.4
-13.9
3Q-20 4Q-20
GDP, Annual change (%)
Manufacturing AgricultureServices Mining Construction
Continued robust
external demand for
E&E production
Continued labour
shortages and poor
weather conditions
affecting oil palm output
Greater restrictions
on mobility and
operating hours
Maintenance closures of
oil & gas facilities
Project delays partly due
to labour shortages and
COVID-related shutdown
of sites
Updated
6.9
2.7
3Q-20 4Q-20
GDP, Annual change (%)
Subdued private consumption and public investment activities
Private Consumption
Source: Department of Statistics Malaysia
Private Investment Public Investment Public Consumption Net exports
Lower household
expenditure amid tighter
movement restrictions
Continued capital
spending in existing
projects, particularly in
export-oriented industries
Lower capital spending
by both General Govt.
and public corporations
Moderate expansion in
Federal Govt.
spending
Higher demand for
manufactured exports
while imports improved at
a faster pace
4
-2.1
-3.4
3Q-20 4Q-20
GDP, Annual change (%)
-9.3
-7.0
3Q-20 4Q-20
GDP, Annual change (%)
-18.6
-19.8
3Q-20 4Q-20
GDP, Annual change (%)
21.9
12.4
3Q-20 4Q-20
GDP, Annual change (%)
Updated
Current account of the balance of payments registered a surplus
of RM19.0 billion or 5.0% of GDP
Goods
Source: Department of Statistics Malaysia
Services Primary Income Secondary Income
5
Updated
41.5
42.9
3Q-20 4Q-20
-9.2
-7.1
3Q-20 4Q-20
-13.3 -14.2
3Q-20 4Q-20
7.1
-2.5
3Q-20 4Q-20
Higher surplus in Goods
Smaller deficit in
Primary income
The increase was
supported by exports of
Palm oil, Rubber and
Chemicals based
products; primarily to
PR China, Singapore
and USA.
Malaysian companies
abroad earned higher
income as compared to
the preceding quarter.
Higher unemployment, particularly in tourism-related industries, due to CMCO
Source: Department of Statistics Malaysia
*Tourism-related industries include wholesale retail, administrative and support services,
accommodation and F&B, transportation and storage, entertainment and recreation
Source: Employment Insurance System, Social Security Organisation
Higher jobless claims and lower placement rates in tourism-
related sectors
5.0
5.3
4.9
4.7 4.7
4.6
4.7
4.8 4.8
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Unemployment rate (%)
3.0 4.8
8.2 7.5
3.6 2.8 2.8 4.6 3.3
3.2
5.2
10.4 9.2
5.6 4.6 4.6
4.5
3.5
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Tourism-related*
Non tourism-related
Jobless claims
Thousands of persons
4 5 7
20
37 47
22 28
11 7
14 31
46
58 53 52
May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Tourism-related*
Non tourism-related
Placement rates
52 new job placements
for every 100 jobs lost
6
Mobility restrictions affected employment activity, resulting in
the unemployment rate edging upwards
-1.0
-1.6
-1.0
-0.7
-0.2 -0.2
-0.4
-0.8
-0.5
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Employment growth
Annual change, %
Share of labour force, % Number of new job placements for every 100 job losses
Going into 2021, Malaysia’s GDP is projected to recover, supported mainly by the rebound in
global growth
Source: IMF WEO (Jan. 2021)
Global GDP and trade growth are projected to improve
2.8
-3.5
5.5
2019 2020e 2021f
Global GDP growth
Annual change (%)
1.0
-9.6
8.1
2019 2020e 2021f
Global Trade of Goods and Services Growth
Annual change (%)
7
Gradual normalisation in economic activity and
labour market conditions
Continuation of large infrastructure projects
(e.g. ECRL, MRT2, JENDELA)
Recovery in global growth and trade activity
Various targeted policy support
(e.g. PENJANA, KITA PRIHATIN, 2021 Budget and PERMAI)
The recovery will be underpinned by resumption of economic
activities globally and domestically
Gross exports to expand in 2021
Rebound in major trade partners’
growth
Rising demand for semiconductors for
work-from-home equip. & medical devices
Source: International Monetary Fund, World Semiconductor Trade Statistics, IC Insights, IHS Markit, Department of Statistics Malaysia
* share of 2020 Malaysia’s exports
Malaysia’s export orders remain intact
2.3
-5.8
-3.5
8.1
5.0 5.1
PR China
(16.2%* of Malaysia's
exports)
Singapore
(14.5%* of Malaysia's
exports)
US
(11.1%* of Malaysia's
exports)
2020 2021f
Growth in Malaysia’s Key Trade Partners
%yoy
NEW
8
5.1
8.0
8.4
12.0
WSTS Semicon sales IC Insights
2020 2021f
%yoy
Industry forecasts for global semiconductor sales
46.7
33.5
45.9 45.8 45.9
1Q20 2Q20 3Q20 4Q20 Jan-21
Malaysia’s New Export Orders (PMI)
Index
While the imposition of MCO 2.0 will weigh on growth, the impact is less severe than in 2020
Markedly smaller impact on consumer spending after the
MCO2.0 in mid-Jan 2021 compared to the MCO in 2020…
…as factors are in place to cushion the adverse impact to
economic activities
1MCO 2.0 data refers to average spending from 13 Jan – 07 Feb 2021 relative to the week before the MCO 2.0 (06 Jan – 12 Jan 2021). MCO 1.0 data refers to average spending from 18 Mar to 12 Apr 2020, relative to the
week before the MCO 1.0 (11 Mar – 17 Mar 2020).
Source: Bank Negara Malaysia
Most economic sectors allowed to operate, subject to SOPs
Absence of explicit labour capacity and operating hour restrictions,
particularly in the manufacturing and construction sectors
The nation is more accustomed to SOPs
Households and businesses able to adjust more quickly to recent
mobility restriction
Policy responses to support the economy
Accommodative monetary policy, continued assistance to vulnerable
segments, cash transfers to affected households and reskilling and
upskilling programs
9
-30
-22
-33
-4
3
-12
-50
-40
-30
-20
-10
0
10
Total Spending Online Spending Physical Spending
MCO 1.0
MCO 2.0
Change in Spending Relative to 1-Week Before Containment Measures
%
Greater digitalisation helped to facilitate continued consumption
and business activities through online platforms
Continued economic activities through online platforms
Growing momentum of digitalisation is further supporting economic activities under
the new norms
More individuals and businesses are embracing
digital solutions…
1 Data as at end-Oct 2020
2 List is not exhaustive
Source: Bank Negara Malaysia, Malaysia Digital Economy Corporation
10
Despite CMCO in Q4 2020, online banking transactions rose by
10% from the previous quarter.
…supported by concerted efforts to catalyse nationwide
digital transformation2
Conducive and enabling
ecosystem
Transforming existing industries
Catalysing new digital industries
Industrialising Digital
Strengthening Enablers Digitalising Industries
Cyber Resilience (Malaysia
Cyber Security Policy
Digital Connectivity (JENDELA)
Digital Government initiatives 100 GoDigital Program
Micro & SME E-Commerce
Campaign, Shop Malaysia Online
Business Digitalisation Grants
Penjana Kapital
National Technology &
Innovation Sandbox
Global Accelerator
Program (GAIN)
1.7 bn 298k 0.3 bn
2.5 bn
701k
0.6 bn
Increase in
online banking
transaction volume
Increase in
merchant registrations for
QR acceptance
Increase in
e-wallet transaction
volume
2019 2020
+49% +135% +131%
Updated
1
Pick-up in investment and production activities would provide support to growth in 2021
Gradual normalisation in
economic activities
Improving
investment activities
1 WSTS forecast an acceleration in global tech up-cycle to 8.4% in 2021 (5.1% in 2020)
2 Include RM10bn committed investment in rubber products
3 Including MRT2, ECRL, West Coast Expressway
4 JENDELA, JB-Singapore RTS, investment approved under PENJANA incentives for E&E and healthcare subsectors
5 For data storage and servers and high-end consumer products
Ramp up in existing and new
production facilities
Restart of RAPID
refinery complex
Ramp up in new E&E
facilities5 to meet
higher demand
Commencement of
PFLNG2 facility
Improved E&E and
healthcare-related
manufacturing1 activity
Continued rehiring
activities and better
income prospects
Gradual improvement in
consumer spending
Strong investments in
rubber and medical-
related sectors2
Further progress of
large infrastructure
projects3
Roll-out of new
catalytic investment
/ high multiplier
projects4
11
Headline inflation moderated in 4Q 2020 but is projected to average higher in 2021
Slightly more negative headline inflation in 4Q 2020 reflecting
mainly lower inflation for communication services, rental and
fuel
In 2021, headline inflation is expected to be higher, while core
inflation would remain subdued
1Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of consumption tax policy changes
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
-1.4 -1.5
1.0
0.8
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
3Q-20 4Q-20
Other price-administered items (ppt) Fuel (ppt)
Core inflation¹ (ppt) Price-volatile items (ppt)
Headline inflation (%) Core inflation¹ (%)
Contribution to Headline Inflation by Component
Annual change (%),Ppt contribution to headline inflation
Assessments for 2021
1 Headline inflation is expected to average higher,
primarily due to higher projected global oil prices
2 Core inflation would remain subdued amid
continued spare capacity in the economy
3 Uncertainties in the 2021 outlook
• Trajectory mainly depends on global oil and commodity
price developments
12
2020 Headline Inflation = -1.2%
2020 Core Inflation = 1.1%
Monetary policy remains accommodative
Source: Bank Negara Malaysia
• Overnight Policy Rate (OPR) was
maintained at 1.75% at the January MPC
meeting.
• Monetary policy will remain
accommodative to support economic
growth.
• Given uncertainties surrounding the
pandemic, monetary policy going forward
will continue to be determined by new
data and information.
Jan-21
1.75%
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Overnight Policy Rate (OPR)
%
13
Conditions in the domestic financial markets improved as investor sentiments were
supported by positive prospects for a recovery from the pandemic
-30
-20
-10
0
10
20
30
40
Jan-
20
Feb-
20
Mar-
20
Apr-
20
May-
20
Jun-
20
Jul-
20
Aug-
20
Sep-
20
Oct-
20
Nov-
20
Dec-
20
Jan-
21
Feb-
21
Bond
Equity
Cumulative Non-resident Portfolio Flows and MYR/USD change
R
M
b
illi
on
MYR/USD % change in brackets
Source: Bank Negara Malaysia, Bursa Malaysia
*Regional countries include Indonesia, the Philippines, PR China, Singapore, South Korea and
Thailand. YTD as at 8 February 2021.
Source: Bank Negara Malaysia, Bloomberg
Ringgit recorded an overall appreciation for 2020 amid
resumption in non-resident inflows since the second quarter
While NR inflows provided support to the bond market, the
improvement in equities was driven by domestic investors
4.4
-49.0 -20.6
-1.0
-66.2
13.5
0.8
-54.6
6.1
-13.1
-60.8
14.8
-100
-60
-20
20
60
Q1 Q2 Q3 Q4 2020 2021
YTD
Malaysia Regional Avg
Movement of 10-Year Sovereign Bond Yields
bps
-15.0
11.1 0.3 8.1
2.4
-3.3
-23.6
12.8
-0.1
18.1
1.8
3.2
-35
-15
5
25
Q1 Q2 Q3 Q4 2020 2021
YTD
Malaysia Regional Avg
Movement of Equity Prices
%
Year 2020 [+2.0] 2021 YTD
[-1.2]
Quarter Q1 [-4.9] Q2: [+0.5] Q3 [+2.9] Q4 [+3.6]
14
Updated
89.2
99.1 99.5
86.8
76.1
94.6
2017 - 19
Quarterly average
3Q 2020 4Q 2020
Disbursements Repayments
Sustained growth in net financing
Net financing expanded by 4.4% during
the quarter
Higher loan disbursements and
repayments in the business segment
Note: Data refers to loans from banking system and development financial institutions (DFIs), *Excludes issuances by Cagamas and non-residents
Numbers may not add up due to rounding
Source: Bank Negara Malaysia
Continued robust disbursements to
households
3.5
2.7
1.1
1.7
4.6 4.4
3Q 2020 4Q 2020
Outstanding corporate bonds*
Outstanding loans
Net financing
Net Financing*
Annual change, % / Cont. to growth, ppt
Household Loan Disbursements and Repayments
RM bn
15
196.7
182.4
206.2
196.5
185.3
207.1
2017 - 19
Quarterly average
3Q 2020 4Q 2020
Disbursements Repayments
Business Loan Disbursements and Repayments
RM bn
Guarantee Schemes
New SME financing continues to be driven by banks, complemented by other schemes and a
supportive financing ecosystem
Financing activity has returned to pre-
COVID levels, driven by banks’ own funds
RM6.4 billion still available under BNM’s
Funds with recent TRRF upsize
* Banking system and development financial institutions (DFI)
Source: Bank Negara Malaysia
Financing ecosystem offers
comprehensive support which has been
strengthened over the years
Agrofood
All Economic Sectors
Targeted Relief & Recovery
Tourism
Disaster Relief
Automation & Digitisation
Microenterprises
High tech & innovation
Total allocation of RM 23.1 billion with dedicated
facilities for:
Debt Advisory & Resolution
Financing Referral
63.7
55.3
16.2
73.3 71.8
18.8
Disbursements Repayments Approvals
3Q 2020
4Q 2020
2017-19 Qtrly Average
RM bn
RM257 billion
>95%
Are from banks internal funds
of which
New loans disbursed
Disbursements in 2020
16
Banking system remains well-placed to support financial intermediation
Banks continue to preserve healthy
capital buffers…
…amid higher impairments
in 4Q 2020
Banks’ loss-absorbing capacity further
supported by provision built up over the
past year
1 Excess capital buffers refer to excess above regulatory minimum
2 Refers to cumulative loan loss impairment and other provisions charged to income statement year-to-date
Source: Bank Negara Malaysia
115
122
125 123
Mar-20 Jun-20 Sep-20 Dec-20
Excess Capital Buffers1
RM billion
17
1.57%
1.44%
1.37%
1.57%
Mar-20 Jun-20 Sep-20 Dec-20
Gross Impaired Loans Ratio
1.3
14.3
Dec-19 Dec-20
Credit Cost2
RM billion
In a nutshell…
Malaysia’s GDP growth moderated in the fourth quarter.
Resurgence in cases and the containment measures will weigh on growth in
near-term, but the impact will be less severe
Policy measures and assistance will continue to support both businesses and households
Going into 2021, growth will rebound, supported by a pick up in global demand
and normalisation in domestic economic activities
18
Downside risks to growth remain, with the pace and strength of recovery subject to
developments surrounding the COVID-19 pandemic globally and domestically.
UpdatedUpdated
Vaccine rollout starting this month, with herd immunity targeted by early-2022,
will lift sentiments and growth
End of Presentation
Additional Information
Malaysian GDP growth moderated to -3.4% in 4Q 2020
Annual change in GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics, Malaysia
Add. Info
Real GDP
(% YoY)
Share1 %
(2020)
2019 2020
4Q 3Q 4Q
Services 57.7 6.2 -4.0 -4.9
Manufacturing 23.0 3.0 3.3 3.0
Agriculture 7.4 -5.7 -0.5 -0.7
Mining and Quarrying 6.8 -3.4 -6.8 -10.6
Construction 4.0 1.0 -12.4 -13.9
Real GDP 100.0 3.6 -2.6 -3.4
Real GDP
(% YoY)
Share1, %
(2020)
2019 2020
4Q 3Q 4Q
Domestic demand
(excluding stocks) 93.9 4.8 -3.3 -4.4
Private Sector 75.2 7.4 -3.6 -4.1
Consumption 59.5 8.1 -2.1 -3.4
Investment 15.7 4.3 -9.3 -7.0
Public Sector 18.7 -2.3 -1.6 -5.4
Consumption 13.4 1.3 6.9 2.7
Investment 5.2 -8.0 -18.6 -19.8
Net exports of goods and
services 6.5 -12.4 21.9 12.4
Exports 61.6 -3.4 -4.7 -1.8
Imports 55.1 -2.4 -7.8 -3.3
Change in stocks -0.4 -1.4 -7.8 -1.4
Real GDP 100.0 3.6 -2.6 -3.4
19
The moderation in growth was broad-based across most sectors and components
Percentage point contribution to GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics, Malaysia
Add. Info
Real GDP
(Ppt contribution, %)
Share1 %
(2020)
2019 2020
4Q 3Q 4Q
Services 57.7 3.5 -2.3 -2.8
Manufacturing 23.0 0.7 0.7 0.7
Agriculture 7.4 -0.4 -0.04 -0.05
Mining and Quarrying 6.8 -0.3 -0.4 -0.8
Construction 4.0 -0.05 -0.6 -0.6
Real GDP 100.0 3.6 -2.6 -3.4
Real GDP
(Ppt contribution)
Share1, %
(2020)
2019 2020
4Q 3Q 4Q
Domestic demand
(excluding stocks) 93.9 4.5 -3.1 -4.2
Private Sector 75.2 5.1 -2.8 -2.9
Consumption 59.5 4.5 -1.2 -2.0
Investment 15.7 0.6 -1.6 -0.9
Public Sector 18.7 -0.6 -0.3 -1.2
Consumption 13.4 0.2 0.8 0.4
Investment 5.2 -0.7 -1.0 -1.6
Net exports of goods and
services 6.5 -0.9 1.5 0.7
Exports 61.6 -2.3 -2.9 -1.1
Imports 55.1 -1.4 -4.4 -1.9
Change in stocks -0.4 -0.1 -1.0 0.0
Real GDP 100.0 3.6 -2.6 -3.4
20
Financial account registered a smaller net outflow in 4Q 2020
This was driven by inflows in non-resident portfolio investment and FDI
*As per the IMF’s BPM5 classifications (i.e. directional basis)
Note: Numbers may not add up due to rounding
Source: Department of Statistics, Malaysia; and Bank Negara Malaysia
RM billion
2019 2020
Year 3Q 4Q Year
Direct Investment 5.6 -3.1 0.8 -0.2
Direct Investment Abroad (DIA)* -26.1 -2.2 -5.4 -14.1
Foreign Direct Investment (FDI)* 31.7 -0.8 6.1 13.9
Portfolio Investment -29.0 -23.1 -6.9 -49.1
Residents -41.7 -20.7 -19.7 -57.6
Non-residents 12.6 -2.4 12.8 8.5
Financial Derivatives -0.5 -0.5 -0.9 1.6
Other Investment -9.9 -8.5 -3.7 -31.4
Financial Account Balance -33.8 -35.2 -10.8 -79.1
FDI inflows amid larger DIA outflows
Rebound in non-resident
portfolio investment
Smaller other investment outflows
Financial Account by Component
Add. Info
21
FDI registered net inflows in 4Q 2020
Net FDI inflows driven mainly by higher equity injections and
inflows in debt instruments
FDI firms continued to inject new equity and reinvested
higher earnings in Malaysia
Continued equity injections
RM13 billion in 2020 (2019: RM22.4 billion)
Higher reinvestment of profits
RM3 billion in 2020 (2019: RM1.8 billion)
Debt outflows due to intercompany loan
extensions and scheduled debt repayments,
reflecting MNCs’ operations
RM-2.2 billion in 2020 (2019: RM7.6 billion)
Source: Department of Statistics Malaysia, Bank Negara Malaysia
19.4
3.9 3.0
5.4 6.4
2.2
-0.8
6.1
31.7
13.9
-10
-5
0
5
10
15
20
25
30
35
1Q-19 2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 2019 2020
Equity and investment fund shares Reinvestment of earnings
Debt instruments FDI
Quarterly Net Foreign Direct Investment (FDI)
RM billion
Add. Info
22
National Investment Aspirations (NIAs) as the anchor of Malaysia’s new investment
strategies to attract quality investments
The Five Pillars of the NIAs
• Development of
sophisticated products
and services
• High local R&D and
innovation intensity
Note: For more information, please refer to BNM’s EMR 2019 Box Article titled “Securing Future Growth through Quality Investments”
Link: https://www.bnm.gov.my/o/annual-report/html/files/emr2019_en_box1.pdf
• High-skilled, high-
income employment
for locals
• High use of domestic
inputs
• Increase breadth and
depth of domestic
supply chain
• Development of high-
productivity sectors
• Development of new
products and services
locally
• Increase development
in underserved areas
and communities
Increase
economic complexity
Create
high-value jobs
Extend
domestic linkages
Develop new and
existing clusters
Improve
inclusivity
1 2 3 4 5
23
UpdatedAdd. Info
Malaysia’s external debt remains manageable
* Consist of currency and deposit placements, and portfolio investments
** Consist of short-term financial institutions’ deposits, interbank borrowings and loans from unrelated counterparties
Source: Bank Negara Malaysia
Banks are resilient to face potential
external shocks …
…while corporates’ external debt is
mainly subject to prudential requirements
63.1
110.6
125.1
56.6
14.4
11.7
Corporate External Debt Breakdown by Instrument
(as at end-4Q 2020)
RM billion
Total: RM381.4 billion
Bonds and
notes
Loans
Other debt liabilities
Intercompany
loans
Trade
credits
On
concessionary
and flexible
terms
Subject to
prudential
requirements
NR holdings of domestic
debt securities
Backed by
export earnings
108.8
62.1
Liquid external
assets
External
debt-at-risk
Banks’ Liquid External Assets* and External Debt-
at-Risk** RM billion
0
2
4
6
Ja
n
Fe
b
M
ar Ap
r
M
ay Ju
n
Ju
l
Au
g
Se
p
O
ct
N
ov
D
ec Ja
n
Fe
b
M
ar Ap
r
M
ay Ju
n
Ju
l
Au
g
Se
p
O
ct
N
ov
D
ec
2019 2020
FX USD
Banks’ FX and USD Net Open Positions as
Percentage of Capital % of total capital
Add. Info
…and Government’s external debt mainly
in ringgit
24.0
206.1
Government External Debt Breakdown by
Currency (as at end-4Q 2020)
RM billion
Total: RM230.1 billion
Foreign currency-denominated
Ringgit-denominated
Not affected by ringgit exchange rate
fluctuations
Comprise medium- and long-term loans and
bonds and notes, suggesting limited rollover risks
24
Banks continue to provide targeted repayment assistance
Data as at 31 December 2020
Source: Bank Negara Malaysia, Agensi Kaunseling dan Pengurusan Kredit (AKPK)
1 Refer to individual repayments excluding credit card
Source: Bank Negara Malaysia
25
Updated
December loan repayments
(RM billion)
SMEs
Households1
Statistics on Assistance Measures
(Year-to-date)
1.4 million
R&R applications received
with 95% approved
123,638
33,356
for AKPK’s Debt
Management
Programmeof which
55% Extension of moratorium
Applications for AKPK
Counselling
18.3
17.1
1Q20
monthly
average
Dec-20 93%
Of levels seen in 1Q 2020
21.5
25.0
1Q20
monthly
average
Dec-20 116%
Of levels seen in 1Q 2020
45% Reduction in instalment
Add. Info
5-step guide on the Targeted Repayment Assistance
26
NEWAdd. Info
Please visit TRA microsite (bnm.gov.my/tra) for latest information (including infographics
& webinar videos)
Add. Info
27
8 BNM’s Funds available for SMEs
Please visit bnm.gov.my/covid19 or bnm.gov.my/sme-financing
NEW
28
Add. Info
https://www.bnm.gov.my/sme-financing
Slide Number 1
Global growth improved in 4Q 2020, but remained negative for many countries
Malaysia’s GDP declined by 3.4% in 4Q 2020
Most economic sectors continued to contract
Subdued private consumption and public investment activities
Current account of the balance of payments registered a surplus �of RM19.0 billion or 5.0% of GDP
Higher unemployment, particularly in tourism-related industries, due to CMCO
Going into 2021, Malaysia’s GDP is projected to recover, supported mainly by the rebound in global growth
Gross exports to expand in 2021
While the imposition of MCO 2.0 will weigh on growth, the impact is less severe than in 2020
Growing momentum of digitalisation is further supporting economic activities under �the new norms
Pick-up in investment and production activities would provide support to growth in 2021
Headline inflation moderated in 4Q 2020 but is projected to average higher in 2021
Monetary policy remains accommodative
Conditions in the domestic financial markets improved as investor sentiments were supported by positive prospects for a recovery from the pandemic
Sustained growth in net financing
New SME financing continues to be driven by banks, complemented by other schemes and a supportive financing ecosystem
Banking system remains well-placed to support financial intermediation
In a nutshell…
Slide Number 20
Slide Number 21
Malaysian GDP growth moderated to -3.4% in 4Q 2020
The moderation in growth was broad-based across most sectors and components
Financial account registered a smaller net outflow in 4Q 2020
FDI registered net inflows in 4Q 2020
National Investment Aspirations (NIAs) as the anchor of Malaysia’s new investment strategies to attract quality investments
Malaysia’s external debt remains manageable
Banks continue to provide targeted repayment assistance
5-step guide on the Targeted Repayment Assistance
Please visit TRA microsite (bnm.gov.my/tra) for latest information (including infographics �& webinar videos)
8 BNM’s Funds available for SMEs
Slide Number 32
| Press Release |
08 Feb 2021 | International Reserves of Bank Negara Malaysia as at 29 January 2021 | https://www.bnm.gov.my/-/international-reserves-of-bnm-29-jan-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 29 January 2021
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International Reserves of Bank Negara Malaysia as at 29 January 2021
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Monday, 8 February 2021
8 Feb 2021
The international reserves of Bank Negara Malaysia amounted to USD108.6 billion as at 29 January 2021. The reserves position is sufficient to finance 8.6 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 29 January 2021
Bank Negara Malaysia
8 February 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
05 Feb 2021 | Additional Allocation of RM2 billion for the Targeted Relief and Recovery Facility and the Establishment of a RM200 million Disaster Relief Facility 2021 | https://www.bnm.gov.my/-/trrf-drf-enhancement-2021 | https://www.bnm.gov.my/documents/20124/2294076/DRF_Appendix+2.pdf, https://www.bnm.gov.my/documents/20124/2294076/TRRF_Appendix+1.pdf | null |
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Additional Allocation of RM2 billion for the Targeted Relief and Recovery Facility and the Establishment of a RM200 million Disaster Relief Facility 2021
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Additional Allocation of RM2 billion for the Targeted Relief and Recovery Facility and the Establishment of a RM200 million Disaster Relief Facility 2021
Embargo :
For immediate release
Not for publication or broadcast before
1045 on
Friday, 5 February 2021
5 Feb 2021
Bank Negara Malaysia (BNM) wishes to announce an additional allocation of RM2 billion for the Targeted Relief and Recovery Facility and the establishment of a RM200 million Disaster Relief Facility 2021.
Additional allocation for Targeted Relief and Recovery Facility (TRRF)
BNM will increase the allocation for the Targeted Relief and Recovery Facility by another RM2 billion, increasing the total allocation of the facility to RM4 billion. The Facility will be available until 31 December 2021 or full utilisation, whichever is earlier.
SMEs that are recipients of the Special Relief Facility and PENJANA SME Financing are now eligible to apply for TRRF, subject to a total financing limit not exceeding RM500,000. For SMEs in the tourism and tourism-related services subsectors, assistance remains available under the existing PENJANA Tourism Financing. Updated features of TRRF are provided in Appendix 1.
Establishment of a RM200 million Disaster Relief Facility (DRF) 2021
The DRF 2021, with an allocation of RM200 million, is established to alleviate the financial burden and assist in the resumption of business operations of SMEs affected by the recent floods in districts identified by Agensi Pengurusan Bencana Negara as flood disaster areas.
DRF 2021 aims to assist SMEs cover the costs of repairs and replacements of damaged assets for business use. It is available to Malaysian SMEs, including microenterprises, with a maximum amount of financing of up to RM500,000 per SME and up to RM75,000 per micro enterprise. The tenure of the financing is up to 5 years, including a moratorium period of 6 months on both principal and interest payments. The financing rate is up to 3.50% per annum, inclusive of guarantee fee.
The facility will be available until 31 July 2021 or full utilisation, whichever is earlier.
Affected businesses can apply for financing at a concessionary rate from participating financial institutions which comprise commercial banks, Islamic banks and development financial institutions regulated by BNM.
Further details on the DRF 2021 are provided in Appendix 2. More information is also available at bnm.gov.my/sme-financing.
SMEs in other sectors can access the various facilities available under BNM’s Fund for SMEs. Details on these funds are available at bnm.gov.my/covid19/.
The public may also contact Bank Negara Malaysia at bnm.my/LINK if they face any difficulties with respect to the above facilities.
Bank Negara Malaysia
5 February 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Economic & Financial Developments in Malaysia Q4 2020
Sidang Akhbar
Prestasi Ekonomi Suku
11 Februari 2021
Keempat Tahun 2020
EMBARGO: NOT FOR DISSEMINATION BEFORE 12 NOON
ON THURSDAY 11 FEBRUARY 2021
Global growth improved in 4Q 2020, but remained negative for many countries
Source: CEIC, national authorities
Global Growth
• Some economies were affected by the
reimposition of containment measures
• Goods trade remained resilient, with
services activity still affected by
international travel restrictions
• Exports continued to support growth in
the region
1
-11.4
-5.6
-2.8 -3.5
3.9 4.9
-1.1
-4.3
-8.3
-3.8
-2.5 -2.2
4.9
6.5
-1.4
-5.1
Philippines Singapore US Indonesia Chinese
Taipei
PR
China
Korea Euro
Area
3Q20 4Q20
Real GDP Growth
Annual change (%)
Malaysia’s GDP declined by 3.4% in 4Q 2020
Source: Department of Statistics, Malaysia
4.5 4.8 4.4 3.6
0.7
-17.1
-2.6 -3.4
0.9 1.3 0.8 0.6
-2.0
-16.5
18.2
-0.3
1Q-19 2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20
yoy
qoq SA
Real GDP Growth (Quarterly)
Period-on-period change
(%)
Annual growth
2020: -5.6%
2019: 4.3%
Key Factors:
Tightening of movement
restrictions
2
Continued growth in
external demand
more than offset
Commodity supply
disruptions due to labour
shortages and facility
closures
Overall, for 2020, the Malaysian economy contracted by 5.6%
-4.7
-4.0
-1.7
Oct-20 Nov-20 Dec-20
yoy
Real GDP Growth (Monthly)
Period-on-period change
(%)
Sep-20
-1.6%
Most economic sectors continued to contract
Source: Department of Statistics Malaysia
3
3.3
3.0
3Q-20 4Q-20
GDP, Annual change (%)
-0.5
-0.7
3Q-20 4Q-20
GDP, Annual change (%)
-4.0
-4.9
3Q-20 4Q-20
GDP, Annual change (%)
-6.8
-10.6
3Q-20 4Q-20
GDP, Annual change (%)
-12.4
-13.9
3Q-20 4Q-20
GDP, Annual change (%)
Manufacturing AgricultureServices Mining Construction
Continued robust
external demand for
E&E production
Continued labour
shortages and poor
weather conditions
affecting oil palm output
Greater restrictions
on mobility and
operating hours
Maintenance closures of
oil & gas facilities
Project delays partly due
to labour shortages and
COVID-related shutdown
of sites
Updated
6.9
2.7
3Q-20 4Q-20
GDP, Annual change (%)
Subdued private consumption and public investment activities
Private Consumption
Source: Department of Statistics Malaysia
Private Investment Public Investment Public Consumption Net exports
Lower household
expenditure amid tighter
movement restrictions
Continued capital
spending in existing
projects, particularly in
export-oriented industries
Lower capital spending
by both General Govt.
and public corporations
Moderate expansion in
Federal Govt.
spending
Higher demand for
manufactured exports
while imports improved at
a faster pace
4
-2.1
-3.4
3Q-20 4Q-20
GDP, Annual change (%)
-9.3
-7.0
3Q-20 4Q-20
GDP, Annual change (%)
-18.6
-19.8
3Q-20 4Q-20
GDP, Annual change (%)
21.9
12.4
3Q-20 4Q-20
GDP, Annual change (%)
Updated
Current account of the balance of payments registered a surplus
of RM19.0 billion or 5.0% of GDP
Goods
Source: Department of Statistics Malaysia
Services Primary Income Secondary Income
5
Updated
41.5
42.9
3Q-20 4Q-20
-9.2
-7.1
3Q-20 4Q-20
-13.3 -14.2
3Q-20 4Q-20
7.1
-2.5
3Q-20 4Q-20
Higher surplus in Goods
Smaller deficit in
Primary income
The increase was
supported by exports of
Palm oil, Rubber and
Chemicals based
products; primarily to
PR China, Singapore
and USA.
Malaysian companies
abroad earned higher
income as compared to
the preceding quarter.
Higher unemployment, particularly in tourism-related industries, due to CMCO
Source: Department of Statistics Malaysia
*Tourism-related industries include wholesale retail, administrative and support services,
accommodation and F&B, transportation and storage, entertainment and recreation
Source: Employment Insurance System, Social Security Organisation
Higher jobless claims and lower placement rates in tourism-
related sectors
5.0
5.3
4.9
4.7 4.7
4.6
4.7
4.8 4.8
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Unemployment rate (%)
3.0 4.8
8.2 7.5
3.6 2.8 2.8 4.6 3.3
3.2
5.2
10.4 9.2
5.6 4.6 4.6
4.5
3.5
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Tourism-related*
Non tourism-related
Jobless claims
Thousands of persons
4 5 7
20
37 47
22 28
11 7
14 31
46
58 53 52
May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Tourism-related*
Non tourism-related
Placement rates
52 new job placements
for every 100 jobs lost
6
Mobility restrictions affected employment activity, resulting in
the unemployment rate edging upwards
-1.0
-1.6
-1.0
-0.7
-0.2 -0.2
-0.4
-0.8
-0.5
Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Employment growth
Annual change, %
Share of labour force, % Number of new job placements for every 100 job losses
Going into 2021, Malaysia’s GDP is projected to recover, supported mainly by the rebound in
global growth
Source: IMF WEO (Jan. 2021)
Global GDP and trade growth are projected to improve
2.8
-3.5
5.5
2019 2020e 2021f
Global GDP growth
Annual change (%)
1.0
-9.6
8.1
2019 2020e 2021f
Global Trade of Goods and Services Growth
Annual change (%)
7
Gradual normalisation in economic activity and
labour market conditions
Continuation of large infrastructure projects
(e.g. ECRL, MRT2, JENDELA)
Recovery in global growth and trade activity
Various targeted policy support
(e.g. PENJANA, KITA PRIHATIN, 2021 Budget and PERMAI)
The recovery will be underpinned by resumption of economic
activities globally and domestically
Gross exports to expand in 2021
Rebound in major trade partners’
growth
Rising demand for semiconductors for
work-from-home equip. & medical devices
Source: International Monetary Fund, World Semiconductor Trade Statistics, IC Insights, IHS Markit, Department of Statistics Malaysia
* share of 2020 Malaysia’s exports
Malaysia’s export orders remain intact
2.3
-5.8
-3.5
8.1
5.0 5.1
PR China
(16.2%* of Malaysia's
exports)
Singapore
(14.5%* of Malaysia's
exports)
US
(11.1%* of Malaysia's
exports)
2020 2021f
Growth in Malaysia’s Key Trade Partners
%yoy
NEW
8
5.1
8.0
8.4
12.0
WSTS Semicon sales IC Insights
2020 2021f
%yoy
Industry forecasts for global semiconductor sales
46.7
33.5
45.9 45.8 45.9
1Q20 2Q20 3Q20 4Q20 Jan-21
Malaysia’s New Export Orders (PMI)
Index
While the imposition of MCO 2.0 will weigh on growth, the impact is less severe than in 2020
Markedly smaller impact on consumer spending after the
MCO2.0 in mid-Jan 2021 compared to the MCO in 2020…
…as factors are in place to cushion the adverse impact to
economic activities
1MCO 2.0 data refers to average spending from 13 Jan – 07 Feb 2021 relative to the week before the MCO 2.0 (06 Jan – 12 Jan 2021). MCO 1.0 data refers to average spending from 18 Mar to 12 Apr 2020, relative to the
week before the MCO 1.0 (11 Mar – 17 Mar 2020).
Source: Bank Negara Malaysia
Most economic sectors allowed to operate, subject to SOPs
Absence of explicit labour capacity and operating hour restrictions,
particularly in the manufacturing and construction sectors
The nation is more accustomed to SOPs
Households and businesses able to adjust more quickly to recent
mobility restriction
Policy responses to support the economy
Accommodative monetary policy, continued assistance to vulnerable
segments, cash transfers to affected households and reskilling and
upskilling programs
9
-30
-22
-33
-4
3
-12
-50
-40
-30
-20
-10
0
10
Total Spending Online Spending Physical Spending
MCO 1.0
MCO 2.0
Change in Spending Relative to 1-Week Before Containment Measures
%
Greater digitalisation helped to facilitate continued consumption
and business activities through online platforms
Continued economic activities through online platforms
Growing momentum of digitalisation is further supporting economic activities under
the new norms
More individuals and businesses are embracing
digital solutions…
1 Data as at end-Oct 2020
2 List is not exhaustive
Source: Bank Negara Malaysia, Malaysia Digital Economy Corporation
10
Despite CMCO in Q4 2020, online banking transactions rose by
10% from the previous quarter.
…supported by concerted efforts to catalyse nationwide
digital transformation2
Conducive and enabling
ecosystem
Transforming existing industries
Catalysing new digital industries
Industrialising Digital
Strengthening Enablers Digitalising Industries
Cyber Resilience (Malaysia
Cyber Security Policy
Digital Connectivity (JENDELA)
Digital Government initiatives 100 GoDigital Program
Micro & SME E-Commerce
Campaign, Shop Malaysia Online
Business Digitalisation Grants
Penjana Kapital
National Technology &
Innovation Sandbox
Global Accelerator
Program (GAIN)
1.7 bn 298k 0.3 bn
2.5 bn
701k
0.6 bn
Increase in
online banking
transaction volume
Increase in
merchant registrations for
QR acceptance
Increase in
e-wallet transaction
volume
2019 2020
+49% +135% +131%
Updated
1
Pick-up in investment and production activities would provide support to growth in 2021
Gradual normalisation in
economic activities
Improving
investment activities
1 WSTS forecast an acceleration in global tech up-cycle to 8.4% in 2021 (5.1% in 2020)
2 Include RM10bn committed investment in rubber products
3 Including MRT2, ECRL, West Coast Expressway
4 JENDELA, JB-Singapore RTS, investment approved under PENJANA incentives for E&E and healthcare subsectors
5 For data storage and servers and high-end consumer products
Ramp up in existing and new
production facilities
Restart of RAPID
refinery complex
Ramp up in new E&E
facilities5 to meet
higher demand
Commencement of
PFLNG2 facility
Improved E&E and
healthcare-related
manufacturing1 activity
Continued rehiring
activities and better
income prospects
Gradual improvement in
consumer spending
Strong investments in
rubber and medical-
related sectors2
Further progress of
large infrastructure
projects3
Roll-out of new
catalytic investment
/ high multiplier
projects4
11
Headline inflation moderated in 4Q 2020 but is projected to average higher in 2021
Slightly more negative headline inflation in 4Q 2020 reflecting
mainly lower inflation for communication services, rental and
fuel
In 2021, headline inflation is expected to be higher, while core
inflation would remain subdued
1Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of consumption tax policy changes
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
-1.4 -1.5
1.0
0.8
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
3Q-20 4Q-20
Other price-administered items (ppt) Fuel (ppt)
Core inflation¹ (ppt) Price-volatile items (ppt)
Headline inflation (%) Core inflation¹ (%)
Contribution to Headline Inflation by Component
Annual change (%),Ppt contribution to headline inflation
Assessments for 2021
1 Headline inflation is expected to average higher,
primarily due to higher projected global oil prices
2 Core inflation would remain subdued amid
continued spare capacity in the economy
3 Uncertainties in the 2021 outlook
• Trajectory mainly depends on global oil and commodity
price developments
12
2020 Headline Inflation = -1.2%
2020 Core Inflation = 1.1%
Monetary policy remains accommodative
Source: Bank Negara Malaysia
• Overnight Policy Rate (OPR) was
maintained at 1.75% at the January MPC
meeting.
• Monetary policy will remain
accommodative to support economic
growth.
• Given uncertainties surrounding the
pandemic, monetary policy going forward
will continue to be determined by new
data and information.
Jan-21
1.75%
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Overnight Policy Rate (OPR)
%
13
Conditions in the domestic financial markets improved as investor sentiments were
supported by positive prospects for a recovery from the pandemic
-30
-20
-10
0
10
20
30
40
Jan-
20
Feb-
20
Mar-
20
Apr-
20
May-
20
Jun-
20
Jul-
20
Aug-
20
Sep-
20
Oct-
20
Nov-
20
Dec-
20
Jan-
21
Feb-
21
Bond
Equity
Cumulative Non-resident Portfolio Flows and MYR/USD change
R
M
b
illi
on
MYR/USD % change in brackets
Source: Bank Negara Malaysia, Bursa Malaysia
*Regional countries include Indonesia, the Philippines, PR China, Singapore, South Korea and
Thailand. YTD as at 8 February 2021.
Source: Bank Negara Malaysia, Bloomberg
Ringgit recorded an overall appreciation for 2020 amid
resumption in non-resident inflows since the second quarter
While NR inflows provided support to the bond market, the
improvement in equities was driven by domestic investors
4.4
-49.0 -20.6
-1.0
-66.2
13.5
0.8
-54.6
6.1
-13.1
-60.8
14.8
-100
-60
-20
20
60
Q1 Q2 Q3 Q4 2020 2021
YTD
Malaysia Regional Avg
Movement of 10-Year Sovereign Bond Yields
bps
-15.0
11.1 0.3 8.1
2.4
-3.3
-23.6
12.8
-0.1
18.1
1.8
3.2
-35
-15
5
25
Q1 Q2 Q3 Q4 2020 2021
YTD
Malaysia Regional Avg
Movement of Equity Prices
%
Year 2020 [+2.0] 2021 YTD
[-1.2]
Quarter Q1 [-4.9] Q2: [+0.5] Q3 [+2.9] Q4 [+3.6]
14
Updated
89.2
99.1 99.5
86.8
76.1
94.6
2017 - 19
Quarterly average
3Q 2020 4Q 2020
Disbursements Repayments
Sustained growth in net financing
Net financing expanded by 4.4% during
the quarter
Higher loan disbursements and
repayments in the business segment
Note: Data refers to loans from banking system and development financial institutions (DFIs), *Excludes issuances by Cagamas and non-residents
Numbers may not add up due to rounding
Source: Bank Negara Malaysia
Continued robust disbursements to
households
3.5
2.7
1.1
1.7
4.6 4.4
3Q 2020 4Q 2020
Outstanding corporate bonds*
Outstanding loans
Net financing
Net Financing*
Annual change, % / Cont. to growth, ppt
Household Loan Disbursements and Repayments
RM bn
15
196.7
182.4
206.2
196.5
185.3
207.1
2017 - 19
Quarterly average
3Q 2020 4Q 2020
Disbursements Repayments
Business Loan Disbursements and Repayments
RM bn
Guarantee Schemes
New SME financing continues to be driven by banks, complemented by other schemes and a
supportive financing ecosystem
Financing activity has returned to pre-
COVID levels, driven by banks’ own funds
RM6.4 billion still available under BNM’s
Funds with recent TRRF upsize
* Banking system and development financial institutions (DFI)
Source: Bank Negara Malaysia
Financing ecosystem offers
comprehensive support which has been
strengthened over the years
Agrofood
All Economic Sectors
Targeted Relief & Recovery
Tourism
Disaster Relief
Automation & Digitisation
Microenterprises
High tech & innovation
Total allocation of RM 23.1 billion with dedicated
facilities for:
Debt Advisory & Resolution
Financing Referral
63.7
55.3
16.2
73.3 71.8
18.8
Disbursements Repayments Approvals
3Q 2020
4Q 2020
2017-19 Qtrly Average
RM bn
RM257 billion
>95%
Are from banks internal funds
of which
New loans disbursed
Disbursements in 2020
16
Banking system remains well-placed to support financial intermediation
Banks continue to preserve healthy
capital buffers…
…amid higher impairments
in 4Q 2020
Banks’ loss-absorbing capacity further
supported by provision built up over the
past year
1 Excess capital buffers refer to excess above regulatory minimum
2 Refers to cumulative loan loss impairment and other provisions charged to income statement year-to-date
Source: Bank Negara Malaysia
115
122
125 123
Mar-20 Jun-20 Sep-20 Dec-20
Excess Capital Buffers1
RM billion
17
1.57%
1.44%
1.37%
1.57%
Mar-20 Jun-20 Sep-20 Dec-20
Gross Impaired Loans Ratio
1.3
14.3
Dec-19 Dec-20
Credit Cost2
RM billion
In a nutshell…
Malaysia’s GDP growth moderated in the fourth quarter.
Resurgence in cases and the containment measures will weigh on growth in
near-term, but the impact will be less severe
Policy measures and assistance will continue to support both businesses and households
Going into 2021, growth will rebound, supported by a pick up in global demand
and normalisation in domestic economic activities
18
Downside risks to growth remain, with the pace and strength of recovery subject to
developments surrounding the COVID-19 pandemic globally and domestically.
UpdatedUpdated
Vaccine rollout starting this month, with herd immunity targeted by early-2022,
will lift sentiments and growth
End of Presentation
Additional Information
Malaysian GDP growth moderated to -3.4% in 4Q 2020
Annual change in GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics, Malaysia
Add. Info
Real GDP
(% YoY)
Share1 %
(2020)
2019 2020
4Q 3Q 4Q
Services 57.7 6.2 -4.0 -4.9
Manufacturing 23.0 3.0 3.3 3.0
Agriculture 7.4 -5.7 -0.5 -0.7
Mining and Quarrying 6.8 -3.4 -6.8 -10.6
Construction 4.0 1.0 -12.4 -13.9
Real GDP 100.0 3.6 -2.6 -3.4
Real GDP
(% YoY)
Share1, %
(2020)
2019 2020
4Q 3Q 4Q
Domestic demand
(excluding stocks) 93.9 4.8 -3.3 -4.4
Private Sector 75.2 7.4 -3.6 -4.1
Consumption 59.5 8.1 -2.1 -3.4
Investment 15.7 4.3 -9.3 -7.0
Public Sector 18.7 -2.3 -1.6 -5.4
Consumption 13.4 1.3 6.9 2.7
Investment 5.2 -8.0 -18.6 -19.8
Net exports of goods and
services 6.5 -12.4 21.9 12.4
Exports 61.6 -3.4 -4.7 -1.8
Imports 55.1 -2.4 -7.8 -3.3
Change in stocks -0.4 -1.4 -7.8 -1.4
Real GDP 100.0 3.6 -2.6 -3.4
19
The moderation in growth was broad-based across most sectors and components
Percentage point contribution to GDP growth by component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics, Malaysia
Add. Info
Real GDP
(Ppt contribution, %)
Share1 %
(2020)
2019 2020
4Q 3Q 4Q
Services 57.7 3.5 -2.3 -2.8
Manufacturing 23.0 0.7 0.7 0.7
Agriculture 7.4 -0.4 -0.04 -0.05
Mining and Quarrying 6.8 -0.3 -0.4 -0.8
Construction 4.0 -0.05 -0.6 -0.6
Real GDP 100.0 3.6 -2.6 -3.4
Real GDP
(Ppt contribution)
Share1, %
(2020)
2019 2020
4Q 3Q 4Q
Domestic demand
(excluding stocks) 93.9 4.5 -3.1 -4.2
Private Sector 75.2 5.1 -2.8 -2.9
Consumption 59.5 4.5 -1.2 -2.0
Investment 15.7 0.6 -1.6 -0.9
Public Sector 18.7 -0.6 -0.3 -1.2
Consumption 13.4 0.2 0.8 0.4
Investment 5.2 -0.7 -1.0 -1.6
Net exports of goods and
services 6.5 -0.9 1.5 0.7
Exports 61.6 -2.3 -2.9 -1.1
Imports 55.1 -1.4 -4.4 -1.9
Change in stocks -0.4 -0.1 -1.0 0.0
Real GDP 100.0 3.6 -2.6 -3.4
20
Financial account registered a smaller net outflow in 4Q 2020
This was driven by inflows in non-resident portfolio investment and FDI
*As per the IMF’s BPM5 classifications (i.e. directional basis)
Note: Numbers may not add up due to rounding
Source: Department of Statistics, Malaysia; and Bank Negara Malaysia
RM billion
2019 2020
Year 3Q 4Q Year
Direct Investment 5.6 -3.1 0.8 -0.2
Direct Investment Abroad (DIA)* -26.1 -2.2 -5.4 -14.1
Foreign Direct Investment (FDI)* 31.7 -0.8 6.1 13.9
Portfolio Investment -29.0 -23.1 -6.9 -49.1
Residents -41.7 -20.7 -19.7 -57.6
Non-residents 12.6 -2.4 12.8 8.5
Financial Derivatives -0.5 -0.5 -0.9 1.6
Other Investment -9.9 -8.5 -3.7 -31.4
Financial Account Balance -33.8 -35.2 -10.8 -79.1
FDI inflows amid larger DIA outflows
Rebound in non-resident
portfolio investment
Smaller other investment outflows
Financial Account by Component
Add. Info
21
FDI registered net inflows in 4Q 2020
Net FDI inflows driven mainly by higher equity injections and
inflows in debt instruments
FDI firms continued to inject new equity and reinvested
higher earnings in Malaysia
Continued equity injections
RM13 billion in 2020 (2019: RM22.4 billion)
Higher reinvestment of profits
RM3 billion in 2020 (2019: RM1.8 billion)
Debt outflows due to intercompany loan
extensions and scheduled debt repayments,
reflecting MNCs’ operations
RM-2.2 billion in 2020 (2019: RM7.6 billion)
Source: Department of Statistics Malaysia, Bank Negara Malaysia
19.4
3.9 3.0
5.4 6.4
2.2
-0.8
6.1
31.7
13.9
-10
-5
0
5
10
15
20
25
30
35
1Q-19 2Q-19 3Q-19 4Q-19 1Q-20 2Q-20 3Q-20 4Q-20 2019 2020
Equity and investment fund shares Reinvestment of earnings
Debt instruments FDI
Quarterly Net Foreign Direct Investment (FDI)
RM billion
Add. Info
22
National Investment Aspirations (NIAs) as the anchor of Malaysia’s new investment
strategies to attract quality investments
The Five Pillars of the NIAs
• Development of
sophisticated products
and services
• High local R&D and
innovation intensity
Note: For more information, please refer to BNM’s EMR 2019 Box Article titled “Securing Future Growth through Quality Investments”
Link: https://www.bnm.gov.my/o/annual-report/html/files/emr2019_en_box1.pdf
• High-skilled, high-
income employment
for locals
• High use of domestic
inputs
• Increase breadth and
depth of domestic
supply chain
• Development of high-
productivity sectors
• Development of new
products and services
locally
• Increase development
in underserved areas
and communities
Increase
economic complexity
Create
high-value jobs
Extend
domestic linkages
Develop new and
existing clusters
Improve
inclusivity
1 2 3 4 5
23
UpdatedAdd. Info
Malaysia’s external debt remains manageable
* Consist of currency and deposit placements, and portfolio investments
** Consist of short-term financial institutions’ deposits, interbank borrowings and loans from unrelated counterparties
Source: Bank Negara Malaysia
Banks are resilient to face potential
external shocks …
…while corporates’ external debt is
mainly subject to prudential requirements
63.1
110.6
125.1
56.6
14.4
11.7
Corporate External Debt Breakdown by Instrument
(as at end-4Q 2020)
RM billion
Total: RM381.4 billion
Bonds and
notes
Loans
Other debt liabilities
Intercompany
loans
Trade
credits
On
concessionary
and flexible
terms
Subject to
prudential
requirements
NR holdings of domestic
debt securities
Backed by
export earnings
108.8
62.1
Liquid external
assets
External
debt-at-risk
Banks’ Liquid External Assets* and External Debt-
at-Risk** RM billion
0
2
4
6
Ja
n
Fe
b
M
ar Ap
r
M
ay Ju
n
Ju
l
Au
g
Se
p
O
ct
N
ov
D
ec Ja
n
Fe
b
M
ar Ap
r
M
ay Ju
n
Ju
l
Au
g
Se
p
O
ct
N
ov
D
ec
2019 2020
FX USD
Banks’ FX and USD Net Open Positions as
Percentage of Capital % of total capital
Add. Info
…and Government’s external debt mainly
in ringgit
24.0
206.1
Government External Debt Breakdown by
Currency (as at end-4Q 2020)
RM billion
Total: RM230.1 billion
Foreign currency-denominated
Ringgit-denominated
Not affected by ringgit exchange rate
fluctuations
Comprise medium- and long-term loans and
bonds and notes, suggesting limited rollover risks
24
Banks continue to provide targeted repayment assistance
Data as at 31 December 2020
Source: Bank Negara Malaysia, Agensi Kaunseling dan Pengurusan Kredit (AKPK)
1 Refer to individual repayments excluding credit card
Source: Bank Negara Malaysia
25
Updated
December loan repayments
(RM billion)
SMEs
Households1
Statistics on Assistance Measures
(Year-to-date)
1.4 million
R&R applications received
with 95% approved
123,638
33,356
for AKPK’s Debt
Management
Programmeof which
55% Extension of moratorium
Applications for AKPK
Counselling
18.3
17.1
1Q20
monthly
average
Dec-20 93%
Of levels seen in 1Q 2020
21.5
25.0
1Q20
monthly
average
Dec-20 116%
Of levels seen in 1Q 2020
45% Reduction in instalment
Add. Info
5-step guide on the Targeted Repayment Assistance
26
NEWAdd. Info
Please visit TRA microsite (bnm.gov.my/tra) for latest information (including infographics
& webinar videos)
Add. Info
27
8 BNM’s Funds available for SMEs
Please visit bnm.gov.my/covid19 or bnm.gov.my/sme-financing
NEW
28
Add. Info
https://www.bnm.gov.my/sme-financing
Slide Number 1
Global growth improved in 4Q 2020, but remained negative for many countries
Malaysia’s GDP declined by 3.4% in 4Q 2020
Most economic sectors continued to contract
Subdued private consumption and public investment activities
Current account of the balance of payments registered a surplus �of RM19.0 billion or 5.0% of GDP
Higher unemployment, particularly in tourism-related industries, due to CMCO
Going into 2021, Malaysia’s GDP is projected to recover, supported mainly by the rebound in global growth
Gross exports to expand in 2021
While the imposition of MCO 2.0 will weigh on growth, the impact is less severe than in 2020
Growing momentum of digitalisation is further supporting economic activities under �the new norms
Pick-up in investment and production activities would provide support to growth in 2021
Headline inflation moderated in 4Q 2020 but is projected to average higher in 2021
Monetary policy remains accommodative
Conditions in the domestic financial markets improved as investor sentiments were supported by positive prospects for a recovery from the pandemic
Sustained growth in net financing
New SME financing continues to be driven by banks, complemented by other schemes and a supportive financing ecosystem
Banking system remains well-placed to support financial intermediation
In a nutshell…
Slide Number 20
Slide Number 21
Malaysian GDP growth moderated to -3.4% in 4Q 2020
The moderation in growth was broad-based across most sectors and components
Financial account registered a smaller net outflow in 4Q 2020
FDI registered net inflows in 4Q 2020
National Investment Aspirations (NIAs) as the anchor of Malaysia’s new investment strategies to attract quality investments
Malaysia’s external debt remains manageable
Banks continue to provide targeted repayment assistance
5-step guide on the Targeted Repayment Assistance
Please visit TRA microsite (bnm.gov.my/tra) for latest information (including infographics �& webinar videos)
8 BNM’s Funds available for SMEs
Slide Number 32
Updated on 5 February 2021
Appendix 1
Targeted Relief and Recover Facility (TRRF)
Features Details
Objective Provide relief and support recovery for SMEs in the services sector
affected by reintroduction of containment measures since June 2020,
except tourism and tourism-related subsectors
Allocation RM4 billion
Eligibility SMEs* in services sector affected by reintroduction of COVID-19
containment measures since June 2020 (except for tourism and
tourism-related subsectors), such as:
• Personal services (e.g. repair of computers / household goods,
laundry, hairdressing, beauty)
• Food and beverage service activities
• Human health and social work activities
• Arts, entertainment and recreation
• Wholesale and retail trade
• Business services (e.g. professional, scientific and technical
activities; administrative and support service activities)
Note: Recipients of the Special Relief Fund and PENJANA SME
Financing are eligible for the TRRF up to an aggregate limit of
RM500,000 per SME
Purpose of
financing
Working capital only
Financing size • Up to RM500,000 per SME; and
• Up to RM75,000 per micro enterprise.
Note: The above is applicable for SMEs with common shareholder(s)
of > 20% shareholding
Financing rate to
SMEs
Up to 3.50% per annum, inclusive of guarantee fee
Tenure Up to 7 years, with a moratorium on monthly instalments of at least 6
months
Guarantee coverage • SMEs: 80% (0.5% p.a. guarantee fee);
• Optional for participating financial institutions – Micro enterprises:
90% (0.5% p.a. guarantee fee).
Participating financial institutions can obtain guarantee coverage from
the Credit Guarantee Corporation Malaysia Berhad (CGC) / Syarikat
Jaminan Pembiayaan Perniagaan (SJPP)
Updated on 5 February 2021
Application
procedure
Interested SMEs may apply for the TRRF at participating financial
institutions which comprise:
1. Affin Bank Berhad / Affin Islamic Bank Berhad
2. Alliance Bank Malaysia Berhad / Alliance Islamic Bank Berhad
3. AmBank (M) Berhad / AmBank Islamic Berhad
4. Bangkok Bank Berhad
5. Bank Islam Malaysia Berhad
6. Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)
7. Bank Muamalat Malaysia Berhad
8. Bank of China (Malaysia) Berhad
9. Bank Pertanian Malaysia Berhad (Agrobank)
10. Bank Simpanan Nasional
11. CIMB Bank Berhad / CIMB Islamic Bank Berhad
12. HSBC Bank Malaysia Berhad / HSBC Amanah Malaysia Berhad
13. Hong Leong Bank Berhad / Hong Leong Islamic Bank Berhad
14. Malayan Banking Berhad / Maybank Islamic Berhad
15. MBSB Bank Berhad
16. OCBC Bank (Malaysia) Berhad / OCBC Al-Amin Bank Berhad
17. Public Bank Berhad / Public Islamic Bank Berhad
18. RHB Bank Berhad / RHB Islamic Bank Berhad
19. Small Medium Enterprise Development Bank Berhad (SME Bank)
20. Standard Chartered Bank Malaysia Berhad
21. United Overseas Bank (Malaysia) Berhad
Availability Until 31 December 2021 or full utilisation (whichever is earlier)
*At least 51% shares held by Malaysians and as defined by SME Corp’s Guidelines on
National SME Definition accessible at:
https://www.smecorp.gov.my/images/pdf/2020/Guideline-SMEDefinition_updated.pdf)
https://www.smecorp.gov.my/images/pdf/2020/Guideline-SMEDefinition_updated.pdf
| Press Release |
29 Jan 2021 | Monetary and Financial Developments in December 2020 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-december-2020 | https://www.bnm.gov.my/documents/20124/2432443/i_en.pdf | null |
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Monetary and Financial Developments in December 2020
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Monetary and Financial Developments in December 2020
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29 Jan 2021
Headline inflation was less negative at -1.4% in December
The less negative headline inflation at -1.4% during the month (November 2020:-1.7%) was due mainly to higher domestic retail fuel prices.
Underlying inflation, as measured by core inflation1, remained stable at 0.7%.
For 2020 as a whole, average headline inflation was lower at -1.2% (2019: 0.7%) mainly reflecting the substantially lower global oil prices. Core inflation remained positive, averaging at 1.1% (2019: 1.5%).
Export growth improved in November
Export growth improved to 4.3% in November 2020 (October 2020: 0.2%), due mainly to stronger E&E exports. By destination, the stronger E&E export performance was driven by higher exports to PR China, Hong Kong SAR and Singapore.
Looking ahead, exports are expected to be supported by the recovery in global growth, continued demand for electronics exports and higher commodity prices. Nonetheless, the trade outlook remains contingent on global developments surrounding the COVID-19 pandemic.
Continued expansion in net financing
Net financing2 continued to expand amid a moderation in total outstanding loan growth (December 2020: 3.4%, November 2020: 3.8%) while outstanding corporate bond growth was sustained at 6.5% (November 2020: 6.7%).
Outstanding household loan growth was sustained at 5.0% (November 2020: 5.0%) as loan disbursements increased and remained higher than the historical average (December 2020: RM33.1 billion, November 2020: RM29.7 billion).
Outstanding business loan growth declined (December 2020: 0.5%, November 2020: 1.2%) due to a high base effect3 in December 2019. However, disbursements increased driven by higher working capital loans.
Performance of domestic financial markets improved significantly
In December, global investor sentiments continued to improve amid expectations for an eventual normalisation of economic activities, following government authorisations on the use of COVID-19 vaccines by major economies. This occurred despite some concerns on the potential slowing down of the global economic recovery, as several major economies introduced additional lockdown measures amid surges in COVID-19 infections during the month.
Consequently, global and regional equity indices recorded gains, reflecting higher investor risk appetite for riskier assets. Similarly, the FBM KLCI increased by 4.1%.
The improved investor risk appetite also led to non-resident portfolio inflows into the domestic bond market amid yield-seeking activities by global investors. As a result, the 10-year MGS declined by 9 basis points, and the ringgit appreciated by 1.4% against the US dollar.
Banking system asset quality remains healthy despite rising impairments
Gross impaired loans ratio continued to inch upwards, returning to levels comparable to 2019 (December 2020: 1.6%; November 2020: 1.5%).
Banks continued to set aside additional provisions as a precaution against future credit losses with the total provisions to total loans ratio increasing to 1.7% in December (November 2020: 1.6%).
Borrowers that remain affected by the challenging conditions continue to receive needed support from banks, through targeted repayment assistance.
See also:
Press release [PDF]
-------------------
1 Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of tax policy changes.
2 Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)).
3 Due to disbursements of large-value loans in the manufacturing sector. The growth would have been 1.3% excluding the base effect. Related Assets
Monthly Highlights and Statistics in December 2020
Bank Negara Malaysia
29 January 2021
© Bank Negara Malaysia, 2021. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
29 Jan 2021 | Detailed Disclosure of International Reserves as at end-December 2020 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-december-2020 | null | null |
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Detailed Disclosure of International Reserves as at end-December 2020
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Detailed Disclosure of International Reserves as at end-December 2020
Embargo :
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29 Jan 2021
In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD107,636 million, while other foreign currency assets amounted to USD561.1 million as at end-December 2020. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD7,305.7 million. The short forward positions amounted to USD5,794 million while long forward positions amounted to USD535 million as at end-December 2020, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,470.2 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD327.6 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-December 2020, Malaysia’s international reserves remain usable.
Related Assets
International Reserves and Foreign Currency Liquidity (31 December 2020)
Bank Negara Malaysia
29 January 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
22 Jan 2021 | International Reserves of Bank Negara Malaysia as at 15 January 2021 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-15-january-2021 | null | null |
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International Reserves of Bank Negara Malaysia as at 15 January 2021
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International Reserves of Bank Negara Malaysia as at 15 January 2021
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22 Jan 2021
The international reserves of Bank Negara Malaysia amounted to USD107.8 billion as at 15 January 2021. The reserves position is sufficient to finance 8.7 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 15 January 2021
Bank Negara Malaysia
22 January 2021
© Bank Negara Malaysia, 2021. All rights reserved.
| null | Press Release |
20 Jan 2021 | Monetary Policy Statement | https://www.bnm.gov.my/-/monetary-policy-statement-20012021 | null | null |
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Monetary Policy Statement
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20 Jan 2021
At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.
The global economy continues to recover, led by improvements in manufacturing and export activity. However, the recent resurgences of COVID-19 cases and the subsequent containment measures have affected economic activity in several major economies. The expedited roll-out of mass vaccination programmes, together with ongoing policy support, are expected to lift global growth prospects going forward. Financial conditions also remain supportive. The overall outlook remains subject to downside risks, primarily if there is further resurgence of COVID-19 infections and delays in mass inoculation against COVID-19.
For Malaysia, the resurgence in COVID-19 cases and the introduction of targeted containment measures has affected the recovery momentum in the fourth quarter of 2020. As a result, growth for 2020 is expected to be near the lower end of the earlier forecasted range. For 2021, while near-term growth will be affected by the re-introduction of stricter containment measures, the impact will be less severe than that experienced in 2020. The growth trajectory is projected to improve from the second quarter onwards. The improvement will be driven by the recovery in global demand, turnaround in public and private sector expenditure amid continued support from policy measures, and higher production from existing and new manufacturing and mining facilities. The roll-out of vaccines in the coming months will also lift sentiments. Downside risks to the outlook remain, stemming mainly from ongoing uncertainties surrounding the dynamics of the pandemic and potential challenges that might affect the roll-out of vaccines both globally and domestically.
In line with earlier assessments, the average headline inflation is expected to be negative in 2020 due mainly to the substantially lower global oil prices. For 2021, headline inflation is projected to average higher, primarily due to higher global oil prices. Underlying inflation is expected to remain subdued amid continued spare capacity in the economy. The outlook, however, is subject to global oil and commodity price developments.
The MPC considers the stance of monetary policy to be appropriate and accommodative. Given the uncertainties surrounding the pandemic, the stance of monetary policy going forward will be determined by new data and information, and their implications on the overall outlook for inflation and domestic growth. The Bank remains committed to utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.
Bank Negara Malaysia
20 January 2021
© Bank Negara Malaysia, 2021. All rights reserved.
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20 Jan 2021 | Statement on Statutory Reserve Requirement | https://www.bnm.gov.my/-/statement-on-statutory-reserve-requirement | null | null |
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Statement on Statutory Reserve Requirement
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Bank Negara Malaysia is announcing today the extension of the flexibility for banking institutions to use MGS and MGII to meet the SRR compliance until 31 December 2022. This flexibility which was previously announced on 5 May 2020, is currently applicable until 31 May 2021. The Statutory Reserve Requirement (SRR) ratio remains unchanged at 2.00%.
The decision to extend this flexibility is part of Bank Negara Malaysia’s continuous efforts to ensure sufficient liquidity to support financial intermediation activity. Since March 2020, the reduction in the SRR ratio by 100 basis points and flexibility to recognise MGS and MGII as part of SRR compliance have released approximately RM46 billion worth of liquidity into the banking system.
The SRR is an instrument to manage liquidity and is not a signal on the stance of monetary policy. The Overnight Policy Rate (OPR) is the sole indicator used to signal the stance of monetary policy, and is announced through the Monetary Policy Statement released after the Monetary Policy Committee meeting.
Bank Negara Malaysia
20 January 2021
© Bank Negara Malaysia, 2021. All rights reserved.
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14 Jan 2021 | Appointment of Two External Members to Bank Negara Malaysia’s Monetary Policy Committee | https://www.bnm.gov.my/-/appointment-of-two-external-members-to-bank-negara-malaysia-s-monetary-policy-committee-2 | null | null |
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Appointment of Two External Members to Bank Negara Malaysia’s Monetary Policy Committee
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14 Jan 2021
Bank Negara Malaysia wishes to announce the appointment of Encik Nor Zahidi Alias and reappointment of Dato’ Dr. Gan Wee Beng as external members of Bank Negara Malaysia’s Monetary Policy Committee for two-year terms, effective 1 January 2021 and 1 April 2021, respectively.
Under the Central Bank of Malaysia Act 2009, the Monetary Policy Committee of Bank Negara Malaysia is responsible for formulating monetary policy and policies for the conduct of monetary policy operations. The Central Bank of Malaysia Act 2009 also provides for the appointment of external members to the Monetary Policy Committee.
Encik Nor Zahidi Alias
Encik Nor Zahidi Alias was the Chief Economist of the Malaysian Rating Corporation Berhad (MARC). Earlier in his career, he worked at The New Straits Times Press (M) Berhad as a senior analyst before subsequently joining Kuala Lumpur City Securities as an economist. Prior to his position in MARC, he was the Head of Research and Chief Economist of Alliance Merchant Bank and Head of Research of MCIS Zurich Insurance. Encik Nor Zahidi holds a Master’s degree in Economics Policy and a Bachelor’s degree in Economics from Boston University.
Dato’ Dr. Gan Wee Beng
Dato’ Dr. Gan Wee Beng has been on the Monetary Policy Committee since 1 April 2019. He is also currently a Board Member of Perbadanan Insurans Deposit Malaysia (PIDM). He was previously a board member at Kumpulan Wang Persaraan (KWAP) and has held several positions in CIMB Group including as Advisor for Investment Banking, and Executive Director at CIMB Bank, CIMB Investment Bank and CIMB Securities. Prior to this, he was a Senior Advisor at the Economics Department of the Monetary Authority of Singapore, and consultant to the World Bank and International Labour Organisation. He was also a Research Fellow at the Malaysian Institute of Economic Research. Dato’ Dr. Gan holds a PhD in Economics from the University of Pennsylvania, and a Master’s degree and a Bachelor’s degree in Economics from the University of Malaya.
The appointment of Encik Nor Zahidi Alias and Dato’ Dr. Gan Wee Beng will continue to enhance the collective expertise and experience relevant to the responsibilities and functions of the Monetary Policy Committee. With their appointment, the Monetary Policy Committee will comprise a total of eight members.
Members of the Monetary Policy Committee
Governor Nor Shamsiah Yunus
Deputy Governor Abdul Rasheed Ghaffour
Deputy Governor Jessica Chew Cheng Lian
Deputy Governor Marzunisham Omar
Assistant Governor Norzila Abdul Aziz
Assistant Governor Dr. Norhana Endut
Dato’ Dr. Gan Wee Beng
Encik Nor Zahidi AliasBank Negara Malaysia
14 January 2021
© Bank Negara Malaysia, 2021. All rights reserved.
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08 Jan 2021 | International Reserves of Bank Negara Malaysia as at 31 December 2020 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-31-december-2020 | null | null |
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International Reserves of Bank Negara Malaysia as at 31 December 2020
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International Reserves of Bank Negara Malaysia as at 31 December 2020
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The international reserves of Bank Negara Malaysia amounted to USD107.6 billion as at 31 December 2020. The reserves level has taken into account the quarterly foreign exchange revaluation changes. The reserves position is sufficient to finance 8.6 months of retained imports and is 1.2 times total short-term external debt. Related Assets
BNM Statement of Assets & Liabilities - 31 December 2020
Bank Negara Malaysia
8 January 2021
© Bank Negara Malaysia, 2021. All rights reserved.
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30 Dec 2022 | Monetary and Financial Developments in November 2022 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-november-2022 | https://www.bnm.gov.my/documents/20124/9292269/i_en.pdf | null |
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Monetary and Financial Developments in November 2022
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Monetary and Financial Developments in November 2022
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30 Dec 2022
Headline inflation was stable at 4.0% in November
Headline inflation was stable at 4.0% in November (October: 4.0%) as the increase in core inflation was offset by lower inflation in other categories, namely fuel and fresh food.
Core inflation increased slightly to 4.2% (October: 4.1%) due mainly to the increase in prices for food away from home.
Continued manufacturing production growth in October 2022
Manufacturing IPI expanded in October 2022 by 4.2%.
Growth was driven mainly by the E&E cluster which recorded above average growth at 8.7% (2016-2019 avg.: 6.2%).
The primary cluster, particularly refined petroleum products production, also supported growth with resumption of operations at an existing oil refinery that was previously under maintenance.
Net financing moderated, as repayments outpaced disbursements
Net financing grew by 4.7% as at end-November (October: 5.7%), reflecting lower growth in both outstanding loans (5.5%; October: 6.5%) and corporate bonds (2.6%; October: 3.6%).
Household loan growth moderated to 6.0% (October: 6.3%) as loan repayments growth outpaced that of disbursements across major loan purposes.
Outstanding business loan growth moderated to 3.4% (October: 5.2%), due mainly to strong growth in repayments among large firms. Loan disbursements continued to record double-digit growth (13.7%; October: 13.4%), despite some moderation in growth in the consumer manufacturing and real estate sectors.
Domestic financial conditions eased amid improved investor sentiment
Global financial conditions eased following expectations for a slower pace of monetary policy tightening as inflation continued to show signs of peaking, especially in the US. Easing of COVID-19 restrictions in China also supported the overall investors’ risk sentiment.
Consequently, domestic financial conditions eased, with the 10-year MGS yields declining by 26 bps (regional average*: -44.4 bps) and the FBM KLCI rising by 1.9% (regional average*: +5.2%). Financial markets’ performance was also supported by improved political certainty following the formation of the new Government.
The ringgit appreciated by 6.3% against the US dollar, in line with a broad-based appreciation in major and regional* (average: +4.5%) currencies against the US dollar.
Banks maintained strong liquidity and funding positions to support intermediation
The banking system’s Liquidity Coverage Ratio remained healthy. Banks are proactive in managing their buffers to address the year-end seasonal fluctuations in banking system liquidity and continue to be supportive of intermediation.
The aggregate loan-to-fund ratio remained largely stable at 82.3% (Oct-22: 82.0%).
Asset quality in the banking system remained intact
Overall gross and net impaired loans ratios remained unchanged at 1.8% (Oct-22: 1.8%) and 1.1% (Oct-22: 1.1%), respectively.
Loan loss coverage ratio (including regulatory reserves) continues to record a prudent level of 116.5% of impaired loans, with total provisions accounting for 1.8% of total loans.
Monthly Highlights [PDF]
*Regional countries comprise Singapore, Thailand, Philippines, Indonesia and Korea
Related Assets
Monthly Highlights & Statistics in November 2022
Bank Negara Malaysia
30 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
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l
2
2
A
u
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2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
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2
2
J
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l
2
2
A
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2
2
S
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2
2
O
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2
2
N
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2
2
D
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2
2
J
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3
F
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b
2
3
M
a
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2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Dec 2022 | Detailed Disclosure of International Reserves as at end-November 2022 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-november-2022 | null | null |
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Detailed Disclosure of International Reserves as at end-November 2022
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In accordance with the International Monetary Fund (IMF) Special Data Dissemination Standard (SDDS) format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD109,719.0 million, while other foreign currency assets amounted to USD4.9 million as at end-November 2022. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD15,426.7 million. The short forward positions amounted to USD25,988.2 million as at end-November 2022, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD1,982.7 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets is Government guarantees of foreign currency debt due within one year, amounting to USD399.4 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-November 2022, Malaysia’s international reserves remain usable.
Related Assets
International Reserves and Foreign Currency Liquidity (30 November 2022)
Bank Negara Malaysia
30 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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23 Dec 2022 | Issuance of Commemorative Coins in Conjunction with the 100th Anniversary of the Cooperative Movement in Malaysia | https://www.bnm.gov.my/-/csm-100yrs-coins | null | null |
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Issuance of Commemorative Coins in Conjunction with the 100th Anniversary of the Cooperative Movement in Malaysia
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Issuance of Commemorative Coins in Conjunction with the 100th Anniversary of the Cooperative Movement in Malaysia
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23 Dec 2022
Bank Negara Malaysia announces today the issuance of commemorative coins in conjunction with the 100th anniversary of the Cooperative Movement in Malaysia.
The commemorative coins will be issued in two denominations:
1. Coloured Sterling Silver Commemorative Coin (proof)
The coin weighs 31 grams and is made of sterling silver with 92.5 purity. It has a face value of RM10 and will be sold at RM385 per piece. The mintage quantity is 1,000 pieces.
2. Nordic Gold Brilliant Uncirculated (B.U.) Commemorative Coin
This coin weighs 8.5 grams and is made of copper and several other metals. It has a face value of RM1 and will be sold at RM16.50 per piece. The mintage quantity is 5,000 pieces.
These commemorative coins are also available for sale in a Set of 2, with each set priced at RM440. The set comprises one coloured sterling silver proof coin and one Nordic gold proof coin. A total of 1,000 sets will be available for purchase.
Detailed specifications of these commemorative coins are set out in the Appendix.
Coin design
The design of the commemorative coins is as follows:
Obverse
The obverse features the word “co-op” in the style of two infinity loops, symbolising the various ways in which cooperatives have contributed to nation building. Within each letter is an icon, symbolising the different ways in which cooperatives have helped improve the lives and livelihoods of their members.
Reverse
The top circumference of the reverse side features the text “BANK NEGARA MALAYSIA” to depict the issuing authority, while the event logo is displayed on the left (highlighted in colour on the silver coins). An array of diagonal rippling waves is featured on the background to symbolise progress of the cooperative movement over the past 100 years. The text “10 RINGGIT” and “1 RINGGIT” are shown at the bottom circumference, representing the face value of the coins.
Sale of commemorative coins
To provide a fair opportunity for members of the public to buy these limited-edition coins, there will be a purchase limit of one Set of 2, one coloured sterling silver coin (proof) and up to five Nordic gold (B.U.) coins per person.
Members of the public can place their orders at duit.bnm.gov.my from 10 a.m., Friday, 23 December 2022 to 11 p.m., Sunday, 8 January 2023.
Members of the public are advised to place their orders through the Bank Negara Malaysia online system and not with or through any other party or unauthorised ordering facility. All orders will be considered, and there will be no preference given to orders based on the order date and time. In the event of oversubscription, balloting will take place.
Appendix: Technical Specifications
Category
Metal
Alloy
Face Value (RM)
Diameter
(mm)
Weight
(g)
Mintage Quantity (pcs/set)
Price
(RM)
Single
Coloured Sterling Silver (proof)
Ag 92.5
10
40.7
31
1,000
385
Nordic Gold (B.U.)
Cu89 Zn5 Al5 Sn1
1
30
8.5
5,000
16.50
Set of 2
Coloured Sterling Silver (proof) and
Nordic Gold (proof)
Ag 92.5 and Cu89 Zn5 Al5 Sn1
10 and 1
40.7 and
30
31 and
8.5
1,000
440
Note: Prices stated above are inclusive of 10% Sales and Services Tax (SST).
Bank Negara Malaysia
23 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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23 Dec 2022 | Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of RELA | https://www.bnm.gov.my/-/rela-50yrs-coins | null | null |
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Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of RELA
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23 Dec 2022
Bank Negara Malaysia announces today the issuance of commemorative coins in conjunction with the 50th anniversary of the Malaysia Volunteers Corps Department (Jabatan Sukarelawan Malaysia, or RELA)
The commemorative coins will be issued in two denominations:
1. Coloured Sterling Silver Commemorative Coin (proof)
The coin weighs 31 grams and is made of sterling silver with 92.5 purity. It has a face value of RM10 and will be sold at RM275 per piece. The mintage quantity is 1,000 pieces.
2. Nordic Gold Brilliant Uncirculated (B.U.) Commemorative Coin
This coin weighs 8.5 grams and is made of copper and several other metals. It has a face value of RM1 and will be sold at RM16.50 per piece. The mintage quantity is 5,000 pieces.
These commemorative coins are also available for sale in a Set of 2, with each set priced at RM330. The set comprises one coloured sterling silver proof coin and one Nordic gold proof coin. A total of 1,000 sets will be available for purchase.
Detailed specifications of these commemorative coins are set out in the Appendix.
Coin Design
The design of the commemorative coins is as follows:
Obverse
The obverse features the text "JUBLI EMAS” and “JABATAN SUKARELAWAN MALAYSIA" on the coin’s top and left circumference, with RELA's iconic digital camouflage pattern in colour featured the left segment. On the right side of the obverse is the silhouette of a RELA member giving a hand salute, symbolising discipline and steadfastness. The silhouette is set against a shield, representing RELA's service in providing protection and security to the public.
Reverse
The left circumference features the text “BANK NEGARA MALAYSIA” to depict the issuing authority. Meanwhile, the event logo is depicted on the right (highlighted in colour on the silver coins) against the silhouette of RELA’s original logo from 1972. The text “10 RINGGIT” and “1 RINGGIT” are also depicted on the left, representing the face value of the coins.
Sale of commemorative coins
To provide a fair opportunity for members of the public to buy these limited-edition coins, there will be a purchase limit of one Set of 2, one coloured sterling silver coin (proof) and up to five Nordic gold (B.U.) coins per person.
Members of the public can place their orders at duit.bnm.gov.my from 10 a.m., Friday, 23 December 2022 to 11 p.m., Sunday, 8 January 2023.
Members of the public are advised to place their orders through the Bank Negara Malaysia online system and not with or through any other party or unauthorised ordering facility. All orders will be considered, and there will be no preference given to orders based on the order date and time. In the event of oversubscription, balloting will take place..
Appendix: Technical Specification
Category
Metal
Alloy
Face Value (RM)
Diameter
(mm)
Weight
(g)
Mintage Quantity (pcs/set)
Price
(RM)
Single
Colored Sterling Silver (proof)
Ag 92.5
10
40.7
31
1,000
275
Nordic Gold (B.U.)
Cu89 Zn5 Al5 Sn1
1
30
8.5
5,000
16.50
Set of 2
Coloured Sterling Silver (proof) and
Nordic Gold (proof)
Ag 92.5 and
Cu89 Zn5 Al5 Sn1
10 and1
40.7 and
30
31 and
8.5
1,000
330
Note: Prices stated above are inclusive of 10% Sales and Services Tax (SST).
Bank Negara Malaysia
23 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
22 Dec 2022 | International Reserves of Bank Negara Malaysia as at 15 December 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-15-december-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
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International Reserves of Bank Negara Malaysia as at 15 December 2022
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International Reserves of Bank Negara Malaysia as at 15 December 2022
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For immediate release
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1500 on
Thursday, 22 December 2022
22 Dec 2022
The international reserves of Bank Negara Malaysia amounted to USD110.3 billion as at 15 December 2022. The reserves position is sufficient to finance 5.3 months of imports of goods and services[1], and is 1.1 times of the total short-term external debt.
[1] Under the previous import coverage measure, reserves is sufficient to finance 6.3 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021. Related Assets
BNM Statement of Assets & Liabilities - 15 December 2022
Bank Negara Malaysia
22 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
a
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-2
2
F
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-2
2
M
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2
2
A
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2
M
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-2
2
J
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-2
2
J
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2
2
A
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-2
2
S
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-2
2
O
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2
2
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-2
2
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-2
2
J
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-2
3
F
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-2
3
M
a
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2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
16 Dec 2022 | 58th SEACEN Governors’ Conference/High-Level Seminar and the 42nd Meeting of the SEACEN Board of Governors | https://www.bnm.gov.my/-/seacen-58-gov-conference | null | null |
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58th SEACEN Governors’ Conference/High-Level Seminar and the 42nd Meeting of the SEACEN Board of Governors
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2
58th SEACEN Governors’ Conference/High-Level Seminar and the 42nd Meeting of the SEACEN Board of Governors
Embargo :
For immediate release
Not for publication or broadcast before
1200 on
Friday, 16 December 2022
16 Dec 2022
Joint Press Communiqué
The National Bank of Cambodia (NBC) hosted the 58th SEACEN Governors’ Conference/High-Level Seminar and the 42nd Meeting of the SEACEN Board of Governors (BOG) on 4-5 December 2022.[1] The SEACEN community was pleased to re-commence its practice of meeting in person for the first time in three years, especially since the SEACEN Centre is celebrating its 40th anniversary this year.
The last year saw members’ continued recovery from the COVID-19 pandemic met by headwinds from a global financial tightening, an expected slowdown of external demand, bouts of higher inflation, a concerted interest rate hike cycle by systemically important countries, elevated energy and food prices, high levels of non-financial corporate debt, strained public budgets, higher borrowing costs and structural issues. Governors and Managing Directors as well as delegates from SEACEN member central banks and monetary authorities acknowledged the deep economic and financial impact of the pandemic, as well as the scarring effects that may linger over the medium term. Governors re-affirmed their commitment to continue supporting the economic recovery, through leveraging the SEACEN community to enhance their respective policy responses on macro, fiscal, financial, and structural fronts.
The 42nd Meeting of the SEACEN BOG was preceded by a High-Level Seminar on climate change and current policy challenges. Following welcome remarks by Mr. Chea Chanto, Governor, National Bank of Cambodia, and Mr. Mangal Goswami, Executive Director, The SEACEN Centre, Governor Chanto moderated the first of three sessions. This Keynote Session on climate change challenges involved Madame Christine Lagarde, President of the European Central Bank; Professor Larry Summers of Harvard University; Mr. Luiz Pereira da Silva, Deputy General Manager of the Bank for International Settlements; and Mr. Ravi Menon, Managing Director of the Monetary Authority of Singapore and Chair of the Network for Greening the Financial System (NGFS). This was followed by the second session on “The Global and Asia Economic Context”, which featured a presentation by Mr. Sanjaya Panth, Deputy Director of the International Monetary Fund’s (IMF) Asia and Pacific Department, and a roundtable with Mr. Sethaput Suthiwartnarueput, Governor of the Bank of Thailand; Mr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka; Mr. Dody Budi Waluyo, Deputy Governor of Bank Indonesia; and Mr. Darryl Chan, Deputy Chief Executive of the Hong Kong Monetary Authority. The final session, moderated by Mr. Mangal Goswami, was on “Transition Challenges and Scaling Up Climate Financing” and included a presentation by Mr. Fabio Natalucci, Deputy Director of the IMF’s Monetary and Capital Markets Department and a sharing of views and experiences by Mr. Felipe M. Medalla, Governor of the Bangko Sentral ng Pilipinas and Mr. Ma Jun, President of the Institute of Finance and Sustainability in China. All three sessions were followed by a panel discussion and exchange of views from SEACEN Governors. The High-Level Seminar was closed by Mr. Roger Nord, Deputy Director of the IMF’s Institute for Capacity Development.
SEACEN member economies will need significant climate financing in the coming years to facilitate transition in their economies and manage the physical risks caused by climate change. Establishing the right climate policies to complement a central bank’s monetary and financial stability policy goals posesa significant challenge to member economies. Since climate change influences key economic variables such as output and inflation, climate change will need to be considered for the design and operation of monetary policies. Speakers, panellists and SEACEN Governors exchanged views on the macroeconomic effects of climate change (such as economic losses due to extreme weather) and the role central banks and regulators can play in supporting an orderly transition to a net-zero economy, with a particular focus on domestic and regional implications. The discussions centred around assessing and monitoring the various potential impacts of climate change and designing appropriate tools, approaches, and policies for central banks to mitigate macroeconomic and climate risks, and the need for regulators to provide supervisory guidance to promotecredible transition plans by financial institutions. Given the multi-faceted issues surroundingclimate change and sustainable finance, particular attention should be focused on scaling up public-private partnerships in climate financing, addressing data gaps, ensuring comparability and interoperability of taxonomies, overcoming analytical challenges, dealing with new dimensions of uncertainty, identifying financial stability risks, and ensuring disclosures are consistent, comparable, and reliable.
During the BOG meeting, the Governors approved the 2023 SEACEN financial budget, the training and research programmes and other activities for 2023. At the conclusion of the meeting, the members expressed their appreciation to the outgoing Chairman, Ms. Nguyen Thi Hong, Governor of the State Bank of Vietnam for her strong leadership of SEACEN in 2022. The Governors welcomed Mr. Chea Chanto as the new Chair of the SEACEN BOG, and thanked NBC for the excellent arrangements in hosting this year’s meeting of the SEACEN BOG.
In addition, the Governors accepted with appreciation the offer of the Reserve Bank of India to host the 59th SEACEN Governors’ Conference/High-Level Seminar and the 43rd Meeting of the SEACEN Board of Governors in 2023.
[1] SEACEN comprises the 19 member central banks and monetary authorities of Brunei Darussalam, Cambodia, China, India, Indonesia, Hong Kong SAR, Korea, Lao PDR, Malaysia, Mongolia, Myanmar, Nepal, Papua New Guinea, Philippines, Singapore, Sri Lanka, Chinese Taipei, Thailand and Vietnam, as well as eight Associate Members and eight Observers.
Bank Negara Malaysia
16 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
07 Dec 2022 | International Reserves of Bank Negara Malaysia as at 30 November 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-30-november-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
Reading:
International Reserves of Bank Negara Malaysia as at 30 November 2022
Share:
6
International Reserves of Bank Negara Malaysia as at 30 November 2022
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Wednesday, 7 December 2022
7 Dec 2022
The international reserves of Bank Negara Malaysia amounted to USD109.7 billion as at 30 November 2022. The reserves position is sufficient to finance 5.3 months of imports of goods and services[1], and is 1.0 time the total short-term external debt.
[1] Under the previous import coverage measure, reserves are sufficient to finance 6.4 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021. Related Assets
BNM Statement of Assets & Liabilities - 30 November 2022
Bank Negara Malaysia
7 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
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2
2
A
u
g
2
2
S
e
p
2
2
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3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
07 Dec 2022 | Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Updates at the 9th Joint Committee on Climate Change (JC3) Meeting | https://www.bnm.gov.my/-/jc3-9th-meeting-en | null | null |
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Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Updates at the 9th Joint Committee on Climate Change (JC3) Meeting
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Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Updates at the 9th Joint Committee on Climate Change (JC3) Meeting
Embargo :
For immediate release
Not for publication or broadcast before
1006 on
Wednesday, 7 December 2022
7 Dec 2022
The Joint Committee on Climate Change (JC3) held its ninth meeting on 2 December 2022.
JC3 continues to support efforts to strengthen the management of climate-related risks and increase financial flows towards a greener and sustainable activities for the financial sector.
At this meeting, JC3 members approved the publication of the Data Catalogue and Accompanying Report (DC) on data availability, gaps and recommendations to bridge data gaps. The DC represents an important step toward addressing the critical data needs of the financial sector. It will serve as a source of reference on the availability and accessibility of climate and environmental data based on a priority list of financial sector use cases. Work on the DC has highlighted important data gaps, with only 49% of data items needed for the priority use cases currently available. Of this, the bulk of available data lacks sufficient granularity, or the data, while available, is not easily accessible nor comparable. Following the publication of the DC, JC3 will focus efforts in 2023 on working with relevant data providers to resolve data accessibility issues and improve the quality, comparability and consistency of existing data sources. Given the significant data gaps, JC3 also agreed to work with key data providers on strategies to substantially reduce the data gaps taking into consideration domestic and global developments on sustainability and climate-related disclosures[1]. The DC will be available at these links [1, 2] on 16 December 2022.
As part of efforts to scale up green and sustainable finance, JC3 discussed plans to develop and launch several pilot programmes in 2023, which will be prioritised under its sub-committee on Product and Innovation. Jessica Chew, Deputy Governor of Bank Negara Malaysia and Co-Chair of JC3, said, “For SMEs, the recent launch of the Greening Value Chain programme by Bank Negara Malaysia in collaboration with JC3 is an example of a pilot project targeting SMEs that are part of global supply chains that will need to make long-term changes to green their operations. JC3 will actively seek out more pilot projects with high impacts on expanding sustainable and transition finance, including projects that can create positive demonstration effects and further develop the ecosystem for sustainable and transition finance. This is key for Malaysia to achieve Net Zero by 2050.”
JC3 will also continue to pursue the following priorities under its sub-committees on risk management, governance and disclosures, as well as engagement and capacity building in 2023:
Expanding the use cases for the application of the Climate Change and Principle-based Taxonomy (CCPT) to include sector/project-specific use cases based on VBIAF[2] Sectoral Guides. JC3 will also undertake thematic reviews on financial institutions’ transition plans and climate practices, with the view to share leading practices and assess the implications of financial institutions’ transition plans for businesses, particularly in hard-to-abate sectors.
Aligning the TCFD[3] Application Guide for Malaysian Financial Institutions[4] with the International Sustainability Standards Board’s (ISSB) disclosure requirements upon its finalisation. JC3 is also supporting Capital Markets Malaysia (CMM), an affiliate of the Securities Commission Malaysia, to develop an ESG Disclosure Guide (Guide) tailored to Malaysian Small and Medium Enterprises (SMEs). The Guide will provide practical guidance and the baseline exposures expected of SMEs in relation to ESG to encourage greater transparency and improve the quality of SMEs’ ESG disclosures.
Developing a Climate Change Curriculum for financial institutions to provide more curated and specialised climate-related training programmes. This aims to facilitate the development of structured training pathways for financial institutions to build technical capabilities across all levels in climate-related topics and developments. JC3 will work closely with potential training providers and explore relevant accreditations for the training curriculum to assure the quality of training and enable recognition of relevant training across the industry.
JC3 members also discussed the role of the financial sector in facilitating energy transition. The Economic Planning Unit (EPU) presented an overview of the recently released National Energy Policy (NEP) and its four strategic thrusts, one of which is to enhance the energy sector’s contribution towards environmental sustainability. JC3 members noted that it will be important to align the targets under the Low Carbon Nation Aspiration 2040 with Malaysia’s ambition to be a carbon-neutral nation by as early as 2050. JC3 members also exchanged views with PETRONAS on its net zero carbon emissions pathway and were briefed by Bursa Malaysia on the Voluntary Carbon Market that will be launched soon. According to Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive Securities Commission Malaysia and Co-Chair of JC3, “The policy and action plans by key actors in the energy sector will increase the urgency and need for financing and investment as one of the key enablers to support the implementation of strategic initiatives. The financial sector has a key role in providing green financing and sustainable investing, which JC3 is currently exploring to facilitate a just and orderly transition of the country.”
JC3 also welcomed six[5] new industry associations and the Labuan Financial Services Authority as observers.
Bank Negara Malaysia
Securities Commission Malaysia
7 December 2022
About the JC3
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysia financial sector. The JC3 is co-chaired by Datuk Jessica Chew Cheng Lian, Deputy Governor Bank Negara Malaysia and Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive Securities Commission Malaysia with members comprising senior officials from Bursa Malaysia and 21 financial industry players. The JC3’s initiatives and priorities are undertaken by its five sub-committees, namely Risk Management; Governance and Disclosure; Product and Innovation; Engagement and Capacity Building; and Bridging Data Gaps.
Members: Allianz General Insurance Company (Malaysia) Berhad, AmBank (M) Berhad, Bank Islam Malaysia Berhad, Bank Pembangunan Malaysia Berhad, Bank Pertanian Malaysia Berhad (Agrobank), BIMB Investment Management Berhad, BNP Paribas Asset Management Sdn. Bhd., Bursa Malaysia Berhad, CIMB Bank Berhad, Etiqa Family Takaful Berhad, HSBC Amanah Malaysia Berhad, Kenanga Investors Berhad, Maybank Berhad, MIDF Amanah Investment Bank Berhad, MSIG Insurance (Malaysia) Berhad, RHB Islamic Bank Berhad, RHB Islamic International Asset Management Bhd., Standard Chartered Bank Malaysia Berhad, Swiss Re Asia Pte. Ltd. (Swiss Retakaful), Syarikat Takaful Malaysia Am Berhad, UOB Asset Management (Malaysia) Berhad and Zurich General Insurance Malaysia Berhad.
[1] Including standards issued by the International Sustainability Standards Board (ISSB) and mandatory TCFD-aligned disclosures by licensed financial institutions from 2024
[2] Value-based Intermediation Financing and Investment Impact Assessment Framework
[3] Task Force on Climate-related Financial Disclosures
[4] Issued on 29 June 2022
[5] Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), Association of Development Finance Institutions Malaysia (ADFIM), Malaysian Investment Banking Association (MIBA), Malaysian Takaful Association (MTA), The Federation of Investment Managers Malaysia (FIMM), Malaysian Association of Asset Managers (MMA)
Bank Negara Malaysia
7 December 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
30 Nov 2022 | Monetary and Financial Developments in October 2022 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-october-2022 | https://www.bnm.gov.my/documents/20124/9010873/i_en.pdf | null |
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Monetary and Financial Developments in October 2022
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Monetary and Financial Developments in October 2022
Embargo :
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Not for publication or broadcast before
1521 on
Wednesday, 30 November 2022
30 Nov 2022
Headline inflation declined to 4.0% in October
As expected, headline inflation moderated to 4.0% in October (September: 4.5%), following the dissipation of the base effect[1] in electricity inflation.
Core inflation[2] increased slightly to 4.1% (September: 4.0%). The increase was predominantly contributed by food-related services and goods.
On a month-on-month basis, the increase in core CPI moderated further to 0.1% in October (September: 0.3%).
Continued export growth in October
Exports registered a growth of 15% (September: 30.1%) in October 2022.
Manufactured export growth was driven by E&E and petroleum products. Commodities exports continued to be attributed mainly to LNG and crude petroleum shipments.
Moving forward, the moderation in global growth and lower commodity prices are expected to weigh on Malaysia’s export growth. Nevertheless, Malaysia’s diversified exports across products and markets should help cushion this impact.
Continued expansion in net financing[3] supporting economic activity
Net financing grew by 5.7% as at end-October (September: 5.6%), reflecting slightly higher growth in both outstanding loans (6.5%; September: 6.4%) and corporate bonds (3.6%; September: 3.5%).
Household loan growth moderated to 6.3% (September: 6.6%) as loan repayments growth outpaced that of disbursements across major loan purposes. The slower growth in disbursements reflected moderation in loan demand, particularly for the purchase of big-ticket items such as houses and cars.
For businesses, growth in outstanding loans increased to 5.5% (September: 5.2%), with higher loan growth recorded across most purposes. By segment, growth in loan disbursements remained forthcoming, particularly for SMEs.
Domestic financial market adjustments remained orderly
Global financial conditions continued to tighten. Many central banks had raised their policy rates and signalled further rate hikes to dampen high and persistent inflation. Against this backdrop, the global growth outlook has weakened, with the IMF lowering its 2023 global growth forecast to 2.7% from 2.9%.
As these factors continued to support the US dollar strength, the ringgit depreciated by 1.9% against the US dollar during the month (regional[4] average: -0.04%).
Notwithstanding these global developments, domestic financial market adjustments remained orderly and financial conditions had somewhat eased. The 10-year MGS yields declined by 4.0 bps (regional average: +13.3 bps) and the FBM KLCI gained 4.7% (regional average: +2.9%), supported by the strong growth momentum of the domestic economy.
Banks remain well-capitalised to support economic recovery
Banks’ capital position remained strong to withstand potential stress and continue supporting credit flows to the economy with excess capital buffers[5] of RM123.1 billion.
Capital ratios rose marginally in October, driven by increases in retained earnings and new issuances of capital instruments.
The resilience of banks continued to be underpinned by sound asset quality
Overall gross and net impaired loans ratios remain unchanged at 1.8% and 1.1%, respectively.
Loan loss coverage ratio (including regulatory reserves) remains at a prudent level of 114.2% of impaired loans, with total provisions accounting for 1.8% of total loans.
As of end-October 2022, the banking system recorded RM 41.9 billion of total provisions and regulatory reserves.
Monthly Highlights [PDF]
[1] The base effect arose from the discount on electricity bill implemented in 3Q 2021, which contributed to higher inflation in 3Q 2022.
[2] Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of tax policy changes.
[3] Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)) and outstanding corporate bonds. Data from July 2022 onwards are based on the new set of loan/financing data reflecting the latest requirements.
[4] Regional countries comprise Singapore, Thailand, Philippines, Indonesia and Korea.
[5] Refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5%) and bank-specific higher minimum requirements.
Related Assets
Monthly Highlights & Statistics in October 2022
Bank Negara Malaysia
30 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
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2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
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p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
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-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
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2
2
J
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2
J
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2
A
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2
2
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2
2
O
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2
2
N
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2
2
D
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2
2
J
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2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
y
2
2
J
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2
2
J
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2
2
A
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2
2
S
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2
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2
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2
D
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2
2
J
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3
F
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b
2
3
M
a
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2
3
A
p
r
2
3
M
a
y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Nov 2022 | Detailed Disclosure of International Reserves as at end-October 2022 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-october-2022 | null | null |
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Detailed Disclosure of International Reserves as at end-October 2022
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Detailed Disclosure of International Reserves as at end-October 2022
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30 Nov 2022
In accordance with the International Monetary Fund (IMF) Special Data Dissemination Standard (SDDS) format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV. As shown in Table I, official reserve assets amounted to USD105,229.2 million, while other foreign currency assets amounted to USD5.8 million as at end-October 2022. As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD13,519.3 million. The short forward positions amounted to USD24,375.1 million as at end-October 2022, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD1,936.3 million in the next 12 months. As shown in Table III, the only contingent short-term net drain on foreign currency assets is Government guarantees of foreign currency debt due within one year, amounting to USD399.4 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-October 2022, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (31 October 2022)
Bank Negara Malaysia
30 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
25 Nov 2022 | BNM Invites Written Feedback on Exposure Draft on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators (DITOs) | https://www.bnm.gov.my/-/bnm-feedback-ditos | https://www.bnm.gov.my/documents/20124/948107/ED_DITO_Licensing_and_Regulatory_Framework.pdf, https://www.bnm.gov.my/documents/20124/963937/Risk+Management+in+Technology+(RMiT).pdf | null |
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BNM Invites Written Feedback on Exposure Draft on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators (DITOs)
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BNM Invites Written Feedback on Exposure Draft on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators (DITOs)
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Friday, 25 November 2022
25 Nov 2022
Bank Negara Malaysia (BNM) today issued the Exposure Draft on Licensing and Regulatory Framework for DITOs for written feedback following the issuance of the Discussion Paper earlier this year.
The Exposure Draft outlines the proposed framework to facilitate the entry of DITOs in Malaysia that can offer strong value propositions to realise the following outcomes:
Inclusion – Enhanced financial resilience of consumers whose protection needs are currently not served or not adequately served;
Competition – Innovative products to cater to diverse protection needs; and
Efficiency – Convenient and seamless consumer experience with greater cost savings.
DITOs are envisaged to carry on insurance or takaful business wholly (or almost wholly) through digital or electronic means. This in turn is expected to drive new types of business and operating models to meet diverse consumer needs through wider product choices and more efficient service quality. In advancing these innovations, BNM continues to preserve a strong focus on sound risk management and consumer protection.
The Exposure Draft specifies licensing and application procedures, as well as specific requirements on the eligible business models and distribution channels of DITOs. This is intended to promote sustainable business operations, while delivering value to policyholders. DITOs will have to comply with the existing requirements under the Financial Services Act 2013 (FSA) or Islamic Financial Services Act 2013 (IFSA). This includes standards on prudential aspects, business conduct and anti-money laundering and terrorism financing measures.
As part of the licensing application process, BNM will require an applicant to submit a comprehensive five-year business plan, which includes, among others, planned measures to effectively manage technology and cyber risks in delivering its products and services. In line with the requirements applied to other financial institutions under the Risk Management in Technology policy document, the applicant will also be expected to demonstrate its ability to protect consumer data and authenticate online transactions to mitigate fraud/cyber risks.
Similar to digital banks, a Foundational Phase will be observed for licensed DITOs. During this period, lower minimum paid-up capital requirements and proportionate regulatory flexibilities will be applied to DITOs, commensurate with their early stage of operations. The Foundational Phase is applicable for a maximum period of five years, but no less than three years. At the end of the Foundational Phase, DITOs that are not able to demonstrate credible prospects for long-term viability or meet higher prudential standards consistent with that applied to all existing licensed insurers and takaful operators will be required to implement an exit plan according to the conditions set out in the Exposure Draft.
BNM aims to finalise the Policy Document and invite the applications for licence in 2023. Up to five licences may be issued to applicants that meet all requirements.
Feedback on the Exposure Draft can include clarification or elaboration and alternative proposals. BNM welcomes written feedback, backed by clear rationales, to be submitted by 28 April 2023 to DITF@bnm.gov.my
See Also:
Risk Management in Technology Policy Document
Exposure Draft on Licensing Framework for Digital Insurers and Takaful OperatorsBank Negara Malaysia
25 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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Peluasan Ukuran Liputan Rizab Bagi Import – daripada Import Tertangguh kepada Import Barangan dan Perkhidmatan
27Buletin Suku Tahunan | S4 2021 27
Peluasan Ukuran Liputan Rizab Bagi Import – daripada Import Tertangguh kepada
Import Barangan dan Perkhidmatan
Salah satu penunjuk yang digunakan oleh Bank untuk mengukur kecukupan rizab antarabangsa ialah liputan
rizab bagi import tertangguh,1 yang disiarkan setiap dua minggu. Apabila ekonomi berkembang dengan bahagian
sektor perkhidmatan yang lebih besar, keadaan ini telah meningkatkan kepentingan import perkhidmatan
dalam pengukuran kecukupan rizab. Dengan mengambil kira perkara ini dan selaras dengan amalan terbaik
antarabangsa, laporan rizab antarabangsa Malaysia secara dwimingguan pada masa hadapan akan merangkumi
penunjuk tentang liputan rizab bagi import barangan dan perkhidmatan, berkuat kuasa mulai 22 Februari 2022.2
1 Ditakrifkan sebagai import kasar ditolak dengan eksport semula. Import tertangguh purata 12 bulan boleh didapati daripada Sorotan Bulanan dan Statistik,
Jadual 3.6.8 (Import oleh Pengguna Akhir; lihat Lampiran 1).
2 Bagi kedudukan rizab antarabangsa pada 15 Februari 2022.
3 Ditakrifkan sebagai import ditambah dengan eksport.
4 Daripada RM101.3 bilion kepada RM351.3 bilion, atau kadar pertumbuhan tahunan terkompaun (compound annual growth rate, CAGR) sebanyak 6.4%.
Services tradeC1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM billion
Travel1
Computer and information
Transport
Manufacturing
Other business3
Other2
Perdagangan perkhidmatanR1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM bilion
Perjalanan1
Komputer dan informasi
Pengangkutan
Pembuatan
Perniagaan Lain3
Lain-lain2
Nota: Data sebelum tahun 2005 adalah berdasarkan garis panduan dalam Edisi Kelima Manual Imbangan Pembayaran dan Kedudukan
............Pelaburan Antarabangsa (BPM5) IMF. Data bagi tahun 2005 dan selanjutnya adalah berdasarkan BPM6.
1 Termasuk perbelanjaan perjalanan bagi aktiviti pelancongan.
2 Termasuk pembinaan, caj penggunaan harta intelek, perkhidmatan persendirian, kebudayaan dan rekreasi.
3 Perkhidmatan perniagaan lain termasuk perkhidmatan penyelidikan dan pembangunan, profesional, teknikal, berkaitan perdagangan dan
...perkhidmatan perniagaan lain.
Sumber: Jabatan Perangkaan Malaysia dan Bank Negara Malaysia
Note: Data prior to 2005 are based on the guideline in the Fifth Edition of the Balance of Payments and International Investment Position
............Manual (BPM5) of the IMF. Data for 2005 and beyond are based on BPM6.
1 Includes travel spending for tourism activity.
2 Includes construction, charges for intellectual property use, personal, culture & recreational services.
3 Other business services comprise research and development, professional, technical, trade-related and other business services.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
Pelaporan Bank berhubung dengan liputan rizab bagi import tertangguh telah diterbitkan seawal tahun 1990-an.
Data bagi import tertangguh tersedia setiap bulan dan oleh itu sangat sepadan dengan siaran kedudukan
rizab antarabangsa setiap dua minggu. Walau bagaimanapun, import tertangguh tidak merangkumi bayaran
untuk perkhidmatan, yang telah berkembang sepanjang dua dekad yang lalu. Dari tahun 1999 hingga 2019,
perdagangan perkhidmatan3 telah meningkat sebanyak 246.9%4 (Rajah 1). Hal ini disebabkan terutamanya
oleh aktiviti pelancongan yang lebih tinggi serta pembayaran untuk perkhidmatan pengangkutan asing bagi
perdagangan barangan. Selain itu, import barangan juga berkembang, sebahagian besarnya bagi menyokong
aktiviti pelaburan dalam negeri dan pengeluaran barangan perkilangan.
28 Buletin Suku Tahunan | S4 202128
Prestasi Malaysia berhubung dengan penunjuk ini selaras dengan ekonomi serantau dan ekonomi yang
setara.5 Data sebelum ini menunjukkan liputan rizab bagi import barangan dan perkhidmatan berada dalam
julat antara lima hingga lapan bulan sejak tahun 2008. Paras ini jauh melebihi nilai ambang yang diterima
pakai secara meluas iaitu tiga bulan. Hal ini menunjukkan keupayaan ekonomi Malaysia untuk bertahan
daripada kejutan luaran.
Penting juga untuk ditekankan bahawa penilaian kecukupan rizab tidak seharusnya berdasarkan semata-
mata nilai muka penunjuk-penunjuk ini. Penilaian ini perlu dilengkapi dengan pemahaman yang mendalam
mengenai kedudukan luaran, sistem kewangan dan dasar ekonomi negara secara am. Khususnya, rizab
antarabangsa bukan sahaja cara untuk memenuhi obligasi luaran.6 Penilaian semasa menunjukkan
kedudukan luaran negara7 disokong oleh asas-asas ekonomi yang utuh termasuk lebihan akaun semasa
yang kukuh, aset luaran mata wang asing yang besar yang dipegang oleh entiti dalam negeri8 dan kadar
pertukaran ringgit yang fleksibel.
Rujukan
Department of Statistics, Malaysia. ‘External Sector’, Jabatan Perangkaan Malaysia, Putrajaya.
Greenspan, A., ‘Currency reserves and debt’. Remarks before the World Bank Conference on Recent Trends in
Reserves Management, Washington, DC, 29 April 1999.
International Monetary Fund, (2016). ‘Guidance Note on the Assessment of Reserve Adequacy and Related
Considerations’.
Lampiran 1: Pengiraan liputan rizab antarabangsa bagi import tertangguh
aSebagai contoh, untuk mengira import tertangguh setiap bulan bagi bulan Disember 2019, import tertangguh
bagi bulan Januari hingga Disember 2019 dicampurkan (iaitu import tertangguh bagi 12 bulan secara berturut-
turut). Jumlah ini kemudiannya dibahagikan dengan 12, bagi mendapatkan purata bulanan. Angka-angka
boleh didapati daripada Jadual 3.6.8, kolum S MHS yang dikeluarkan oleh BNM.
5 Berdasarkan JP Morgan’s Government Bond Index for Emerging Markets.
6 Maklumat lanjut boleh didapati dalam rencana “Daya Tahan Malaysia dalam Mengurus Obligasi Hutang Luar Negeri dan Kecukupan Rizab Antarabangsa” dalam
Laporan Tahunan BNM 2018.
7 Selain itu, turut diberikan penekanan ialah kedudukan hutang luar negeri Malaysia, termasuk hutang luar negeri jangka pendek, yang kekal terurus. Hal ini
disokong oleh profil mata wang dan tempoh matang yang bersesuaian terhadap hutang luar negeri serta daya tahan keupayaan bayaran balik pinjaman oleh
entiti dalam negeri. Hutang luar negeri dalam mata wang asing oleh syarikat-syarikat juga sebahagian besarnya tertakluk pada keperluan berhemat dan lindung
nilai (rujuk penilaian terkini tentang perkembangan hutang luar negeri di halaman [xx])
8 Berjumlah RM1.1 trilion pada akhir tahun 2021.
Risk Management in Technology (RMiT)
Applicable to:
1. Licensed banks
2. Licensed investment banks
3. Licensed Islamic banks
4. Licensed insurers including professional reinsurers
5. Licensed takaful operators including professional retakaful operators
6. Prescribed development financial institutions
7. Approved issuer of electronic money
8. Operator of a designated payment system
Issued on: 19 June 2020 BNM/RH/PD 028-98
Risk Management in Technology 2 of 50
Issued on: 19 June 2020
TABLE OF CONTENTS
PART A OVERVIEW ............................................................................................... 3
1 Introduction ....................................................................................... 3
2 Applicability ....................................................................................... 3
3 Legal provision .................................................................................. 3
4 Effective date .................................................................................... 4
5 Interpretation ..................................................................................... 4
6 Related legal instruments and policy documents .............................. 6
7 Policy documents and circulars superseded ..................................... 6
PART B POLICY REQUIREMENTS ....................................................................... 8
8 Governance ...................................................................................... 8
9 Technology Risk Management ........................................................ 10
10 Technology Operations Management ............................................. 11
11 Cybersecurity Management ............................................................ 26
12 Technology Audit ............................................................................ 31
13 Internal Awareness and Training .................................................... 32
PART C REGULATORY PROCESS ..................................................................... 33
14 Notification for Technology-Related Applications ............................ 33
15 Assessment and Gap Analysis ....................................................... 34
APPENDICES .................................................................................................................. 35
Appendix 1 Storage and Transportation of Sensitive Data
in Removable Media...................................................................... 35
Appendix 2 Control Measures on Self-service Terminals (SST) ...................... 36
Appendix 3 Control Measures on Internet Banking .......................................... 39
Appendix 4 Control Measures on Mobile Application and Devices .................. 40
Appendix 5 Control Measures on Cybersecurity .............................................. 41
Appendix 6 Positive List for Enhancements to Electronic Banking, Internet
Insurance and Internet Takaful Services ....................................... 42
Appendix 7 Risk Assessment Report ............................................................... 46
Appendix 8 Format of Confirmation.................................................................. 48
Appendix 9 Supervisory Expectations on External Party Assurance................ 49
Risk Management in Technology 3 of 50
Issued on: 19 June 2020
PART A OVERVIEW
1 Introduction
1.1 Technology risk refers to risks emanating from the use of information
technology (IT) and the Internet. These risks arise from failures or breaches
of IT systems, applications, platforms or infrastructure, which could result in
financial loss, disruptions in financial services or operations, or reputational
harm to a financial institution.
1.2 With the more prevalent use of technology in the provision of financial
services, there is a need for financial institutions to strengthen their technology
resilience against operational disruptions to maintain confidence in the
financial system. The growing sophistication of cyber threats also calls for the
increased vigilance and capability of financial institutions to respond to
emerging threats. Critically, this should ensure the continuous availability of
essential financial services to customers and adequate protection of customer
data.
1.3 This policy document sets out the Bank’s requirements with regard to financial
institutions’ management of technology risk. In complying with these
requirements, a financial institution shall have regard to the size and
complexity of its operations. Accordingly, larger and more complex financial
institutions are expected to demonstrate risk management practices and
controls that are commensurate with the increased technology risk exposure
of the institution. In addition, all financial institutions shall observe minimum
prescribed standards in this policy document to prevent the exploitation of
weak links in interconnected networks and systems that may cause detriment
to other financial institutions and the wider financial system. The control
measures set out in Appendices 1 to 5 serve as a guide for sound practices in
defined areas. Financial institutions should be prepared to explain alternative
risk management practices that depart from the control measures outlined in
the Appendices and demonstrate their effectiveness in addressing the
financial institution’s technology risk exposure.
2 Applicability
2.1 This policy document is applicable to all financial institutions as defined in
paragraph 5.2.
3 Legal provision
3.1 The requirements in this policy document are specified pursuant to—
(a) Sections 47(1) and 143(2) of the Financial Services Act 2013 (FSA);
(b) Sections 57(1) and 155(2) of the Islamic Financial Services Act 2013
(IFSA); and
(c) Sections 41(1) and 116(1) of the Development Financial Institutions Act
2002 (DFIA).
Risk Management in Technology 4 of 50
Issued on: 19 June 2020
3.2 The guidance in this policy document are issued pursuant to section 266 of
the FSA, section 277 of the IFSA and section 126 of the DFIA.
4 Effective date
4.1 This policy document comes into effect on 1 January 2020.
5 Interpretation
5.1 The terms and expressions used in this policy document shall have the same
meanings assigned to them in the FSA, IFSA or DFIA, as the case may be,
unless otherwise defined in this policy document.
5.2 For purposes of this policy document –
“S” denotes a standard, an obligation, a requirement, specification, direction,
condition and any interpretative, supplemental and transitional provisions that
must be complied with. Non-compliance may result in enforcement action;
“G” denotes guidance which may consist of statements or information
intended to promote common understanding and advice or recommendations
that are encouraged to be adopted;
“board” refers to the board of directors of a financial institution, including any
committee carrying out any of the responsibilities of the board under this policy
document;
“critical system” refers to any application system that supports the provision
of critical banking, insurance or payment services, where failure of the system
has the potential to significantly impair the financial institution’s provision of
financial services to customers or counterparties, business operations,
financial position, reputation, or compliance with applicable laws and
regulatory requirements;
“customer and counterparty information” refers to any information relating
to the affairs or, in particular, the account, of any customer or counterparty of
a financial institution in whatever form;
“cyber resilience” refers to the ability of people, processes, IT systems,
applications, platforms or infrastructures to withstand adverse cyber events;
“cyber risk” refers to threats or vulnerabilities emanating from the
connectivity of internal technology infrastructure to external networks or the
Internet;
“digital services” refers to the provision of payment, banking, Islamic
banking, insurance or takaful services delivered to customers via electronic
channels and devices including Internet and mobile devices, self-service and
point-of-sale terminals;
Risk Management in Technology 5 of 50
Issued on: 19 June 2020
“financial institution” refers to-
(a) a licensed person under the FSA and the IFSA (excluding branches of a
foreign professional reinsurer and a professional retakaful operator);
(b) a prescribed development financial institution under the DFIA;
(c) an eligible issuer of e-money as defined in the policy document on
Interoperable Credit Transfer Framework1; and
(d) an operator of a designated payment system;
“large financial institution” refers to-
(a) a financial institution with one or more business lines that are significant
in terms of market share in the relevant industry; or
(b) a financial institution with a large network of offices within or outside
Malaysia through operations of branches and subsidiaries;
“material technology projects” refers to projects which involve critical
systems, the delivery of essential services to customers or counterparties, or
compliance with regulatory requirements;
“OTP or one-time password” refers to an alphanumeric or numeric code
represented by a minimum of 6 characters or digits which is valid only for
single use;
“public cloud” refers to a fully virtualised environment in which a service
provider makes resources such as platforms, applications or storage available
to the public over the Internet via a logically separated multi-tenant
architecture;
“production data centre” refers to any facility which hosts active critical
production application systems irrespective of location;
"recovery data centre" refers to a facility that a financial institution plans to
activate to recover and restore its IT applications and operations upon failure
of its production data centre irrespective of location;
“senior management” refers to the Chief Executive Officer (CEO) and senior
officers;
“third party service provider” refers to an internal group affiliate or external
entity providing technology-related functions or services that involve the
transmission, processing, storage or handling of confidential information
pertaining to the financial institution or its customers. This includes cloud
computing software, platform and infrastructure service providers.
1 For ease of reference, an “eligible issuer of e-money” is defined as an approved issuer of electronic
money with substantial market presence based on the criteria set out in Appendix 1 of the policy
document on Interoperable Credit Transfer Framework.
Risk Management in Technology 6 of 50
Issued on: 19 June 2020
6 Related legal instruments and policy documents
6.1 This policy document must be read together with any relevant legal
instruments, policy documents and guidelines issued by the Bank, in
particular—
(a) Policy Document on Risk Governance;
(b) Policy Document on Compliance;
(c) Policy Document on Outsourcing;
(d) Policy Document on Operational Risk;
(e) Policy Document on Operational Risk Reporting Requirement –
Operational Risk Integrated Online Network (ORION);
(f) Policy Document on Introduction of New Products;
(g) Policy Document on Interoperable Credit Transfer Framework;
(h) Guidelines on Business Continuity Management (Revised);
(i) Provisions under paragraphs 21, 22 and 26 of the Guidelines on the
Provision of Electronic Banking (e-banking) Services by Financial
Institutions;
(j) Provisions under paragraphs 28 and 29 of the Guidelines on Internet
Insurance (Consolidated);
(k) Guidelines on Data Management and MIS Framework;
(l) Guidelines on Data Management and MIS Framework for Development
Financial Institutions; and
(m) Paragraphs 3 and 5 of the Circular on Internet Takaful2.
7 Policy documents and circulars superseded
7.1 This policy document supersedes the following circulars, guidelines and policy
documents:
(a) Guidelines on Management of IT Environment (GPIS 1) issued in May
2004;
(b) Preparedness against Distributed Denial of Service Attack issued on 17
October 2011;
(c) Managing Inherent Risk of Internet Banking Kiosks issued on 5
December 2011;
(d) Circular on Managing Risks of Malware Attacks on Automated Teller
Machine (ATM) issued on 3 October 2014;
(e) Managing Cyber Risk Circular issued on 31 July 2015;
(f) Guidelines on the Provision of Electronic Banking (e-banking) Services
by Financial Institutions, except for the provisions under paragraphs 21,
22 and 26;
(g) Guidelines on Internet Insurance (Consolidated), except for the
provisions under paragraphs 28 and 29;
(h) Circular on Internet Takaful, except for paragraphs 3 and 5;
(i) Letter to CEO dated 31 October 2017 entitled “Immediate Measures for
Managing identification of Counterfeit Malaysian Currency Notes at
Deposit-Accepting Self Service Terminals (SST)”;
2 For the avoidance of doubt, only the requirements not superseded in this policy document are
applicable.
Risk Management in Technology 7 of 50
Issued on: 19 June 2020
(j) Letter to CEO dated 7 November 2017 entitled “Guidelines on the
Provision of Electronic Banking (e-banking) Services by Financial
Institutions (“Guidelines”) – Specification Pursuant to the Financial
Services Act 2013 (“FSA”), Islamic Financial Services Act 2013 (“IFSA”)
and Development Financial Institutions Act 2002 (“DFIA”)”;
(k) Letter to CEO dated 10 November 2017 entitled “Storage and
Transportation of Sensitive Data in Removable Media”;
(l) Letter to CEO dated 17 May 2018 entitled “Guidelines on Internet
Insurance (Consolidated) (“Guidelines”) and Circular on Internet Takaful
(“the Circular’) – Specification Pursuant to the Financial Services Act
2013 (“FSA”) and Islamic Financial Services Act 2013 (“IFSA”)”;
(m) Letter to CEO dated 11 December 2018 entitled “Leveraging on cloud
services and upliftment of mobile banking condition”; and
(n) Letter to CEO dated 18 November 2019 entitled "Guidelines on the
Provision of Electronic Banking (e-banking) Services by Financial
Institutions, Guidelines on Internet Insurance (Consolidated), Circular on
Internet Takaful - Specification Pursuant to the Financial Services Act
2013 ("FSA"), Islamic Financial Services Act 2013 ("IFSA") and the
Development Financial Institutions Act 2002 ("DFIA")”.
Risk Management in Technology 8 of 50
Issued on: 19 June 2020
PART B POLICY REQUIREMENTS
8 Governance
Responsibilities of the Board of Directors
S 8.1 The board must establish and approve the technology risk appetite which is
aligned with the financial institution’s risk appetite statement. In doing so, the
board must approve the corresponding risk tolerances for technology-related
events and ensure key performance indicators and forward-looking risk
indicators are in place to monitor the financial institution’s technology risk
against its approved risk tolerance. The board must ensure senior
management provides regular updates on the status of these indicators
together with sufficiently detailed information on key technology risks and
critical technology operations to facilitate strategic decision-making.
S 8.2 The board must ensure and oversee the adequacy of the financial institution’s
IT and cybersecurity strategic plans covering a period of no less than three
years. These plans shall address the financial institution’s requirements on
infrastructure, control measures to mitigate IT and cyber risk and financial and
non-financial resources, which are commensurate with the complexity of the
financial institution’s operations and changes in the risk profile as well as the
business environment. These plans shall be periodically reviewed, at least
once every three years.
S 8.3 The board shall be responsible to oversee the effective implementation of a
sound and robust technology risk management framework (TRMF) and cyber
resilience framework (CRF), as required to be developed under paragraphs
9.1 and 11.2, for the financial institution to ensure the continuity of operations
and delivery of financial services. The TRMF is a framework to safeguard the
financial institution’s information infrastructure, systems and data, whilst the
CRF is a framework for ensuring the financial institution’s cyber resilience. The
board must ensure that the financial institution’s TRMF and CRF remain
relevant on an ongoing basis. The board must also periodically review and
affirm the TRMF and CRF, at least once every three years to guide the financial
institution’s management of technology risks.
S 8.4 The board must designate a board-level committee3 which shall be responsible
for supporting the board in providing oversight over technology-related
matters. Among other things, the committee shall review the technology-
related frameworks including the requirements spelt out in paragraphs 8.1
through 8.3, for the board’s approval, and ensure that risk assessments
undertaken in relation to material technology applications submitted to the
Bank are robust and comprehensive.
3 A financial institution may either designate an existing board committee or establish a separate
committee for this purpose. Where such a committee is separate from the Board Risk Committee (BRC),
there must be appropriate interface between this committee and the BRC on technology risk-related
matters to ensure effective oversight of all risks at the enterprise level.
Risk Management in Technology 9 of 50
Issued on: 19 June 2020
G 8.5 To promote effective technology discussions at the board level, the
composition of the board and the designated board-level committee should
include at least a member with technology experience and competencies.
S 8.6 Given the rapidly evolving cyber threat landscape, the board shall allocate
sufficient time to discuss cyber risks and related issues, including the strategic
and reputational risks associated with a cyber-incident. This shall be supported
by input from external experts as appropriate. The board must also ensure its
continuous engagement in cybersecurity preparedness, education and
training.
S 8.7 The board audit committee (BAC) is responsible for ensuring the effectiveness
of the internal technology audit function. This includes ensuring the adequate
competence of the audit staff to perform technology audits. The BAC shall
review and ensure appropriate audit scope, procedures and frequency of
technology audits. The BAC must also ensure effective oversight over the
prompt closure of corrective actions to address technology control gaps.
Responsibilities of the senior management
S 8.8 A financial institution’s senior management must translate the board-approved
TRMF and CRF into specific policies and procedures that are consistent with
the approved risk appetite and risk tolerance and supported by effective
reporting and escalation procedures.
S 8.9 The senior management must establish a cross-functional committee to
provide guidance on the financial institution’s technology plans and operations.
Members of the committee must include senior management from both
technology functions and major business units. The committee’s
responsibilities shall include the following:
(a) oversee the formulation and effective implementation of the strategic
technology plan and associated technology policies and procedures;
(b) provide timely updates to the board on key technology matters4; and
(c) approve any deviation from technology-related policies after having
carefully considered a robust assessment of related risks. Material
deviations shall be reported to the board.
S 8.10 Senior management must ensure the adequate allocation of resources to
maintain robust technology systems and appropriately skilled and competent
staff to support the effective management of technology risk.
S 8.11 For large financial institutions, senior management must embed appropriate
oversight arrangements within the technology function to support the
enterprise-wide oversight of technology risk. These arrangements must
provide for designated staff responsible for the identification, assessment and
4 Key technology matters include updates on critical systems’ performance, significant IT and cyber-
incidents, management of technology obsolescence risk, status of patch deployment activities for critical
technology infrastructure, proposals for and progress of strategic technology projects, performance of
critical technology outsourcing activities and utilisation of the technology budget.
Risk Management in Technology 10 of 50
Issued on: 19 June 2020
mitigation of technology risks who do not engage in day-to-day technology
operations.
S 8.12 For the purpose of paragraph 8.11 and all other requirements applicable to
large financial institutions under this policy document, each financial institution
shall conduct a self-assessment on whether it is a large financial institution in
accordance with the definition in paragraph 5.2. The self-assessment shall
take into account–
(a) the complexity of the financial institution’s operations, having particular
regard to the interconnectedness of its operations with other financial
institutions, customers and counterparties that are driven by technology;
(b) the number and size of the financial institution’s significant business lines
together with its market share5 (e.g. in terms of assets, liabilities, revenue
and premiums);
(c) the number of subsidiaries, branches and agents; and
(d) other business considerations that could give rise to technology risk.
S 8.13 Notwithstanding the self-assessment in paragraph 8.12, the Bank may
designate a financial institution as a large financial institution and such
financial institutions shall comply with all requirements in this policy document
applicable to a large financial institution.
9 Technology Risk Management
S 9.1 A financial institution must ensure that the TRMF is an integral part of the
financial institution’s enterprise risk management framework (ERM).
S 9.2 The TRMF must include the following:
(a) clear definition of technology risk;
(b) clear responsibilities assigned for the management of technology risk at
different levels and across functions, with appropriate governance and
reporting arrangements;
(c) the identification of technology risks to which the financial institution is
exposed, including risks from the adoption of new or emerging
technology;
(d) risk classification of all information assets/systems based on its criticality;
(e) risk measurement and assessment approaches and methodologies;
(f) risk controls and mitigations; and
(g) continuous monitoring to timely detect and address any material risks.
S 9.3 A financial institution must establish an independent enterprise-wide
technology risk management function which is responsible for—
5 Size is an indicator of the potential systemic impact that any failure or breach of the financial institution’s
IT systems may have on the broader financial system. When determining the significance of its size, the
financial institution shall consider the extent to which the broader market segment may be unable to
access relevant financial services in the event of a disruption to its systems. It should also consider the
extent to which the operations of other institutions may be disrupted due to a reliance on services
provided by the financial institution that may not be immediately substitutable.
Risk Management in Technology 11 of 50
Issued on: 19 June 2020
(a) implementing the TRMF and CRF;
(b) advising on critical technology projects and ensuring critical issues that
may have an impact on the financial institution’s risk tolerance are
adequately deliberated or escalated in a timely manner; and
(c) providing independent views to the board and senior management on
third party assessments6, where necessary.
S 9.4 A financial institution must designate a Chief Information Security Officer
(CISO), by whatever name called, to be responsible for the technology risk
management function of the financial institution. The financial institution must
ensure that the CISO has sufficient authority, independence and resources7.
The CISO shall—
(a) be independent from day-to-day technology operations;
(b) keep apprised of current and emerging technology risks which could
potentially affect the financial institution’s risk profile; and
(c) be appropriately certified.
S 9.5 The CISO is responsible for ensuring the financial institution’s information
assets and technologies are adequately protected, which includes—
(a) formulating appropriate policies for the effective implementation of TRMF
and CRF;
(b) enforcing compliance with these policies, frameworks and other
technology-related regulatory requirements; and
(c) advising senior management on technology risk and security matters,
including developments in the financial institution’s technology security
risk profile in relation to its business and operations.
10 Technology Operations Management
Technology Project Management
S 10.1 A financial institution must establish appropriate governance requirements
commensurate with the risk and complexity8 of technology projects
undertaken. This shall include project oversight roles and responsibilities,
authority and reporting structures, and risk assessments throughout the
project life cycle.
S 10.2 The risk assessments shall identify and address the key risks arising from the
implementation of technology projects. These include the risks that could
6 Relevant third party assessments may include the Data Centre Risk Assessment (DCRA), Network
Resilience and Risk Assessment (NRA) and independent assurance for introduction of new or enhanced
digital services.
7 A financial institution’s CISO may take guidance from the expertise of a group-level CISO, in or outside
of Malaysia, and may also hold other roles and responsibilities. Such designated CISO shall be
accountable for and serve as the point of contact with the Bank on the financial institution's technology-
related matters, including managing entity-specific risks, supporting prompt incident response and
reporting to the financial institution’s board.
8 For example, large-scale integration projects or those involving critical systems should be subject to
more stringent project governance requirements such as more frequent reporting to the board and senior
management, more experienced project managers and sponsors, more frequent milestone reviews and
independent quality assurance at major project approval stages.
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threaten successful project implementation and the risks that a project failure
will lead to a broader impact on the financial institution's operational
capabilities. At a minimum, due regard shall be given to the following areas:
(a) the adequacy and competency of resources including those of the vendor
to effectively implement the project. This shall also take into consideration
the number, size and duration of significant technology projects already
undertaken concurrently by the financial institution;
(b) the complexity of systems to be implemented such as the use of unproven
or unfamiliar technology and the corresponding risks of integrating the
new technology into existing systems, managing multiple vendor-
proprietary technologies, large-scale data migration or cleansing efforts
and extensive system customisation;
(c) the adequacy and configuration of security controls throughout the project
life cycle to mitigate cybersecurity breaches or exposure of confidential
data;
(d) the comprehensiveness of the user requirement specifications to mitigate
risks from extensive changes in project scope or deficiencies in meeting
business needs;
(e) the robustness of system and user testing strategies to reduce risks of
undiscovered system faults and functionality errors;
(f) the appropriateness of system deployment and fallback strategies to
mitigate risks from prolonged system stability issues; and
(g) the adequacy of disaster recovery operational readiness following the
implementation of new or enhanced systems.
S 10.3 The board and senior management must receive and review timely reports on
the management of these risks on an ongoing basis throughout the
implementation of significant projects.
System Development and Acquisition
G 10.4 A financial institution should establish an enterprise architecture framework
(EAF) that provides a holistic view of technology throughout the financial
institution. The EAF is an overall technical design and high-level plan that
describes the financial institution’s technology infrastructure, systems’ inter-
connectivity and security controls. The EAF facilitates the conceptual design
and maintenance of the network infrastructure, related technology controls and
policies, and serves as a foundation on which financial institutions plan and
structure system development and acquisition strategies to meet business
goals.
S 10.5 A financial institution must establish clear risk management policies and
practices for the key phases of the system development life cycle (SDLC)
encompassing system design, development, testing, deployment, change
management, maintenance and decommissioning. Such policies and
practices must also embed security and relevant enterprise architecture
considerations into the SDLC to ensure confidentiality, integrity and availability
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of data9. The policies and practices must be reviewed at least once every three
years to ensure that they remain relevant to the financial institution’s
environment.
G 10.6 A financial institution is encouraged to deploy automated tools for software
development, testing, software deployment, change management, code
scanning and software version control to support more secure systems
development.
S 10.7 A financial institution shall consider the need for diversity10 in technology to
enhance resilience by ensuring critical systems infrastructure are not
excessively exposed to similar technology risks.
S 10.8 A financial institution must establish a sound methodology for rigorous system
testing prior to deployment. The testing shall ensure that the system meets
user requirements and performs robustly. Where sensitive test data is used,
the financial institution must ensure proper authorisation procedures and
adequate measures to prevent their unauthorised disclosure are in place.
G 10.9 The scope of system testing referred to in paragraph 10.8 should include unit
testing, integration testing, user acceptance testing, application security
testing, stress and regression testing, and exception and negative testing,
where applicable.
S 10.10 A financial institution must ensure any changes to the source code of critical
systems are subject to adequate source code reviews to ensure code is secure
and was developed in line with recognised coding practices prior to introducing
any system changes.
S 10.11 In relation to critical systems that are developed and maintained by vendors, a
financial institution must ensure the source code continues to be readily
accessible and secured from unauthorised access.
S 10.12 A financial institution shall physically segregate the production environment
from the development and testing environment for critical systems. Where a
financial institution is relying on a cloud environment, the financial institution
shall ensure that these environments are not running on the same virtual host.
S 10.13 A financial institution must establish appropriate procedures to independently
review and approve system changes. The financial institution must also
establish and test contingency plans in the event of unsuccessful
implementation of material changes to minimise any business disruption.
S 10.14 Where a financial institution’s IT systems are managed by third party service
providers, the financial institution shall ensure, including through contractual
obligations, that the third party service providers provide sufficient notice to the
9 The security considerations shall include ensuring appropriate segregation of duties throughout the
SDLC.
10 Diversity in technology may include the use of different technology architecture designs and
applications, technology platforms and network infrastructure.
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financial institution before any changes are undertaken that may impact the IT
systems.
S 10.15 When decommissioning critical systems, a financial institution must ensure
minimal adverse impact on customers and business operations. This includes
establishing and testing contingency plans in the event of unsuccessful system
decommissioning.
Cryptography
S 10.16 A financial institution must establish a robust and resilient cryptography policy
to promote the adoption of strong cryptographic controls for protection of
important data and information. This policy, at a minimum, shall address
requirements for:
(a) the adoption of industry standards for encryption algorithms, message
authentication, hash functions, digital signatures and random number
generation;
(b) the adoption of robust and secure processes in managing cryptographic
key lifecycles which include generation, distribution, renewal, usage,
storage, recovery, revocation and destruction;
(c) the periodic review, at least every three years, of existing cryptographic
standards and algorithms in critical systems, external linked or
transactional customer-facing applications to prevent exploitation of
weakened algorithms or protocols; and
(d) the development and testing of compromise-recovery plans in the event
of a cryptographic key compromise. This must set out the escalation
process, procedures for keys regeneration, interim measures, changes to
business-as-usual protocols and containment strategies or options to
minimise the impact of a compromise.
S 10.17 A financial institution shall ensure clear senior-level roles and responsibilities
are assigned for the effective implementation of the cryptographic policy.
S 10.18 A financial institution must conduct due diligence and evaluate the
cryptographic controls associated with the technology used in order to protect
the confidentiality, integrity, authentication, authorisation and non-repudiation
of information. Where a financial institution does not generate its own
encryption keys, the financial institution shall undertake appropriate measures
to ensure robust controls and processes are in place to manage encryption
keys. Where this involves a reliance on third party assessments11, the financial
institution shall consider whether such reliance is consistent with the financial
institution’s risk appetite and tolerance. A financial institution must also give
due regard to the system resources required to support the cryptographic
controls and the risk of reduced network traffic visibility of data that has been
encrypted.
11 For example, where the financial institution is not able to perform its own validation on embedded
cryptographic controls due to the proprietary nature of the software or confidentiality constraints.
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S 10.19 A financial institution must ensure cryptographic controls are based on the
effective implementation of suitable cryptographic protocols. The protocols
shall include secret and public cryptographic key protocols, both of which shall
reflect a high degree of protection to the applicable secret or private
cryptographic keys. The selection of such protocols must be based on
recognised international standards and tested accordingly. Commensurate
with the level of risk, secret cryptographic key and private-cryptographic key
storage and encryption/decryption computation must be undertaken in a
protected environment, supported by a hardware security module (HSM) or
trusted execution environment (TEE).
S 10.20 A financial institution shall store public cryptographic keys in a certificate issued
by a certificate authority as appropriate to the level of risk. Such certificates
associated with customers shall be issued by recognised certificate authorities.
The financial institution must ensure that the implementation of authentication
and signature protocols using such certificates are subject to strong protection
to ensure that the use of private cryptographic keys corresponding to the user
certificates are legally binding and irrefutable. The initial issuance and
subsequent renewal of such certificates must be consistent with industry best
practices and applicable legal/regulatory specifications.
Data Centre Resilience
Data Centre Infrastructure
S 10.21 A financial institution must specify the resilience and availability objectives of
its data centres which are aligned with its business needs. The network
infrastructure must be designed to be resilient, secure and scalable. Potential
data centre failures or disruptions must not significantly degrade the delivery
of its financial services or impede its internal operations.
S 10.22 A financial institution must ensure production data centres are concurrently
maintainable. This includes ensuring that production data centres have
redundant capacity components and distribution paths serving the computer
equipment.
S 10.23 In addition to the requirement in paragraph 10.22, large financial institutions
are also required to ensure recovery data centres are concurrently
maintainable.
S 10.24 A financial institution shall host critical systems in a dedicated space intended
for production data centre usage. The dedicated space must be physically
secured from unauthorised access and is not located in a disaster-prone area.
A financial institution must also ensure there is no single point of failure (SPOF)
in the design and connectivity for critical components of the production data
centres, including hardware components, electrical utility, thermal
management and data centre infrastructure. A financial institution must also
ensure adequate maintenance, and holistic and continuous monitoring of
these critical components with timely alerts on faults and indicators of potential
issues.
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S 10.25 A financial institution is required to appoint a technically competent external
service provider to carry out a production data centre resilience and risk
assessment (DCRA) and set proportionate controls aligned with the financial
institution’s risk appetite. The assessment must consider all major risks and
determine the current level of resilience of the production data centre. A
financial institution must ensure the assessment is conducted at least once
every three years or whenever there is a material change in the data centre
infrastructure, whichever is earlier. The assessment shall, at a minimum,
include a consideration of whether the requirements in paragraphs 10.22 to
10.24 have been adhered to. For data centres managed by third party service
providers, a financial institution may rely on independent third party assurance
reports provided such reliance is consistent with the financial institution’s risk
appetite and tolerance, and the independent assurance has considered similar
risks and meets the expectations in this paragraph for conducting the DCRA.
The designated board-level committee must deliberate the outcome of the
assessment.
Data Centre Operations
S 10.26 A financial institution must ensure its capacity needs are well-planned and
managed with due regard to business growth plans. This includes ensuring
adequate system storage, central processing unit (CPU) power, memory and
network bandwidth. A financial institution shall involve both the technology
stakeholders and the relevant business stakeholders within the financial
institution in its development and implementation of capacity management
plans.
S 10.27 A financial institution must establish real-time monitoring mechanisms to track
capacity utilisation and performance of key processes and services12. These
monitoring mechanisms shall be capable of providing timely and actionable
alerts to administrators.
S 10.28 A financial institution must segregate incompatible activities in the data centre
operations environment to prevent any unauthorised activity13. In the case
where vendors’ or programmers’ access to the production environment is
necessary, these activities must be properly authorised and monitored.
S 10.29 A financial institution must establish adequate control procedures for its data
centre operations, including the deployment of relevant automated tools for
batch processing management to ensure timely and accurate batch
processes. These control procedures shall also include procedures for
implementing changes in the production system, error handling as well as
management of other exceptional conditions.
S 10.30 A financial institution is required to undertake an independent risk assessment
of its end-to-end backup storage and delivery management to ensure that
12 For example, batch runs and backup processes for the financial institution’s application systems and
infrastructure.
13 For example, system development activities must be segregated from data centre operations.
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existing controls are adequate in protecting sensitive data at all times. A
financial institution must also maintain a sufficient number of backup copies of
critical data, the updated version of the operating system software, production
programs, system utilities, all master and transaction files and event logs for
recovery purposes. Backup media must be stored in an environmentally
secure and access-controlled backup site.
G 10.31 In regard to paragraph 10.30, a financial institution should also adopt the
controls as specified in Appendix 1 or their equivalent to secure the storage
and transportation of sensitive data in removable media.
S 10.32 Where there is a reasonable expectation for immediate delivery of service to
customers or dealings with counterparties, a financial institution must ensure
that the relevant critical systems are designed for high availability with a
cumulative unplanned downtime affecting the interface with customers or
counterparties of not more than 4 hours on a rolling 12 months basis and a
maximum tolerable downtime of 120 minutes per incident.
Network Resilience
S 10.33 A financial institution must design a reliable, scalable and secure enterprise
network that is able to support its business activities, including future growth
plans.
S 10.34 A financial institution must ensure the network services for its critical systems
are reliable and have no SPOF in order to protect the critical systems against
potential network faults and cyber threats14.
S 10.35 A financial institution must establish real-time network bandwidth monitoring
processes and corresponding network service resilience metrics to flag any
over utilisation of bandwidth and system disruptions due to bandwidth
congestion and network faults. This includes traffic analysis to detect trends
and anomalies.
S 10.36 A financial institution must ensure network services supporting critical systems
are designed and implemented to ensure the confidentiality, integrity and
availability of data.
S 10.37 A financial institution must establish and maintain a network design blueprint
identifying all of its internal and external network interfaces and connectivity.
The blueprint must highlight both physical and logical connectivity between
network components and network segmentations.
S 10.38 A financial institution must ensure sufficient and relevant network device logs
are retained for investigations and forensic purposes for at least three years.
14 Measures implemented may include component redundancy, service diversity and alternate network
paths.
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S 10.39 A financial institution must implement appropriate safeguards to minimise the
risk of a system compromise in one entity affecting other entities within the
group. Safeguards implemented may include establishing logical network
segmentation for the financial institution from other entities within the group.
S 10.40 A financial institution is required to appoint a technically competent external
service provider to carry out regular network resilience and risk assessments
(NRA) and set proportionate controls aligned with its risk appetite. The
assessment must be conducted at least once in three years or whenever there
is a material change in the network design. The assessment must consider all
major risks and determine the current level of resilience. This shall include an
assessment of the financial institution’s adherence to the requirements in
paragraphs 10.33 to 10.39. The designated board-level committee must
deliberate the outcome of the assessment.
Third Party Service Provider Management
S 10.41 The board and senior management of the financial institution must exercise
effective oversight and address associated risks when engaging third party
service providers15 for critical technology functions and systems. Engagement
of third party service providers, including engagements for independent
assessments, does not in any way reduce or eliminate the principal
accountabilities and responsibilities of financial institutions for the security and
reliability of technology functions and systems.
S 10.42 A financial institution must conduct proper due diligence on the third party
service provider’s competency, system infrastructure and financial viability as
relevant prior to engaging its services. In addition, an assessment shall be
made of the third party service provider’s capabilities in managing the following
specific risks ̶
(a) data leakage such as unauthorised disclosure of customer and
counterparty information;
(b) service disruption including capacity performance;
(c) processing errors;
(d) physical security breaches;
(e) cyber threats;
(f) over-reliance on key personnel;
(g) mishandling of confidential information pertaining to the financial
institution or its customers in the course of transmission, processing or
storage of such information; and
(h) concentration risk.
S 10.43 A financial institution must establish service-level agreements (SLA) when
engaging third party service providers. At a minimum, the SLA shall contain
the following:
(a) access rights for the regulator and any party appointed by the financial
institution to examine any activity or entity of the financial institution. This
15 Financial institutions must adhere to the requirements in the Policy Document on Outsourcing for
engagements with third party service providers that meet the definition of outsourcing arrangement as
specified in the policy document.
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shall include access to any record, file or data of the financial institution,
including management information and the minutes of all consultative and
decision-making processes;
(b) requirements for the service provider to provide sufficient prior notice to
financial institutions of any sub-contracting which is substantial;
(c) a written undertaking by the service provider on compliance with secrecy
provisions under relevant legislation. The SLA shall further clearly provide
for the service provider to be bound by confidentiality provisions stipulated
under the contract even after the engagement has ended;
(d) arrangements for disaster recovery and backup capability, where
applicable;
(e) critical system availability; and
(f) arrangements to secure business continuity in the event of exit or
termination of the service provider.
S 10.44 A financial institution must ensure its ability to regularly review the SLA with its
third party service providers to take into account the latest security and
technological developments in relation to the services provided.
S 10.45 A financial institution must ensure its third party service providers comply with
all relevant regulatory requirements prescribed in this policy document16.
S 10.46 A financial institution must ensure data residing in third party service providers
are recoverable in a timely manner. The financial institution shall ensure clearly
defined arrangements with the third party service provider are in place to
facilitate the financial institution’s immediate notification and timely updates to
the Bank and other relevant regulatory bodies in the event of a cyber-incident.
S 10.47 A financial institution must ensure the storage of its data is at least logically
segregated from the other clients of the third party service provider. There shall
be proper controls over and periodic review of the access provided to
authorised users.
S 10.48 A financial institution must ensure any critical system hosted by third party
service providers have strong recovery and resumption capability and
provisions to facilitate an orderly exit in the event of failure or unsatisfactory
performance by the third party service provider.
Cloud Services
S 10.49 A financial institution must fully understand the inherent risk of adopting cloud
services. In this regard, a financial institution is required to conduct a
comprehensive risk assessment prior to cloud adoption which considers the
inherent architecture of cloud services that leverages on the sharing of
resources and services across multiple tenants over the Internet. The
assessment must specifically address risks associated with the following:
(a) sophistication of the deployment model;
16 This includes specific requirements for system development and acquisition, data centre operations,
network resilience, technology security and cybersecurity, wherever applicable.
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(b) migration of existing systems to cloud infrastructure;
(c) location of cloud infrastructure;
(d) multi-tenancy or data co-mingling;
(e) vendor lock-in and application portability or interoperability;
(f) ability to customise security configurations of the cloud infrastructure to
ensure a high level of data and technology system protection;
(g) exposure to cyber-attacks via cloud service providers;
(h) termination of a cloud service provider including the ability to secure the
financial institution’s data following the termination;
(i) demarcation of responsibilities, limitations and liability of the service
provider; and
(j) ability to meet regulatory requirements and international standards on
cloud computing on a continuing basis.
S 10.50 A financial institution must separately identify critical and non-critical systems
prior to using any cloud services, guided by the definition of “critical system” in
paragraph 5.2. A financial institution must notify the Bank of its intention to use
cloud services for non-critical systems. The risk assessment as outlined in
paragraph 10.49 must be documented and made available for the Bank’s
review as and when requested by the Bank.
S 10.51 A financial institution is required to consult the Bank prior to the use of public
cloud for critical systems. The financial institution is expected to demonstrate
that specific risks associated with the use of cloud services for critical systems
have been adequately considered and addressed. The risk assessment shall
address the risks outlined in paragraph 10.49 as well as the following areas:
(a) the adequacy of the over-arching cloud adoption strategy of the financial
institution including:
(i) board oversight over cloud strategy and cloud operational
management;
(ii) senior management roles and responsibilities on cloud
management;
(iii) conduct of day-to-day operational management functions;
(iv) management and oversight by the financial institution of cloud
service providers;
(v) quality of risk management and internal control functions; and
(vi) strength of in-house competency and experience;
(b) the availability of independent, internationally recognised certifications of
the cloud service providers, at a minimum, in the following areas:
(i) information security management framework, including
cryptographic modules such as used for encryption and decryption
of user data; and
(ii) cloud-specific security controls for protection of customer and
counterparty or proprietary information including payment
transaction data in use, in storage and in transit; and
(c) the degree to which the selected cloud configuration adequately
addresses the following attributes:
(i) geographical redundancy;
(ii) high availability;
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(iii) scalability;
(iv) portability;
(v) interoperability; and
(vi) strong recovery and resumption capability including appropriate
alternate Internet path to protect against potential Internet faults.
S 10.52 A financial institution shall consider the need for a third party pre-
implementation review on cloud implementation that also covers the areas set
out in paragraph 10.51.
S 10.53 A financial institution must implement appropriate safeguards on customer and
counterparty information and proprietary data when using cloud services to
protect against unauthorised disclosure and access. This shall include
retaining ownership, control and management of all data pertaining to customer
and counterparty information, proprietary data and services hosted on the
cloud, including the relevant cryptographic keys management.
Access Control
S 10.54 A financial institution must implement an appropriate access controls policy for
the identification, authentication and authorisation of users (internal and
external users such as third party service providers). This must address both
logical and physical technology access controls which are commensurate with
the level of risk of unauthorised access to its technology systems.
G 10.55 In observing paragraph 10.54, a financial institution should consider the
following principles in its access control policy:
(a) adopt a “deny all” access control policy for users by default unless
explicitly authorised;
(b) employ “least privilege” access rights or on a ‘need-to-have’ basis where
only the minimum sufficient permissions are granted to legitimate users
to perform their roles;
(c) employ time-bound access rights which restrict access to a specific period
including access rights granted to service providers;
(d) employ segregation of incompatible functions where no single person is
responsible for an entire operation that may provide the ability to
independently modify, circumvent, and disable system security features.
This may include a combination of functions such as:
(i) system development and technology operations;
(ii) security administration and system administration; and
(iii) network operation and network security;
(e) employ dual control functions which require two or more persons to
execute an activity;
(f) adopt stronger authentication for critical activities including for remote
access;
(g) limit and control the use of the same user ID for multiple concurrent
sessions;
(h) limit and control the sharing of user ID and passwords across multiple
users; and
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(i) control the use of generic user ID naming conventions in favour of more
personally identifiable IDs.
S 10.56 A financial institution must employ robust authentication processes to ensure
the authenticity of identities in use. Authentication mechanisms shall be
commensurate with the criticality of the functions and adopt at least one or
more of these three basic authentication factors, namely, something the user
knows (e.g. password, PIN), something the user possesses (e.g. smart card,
security device) and something the user is (e.g. biometric characteristics, such
as a fingerprint or retinal pattern).
S 10.57 A financial institution shall periodically review and adapt its password practices
to enhance resilience against evolving attacks. This includes the effective and
secure generation of passwords. There must be appropriate controls in place
to check the strength of the passwords created.
G 10.58 Authentication methods that depend on more than one factor typically are
more difficult to compromise than a single factor system. In view of this,
financial institutions are encouraged to properly design and implement
(especially in high-risk or ‘single sign-on’ systems) multi-factor authentication
(MFA) that are more reliable and provide stronger fraud deterrents.
G 10.59 A financial institution is encouraged to adopt dedicated user domains for
selected critical functions, separate from the broader enterprise-wide user
authentication system.
S 10.60 A financial institution must establish a user access matrix to outline access
rights, user roles or profiles, and the authorising and approving authorities. The
access matrix must be periodically reviewed and updated.
S 10.61 A financial institution must ensure—
(a) access controls to enterprise-wide systems are effectively managed and
monitored; and
(b) user activities in critical systems are logged for audit and investigations.
Activity logs must be maintained for at least three years and regularly
reviewed in a timely manner.
S 10.62 In fulfilling the requirement under paragraph 10.61, large financial institutions
are required to—
(a) deploy an identity access management system to effectively manage and
monitor user access to enterprise-wide systems; and
(b) deploy automated audit tools to flag any anomalies.
Patch and End-of-Life System Management
S 10.63 A financial institution must ensure that critical systems are not running on
outdated systems with known security vulnerabilities or end-of-life (EOL)
technology systems. In this regard, a financial institution must clearly assign
responsibilities to identified functions:
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(a) to continuously monitor and implement latest patch releases in a timely
manner; and
(b) identify critical technology systems that are approaching EOL for further
remedial action.
S 10.64 A large financial institution must establish dedicated resources to perform the
functions under paragraph 10.63.
S 10.65 A financial institution must establish a patch and EOL management framework
which addresses among others the following requirements:
(a) identification and risk assessment of all technology assets for potential
vulnerabilities arising from undeployed patches or EOL systems;
(b) conduct of compatibility testing for critical patches;
(c) specification of turnaround time for deploying patches according to the
severity of the patches; and
(d) adherence to the workflow for end-to-end patch deployment processes
including approval, monitoring and tracking of activities.
Security of Digital Services
S 10.66 A financial institution must implement robust technology security controls in
providing digital services which assure the following:
(a) confidentiality and integrity of customer and counterparty information and
transactions;
(b) reliability of services delivered via channels and devices with minimum
disruption to services;
(c) proper authentication of users or devices and authorisation of
transactions;
(d) sufficient audit trail and monitoring of anomalous transactions;
(e) ability to identify and revert to the recovery point prior to incident or service
disruption; and
(f) strong physical control and logical control measures.
S 10.67 A financial institution must implement controls to authenticate and monitor all
financial transactions. These controls, at a minimum, must be effective in
mitigating man-in-the-middle attacks, transaction fraud, phishing and
compromise of application systems and information.
S 10.68 A financial institution must implement additional controls to authenticate
devices and users, authorise transactions and support non-repudiation and
accountability for high-risk transactions or transactions above RM10,000.
These measures must include, at a minimum, the following:
(a) ensure transactions are performed over secured channels such as the
latest version of Transport Layer Security (TLS);
(b) both client and host application systems must encrypt all confidential
information prior to transmission over the network;
(c) adopt MFA for transactions;
(d) if OTP is used as a second factor, it must be dynamic and time-bound;
(e) request users to verify details of the transaction prior to execution;
(f) ensure secure user and session handling management;
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(g) be able to capture the location of origin and destination of each
transaction;
(h) implement strong mutual authentication between the users’ end-point
devices and financial institutions’ servers, such as the use of the latest
version of Extended Validation SSL certificate (EV SSL); and
(i) provide timely notification to customers that is sufficiently descriptive of
the nature of the transaction.
S 10.69 A financial institution must ensure the MFA solution used to authenticate
financial transactions are adequately secure, which includes the following:
(a) binding of the MFA solution to the customer’s account;
(b) activation of MFA must be subject to verification by the financial institution;
and
(c) timely notification to customers of any activation of and changes to the
MFA solution via the customers’ verified communication channel.
G 10.70 A financial institution should deploy MFA technology and channels that are
more secure than unencrypted short messaging service (SMS).
S 10.71 A financial institution shall deploy MFA solutions with stronger security controls
for open third party fund transfer and open payment transactions with a value
of RM10,000 and above.
S 10.72 Such stronger MFA solutions shall adhere to the following requirements:
(a) payer/sender must be made aware and prompted to confirm details of the
identified beneficiary and amount of the transaction;
(b) authentication code must be initiated and generated locally by the
payer/sender using MFA;
(c) authentication code generated by payer/sender must be specific to the
confirmed identified beneficiary and amount;
(d) secure underlying technology must be established to ensure the
authentication code accepted by the financial institution corresponds to
the confirmed transaction details; and
(e) notification must be provided to the payer/sender of the transaction.
S 10.73 Where a financial institution deploys OTP as part of its stronger MFA solutions,
the following features must be implemented:
(a) binding of the transaction details to the OTP generated by the device (e.g.
beneficiary account number, amount of transaction);
(b) generation of the OTP from the customer’s device and not from the bank’s
server; and
(c) requiring the customer to physically enter the generated OTP into the
application.
S 10.74 For financial transactions below RM10,000, a financial institution may decide
on proportionate controls and authentication methods for transactions
assessed by the financial institution to be of low risk. In undertaking the
assessment, the financial institution must establish a set of criteria or factors
that reflect the nature, size and characteristics of a financial transaction. Such
criteria or factors must be consistent with the financial institution’s risk appetite
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and tolerance. The financial institution must periodically review the risk
assessment criteria to ensure its continued relevance, having regard to the
latest developments in cybersecurity risks and authentication technologies as
well as fraud trends and incidents.
S 10.75 Where a financial institution decides not to adopt MFA for financial transactions
that are assessed to be of low risk, the financial institution must nevertheless
implement adequate safeguards for such transactions which shall include at a
minimum the following measures:
(a) set appropriate limits on a per-transaction basis, and on a cumulative
basis;
(b) provide a convenient means for customers to reduce the limits described
in paragraph (a) or to opt for MFA;
(c) provide a convenient means for its customers to temporarily suspend their
account in the event of suspected fraud; and
(d) provide its customers with adequate notice of the safeguards set out in
sub-paragraphs (a) to (c).
S 10.76 A financial institution must ensure sufficient and relevant digital service logs
are retained for investigations and forensic purposes for at least three years.
S 10.77 A financial institution must ensure that critical online payments and banking17
services have high availability with reasonable response time to customer
actions.
S 10.78 A financial institution must ensure that the use of more advanced technology
to authenticate and deliver digital services such as biometrics, tokenisation
and contactless communication18 comply with internationally recognised
standards where available. The technology must be resilient against cyber
threats19 including malware, phishing or data leakage.
S 10.79 A financial institution must undertake a comprehensive risk assessment of the
advanced technologies and the algorithms deployed in its digital services.
Algorithms must be regularly reviewed and validated to ensure they remain
appropriate and accurate. Where third party software is used, a financial
institution may rely on relevant independent reports provided such reliance is
consistent with the financial institution’s risk appetite and tolerance, and the
nature of digital services provided by the financial institution which leverage on
the technologies and algorithms.
S 10.80 A financial institution must ensure authentication processes using biometric
technology are secure, highly resistant to spoofing and have a minimal false
acceptance rate to ensure confidentiality, integrity and non-repudiation of
transactions.
17 For example, Internet and mobile banking services.
18 Such as Quick Response (QR) code, Bar Code, Near Field Communication (NFC), Radio Frequency
Identification (RFID), Wearables.
19 For example, in respect of QR payments, financial institutions shall implement safeguards within its
respective mobile applications to detect and mitigate risks relating to QR code that may contain malware
or links to phishing websites.
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S 10.81 A financial institution must perform continuous surveillance to assess the
vulnerability of the operating system and the relevant technology platform used
for its digital delivery channels to security breaches and implement appropriate
corresponding safeguards. At a minimum, a financial institution must
implement sufficient logical and physical safeguards for the following
channels:
(a) self-service terminal (SST);
(b) non-cash SST;
(c) Internet banking; and
(d) mobile application and devices.
In view of the evolving threat landscape, these safeguards must be
continuously reviewed and updated to protect against fraud and to secure the
confidentiality and integrity of customer and counterparty information and
transactions.
G 10.82 In fulfilling paragraph 10.81, a financial institution should adopt the controls
specified in the following Appendices for the respective digital delivery
channel:
(a) Appendix 2: Control Measures on Self-Service Terminals (SST);
(b) Appendix 3: Control Measures on Internet Banking; and
(c) Appendix 4: Control Measures on Mobile Application and Devices.
11 Cybersecurity Management
Cyber Risk Management
S 11.1 A financial institution must ensure that there is an enterprise-wide focus on
effective cyber risk management to reflect the collective responsibility of
business and technology lines for managing cyber risks.
S 11.2 A financial institution must develop a CRF which clearly articulates the
institution’s governance for managing cyber risks, its cyber resilience
objectives and its risk tolerance, with due regard to the evolving cyber threat
environment. Objectives of the CRF shall include ensuring operational
resilience against extreme but plausible cyber-attacks. The framework must be
able to support the effective identification, protection, detection, response, and
recovery (IPDRR) of systems and data hosted on-premise or by third party
service providers from internal and external cyber-attacks.
S 11.3 The CRF must consist of, at a minimum, the following elements:
(a) development of an institutional understanding of the overall cyber risk
context in relation to the financial institution’s business and operations, its
exposure to cyber risks and current cybersecurity posture;
(b) identification, classification and prioritisation of critical systems,
information, assets and interconnectivity (with internal and external
parties) to obtain a complete and accurate view of the financial institution’s
information assets, critical systems, interdependencies and cyber risk
profile;
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(c) identification of cybersecurity threats and countermeasures including
measures to contain reputational damage that can undermine confidence
in the financial institution;
(d) layered (defense-in-depth) security controls to protect its data,
infrastructure and assets against evolving threats;
(e) timely detection of cybersecurity incidents through continuous
surveillance and monitoring;
(f) detailed incident handling policies and procedures and a crisis response
management playbook to support the swift recovery from cyber-incidents
and contain any damage resulting from a cybersecurity breach; and
(g) policies and procedures for timely and secure information sharing and
collaboration with other financial institutions and participants in financial
market infrastructure to strengthen cyber resilience.
S 11.4 In addition to the requirements in paragraph 11.3, a large financial institution
is required to—
(a) implement a centralised automated tracking system to manage its
technology asset inventory; and
(b) establish a dedicated in-house cyber risk management function to
manage cyber risks or emerging cyber threats. The cyber risk
management function shall be responsible for the following:
(i) perform detailed analysis on cyber threats, provide risk assessments
on potential cyber-attacks and ensure timely review and escalation
of all high-risk cyber threats to senior management and the board;
and
(ii) proactively identify potential vulnerabilities including those arising
from infrastructure hosted with third party service providers through
the simulation of sophisticated “Red Team” attacks on its current
security controls.
Cybersecurity Operations
S 11.5 A financial institution must establish clear responsibilities for cybersecurity
operations which shall include implementing appropriate mitigating measures
in the financial institution’s conduct of business that correspond to the following
phases of the cyber-attack lifecycle:
(a) reconnaissance;
(b) weaponisation;
(c) delivery;
(d) exploitation;
(e) installation;
(f) command and control; and
(g) exfiltration.
G 11.6 Where relevant, a financial institution should adopt the control measures on
cybersecurity as specified in Appendix 5 to enhance its resilience to cyber-
attacks.
S 11.7 A financial institution must deploy effective tools to support the continuous and
proactive monitoring and timely detection of anomalous activities in its
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technology infrastructure. The scope of monitoring must cover all critical
systems including the supporting infrastructure.
S 11.8 A financial institution must ensure that its cybersecurity operations
continuously prevent and detect any potential compromise of its security
controls or weakening of its security posture. For large financial institutions,
this must include performing a quarterly vulnerability assessment of external
and internal network components that support all critical systems.
S 11.9 A financial institution must conduct annual intelligence-led penetration tests on
its internal and external network infrastructure as well as critical systems
including web, mobile and all external-facing applications. The penetration
testing shall reflect extreme but plausible cyber-attack scenarios based on
emerging and evolving threat scenarios. A financial institution must engage
suitably accredited penetration testers and service providers to perform this
function.
S 11.10 In addition to the requirement in paragraph 11.9, a large financial institution
must undertake independent compromise assessments on the technology
infrastructure of its critical systems at least annually and ensure the results of
such assessments are escalated to senior management and the board in a
timely manner.
S 11.11 A financial institution must establish standard operating procedures (SOP) for
vulnerability assessment and penetration testing (VAPT) activities. The SOP
must outline the relevant control measures including ensuring the external
penetration testers are accompanied on-premises at all times, validating the
event logs and ensuring data purging.
S 11.12 A financial institution must ensure the outcome of the penetration testing
exercise is properly documented and escalated in a timely manner to senior
management to identify and monitor the implementation of relevant remedial
actions.
Distributed Denial of Service (DDoS)
S 11.13 A financial institution must ensure its technology systems and infrastructure,
including critical systems outsourced to or hosted by third party service
providers, are adequately protected against all types of DDoS attacks
(including volumetric, protocol and application layer attacks) through the
following measures:
(a) subscribing to DDoS mitigation services, which include automatic ‘clean
pipe’ services to filter and divert any potential malicious traffic away from
the network bandwidth;
(b) regularly assessing the capability of the provider to expand network
bandwidth on-demand including upstream provider capability, adequacy
of the provider’s incident response plan and its responsiveness to an
attack; and
(c) implementing mechanisms to mitigate against Domain Name Server
(DNS) based layer attacks.
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Data Loss Prevention (DLP)
S 11.14 A financial institution must establish a clear DLP strategy and processes in
order to ensure that proprietary and customer and counterparty information is
identified, classified and secured. At a minimum, a financial institution must-
(a) ensure that data owners are accountable and responsible for identifying
and appropriately classifying data;
(b) undertake a data discovery process prior to the development of a data
classification scheme and data inventory; and
(c) ensure that data accessible by third parties is clearly identified and
policies must be implemented to safeguard and control third party access.
This includes adequate contractual agreements to protect the interests of
the financial institution and its customers.
S 11.15 A financial institution must design internal control procedures and implement
appropriate technology in all applications and access points to enforce DLP
policies and trigger any policy violations. The technology deployed must cover
the following:
(a) data in-use – data being processed by IT resources;
(b) data in-motion – data being transmitted on the network; and
(c) data at-rest – data stored in storage mediums such as servers, backup
media and databases.
S 11.16 A financial institution must implement appropriate policies for the removal of
data on technology equipment, mobile devices or storage media to prevent
unauthorised access to data.
Security Operations Centre (SOC)
S 11.17 A financial institution must ensure its SOC, whether managed in-house or by
third party service providers, has adequate capabilities for proactive
monitoring of its technology security posture. This shall enable the financial
institution to detect anomalous user or network activities, flag potential
breaches and establish the appropriate response supported by skilled
resources based on the level of complexity of the alerts. The outcome of the
SOC activities shall also inform the financial institution’s reviews of its
cybersecurity posture and strategy.
S 11.18 The SOC must be able to perform the following functions:
(a) log collection and the implementation of an event correlation engine with
parameter-driven use cases such as Security Information and Event
Management (SIEM);
(b) incident coordination and response;
(c) vulnerability management;
(d) threat hunting;
(e) remediation functions including the ability to perform forensic artifact
handling, malware and implant analysis; and
(f) provision of situational awareness to detect adversaries and threats
including threat intelligence analysis and operations, and monitoring
indicators of compromise (IOC). This includes advanced behavioural
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analysis to detect signature-less and file-less malware and to identify
anomalies that may pose security threats including at endpoints and
network layers.
S 11.19 A financial institution must ensure that the SOC provides a regular threat
assessment report, which shall include, at a minimum, the following:
(a) trends and statistics of cyber events and incidents categorised by type of
attacks, target and source IP addresses, location of data centres and
criticality of applications; and
(b) intelligence on emerging and potential threats including tactics,
techniques and procedures (TTP).
For large financial institutions, such reports shall be provided on a monthly
basis.
S 11.20 A financial institution must subscribe to reputable threat intelligence services
to identify emerging cyber threats, uncover new cyber-attack techniques and
support the implementation of countermeasures.
S 11.21 A financial institution must ensure the following:
(a) the SOC is located in a physically secure environment with proper access
controls;
(b) the SOC operates on a 24x7 basis with disaster recovery capability to
ensure continuous availability; and
(c) the SOC has a holistic and end-to-end view of the financial institution’s
infrastructure including internal and external facing perimeters.
Cyber Response and Recovery
S 11.22 A financial institution must establish comprehensive cyber crisis management
policies and procedures that incorporate cyber-attack scenarios and
responses in the organisation’s overall crisis management plan, escalation
processes, business continuity and disaster recovery planning. This includes
developing a clear communication plan for engaging shareholders, regulatory
authorities, customers and employees in the event of a cyber-incident.
S 11.23 A financial institution must establish and implement a comprehensive Cyber
Incident Response Plan (CIRP). The CIRP must address the following:
(a) Preparedness
Establish a clear governance process, reporting structure and roles and
responsibilities of the Cyber Emergency Response Team (CERT) as well
as invocation and escalation procedures in the event of an incident;
(b) Detection and analysis
Ensure effective and expedient processes for identifying points of
compromise, assessing the extent of damage and preserving sufficient
evidence for forensics purposes;
(c) Containment, eradication and recovery
Identify and implement remedial actions to prevent or minimise damage
to the financial institution, remove the known threats and resume business
activities; and
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(d) Post-incident activity
Conduct post-incident review incorporating lessons learned and develop
long-term risk mitigations.
S 11.24 A financial institution must ensure that relevant CERT members are
conversant with the incident response plan and handling procedures, and
remain contactable at all times. A key contact person or an alternate must be
appointed to liaise with the Bank during an incident.
S 11.25 A financial institution must conduct an annual cyber drill exercise to test the
effectiveness of its CIRP, based on various current and emerging threat
scenarios (e.g. social engineering), with the involvement of key stakeholders
including members of the board, senior management and relevant third party
service providers. The test scenarios must include scenarios designed to test:
(a) the effectiveness of escalation, communication and decision-making
processes that correspond to different impact levels of a cyber-incident;
and
(b) the readiness and effectiveness of CERT and relevant third party service
providers in supporting the recovery process.
S 11.26 A financial institution must immediately notify the Bank of any cyber-incidents
affecting the institution. Upon completion of the investigation, the financial
institution is also required to submit a report on the incident through ORION20.
G 11.27 Financial institutions are strongly encouraged to collaborate and cooperate
closely with relevant stakeholders and competent authorities in combating
cyber threats and sharing threat intelligence and mitigation measures.
12 Technology Audit
S 12.1 A financial institution must ensure that the scope, frequency and intensity of
technology audits are commensurate with the complexity, sophistication and
criticality of technology systems and applications.
S 12.2 The internal audit function must be adequately resourced with relevant
technology audit competencies and sound knowledge of the financial
institution’s technology processes and operations.
S 12.3 A financial institution must ensure its internal technology audit staff are
professionally certified and adequately conversant with the developing
sophistication of the financial institution’s technology systems and delivery
channels.
S 12.4 In addition to paragraph 12.2, a large financial institution must establish a
dedicated internal technology audit function that has specialised technology
audit competencies to undertake technology audits.
20 Operational Risk Integrated Online Network
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S 12.5 A financial institution must establish a technology audit plan that provides
appropriate coverage of critical technology services, third party service
providers, material external system interfaces, delayed or prematurely
terminated critical technology projects and post-implementation review of new
or material enhancements of technology services.
G 12.6 The internal audit function (in the case of paragraph 12.2) and the dedicated
internal technology audit function (in the case of paragraph 12.4) may be
enlisted to provide advice on compliance with and adequacy of control
processes during the planning and development phases of new major
products, systems or technology operations. In such cases, the technology
auditors participating in this capacity should carefully consider whether such
an advisory or consulting role would materially impair their independence or
objectivity in performing post-implementation reviews of the products, systems
and operations concerned.
13 Internal Awareness and Training
S 13.1 A financial institution must provide adequate and regular technology and
cybersecurity awareness education for all staff in undertaking their respective
roles, and measure the effectiveness of its education and awareness
programmes. This cybersecurity awareness education must be conducted at
least annually by the financial institution and must reflect the current cyber
threat landscape.
S 13.2 A financial institution must provide adequate and continuous training for staff
involved in technology operations, cybersecurity and risk management in order
to ensure that the staff are competent to effectively perform their roles and
responsibilities.
S 13.3 In fulfilling the requirements under paragraph 13.2, a large financial institution
shall ensure the staff working on day-to-day IT operations such as IT security,
project management and cloud operations are also suitably certified.
S 13.4 A financial institution must provide its board members with regular training and
information on technology developments to enable the board to effectively
discharge its oversight role.
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PART C REGULATORY PROCESS
14 Notification for Technology-Related Applications
S 14.1 A financial institution must notify the Bank in accordance with the requirements
in paragraphs 14.2 to 14.7 prior to conducting e-banking, Internet insurance
and Internet takaful services, including introducing new technology relating to
e-banking, Internet insurance and Internet takaful21.
S 14.2 A financial institution offering e-banking, Internet insurance and Internet takaful
services for the first time must submit the following information in the
notification to the Bank:
(a) risks identified and strategies to manage such risks. This includes specific
accountabilities, policies and controls to address risks;
(b) security arrangements and controls;
(c) significant terms and conditions for e-banking, Internet insurance and
Internet takaful services;
(d) client charter on e-banking, Internet insurance and Internet takaful
services;
(e) privacy policy statement; and
(f) any outsourcing or website link arrangements, or strategic alliances or
partnerships with third parties that have been finalised.
S 14.3 In introducing any enhancement to existing e-banking, Internet insurance and
Internet takaful services, the financial institution is required to follow the
notification process based on whether the enhancement is explicitly listed in
Appendix 6 (Positive List for Enhancement to Electronic Banking, Internet
Insurance and Internet Takaful Services). The list may be updated as and
when there are changes to the risk profile and risk management of the
technology landscape.
S 14.4 For any enhancements listed in Appendix 6, the financial institution must
submit the notification together with the following information:
(a) description of the enhancements to the existing technologies; and
(b) risk assessment of the proposed enhancements, including the impact and
measures to mitigate identified risks.
S 14.5 For the introduction of new services, and any enhancements to existing
services not listed in Appendix 6, the financial institution is required to
undertake the following measures prior to notifying the Bank:
(a) engage an independent external party to provide assurance that the
financial institution has addressed the technology risks and security
21 For the purpose of this Part, ̶
“e-banking” means the provision of banking products and services through electronic channels.
E-banking includes banking via the Internet, phone, automated teller machines (ATM), and any other
electronic channel.
“Internet insurance” means the use of the Internet as a channel to transact insurance business with
customers or as a platform for transmission of customers’ information; and
“Internet takaful” means the use of the Internet as a channel to transact takaful business with customers
or as a platform for transmission of customers’ information.
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controls associated with the e-banking, Internet insurance and Internet
takaful services or any material enhancement to the existing e-banking,
Internet insurance and Internet takaful services. The format of the
assurance shall be as set out in Appendix 7; and
(b) provide a confirmation by the CISO, senior management officer or the
chairman of the board or designated board-level committee stipulated in
paragraph 8.4 of the financial institution’s readiness to provide e-banking,
Internet insurance and Internet takaful services or implement any material
enhancement to the e-banking, Internet insurance and Internet takaful
services. The format of the confirmation shall be as set out in Appendix 8.
S 14.6 A financial institution must ensure that the independent external party
providing the assurance is competent and has a good track record. The
assurance shall address the matters covered in, and comply with, Appendix 9.
G 14.7 For any enhancements that do not materially alter the prior assessments and
representations made by a financial institution to the Bank, a notification under
paragraph 14.4 and Appendix 6 is not required. However, a financial institution
should have the relevant information readily available upon request by the
Bank to facilitate the ongoing supervisory process.
G 14.8 A financial institution may offer the services or implement any enhancement to
the services immediately upon submission of the notification under paragraph
14.1 and compliance with the requirements in paragraphs 14.2 to 14.6.
15 Assessment and Gap Analysis
S 15.1 A financial institution must perform a gap analysis of existing practices in
managing technology risk against the requirements in this policy document
and highlight key implementation gaps. The financial institution must develop
an action plan with a clear timeline and key milestones to address the gaps
identified particularly for gaps that extend beyond the effective date of this
policy document. The gap analysis and action plan must be submitted to the
Bank no later than 18 October 2019.
S 15.2 For the purpose of paragraph 8.12, a financial institution shall submit together
with the gap analysis and action plan its self-assessment on whether it is a
large financial institution.
S 15.3 The self-assessment, gap analysis and action plan in paragraphs 15.1 and
15.2 must be submitted to Jabatan Penyeliaan Konglomerat Kewangan,
Jabatan Penyeliaan Perbankan, Jabatan Penyeliaan Insurans dan Takaful or
Jabatan Pemantauan Pembayaran, as the case may be.
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Appendix 1 Storage and Transportation of Sensitive Data in Removable Media
Financial institutions should ensure adequate controls and measures are implemented
for the storage and transportation of sensitive data in removable media, including:
1. Deploying the latest industry-tested and accepted encryption techniques;
2. Implementing authorised access control to sensitive data (e.g. password
protection, user access matrix);
3. Prohibiting unauthorised copying and reading from the media;
4. Should there be a need to transport the removable media to a different physical
location, financial institutions must—
(a) strengthen the chain of custody process for media management which
includes:
(i) the media must not be under single custody at any point of time;
(ii) the media must always be within sight of the designated custodians;
and
(iii) the media must be delivered to its target destination without
unscheduled stops or detours;
(b) use secure and official vehicle for transportation;
(c) use strong and tamper-proof containers for storing the media with high-
security lock (e.g. dual key and combination lock); and
(d) implement location tracking functionality for each media container; and
5. Ensuring third party service providers comply with the requirements in
paragraphs 1 to 4 of this Appendix, in the event third party services are required
in undertaking the storage management or transportation process of sensitive
data.
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Appendix 2 Control Measures on Self-service Terminals (SSTs)
Cash SST
Cash SSTs are computer terminals provided by banking institutions such as
Automated Teller Machine, Cash Deposit Machine and Cash Recycler Machine that
provide cash transactions such as cash withdrawals and deposits including in foreign
currencies.
Financial institutions should ensure the adequacy of physical and logical security and
controls implemented on the Cash SST, which includes:
1. Enforcing full hard disk encryption;
2. Retaining cards or block access to Cash SST service when the following are
detected:
(a) exceed maximum PIN tries;
(b) invalid card authentication value;
(c) cash SST card unable to eject;
(d) “deactivated” card status;
(e) inactive account status such as “Dormant” or “Deceased”; and
(f) cards tagged as “Lost” or “Stolen”;
3. Ensuring Cash SST operating system is running on a secure version operating
system with continued developer or vendor support for security patches to fix any
operating system security and vulnerabilities;
4. Deploying Anti-virus (AV) solution for Cash SST and ensure timely update of
signatures. Ensure virus scanning on all Cash SSTs is performed periodically;
5. Implementing a centralised management system to monitor and alert any
unauthorised activities on Cash SST such as unauthorised shutting-down of OS
or deactivation of the white-listing programme;
6. Ensuring effective control over the Cash SST lock and key by using a unique and
non-duplicable key to open the Cash SST PC Core compartment as well as
ensure proper safekeeping and custody of the key;
7. Installing alarm system with triggering mechanism connected to a centralised
alert system to detect and alert bank’s staff of any unauthorised opening or
tampering of the physical component of the Cash SST, particularly the access to
the Cash SST PC Core;
8. Securing physically the Cash SST PC Core by enclosing the CPU in a locked
case;
9. Enforcing firewall and Intrusion Prevention System (IPS) at the financial
institution’s network to filter communication between the host server and the
Cash SST;
10. Enforcing pairing authentication for key Cash SST components, particularly
between cash dispenser and Cash SST controller;
11. Enforcing Basic Input Output System (BIOS) lock-down which includes:
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(a) enabling unique password protection for accessing BIOS. The password
should be held by financial institutions under strict control;
(b) disabling external input device and port such as CD-ROM, floppy disk and
USB port. The Cash SST operating system can only be booted from the
internal hard disk; and
(c) disabling automatic BIOS update;
12. Ensuring proper configuration and hardening of the OS and application system,
which includes:
(a) blocking any wireless network connection such as Bluetooth, Wi-Fi;
(b) disabling Microsoft default program system (such as Notepad, Internet
browser, Windows shortcut, file download, file sharing and command
prompt);
(c) disabling unnecessary services in the operating system such as the auto-
play features;
(d) concealing Start Bar or Tray Menu;
(e) enabling cache auto-deletion; and
(f) disabling key combinations and right-click mouse functions;
13. Enforcing secure system parameter setting, which includes:
(a) changing defaults password and other system security parameters setting
of the Cash SST;
(b) using a unique system administrator password for all Cash SSTs; and
(c) using lowest-level privileges for programmes and users system access;
14. Performing scanning and removing any known malware such as
Backdoor.Padpin and Backdoor.Ploutus;
15. Enforcing and monitor Cash SST end-point protection such as installing white-
listing programmes. The end-point protection programme, at a minimum, shall
ensure only authorised Cash SST system processes and libraries are installed
and executed;
16. Enforcing strict control procedures over installation and maintenance of Cash
SST OS and application systems, which includes:
(a) ensuring only authorised personnel have access to gold disk copy (master
copy of Cash SST installation software);
(b) ensuring the gold disk copy is scanned for virus/malware prior to installation
into Cash SST; and
(c) enforcing dual control for installation and maintenance of Cash SST
software; and
17. Installing closed-circuit cameras and transaction triggered cameras at strategic
locations with adequate lighting in order to ensure high quality and clear closed-
circuit television images of cardholder performing a transaction as well as any
suspicious activities.
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Non-Cash SST
Non-cash SSTs are computer terminals such as desktops, laptops, tablets and cheque
deposit machines that provide non-cash transactions such as cheque deposits,
balance enquiries, fund transfers, utilities bill payments and insurance quotations.
Financial institutions should ensure the adequacy of physical and logical security and
controls implemented on the self-service terminals, which includes:
1. Enforcing the use of lock and key on the computer terminal’s central processing
unit (CPU) at all times;
2. Deploying closed-circuit television to monitor the usage of self-service terminals;
3. Ensuring adequate control over network security of the self-service terminals to
ensure that the kiosks are secured and segregated from the internal network;
4. Disabling the use of all input devices (such as USB, CD and DVD), application
system (such as Notepad, Microsoft Word, and Microsoft PowerPoint) and file
download as well as command prompt on the kiosk;
5. Disabling browser scripting, pop-ups, ActiveX, Windows shortcut;
6. Concealing Start Bar or Tray Menu;
7. Enabling cache auto-deletion;
8. Disabling key combinations and right-click mouse functions; and
9. Restricting use of Internet browser i.e. only to be used to access the financial
institution’s internet website.
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Appendix 3 Control Measures on Internet Banking
1. A financial institution should ensure the adequacy of security controls
implemented for Internet banking, which include:
(a) Ensure Internet banking only runs on secured versions of web browsers
that have continued developer support for security patches to fix any
vulnerabilities;
(b) Put in place additional authentication protocols to enable customers to
identify the financial institution’s genuine website such as deploying image
or word verification authentication or similar controls. The system should
require the customer to acknowledge that the image or word is correct
before the password box is displayed to the customer;
(c) Assign a customer to MFA solution binding to a single device;
(d) Require MFA when registering an account as a “favourite” beneficiary. A
financial institution must also require MFA, for the first funds transfer to the
favourite beneficiary;
(e) For new customers, the default transfer limit shall be set at a conservatively
low level (such as RM5,000 per day). However, customers should be
provided with the option to change the limit via secure channels (e.g. online
with MFA or at branches); and
(f) Deploy an automated fraud detection system which has the capability to
conduct heuristic behavioural analysis.
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Appendix 4 Control Measures on Mobile Application and Devices
1. A financial institution should ensure digital payment, banking and insurance
services involving sensitive customer and counterparty information offered via
mobile devices are adequately secured. This includes the following:
(a) ensure mobile applications run only on the supported version of operating
systems and enforce the application to only operate on a secure version of
operating systems which have not been compromised, jailbroken or rooted
i.e. the security patches are up-to-date;
(b) design the mobile application to operate in a secure and tamper-proof
environment within the mobile devices. The mobile application shall be
prohibited from storing customer and counterparty information used for
authentication with the application server such as PIN and passwords.
Authentication and verification of unique key and PIN shall be centralised
at the host;
(c) undertake proper due diligence processes to ensure the application
distribution platforms used to distribute the mobile application are
reputable;
(d) ensure proper controls are in place to access, maintain and upload the
mobile application on application distribution platforms;
(e) activation of the mobile application must be subject to authentication by the
financial institution;
(f) ensure secure provisioning process of mobile application in the customer’s
device is in place by binding the mobile application to the customer’s profile
such as device ID and account number; and
(g) monitor the application distribution platforms to identify and address the
distribution of fake applications in a timely manner.
2. In addition to the guidance in paragraph 1, a financial institution should also
ensure the following measures are applied specifically for applications running
on mobile devices used by the financial institution, appointed agents or
intermediaries for the purpose of processing customer and counterparty
information:
(a) mobile device to be adequately hardened and secured;
(b) ensure the capability to automatically wipe data stored in the mobile devices
in the event the device is reported stolen or missing;
(c) establish safeguards that ensure the security of customer and counterparty
information (e.g. Primary Account Numbers (PAN), Card Verification Value
Numbers (CVV), expiry dates and Personal Identification Numbers (PIN) of
payment cards), including to mitigate risks of identity theft and fraud22;
(d) enforce masking of sensitive customer and counterparty information when
displayed on mobile devices; and
(e) limit the storage of customer and counterparty information for soliciting
insurance businesses in mobile devices to 30 days.
22 This includes risks associated with malwares that enable keystroke logging, PIN harvesting and other
malicious forms of customer and counterparty information downloading.
Risk Management in Technology 41 of 50
Issued on: 19 June 2020
Appendix 5 Control Measures on Cybersecurity
1. Conduct periodic review on the configuration and rules settings for all security
devices. Use automated tools to review and monitor changes to configuration
and rules settings.
2. Update checklists on the latest security hardening of operating systems.
3. Update security standards and protocols for web services encryption regularly.
Disable support of weak ciphers and protocol in web-facing applications.
4. Ensure technology networks are segregated into multiple zones according to
threat profile. Each zone shall be adequately protected by various security
devices including firewall and Intrusion Prevention System (IPS). This must
include mobile and wireless networks as well.
5. Ensure security controls for server-to-server external network connections
include the following:
(a) server-to-server authentication such as Public Key Infrastructure (PKI)
certificate or user ID and password;
(b) use of secure tunnels such as Transport Layer Security (TLS) and Virtual
Private Network (VPN) IPSec; and
(c) deploying staging servers with adequate perimeter defences and protection
such as firewall, IPS and antivirus.
6. Ensure security controls for remote access to server include the following:
(a) restrict access to only hardened and locked down end-point devices;
(b) use secure tunnels such as TLS and VPN IPSec;
(c) deploy ‘gateway’ server with adequate perimeter defences and protection
such as firewall, IPS and antivirus; and
(d) close relevant ports immediately upon expiry of remote access.
7. Ensure overall network security controls are implemented including the following:
(a) dedicated firewalls at all segments. All external-facing firewalls must be
deployed on High Availability (HA) configuration and “fail-close” mode
activated. Deploy different brand name/model for two firewalls located in
sequence within the same network path;
(b) IPS at all critical network segments with the capability to inspect and
monitor encrypted network traffic;
(c) web and email filtering systems such as web-proxy, spam filter and anti-
spoofing controls;
(d) end-point protection solution to detect and remove security threats
including viruses and malicious software;
(e) solution to mitigate advanced persistent threats including zero-day and
signatureless malware; and
(f) capture the full network packets to rebuild relevant network sessions to aid
forensics in the event of incidents.
8. Synchronise and protect the Network Time Protocol (NTP) server against
tampering.
Risk Management in Technology 42 of 50
Issued on: 19 June 2020
Appendix 6 Positive List for Enhancements to electronic Banking, Internet
Insurance and Internet Takaful Services
Guiding Principles:
1. Does not result in any introduction of new technology to the institution or industry.
2. Does not result in any material change in application architecture or network design.
3. The simplified notification process only applies to enhancements that are explicitly
listed below.
Category 1:
Notification for Add-on
Services to Internet/Mobile
Banking/Insurance/Takaful
Category 2:
Notification for Add-on
Security Features to
Internet/Mobile
Banking/Insurance/Takaful
Category 3:
Notification for Add-
on Network/security
devices and systems
connectivity to
approved schemes
1. Participation in payment
gateways involving
Financial Process
Exchange (FPX),
approved payment
system operator and
registered business
(merchant acquiring
business) with BNM.
2. Implementation of
technology platform
approved by Securities
Commission e.g. Digital
Investment
Management
3. Participation in
approved schemes as
follows:
(i) Tabung Haji;
(ii) Amanah Saham
Nasional Berhad
(ASNB);
(iii) Skim Simpanan
Pendidikan Nasional
(SSPN-i); and
(iv) PayNet’s current
and future products
and services, e.g.
Real-time Retail
Payments Platform
(RPP) / DuitNow /
DuitNow QR,
JomPAY and
Fasstap
1. Enhance Transaction
Authorisation Code (TAC)
delivery including
subscribing to a new TAC
gateway service provider.
2. Enhance the e-Banking
system to support
migration to Chip and PIN
cards.
3. Implement automated
storing of privilege IDs.
4. Enhancements to existing
login features of biometric
security.
5. Enhancement to existing
features of MFA method.
6. Enhancement to existing
features of phone
banking technology.
7. Enhancement on login
authentication method on
the existing Internet
platform.
1. System
connectivity with
approved
schemes i.e.
PayNet.
2. Enhancement to
add connectivity to
third-party service
providers i.e.
MYEG, Financial
Link, Rexit,
Bestinet, PSPPA
and Merimen.
3. Changes on
security and
monitoring related
tools that include
(i) Firewalls;
(ii) Intrusion
Detection
Systems
(IDS); and
(iii) Intrusion
Prevention
Systems
(IPS).
4. Enhancements of
Open API
integrations which
does not involve
the transmission of
“confidential” or
“sensitive”
information.
Risk Management in Technology 43 of 50
Issued on: 19 June 2020
Guiding Principles:
1. Does not result in any introduction of new technology to the institution or industry.
2. Does not result in any material change in application architecture or network design.
3. The simplified notification process only applies to enhancements that are explicitly
listed below.
Category 1:
Notification for Add-on
Services to Internet/Mobile
Banking/Insurance/Takaful
Category 2:
Notification for Add-on
Security Features to
Internet/Mobile
Banking/Insurance/Takaful
Category 3:
Notification for Add-
on Network/security
devices and systems
connectivity to
approved schemes
4. Enable RENTAS and
SWIFT payment
transaction initiative on
the Internet platform.
5. Participation in existing
approved e-channels
e.g.:
(i) Western Union;
(ii) Merchantrade;
(iii) Paypal;
(iv) Inter Bank Giro
(IBG); and
(v) Inter Bank Fund
Transfer (IBFT).
6. Notification to participate
in existing approved e-
money issuer.
7. Usage of motor
underwriting engine by
third-party for calculation
of motor premium.
8. Enhancement to
application form and
underwriting question.
9. Increase in transaction
limits including default
limit for online/ATM.
10. Enhancement for the
following services
including new add-on
services and features on
the existing platform:
(i) Debit/credit card
activation;
(ii) Reset password;
5. Enhancement to
add connectivity
with approved
participants in the
Financial
Technology
Regulatory
Sandbox.
6. Enhancement to
add connectivity
with online
distribution
channel e.g.
telecommunication
company.
7. Enhancement to
add connectivity
with third-party
without material
change to the
existing approved
platform.
8. Leveraging
approved
website/mobile
application for e-
banking or Internet
insurance-related
services within
financial group.
Risk Management in Technology 44 of 50
Issued on: 19 June 2020
Guiding Principles:
1. Does not result in any introduction of new technology to the institution or industry.
2. Does not result in any material change in application architecture or network design.
3. The simplified notification process only applies to enhancements that are explicitly
listed below.
Category 1:
Notification for Add-on
Services to Internet/Mobile
Banking/Insurance/Takaful
Category 2:
Notification for Add-on
Security Features to
Internet/Mobile
Banking/Insurance/Takaful
Category 3:
Notification for Add-
on Network/security
devices and systems
connectivity to
approved schemes
(iii) Block card
including enabling
debit/credit card
for overseas
usage;
(iv) Credit card PIN
change via
Internet banking;
(v) Credit card
activation via
SMS/online;
(vi) Maintenance of
existing product
features e.g. time
deposit maturity
tenor and rates;
(vii) Add-on features or
services to the
existing IVR
system;
(viii) Add-on features
and services from
the existing
Internet platform to
the existing mobile
application;
(ix) Add-on features
and functions to
existing approved
platform such as
loan applications,
opening of
accounts,
purchasing travel/
motor insurance,
withdrawal,
Risk Management in Technology 45 of 50
Issued on: 19 June 2020
Guiding Principles:
1. Does not result in any introduction of new technology to the institution or industry.
2. Does not result in any material change in application architecture or network design.
3. The simplified notification process only applies to enhancements that are explicitly
listed below.
Category 1:
Notification for Add-on
Services to Internet/Mobile
Banking/Insurance/Takaful
Category 2:
Notification for Add-on
Security Features to
Internet/Mobile
Banking/Insurance/Takaful
Category 3:
Notification for Add-
on Network/security
devices and systems
connectivity to
approved schemes
surrender, claims
and endorsement;
(x) Enrolment of
new/existing
customers onto the
online platform;
(xi) Maintenance of
customer’s
credential via
Internet platform;
and
(xii) Implementation of
“chatbot” or “live
chat” onto the
existing approved
platform to facilitate
non-complex
activity.
Risk Management in Technology 46 of 50
Issued on: 19 June 2020
Appendix 7 Risk Assessment Report
Part A: Financial Institution
Name of Financial Institution
Mailing address
Type of e-banking/Internet
insurance and Internet takaful
service
New / Enhancement
Description of the e-banking,
Internet insurance and
Internet takaful service
Key contact personnel
Email address
Phone number
Part B: External Service Provider
Name of company
SSM registration number
Mailing address
Engagement period
Key contact personnel
Email address
Phone number
Part C: Detail of application
Overview of the application
i.e. business case, target
segment of demographic and
end-user, etc.
(Please keep the response below 200 words.
Additional information may be provided as
supporting documents)
Describe the technology used
to support the product, service
or solution
(Please keep the response below 200 words.
Additional information may be provided as
supporting documents)
Risk Management in Technology 47 of 50
Issued on: 19 June 2020
Part D: Technology risk assessment
Technology risk assessment
shall provide assurance on
the effectiveness of
technology risk control and
mitigation performed by the
financial institutions in
meeting expectations outlined
in Part B of Appendix 9
Part E: Quality assurance
Overall recommendation
Part F: Authorised signatory
Signature
Name
Designation
Date
Risk Management in Technology 48 of 50
Issued on: 19 June 2020
Appendix 8 Format of Confirmation
Name of Financial Institution…. ………..……………………………………………………
As Chairman of the board of directors / designated board-level committee / CISO /
designated senior management officer * of [name of Financial Institution], I confirm
that –
1. e-banking / Internet insurance / Internet takaful * is consistent with the bank’s /
insurer’s / takaful operator’s * strategic and business plans;
2. the board of directors / senior management * understand and are ready to
assume the roles and responsibilities stated in Bank Negara Malaysia’s policy
document on Risk Management in Technology and the Guidelines on Internet
Insurance (Consolidated) / Circular on Internet Takaful and are also apprised
of all relevant provisions in the FSA, IFSA and DFIA and other relevant
legislation, guidelines and codes of conduct;
3. risk management process related to e-banking / Internet insurance / Internet
takaful * is subject to appropriate oversight by the board of directors and senior
management;
4. appropriate security measures to address e-banking / Internet insurance /
Internet takaful * security concerns are in place;
5. customer support services and education related to e-banking / Internet
insurance / Internet takaful * are in place;
6. performance monitoring of e-banking / Internet insurance / Internet takaful *
products, services, delivery channels and processes has been established;
7. e-banking / Internet insurance / Internet takaful * is included in the contingency
and business resumption plans;
8. there are adequate resources to support the offering of e-banking / Internet
insurance / Internet takaful * business; and
9. the systems, procedures, security measures, etc. relevant to sound operations
of e-banking / Internet insurance / Internet takaful * will constantly be reviewed
to keep up with the latest changes.
Signature : ………………………………
Name : …………………………………..
Date : ………………………..…………..
* (delete whichever is not applicable)
Risk Management in Technology 49 of 50
Issued on: 19 June 2020
Appendix 9 Supervisory Expectations on External Party Assurance
Part A: Financial Institutions are required to provide an external assurance
1. The assurance shall be conducted by an independent external service provider
(ESP) engaged by the financial institution.
2. The independent ESP must understand the proposed services, the data flows,
system architecture, connectivity as well as its dependencies.
3. The independent ESP shall review the comprehensiveness of the risk
assessment performed by the financial institution and validate the adequacy of
the control measures implemented or to be implemented.
4. The Risk Assessment Report (as per Part D in Appendix 7) shall state among
others, the scope of review, risk assessment methodology, summary of findings
and remedial actions (if any).
5. The Risk Assessment Report shall confirm there is no exception noted based on
the prescribed risk areas (Negative attestation).
6. The financial institution shall provide the Risk Assessment Report accompanied
by the relevant documents.
Part B: Minimum controls to be assessed by the independent External Service
Provider, where applicable
1. The independent ESP assessment of security requirements shall include the
following key areas:
(a) access control;
(b) physical and environmental security;
(c) operations security;
(d) communication security;
(e) information security incident management; and
(f) information security aspects of business continuity management.
2. For online transactions and services, a financial institution has implemented the
following:
(a) adequate measures to authenticate customer identity and ensure
legitimate transaction authorisation by the customer, including—
(i) measures to prevent session takeover or man-in-the-middle attacks;
(ii) internal controls must be in place to prevent compromise of relevant
internal systems /application /database;
(iii) where appropriate, apply multi-level authentication, out of band
protocol and real-time verification;
(iv) secure session handling functions and authentication databases; and
(v) ensure strong password and cryptographic implementation
(recognised algorithm with reasonable key strength).
(b) adequate measures for transaction authentication that promotes non-
repudiation and establishes accountability—
(i) mechanism exists to ensure proof of origin, content as well as the
integrity of the message;
(ii) chosen channel to deliver transaction is secure;
Risk Management in Technology 50 of 50
Issued on: 19 June 2020
(iii) mechanism exists to alert the user on certain type of transactions for
further authentication; and
(iv) establish mutual authentication or appropriate use of digital
certification.
(c) segregation of duties and access control privilege for systems, databases
and applications—
(i) implement dual control where applicable;
(ii) controls exist to detect and prevent unauthorised access to relevant
resources/devices;
(iii) authorisation database should be tamper-resistant; and
(iv) periodic review of privileged users.
(d) adequate measures to protect data integrity of transactions and
information:
(i) implementation of end-to-end encryption for external communication;
(ii) implementation of multi-layer network security and devices;
(iii) absence of single point of failures in network architecture;
(iv) conduct network security assessment/penetration test to identify
vulnerabilities;
(v) establish audit trail capabilities;
(vi) preserve the confidentiality of information;
(vii) use of stronger authentication for higher risk transactions; and
(viii) timely notification to customers that is sufficiently descriptive of the
nature of the transaction.
(e) adequate measures to mitigate associated risks of using electronic mobile
devices to perform online transactions, which shall include the following:
(i) application is running on secure mobile Operating System versions;
(ii) application is not running on compromised devices;
(iii) conduct penetration test to identify and rectify potential vulnerability;
(iv) secure end-to-end communication between the device and host;
(v) sensitive information is not stored on mobile devices;
(vi) user is notified of successful transactions;
(vii) user is notified of suspicious transactions;
(viii) continuous monitoring and takedown of fake applications in
application distribution platforms;
(ix) controls over the uploading of application to application distribution
platforms;
(x) a unique code is generated per transaction; and
(xi) timely expiry of the transaction code.
| Press Release |
22 Nov 2022 | International Reserves of Bank Negara Malaysia as at 15 November 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-15-november-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
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International Reserves of Bank Negara Malaysia as at 15 November 2022
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International Reserves of Bank Negara Malaysia as at 15 November 2022
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Tuesday, 22 November 2022
22 Nov 2022
The international reserves of Bank Negara Malaysia amounted to USD107.5 billion as at 15 November 2022. The reserves position is sufficient to finance 5.2 months of imports of goods and services[1], and is 1.0 time of the total short-term external debt.
[1]Under the previous import coverage measure, reserves are sufficient to finance 6.2 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021. Related Assets
BNM Statement of Assets & Liabilities -15 November 2022
Bank Negara Malaysia
22 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
a
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-2
2
F
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-2
2
M
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2
2
A
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2
2
M
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-2
2
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-2
2
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2
2
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2
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-2
2
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-2
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-2
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-2
3
M
a
r-
2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
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2
2
A
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M
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2
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J
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2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
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2
2
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2
2
M
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2
3
F
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2
3
M
a
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2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
14 Nov 2022 | Central Banks of Indonesia, Malaysia, Philippines, Singapore and Thailand seal cooperation in regional payment connectivity | https://www.bnm.gov.my/-/5centralbanks-regional-payment-connectivity | null | null |
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Central Banks of Indonesia, Malaysia, Philippines, Singapore and Thailand seal cooperation in regional payment connectivity
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Central Banks of Indonesia, Malaysia, Philippines, Singapore and Thailand seal cooperation in regional payment connectivity
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Bank Indonesia (BI), Bank Negara Malaysia (BNM), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of Singapore (MAS), and Bank of Thailand (BOT) have agreed to strengthen and enhance cooperation on payment connectivity to support faster, cheaper, more transparent, and more inclusive cross-border payments. A Memorandum of Understanding (MOU) on Cooperation in Regional Payment Connectivity (RPC) was signed on 14 November 2022 in Bali, Indonesia, on the sidelines of the G20 Leaders’ Summit with keynote address from Indonesia’s President, His Excellency Joko Widodo.
During his remarks at the signing ceremony, President Widodo emphasized the importance of concrete joint collaborative action in addressing global challenges. The President also expressed his highest appreciation to the Governors of the five central banks for their commitment to delivering innovative breakthroughs that will further accelerate regional payment connectivity.
The RPC is expected to be a significant contributor to accelerating regional economic recovery and promoting inclusive growth. The implementation of cross-border payment connectivity serves to support and facilitate cross-border trade, investment, financial deepening, remittance, tourism, and other economic activities, as well as a more inclusive financial ecosystem in the region. This is particularly beneficial for micro, small, and medium enterprises as it will facilitate their participation in international markets. The cooperation will include a number of modalities, including QR code and fast payment.
Accelerating economic and financial digitalization has become a global initiative with the G20 establishing its Roadmap for Enhancing Cross Border Payments. The cooperation initiative is also in line with Indonesia’s G20 Presidency priority agenda in the area of digital transformation, including through payment systems in the digital era, manifested by the joint efforts to pursue enhanced cross-border payment connectivity involving Indonesia, Malaysia, Philippines, Singapore, and Thailand. Going forward, this payment connectivity initiative could be expanded to include other countries in the region and potentially other partner countries outside the region. This milestone also marks the start of Indonesia’s chairmanship of the Association of Southeast Asian Nations (ASEAN) in 2023.
This joint collaboration also supports ASEAN’s shared aspiration for connected payment systems that will enable fast, seamless and more affordable cross-border payments across the region. In line with ASEAN’s pragmatic approach to deepen integration through mutually beneficial arrangements based on the level of readiness, this initiative provides the building blocks for wider ASEAN participation in the near future, thereby fostering stronger regional economic ties.
BI Governor Perry Warjiyo underscored that “This MOU serves as a significant milestone in paving the road for advancing cross-border payment connectivity. Existing bilateral payment connectivity arrangements will be expanded as part of the region’s efforts to strengthen its economic integration. Such collaboration among central banks is key to accelerating economic recovery. We hope that other countries will follow this good example and leadership in implementing cross-border payment connectivity.”
Nor Shamsiah Yunus, the Governor of BNM, said, “The initiative underscores the importance of central bank collaboration in supporting the development of next-generation payment connectivity. Realising the vision of an ASEAN regional network of fast and efficient cross-border payment systems will advance our digital ambitions and further deepen financial integration for the benefit of the region’s economic development.”
Ravi Menon, Managing Director of MAS, stated, “This MOU underscores ASEAN’s commitment to achieve regional payments interoperability and connectivity by 2025 to enable cheaper, faster, and more transparent cross-border payments. ASEAN’s effort is aligned with the G20’s goal of addressing existing frictions in global cross-border payments, creating new business opportunities and enabling inclusive growth.”
Deputy Governor Mamerto E. Tangonan of the BSP, who represented BSP Governor Felipe M. Medalla, added, “The more we recognize how interdependent our economies are, the more we need to be deliberate in our pursuit of the vision of an interconnected ASEAN region. This MOU concretizes our collaborative and inclusive approach to enhancing cross-border payments in the ASEAN that will translate into efficiency gains and cost savings in various international financial transactions and economic activities.”
Deputy Governor Ronadol Numnonda of the BOT, who represented BOT Governor Sethaput Suthiwartnarueput, emphasized, “Our ASEAN region has now become a global hotspot in cross-border payments linkages. Building on our previous efforts, this MOU marks another milestone in our ASEAN Payment Connectivity initiative in working together to address the long-standing pain points in cross-border payments. It also dovetails ASEAN members’ current network of bilateral cross-border payment linkages and will serve as a basis for multilateral collaboration going forward. Further enhancing regional payment connectivity will pave the way for ASEAN’s digital transformation and deepen financial integration in the region.”
For media enquiries, please contact:Bank Indonesia
Head of Communication Department
Erwin Haryono
Executive Director
Tel: (+62 21) 131
Email: bicara@bi.go.id
Bank Negara Malaysia
Strategic Communications Department
Email: communications@bnm.gov.my
Bangko Sentral ng Pilipinas
Joanna Eileen M. Capones
Director, Communication Office
Tel: (+632) 8811-1277 locals 3025 / 3026
Email: bspmail@bsp.gov.ph
Monetary Authority of Singapore
Corporate Communications Division
Bridgitte Lee
Deputy Director
Tel: +65 6229 9262
Email: Bridgitte_LEE@mas.gov.sg
Bank of Thailand
Payment Systems Policy Department
Email: crossborderpayments@bot.or.th
Bank of Indonesia
Bank Negara Malaysia
Bangko Sentral ng Pilipinas
Monetary Authority of Singapore
Bank of Thailand
14 November 2022
Bank Negara Malaysia
14 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
14 Nov 2022 | Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of Kuala Lumpur as a City | https://www.bnm.gov.my/-/kl-50years-coins | null | null |
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Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of Kuala Lumpur as a City
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Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of Kuala Lumpur as a City
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Bank Negara Malaysia announces today the issuance of commemorative coins in conjunction with the 50th Anniversary of Kuala Lumpur as a city (KL50).
The commemorative coins will be issued in two denominations:
1. Coloured Sterling Silver Commemorative Coin (proof)
The coin weighs 31 grams and is made of sterling silver with 92.5 purity. It has a face value of RM10 and will be sold at RM275 per piece. The mintage quantity is 1,000 pieces.
2. Nordic Gold Brilliant Uncirculated (B.U) Commemorative Coin
This coin weighs 8.5 grams and is made of copper and several other metals. It has a face value of RM1 and will be sold at RM16.50 per piece. The mintage quantity is 5,000 pieces.
These commemorative coins are also available for sale in a Set of 2. The set is priced at RM330. Each set comprises one coloured sterling silver proof coin and one Nordic gold proof coin. A total of 1,000 sets will be available for purchase.
Detailed specifications of these commemorative coins are set out in the Appendix below.
Coin design
The design of the commemorative coins is as follows:Obverse
The obverse features images of the Kuala Lumpur skyline and modern transportation juxtaposed against the clock face of Bangunan Sultan Abdul Samad. This symbolises the passage of time since the granting of city status to Kuala Lumpur in 1972 which saw the city progress and develop into a modern city.
Reverse
The top circumference features the text “BANK NEGARA MALAYSIA” to depict the issuing authority, and the event logo (highlighted in colour on silver coins only). The Istana Budaya building and elements from the Perdana Botanical Garden are also featured, signifying Kuala Lumpur being a cultural centre and environmentally friendly city. The text “10 RINGGIT” and “1 RINGGIT” are shown at the bottom circumference, representing the face value of the coins”.
Sale of commemorative coins
To provide a fair opportunity for members of the public to buy these limited-edition coins, there will be a purchase limit of one Set of 2, one coloured sterling silver coin (proof) and up to five Nordic gold (B.U.) coins per person.
Members of the public can place their orders at duit.bnm.gov.my from 11 a.m., Monday, 14 November 2022 to 11 p.m., Sunday, 27 November 2022.
Members of the public are advised to place their orders through the Bank Negara Malaysia online system and not with or through any other party or unauthorised ordering facility. All orders will be considered, and there will be no preference given to orders based on the order date and time. In the event of oversubscription, balloting will take place.
Appendix - Technical Specifications
Category
Metal
Alloy
Face Value (RM)
Diameter
(mm)
Weight
(g)
Mintage Quantity(pcs/set)
Price
(RM)Single
Coloured Sterling Silver (proof)
Ag 92.5
10
40.7
31
1,000
275
Nordic Gold (B.U.)
Cu89 Zn5 Al5 Sn1
1
30
8.5
5,000
16.50
Set of 2
Coloured Sterling Silver (proof) and
Nordic Gold (proof)
Ag 92.5 and Cu89 Zn5 Al5 Sn1
10 and 1
40.7 and 30
31 and 8.5
1,000
330
Note: Prices stated above are inclusive of 10% Sales and Services Tax (SST).
Bank Negara Malaysia
14 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
11 Nov 2022 | Economic and Financial Developments in Malaysia in the Third Quarter of 2022 | https://www.bnm.gov.my/-/qb22q3_en_pr | https://www.bnm.gov.my/documents/20124/8810581/qb22q3_transcript.pdf, https://www.bnm.gov.my/documents/20124/8810581/qb22q3_slides.pdf, https://www.bnm.gov.my/documents/20124/8810581/qb22q3_en_table1.pdf | null |
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Economic and Financial Developments in Malaysia in the Third Quarter of 2022
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Economic and Financial Developments in Malaysia in the Third Quarter of 2022
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Stronger expansion of 14.2% in the third quarter (2Q 2022: 8.9%)
The Malaysian economy registered a stronger growth of 14.2% in the third quarter of 2022 (2Q 2022: 8.9%). While there were base effects from the negative growth in the third quarter of 2021, growth was also driven by strong domestic demand, underpinned by improvements in labour market and income conditions, as well as ongoing policy support. Exports remained supported by strong demand for E&E products. The recovery of inbound tourism lent further support to economic activity. By sector, the services and manufacturing sectors continued to drive growth. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.9% (2Q 2022: 3.5%). Overall, the Malaysian economy expanded by 9.3% in the first three quarters of 2022.
Headline inflation is likely to have peaked for the year at 4.5% during the quarter (2Q 2022: 2.8%) while core inflation increased further to 3.7% (2Q 2022: 2.5%). As expected, the increase in headline inflation was largely driven by the base effect from the discount on electricity bill implemented in the third quarter of 2021, as well as sustained increases in core inflation and price-volatile items. The inflationary pressures reflected the confluence of elevated cost pressures, particularly for food-related items, and strong demand conditions.
Exchange rate developments
The ringgit depreciated by 4.9% against the US dollar in the third quarter of 2022 (YTD until 9 November 2022: -11.2%), in line with regional currencies which depreciated by an average of 5.5% (YTD: -9.5%). This reflected the continued strengthening of the US dollar amid further monetary policy tightening by the US Federal Reserve and higher investor risk aversion due to moderating global growth prospects. Nonetheless, strong domestic growth mitigated further downward external pressures on the ringgit. Moving forward, although domestic financial markets may face the risk of higher volatility, spillovers to domestic financial intermediation are expected to remain contained, supported by Malaysia’s healthy external position and well-capitalised banking system. The Bank will continue to closely monitor market developments and ensure that adjustments remain orderly to support effective intermediation for the economy.
Financing conditions
Net financing to the private sector grew by 5.4% (2Q 2022: 4.9%) supported mainly by higher outstanding loan growth (6.1%; 2Q 2022: 5.4%), driven by the household segment. Meanwhile, outstanding corporate bond growth remained sustained at 3.5% (2Q 2022: 3.4%). Outstanding business loan growth stood at 5.0%, as the growth in loan repayments outpaced that of loan disbursements. Loan applications remained forthcoming across segments and most loan purposes. For households, outstanding loans grew by 6.2% mostly on account of high growth in loan disbursements for the purchase of houses and cars.
The Malaysian economy will be supported by firm domestic demand
The economy will continue to expand, albeit at a more moderate pace, in the fourth quarter of 2022. The expected slower pace of growth reflects the more challenging global environment as well as absence of base effects. Nevertheless, growth for the whole year of 2022 is expected to remain robust given the strong outturns in the first three quarters of the year.
Looking ahead, the Malaysian economy is expected to expand by 4.0 – 5.0% in 2023[1]. Bank Negara Malaysia Governor Tan Sri Nor Shamsiah explained, “The Malaysian economy will continue to be supported by firm domestic demand amid continued improvements in the labour market. Growth would also benefit from the realisation of large infrastructure projects as well as higher tourist arrivals. However, Malaysia’s growth remains susceptible to a weaker-than-expected global growth, higher risk aversion in global financial markets, further escalation of geopolitical conflicts and re-emergence of supply chain disruptions.”
Headline inflation to moderate for the remainder of 2022
Headline inflation is expected to moderate in the fourth quarter of 2022, but remain elevated. The base effect from the discount on electricity bill which contributed to higher inflation in the third quarter will dissipate in the fourth quarter of 2022[2]. Overall, headline inflation is expected to average at 3.3% in 2022.[3] Underlying inflation, as measured by core inflation, is expected to stay elevated for the remainder of 2022 given improving demand amid the high-cost environment.
Moving into 2023, headline and core inflation are expected to remain elevated amid both demand and cost pressures, as well as any changes to domestic policy measures. Additional upward pressures to inflation will remain partly contained by the existing price controls, subsidies, and the remaining spare capacity in the economy. The balance of risk to the inflation outlook in 2023 is tilted to the upside and continues to be subject to domestic policy measures on subsidies, as well as global commodity price developments arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions.
See also:
Presentation Slides (PDF)
Press Conference Presentation Transcript
Press Conference Video
Table 1: GDP by Expenditure Components and Economic Activity
Publication: Quarterly Bulletin Third Quarter 2022
[1] Source: Economic Outlook 2023, Ministry of Finance Malaysia.
[2] The discount on electricity bill was implemented in 3Q 2021 under the PEMULIH Electricity Discount scheme.
[3] Source: Economic Outlook 2023, Ministry of Finance Malaysia.
Bank Negara Malaysia
11 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Peluasan Ukuran Liputan Rizab Bagi Import – daripada Import Tertangguh kepada Import Barangan dan Perkhidmatan
27Buletin Suku Tahunan | S4 2021 27
Peluasan Ukuran Liputan Rizab Bagi Import – daripada Import Tertangguh kepada
Import Barangan dan Perkhidmatan
Salah satu penunjuk yang digunakan oleh Bank untuk mengukur kecukupan rizab antarabangsa ialah liputan
rizab bagi import tertangguh,1 yang disiarkan setiap dua minggu. Apabila ekonomi berkembang dengan bahagian
sektor perkhidmatan yang lebih besar, keadaan ini telah meningkatkan kepentingan import perkhidmatan
dalam pengukuran kecukupan rizab. Dengan mengambil kira perkara ini dan selaras dengan amalan terbaik
antarabangsa, laporan rizab antarabangsa Malaysia secara dwimingguan pada masa hadapan akan merangkumi
penunjuk tentang liputan rizab bagi import barangan dan perkhidmatan, berkuat kuasa mulai 22 Februari 2022.2
1 Ditakrifkan sebagai import kasar ditolak dengan eksport semula. Import tertangguh purata 12 bulan boleh didapati daripada Sorotan Bulanan dan Statistik,
Jadual 3.6.8 (Import oleh Pengguna Akhir; lihat Lampiran 1).
2 Bagi kedudukan rizab antarabangsa pada 15 Februari 2022.
3 Ditakrifkan sebagai import ditambah dengan eksport.
4 Daripada RM101.3 bilion kepada RM351.3 bilion, atau kadar pertumbuhan tahunan terkompaun (compound annual growth rate, CAGR) sebanyak 6.4%.
Services tradeC1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM billion
Travel1
Computer and information
Transport
Manufacturing
Other business3
Other2
Perdagangan perkhidmatanR1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM bilion
Perjalanan1
Komputer dan informasi
Pengangkutan
Pembuatan
Perniagaan Lain3
Lain-lain2
Nota: Data sebelum tahun 2005 adalah berdasarkan garis panduan dalam Edisi Kelima Manual Imbangan Pembayaran dan Kedudukan
............Pelaburan Antarabangsa (BPM5) IMF. Data bagi tahun 2005 dan selanjutnya adalah berdasarkan BPM6.
1 Termasuk perbelanjaan perjalanan bagi aktiviti pelancongan.
2 Termasuk pembinaan, caj penggunaan harta intelek, perkhidmatan persendirian, kebudayaan dan rekreasi.
3 Perkhidmatan perniagaan lain termasuk perkhidmatan penyelidikan dan pembangunan, profesional, teknikal, berkaitan perdagangan dan
...perkhidmatan perniagaan lain.
Sumber: Jabatan Perangkaan Malaysia dan Bank Negara Malaysia
Note: Data prior to 2005 are based on the guideline in the Fifth Edition of the Balance of Payments and International Investment Position
............Manual (BPM5) of the IMF. Data for 2005 and beyond are based on BPM6.
1 Includes travel spending for tourism activity.
2 Includes construction, charges for intellectual property use, personal, culture & recreational services.
3 Other business services comprise research and development, professional, technical, trade-related and other business services.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
Pelaporan Bank berhubung dengan liputan rizab bagi import tertangguh telah diterbitkan seawal tahun 1990-an.
Data bagi import tertangguh tersedia setiap bulan dan oleh itu sangat sepadan dengan siaran kedudukan
rizab antarabangsa setiap dua minggu. Walau bagaimanapun, import tertangguh tidak merangkumi bayaran
untuk perkhidmatan, yang telah berkembang sepanjang dua dekad yang lalu. Dari tahun 1999 hingga 2019,
perdagangan perkhidmatan3 telah meningkat sebanyak 246.9%4 (Rajah 1). Hal ini disebabkan terutamanya
oleh aktiviti pelancongan yang lebih tinggi serta pembayaran untuk perkhidmatan pengangkutan asing bagi
perdagangan barangan. Selain itu, import barangan juga berkembang, sebahagian besarnya bagi menyokong
aktiviti pelaburan dalam negeri dan pengeluaran barangan perkilangan.
28 Buletin Suku Tahunan | S4 202128
Prestasi Malaysia berhubung dengan penunjuk ini selaras dengan ekonomi serantau dan ekonomi yang
setara.5 Data sebelum ini menunjukkan liputan rizab bagi import barangan dan perkhidmatan berada dalam
julat antara lima hingga lapan bulan sejak tahun 2008. Paras ini jauh melebihi nilai ambang yang diterima
pakai secara meluas iaitu tiga bulan. Hal ini menunjukkan keupayaan ekonomi Malaysia untuk bertahan
daripada kejutan luaran.
Penting juga untuk ditekankan bahawa penilaian kecukupan rizab tidak seharusnya berdasarkan semata-
mata nilai muka penunjuk-penunjuk ini. Penilaian ini perlu dilengkapi dengan pemahaman yang mendalam
mengenai kedudukan luaran, sistem kewangan dan dasar ekonomi negara secara am. Khususnya, rizab
antarabangsa bukan sahaja cara untuk memenuhi obligasi luaran.6 Penilaian semasa menunjukkan
kedudukan luaran negara7 disokong oleh asas-asas ekonomi yang utuh termasuk lebihan akaun semasa
yang kukuh, aset luaran mata wang asing yang besar yang dipegang oleh entiti dalam negeri8 dan kadar
pertukaran ringgit yang fleksibel.
Rujukan
Department of Statistics, Malaysia. ‘External Sector’, Jabatan Perangkaan Malaysia, Putrajaya.
Greenspan, A., ‘Currency reserves and debt’. Remarks before the World Bank Conference on Recent Trends in
Reserves Management, Washington, DC, 29 April 1999.
International Monetary Fund, (2016). ‘Guidance Note on the Assessment of Reserve Adequacy and Related
Considerations’.
Lampiran 1: Pengiraan liputan rizab antarabangsa bagi import tertangguh
aSebagai contoh, untuk mengira import tertangguh setiap bulan bagi bulan Disember 2019, import tertangguh
bagi bulan Januari hingga Disember 2019 dicampurkan (iaitu import tertangguh bagi 12 bulan secara berturut-
turut). Jumlah ini kemudiannya dibahagikan dengan 12, bagi mendapatkan purata bulanan. Angka-angka
boleh didapati daripada Jadual 3.6.8, kolum S MHS yang dikeluarkan oleh BNM.
5 Berdasarkan JP Morgan’s Government Bond Index for Emerging Markets.
6 Maklumat lanjut boleh didapati dalam rencana “Daya Tahan Malaysia dalam Mengurus Obligasi Hutang Luar Negeri dan Kecukupan Rizab Antarabangsa” dalam
Laporan Tahunan BNM 2018.
7 Selain itu, turut diberikan penekanan ialah kedudukan hutang luar negeri Malaysia, termasuk hutang luar negeri jangka pendek, yang kekal terurus. Hal ini
disokong oleh profil mata wang dan tempoh matang yang bersesuaian terhadap hutang luar negeri serta daya tahan keupayaan bayaran balik pinjaman oleh
entiti dalam negeri. Hutang luar negeri dalam mata wang asing oleh syarikat-syarikat juga sebahagian besarnya tertakluk pada keperluan berhemat dan lindung
nilai (rujuk penilaian terkini tentang perkembangan hutang luar negeri di halaman [xx])
8 Berjumlah RM1.1 trilion pada akhir tahun 2021.
GDP 3Q 2022 Presentation Slides
Sidang Akhbar
Prestasi Ekonomi Suku
11 Nov 2022
Ketiga Tahun 2022
Embargoed until 12.00 noon on 11 November 2022
1
The global economy continued to expand, albeit at a slower pace
Note:
1 GDP for the second quarter of 2022 are advanced or preliminary estimates except for China, Indonesia, and Philippines
2 Inflation figures are aggregated across major countries based on their share of global growth. EA refers to Euro Area (EA-19)
Source: CEIC, National authorities, International Monetary Fund, Bank Negara Malaysia estimates
5.4
7.9
3.3
5.5
4.4
6.7
Jan Feb Mar Apr May Jun Jul Aug Sep
Inflation2
Emerging
Economies
Global Growth Developments
• Slower global growth due to
higher inflation and tighter
monetary policy, especially in
advanced economies.
• This was partly offset by
higher growth in China,
attributed to recovery from
COVID-related disruptions.
• Growth in some ASEAN
countries was also lifted by
base effects from last year’s
lockdowns.
2022
Advanced
Economies
World
2
13.7
7.6
5.7
4.1
3.9
1.8
4.4
2.1
-4.5
7.8 7.5
5.4
3.0
0.4
1.8
4.5 4.3
-1.3
-5
-3
-1
1
3
5
7
9
11
13
VN PH ID TW CN US SG EA HK
3Q22 2Q22
Real GDP Growth1
Annual change (%)
Lower growth in 3Q22Higher growth in 3Q22
The Malaysian economy recorded a stronger growth of 14.2% in 3Q 2022
Source: Department of Statistics, Malaysia
Factors Supporting Growth
Firm recovery in the labour market
Monthly Real GDP Growth (Annual change, %)
Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22
5.7 4.9 16.5 15.8 15.3 11.6
Robust E&E and non-E&E exports
Continued expansion in
domestic demand
Ongoing policy support
0.7
-17.1
-4.5
3.6
5.0
8.9
14.2
-0.9
-15.1
-2.7
4.6
3.8 3.5
1.9
-20
-10
0
10
20
1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Annual change (%)
q-o-q SA
Real GDP Growth
Annual
Growth
2021: 3.1%
2020: -5.5%
3
Growth was partly lifted by base effect, due to the strict containment measures in third quarter last year
Expansion in activity across all economic sectors
4
9.2
13.2
2Q-22 3Q-22
Annual change (%)
12.0
16.7
2Q-22 3Q-22
Annual change (%)
ManufacturingServices Agriculture
Strong demand for E&E
products and ramp up of
production in the transport
equipment subsector
Higher consumer-related
activities amid recovery in
tourism, better labour
market conditions and
policy support
Higher oil palm output
due to receding labour
shortages and improved
yields
-2.4
1.2
2Q-22 3Q-22
Annual change (%)
-0.5
9.2
2Q-22 3Q-22
Annual change (%)
2.4
15.3
2Q-22 3Q-22
Annual change (%)
Mining Construction
Higher oil and gas output
Continued progress in
commercial real estate,
mixed development and
small-scale projects
Source: Department of Statistics, Malaysia
Strong domestic and external demand
Private Consumption
18.3
15.1
2Q-22 3Q-22
Annual change (%)
Private Investment
2.6
4.5
2Q-22 3Q-22
Annual change (%)
Public Investment
-28.7
18.7
2Q-22 3Q-22
Annual change (%)
Public Consumption Net Exports
Continued household
spending in necessities
and discretionary items
Improvement in both
structures and M&E
investments
Higher capital spending
by general government
and public corporations
Higher supplies and
services spending
Stronger export growth
amid higher travel and
transport receipts
Updated
6.3
13.2
2Q-22 3Q-22
Annual change (%)
3.2
13.1
2Q-22 3Q-22
Annual change (%)
Source: Department of Statistics, Malaysia
5
17.3
5.2
-3.2
15.3
12.3
6.4
-7.8
13.8
Total Equity
Injections
Debt
Instruments
Reinvestment
of Earnings
2Q22
3Q22
4.4
34.0
-12.3
-14.7
-2.6
14.1
43.0
-9.6
-17.2
-2.1
Current Account
Balance
Goods Services Primary
Income
Secondary
Income
2Q22
3Q22
Higher current account surplus and continued FDI inflows
Source: Department of Statistics, Malaysia
RM bil
▪ Higher goods surplus due mainly to stronger exports
amid high commodity prices
▪ Services deficit narrowed driven by higher travel and
transport receipts
Current Account Foreign Direct Investment
RM bil
▪ Continued FDI inflows despite higher outflows in debt
instruments
▪ FDI was mainly channelled into the manufacturing
sector and financial services sub-sector
6
Current Account
(% of GDP)
3Q22: 3.1%
2Q22: 1.0%
FDI inflow 1Q-3Q22
1Q-3Q21
: RM54.0 bil
: RM29.7 bil
2.2
2.5
3.0
2.8
3.8
5.4
5.4
5.5
7.3
5.9
6.5
8.7
8.0
9.2
2.7
2.9
3.3
4.5
5.2
5.9
7.3
6.5
7.0
7.3
7.3
8.3
9.3
10.0
China
Japan
Vietnam
Malaysia
Indonesia
Korea
Australia
Philippines
India
Singapore
Thailand
US
EU
UK
3Q 2022 2Q 2022
Source: Bloomberg and Department of Statistics, Malaysia
Global commodity prices moderating, but inflation remains elevated
in many countries
…but inflation remains high across many countries
(yoy, %)
0
40
80
120
160
200
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
Brent Grains indexIndex / USD per barrel
Brent, USD/barrel
Sep-22: 90.5
World Bank Grains Price Index
Sep-22: 148.0
Global commodity prices beginning to ease…
Global Inflation Key Commodity Prices
7
Headline inflation has likely peaked for the year at 4.5% in 3Q 2022
Rise in headline inflation reflected base effects from
electricity discount and sustained increase in core inflation as
demand improved amid the high cost environment
Share of CPI items recording month-on-month price
increases moderated slightly, but remain elevated
Note: Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
Headline and core inflation
Headline inflation and core inflation (yoy %)
-2.6
-1.4
-1.5
0.5
4.1
2.2
3.2
2.2
2.8
4.5
1.2
1.0
0.8 0.7 0.7 0.7 0.8 1.7
2.5
3.7
2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Headline inflation
Core inflation
Month-on-month price changes of CPI items
Unchanged
Share of CPI items (%)
21 27 34 32 26 29 27 27 29 32
33
13
8 14
14 9
5
12 11
14
46
60 58 54 59 62 68
61 60 54
2
0
1
1
-2
0
1
9
A
v
e
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
Price
increase
Price
decline
Note: Numbers may not add up to 100 due to rounding error
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
8
3Q 2022
likely peaked”
Net financing recorded sustained growth during the quarter
Net financing expanded by 5.4%
Note: Data refer to loans from the banking system and development financial institutions (DFIs). Financing data from 3Q 2022 onwards are based on the new set of loan/financing data reflecting the latest requirements, and
cannot be directly compared to previous months’ data.* Excludes issuances by Cagamas and non-residents. ** ‘Others’ include loans for the purposes of non-residential property purchases, credit card, consumer durable
goods and other purposes.
Source: Bank Negara Malaysia
3.3 3.3
4.0
4.5
1.4 1.2
0.9
0.9
4.7 4.5
4.9
5.4
4Q 2021 1Q 2022 2Q 2022 3Q 2022
Outstanding corporate bonds*
Outstanding loans
Net financing
Net Financing
Annual change (%) / Cont. to growth (ppt)
22
Outstanding Business Loan Growth
Annual change (%) / Cont. to growth (ppt)
4.0 4.1 4.2 4.3
4.2
4.8
5.7
6.2
4Q-21 1Q-22 2Q-22 3Q-22
Houses Cars Securities
Personal use Others** Total
Annual change (%) / Cont. to growth (ppt)
3.8 3.3
4.4
3.5
4.8
4.3
5.5
5.0
4Q-21 1Q-22 2Q-22 3Q-22
Working Capital Investment-related
Others** Total
For businesses, loan repayment growth
outpaced that of disbursements…
9
New dataset
Outstanding Household Loan Growth
…while household loan growth was
supported by high growth in disbursements
Annual growth in 3Q ‘22
Repayments: 27%
Disbursements: 20%
Annual growth in 3Q ‘22
Repayments: 38%
Disbursements: 48%
New dataset
New dataset
MSME financing exceeded pre-pandemic trends
Note: Reflects banking system and development financial institutions (DFIs)
Source: Bank Negara Malaysia
85
49
127 127
0
20
40
60
80
100
120
140
Applications Approvals Disbursements Repayments
2Q-22 3Q-22 2018-19 quarterly average
MSME Financing Indicators
RM bil
Continued strong momentum in MSME financing activity during the quarter Robust disbursements particularly in the
major MSME sectors, namely services,
manufacturing and construction
23.5
5.6
5.1
34.6%
3Q-22
Others
Mining and
Quarrying
Agriculture
Construction
Manufacturing
Services
Annual change (%) / Contribution to growth (ppt)
MSME Financing Disbursement by Sector
10
7.4
1.3
-1.2 -2.1 -3.7
-7.7
-12.4
-16.3
-18.6
-21.4
-30.1
-40
-30
-20
-10
0
10
In
d
o
n
e
s
ia
S
in
g
a
p
o
re
U
K
T
h
a
ila
n
d
J
a
p
a
n
M
a
la
y
s
ia
P
h
ili
p
p
in
e
s
P
R
C
h
in
a
K
o
re
a
U
S
H
K
YTD 3Q22%
Movement of Equity Prices
Equity markets declined amid expectations for more moderate
global growth
11
Updated
Domestic bond yields rose against the backdrop of tightening
global monetary conditions
YTD as at 9 November 2022
Source: Bursa Malaysia
*Regional countries include Indonesia, the Philippines, Singapore, South Korea and Thailand.
Flows and trading volumes refers to Malaysia
Source: Bank Negara Malaysia, ETP, Bursa Malaysia Bonds and INSIDES
25.0
41.0
15.0
63.4
69.8
29.63.7
3.2
3.7
2.3
-6.5
-3.5
-8.0
-4.0
0.0
4.0
8.0
-80
-40
0
40
80
1Q22 2Q22 3Q22
Malaysia Regional* Avg. Trading volume (RHS) NR bond portfolio flows (RHS)
Movement of 10-Year Sovereign Bond Yields
bps RM bn
Tighter global financial conditions led to spillovers in domestic financial
markets
-21.4
-16.1
-12.8
-12.2
-12.1
-12.0
-11.5
-11.2
-10.0
-8.9
-6.6
-3.8
14.6
JPY
GBP
KRW
CNY
PHP
EUR
AUD
MYR
THB
IDR
CAD
SGD
DXY
Ringgit’s depreciation against the US dollar was in line with regional and
major currencies
YTD Change in DXY and exchange rate against the US dollar as at 9 November 2022
Source: Bank Negara Malaysia
Almost all currencies in the world have depreciated against the
US dollar
Updated
The ringgit’s performance was mixed against currencies of
Malaysia’s major trade partners
YTD Movement of MYR Against Selected Currencies (%)
YTD Change in ringgit NEER and ringgit against selected currencies as at 9 November 2022
*Ringgit Nominal Effective Exchange Rate
Source: Bank Negara Malaysia
YTD Movement of the US Dollar Index (DXY) and Other Currencies Against
the US Dollar (%)
MYR has strengthened against several
major and regional currencies…
…and weakened against some
currencies
But remained broadly stable against currencies of Malaysia’s major trade
partners
*NEER
JPY +13.0%
GBP +4.9%
KRW +1.9%
AUD -0.4%
PHP +1.0%
THB -1.3%
EUR +0.1%
CNY +1.1%
SGD -8.0%
USD -11.2%
-2.0%
IDR -2.5%
CAD -6.2%
12
Signs of an economic crisis Economic performance remain favourable
Real GDP Growth
Current Account Balance (CAB) and Net
International Investment Position (IIP)
Unemployment Rate
Retail and Car1 Sales
Ringgit depreciation is due to the strong US dollar, Malaysia is not in an
economic crisis
-4.5
8.9
14.2
3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Annual change (%)
4.7
3.9
3.7
3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
AFC peak: 4.5%
Unemployment rate (%)
AFC trough: -11.2%
13
High levels of
unemployment
Severe
contraction in GDP
Widespread
closure of businesses
Breakdown in financial
intermediation
Note: 1 Refers to passenger and commercial vehicle sales. COVID trough refers to 2Q 2020.
Source: Department of Statistics Malaysia, Malaysia Automotive Association, Bank Negara Malaysia
CAB, % of GDP Net IIP, RM bil
-12.4
3.1
-17.0
-12.0
-7.0
-2.0
3.0
8.0
-137.6
76.3
-170.0
-120.0
-70.0
-20.0
30.0
80.0
130.0
3Q-22 3Q-22AFC
(Trough)
AFC
(Trough)
Retail Sales, RM mil Car Sales, ‘000 units
161.3
68.3
183.2
4Q19 COVID
(Trough)
3Q22
138.5
107.0
171.2
4Q19 COVID
(Trough)
3Q22
Depreciation of ringgit1
by 5%
Core inflation2 to increase
by 0.1 – 0.3 ppt
Ringgit depreciation affects cost of imports
14
▪ Imported consumption goods constitute around 8% of total imports3
▪ Imported finished goods constitute 10% of private consumption4
▪ Intermediate imported inputs account for 12% of total gross output4.
▪ Prolonged period of elevated costs may increase firms’ willingness to pass on
additional costs from ER depreciation.
▪ Nevertheless, this would be balanced against the need to maintain price
competitiveness and weaker domestic demand conditions
Low share of imports in consumption and production
▪ Imported finished goods constitute less than 20% of CPI basket
▪ ERPT is typically stronger for imported fresh food items, such as beef and round
cabbage, though these have a relatively smaller share in the CPI basket.
▪ Items with high self-sufficiency5, such as chicken and eggs, exhibit lower ERPT.
Varying degree of ERPT across CPI basket
High cost environment may influence extent of
exchange rate pass-through (ERPT)
Note:
1 Source: “The Impact of Exchange Rate Depreciation on Inflation in Malaysia” Bank Negara Malaysia Annual Report 2015
2 Refer to core consumer price index (CPI) which excludes volatile items (e.g. fresh food) and price-administered items, as well as direct impact from consumption tax policy changes
3 Source: Department of Statistics Malaysia
4 Figures based on Input-Output Tables 2020 for Malaysia (Source: Department of Statistics, Malaysia)
5 Self sufficiency ratio (SSR) refers to the reliance of a country’s food supply on imports, i.e. the ratio of domestically produced food to its total supply.
Source: Bank Negara Malaysia
Source: World Bank and Bank Negara Malaysia estimates
Moving forward, the impact of the weaker ringgit to inflation would be
partly mitigated by the lower global commodity prices
Stylised illustration of wheat prices
Wheat price
(USD/metric tonne)
MYRUSD
exchange rate
Jun-22 459.6 4.40
Sep-22 417.9 4.54
A) Global wheat prices
B) Domestic wheat prices
Jun-22 price RM2,022.2
Sep-22 price
(excluding exchange rate
movements)
RM1,838.8
Sep-22 price
(including exchange rate
movements)
RM1,897.3
Impact of lower global
prices: -RM183.4
Impact of exchange rate
movements: +RM58.5
130
140
150
160
-0.2
0.2
0.6
1.0
1.4
Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22
Global food
commodity
price index
(RHS)
CPI food &
non-alcoholic
beverages
Global commodity prices and domestic food inflation
Source: World Bank and Department of Statistics, Malaysia
% month-on-month Index
15
Ringgit depreciation is benefitting the export-oriented sector
Translation gains from ringgit depreciation provided some
support to gross export growth…
…and has been accompanied by growth in employment
and income
16
38.3
3Q-21 4Q-21 1Q-21 2Q-22 3Q-22
Volumes Product prices
Ringgit exchange rate Gross exports, yoy%
Breakdown of Gross Export Growth by Volume, Prices and Exchange Rate
Annual change (%), ppt contribution
Source: Department of Statistics Malaysia, Bank Negara Malaysia estimates
2.3
3.3 3.1
4.3 4.3
3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Export-oriented Manufacturing Employment Growth
Annual change (%)
3.0
4.7 4.2
5.2
6.8
3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Export-oriented Manufacturing Wage Growth
Annual change (%)
2,152.3
1,002.6
0
500
1,000
1,500
2,000
2,500
FCY Assets FCY Liabilities
RM bil
FCY Denominated External Assets & Liabilities
(End-3Q 2022)
FCY-denominated debt accounted for
67.8% of total external debt…
FCY Denominated External Debt
End-3Q 2022: RM792.4 bil, % share
Impact of ringgit depreciation to Malaysia’s external position remains
manageable
Source: Bank Negara Malaysia, Department of Statistics, Malaysia
Large FCY assets outweigh FCY liabilities,
indicating limited risk of currency mismatch
… but risks are largely contained as 67.6% of
FCY-denominated debt are subjected to
either prudential safeguards or flexible terms
17
Trade credits
Backed by export earnings
Interbank borrowing and non-
resident deposits
Subject to prudential standards
and backed by sufficient FCY
liquid assets
Intragroup loans
Flexible/concessionary terms
Bonds and notes, and loans
Largely subject to hedging
requirements
Bonds and
notes
24.4%
Loans
9.1%
Intragroup
loans
14.2%
Interbank
borrowings
27.7%
NR deposits
6.4%
Trade
credits
11.1%
Others
6.9%
4.8
4.4
-5.5
3.1
2018 2019 2020 2021 2022e 2023f
While the global environment is expected to be challenging in 2023, the
Malaysian economy will continue to grow
e Estimate, f forecast
Source: Department of Statistics, Malaysia, Economic Outlook 2023 (Ministry of Finance Malaysia)
Annual change, %
Real GDP Annual Change
6.5 – 7.0
4.0 – 5.0
Slower global growth
Higher tourism activity
Implementation of large
infrastructure projects
Continued expansion in
employment
18
1,424
2019 2020 2021 2022e 2023f
Real GDP (RM Billion)
RM bil
Pre-pandemic level
Factors Supporting Growth Outlook
The economy is projected to grow by 4% - 5% in 2023, and continues to surpass the pre-pandemic level
4.7
7.8 8.0
2.4
4.8
3.3
1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Private sector wages
15.57
15.70
15.83
1.5
2
2.5
3
3.5
4
4.5
5
14
14
14
15
15
15
15
15
16
16
16
1Q-20 2Q-20 3Q-20 4Q-20 1Q-21 2Q-21 3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
T
h
o
u
s
a
n
d
s
Updated
Note: Private sector wages comprise wages of workers in the manufacturing and services sectors
Source: Department of Statistics Malaysia and Bank Negara Malaysia estimates
Going forward, demand for workers is expected to remain strong
Steady rise in employment levels and continued improvement in wages are
supportive of spending
Annual change (%)
Real wages
Nominal wages
Million persons
Employment levels
19
0
10
20
30
40
50
165
170
175
180
185
190
195
1Q-21 2Q-21 3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Continued recovery in the tourism-related sectors
Facility and outlet expansions
Manufacturing (semiconductors, steel products); retail
(e.g., supermarkets, convenience stores)
New offerings or segments
Line or brand extensions by supermarkets, retailers,
F&B outlets, etc.
17.4
thousand positions
In 1Q 21
177.9
thousand positions
in 1Q 21
Vacancies and new job creations
continue to improve…
…while on-going recovery in tourism-related sectors
and expansion plans support hiring intentions*
* Insights based on BNM’s engagements with industry players
30.5
thousand positions
New job creation
in 3Q22
Vacancies in 3Q22
191.3
thousand positions
Continuation of existing and new infrastructure projects and higher tourist
arrivals to support growth in 2023
Continued investment in large infrastructure projects
Key infrastructure projects commencing from 2023 onwards
ECRL
RM50.0 billion
Duration: 2018-2027
LRT3
RM16.6 billion
Duration: 2018-2024
Central Spine Road
RM7.3 billion
Duration: 2014-2026
JENDELA Phase 2
RM8.0 billion
Duration: 2023-2025
Travel Receipts
RM bil
Reopening of borders to international tourists to
support the recovery in travel receipts
2023f:
>15.0
e Estimate, f Forecast
Source: Economic Outlook 2023 (Ministry of Finance Malaysia), Ministry of Tourism, Arts and Culture,
Malaysia
82.1
12.5
0.3
13.4
23.8
2019 2020 2021 2022e 2023f
Tourist Arrivals
Million
2021:
0.1
2022e:
9.2
2019:
26.1
2020:
4.3Trans Borneo Highway
Sarawak-Sabah Link Road
(SSLR) Phase 22
3
Mass Rapid Transit 3
(MRT3)
1
20
Source: News flows
7.3
-0.8 -1.1
26.1
17.4
2.2
2.9
2.0
2018 2019 2020 2021 2022e 2023f
Gross exports
Global export
volume in goods
Annual change (%)
Products
E&E,
37%
Resource-based
manufactured goods,
26%
Mining,
6%
Agriculture,
8%
Impact of sharp slowdown in external demand would be partly mitigated by
diversified export products and markets
Malaysia’s diversified export would help cushion potential
shocks in external demand
e Estimate, f forecast
Note: G3 includes the US, the euro area and Japan. Newly Industrialised Economies (NIEs) refers to Hong Kong SAR, Korea and Chinese Taipei. ASEAN excludes MY.
Source: Department of Statistics, Malaysia; Economic Outlook and Budget 2023 (Ministry of Finance Malaysia); International Monetary Fund
% Share of Total Exports
Markets
ASEAN,
28%
China,
16%
NIEs,
12%
G3,
27%
ROW,
17%
Non resource-based
manufactured goods,
24%
Exports to expand in 2023, albeit at a slower pace, amid
moderation in global trade
Malaysia’s Gross Exports and Global Trade Volume of Goods Exports by Product and Market (2021)
21
Banks remain well-positioned to support ongoing economic recovery
Banks are also proactively managing
risks from tighter financial conditions
1 The loan/financing data used is based on updated statistical reporting requirements to reflect more accurate data definition and reporting methodology and thus may not be directly comparable to the data reported in previous
publications
Source: Bank Negara Malaysia
22
2017-2019
average:
2.6 times
2015-2019
average:
5.7%
Ratio of Foreign Currency Liquid Assets to
External Debt-at-Risk (times)
Foreign Exchange Net Open Position
as a Share of Total Capital (%)
4.2
Sep-22
2.6
Sep-22
Banks have sufficient foreign currency liquid assets
Foreign currency exposures remain manageable
The strong financial position of banks
would continue to lend support to
financial intermediation activities
Total Capital Ratio, %
Liquidity Coverage Ratio, % Total Provisions, as % of loans1
Gross Impaired Loans Ratio1 (%)
Banks have sufficient provisions to
absorb credit losses from vulnerable
borrowers
154.4 153.4
150.5
148.3
152.5
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
18.3
19.2
18.3 18.3 17.8
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
1.90
1.83
1.78 1.79 1.78
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
2010-2019 Average: 1.73%
1.73
1.68 1.71
1.79 1.82
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2.0
2.1
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
2010-2019 Average: 1.93%
Headline inflation to moderate going forward following dissipation of base
effects and moderating global commodity prices
2 Core inflation is expected to average closer to the
upper end of the 2.0% - 3.0% forecast range in 2022,
given some demand-driven price pressures amid the
high-cost environment
Inflation Forecast for 2022 and 2023
Average headline inflation (%)
1
Key drivers of inflation
e Estimate, f forecast
Source: Department of Statistics, Malaysia and Economic Outlook and Budget 2023 (Ministry of Finance Malaysia)
Headline inflation is likely to have peaked in the third
quarter of 2022 and is expected to moderate thereafter,
albeit remaining elevated, due to dissipating base effects
and the expected easing of global commodity prices
3
Moving into 2023, inflation is expected to remain
elevated, with the outlook subject to domestic policy
measures on subsidies, global commodity developments
and prolonged supply-related disruptions
3.3
2023f
3.3
2.8
2.5
2022e2021
23
The MPC further adjusted the degree of accommodation in September
and November
Source: Bank Negara Malaysia
1.0
1.5
2.0
2.5
3.0
3.5
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Nov 2022:
2.75%
Overnight Policy Rate, OPR
%
Historical low
OPR level
24
The OPR was gradually increased to 2.75%
• Amid continued positive growth prospects for
the Malaysian economy
• To pre-emptively manage the risk of
excessive demand on price pressures
The MPC is not on any pre-set course
Any OPR adjustments would continue to be
done in a measured and gradual manner, to
support sustainable economic growth in an
environment of price stability
Monetary policy remains accommodative
▼ Weaker-than-expected global growth
▼ Escalation of geopolitical tension
▼ Worsening supply chain disruptions including
impact from climate change
▼ Faster rise in cost of living and inflation
▼ Greater financial market volatility
▼ Political uncertainty
▲ Stronger employment and income conditions
▲ Larger improvement in tourism sector
▲ Faster-than-expected implementation of
structural reforms
Risk to growth remains tilted to the downside, arising primarily from external
factors
Upside risks
Downside risks
25
Summary
In 3Q 2022, the Malaysian economy grew by 14.2% underpinned by continued expansion
in domestic demand. For the first nine months of 2022, the economy grew by 9.3%
The outlook, however, is subject to risks related to weaker-than-expected global
growth, heightened geopolitical tensions, escalation in supply chain disruptions and
greater global financial market volatility
Growth in 2023 to be supported by domestic demand amid global slowdown
Updated
Headline inflation has likely peaked in 3Q 2022 and is expected to moderate going
forward with moderation in global commodity prices and easing supply chain disruptions
Ringgit’s movements against the US dollar was in line with major and regional
currencies. The ringgit depreciation is a result of the strong US dollar, and Malaysia
is not facing any economic crisis
RM
26
End of Presentation
Q&A
Q&A
BANK NEGARA MALAYSIA
CENTRAL BANK or MALAYSIA
Additional Information
Add. Info
1
Breakdown of 3Q GDP (% yoy)
Annual Change in GDP Growth by Component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics, Malaysia
Real GDP
(% YoY)
Share, %
(2021)
2021 2022
3Q 2Q 3Q
Domestic Demand
(Excluding Stocks)
92.7 -4.2 13.0 13.1
Private Sector 74.4 -4.4 15.4 14.7
Consumption 58.8 -4.2 18.3 15.1
Investment 15.6 -4.9 6.3 13.2
Public Sector 18.3 -3.5 2.8 6.3
Consumption 13.8 7.1 2.6 4.5
Investment 4.5 -28.9 3.2 13.1
Net Exports of Goods and
Services
6.0 -39.9 -28.7 18.7
Exports 69.1 4.2 10.4 23.9
Imports 63.1 11.4 14.0 24.4
Change in stocks, RM bn 1.3 1.3 11.8 3.9
Real GDP 100.0 -4.5 8.9 14.2
Real GDP
(% YoY)
Share1, %
(2021)
2021 2022
3Q 2Q 3Q
Services 57.0 -4.9 12.0 16.7
Manufacturing 24.3 -0.8 9.2 13.2
Agriculture 7.1 -2.0 -2.4 1.2
Mining and Quarrying 6.7 -3.2 -0.5 9.2
Construction 3.7 -20.6 2.4 15.3
Real GDP 100.0 -4.5 8.9 14.2
30
Breakdown of 3Q GDP (ppt contribution)
Percentage Point Contribution to GDP Growth by Component
1 Numbers do not add up due to rounding and exclusion of import duties component
Source: Department of Statistics, Malaysia
Real GDP
(Ppt contribution, %)
Share, %
(2021)
2021 2022
3Q 2Q 3Q
Domestic Demand
(Excluding Stocks)
92.7 -3.9 11.7 12.3
Private Sector 74.4 -3.3 11.2 11.2
Consumption 58.8 -2.6 10.1 9.2
Investment 15.6 -0.8 1.1 2.0
Public Sector 18.3 -0.6 0.5 1.1
Consumption 13.8 0.9 0.3 0.6
Investment 4.5 -1.5 0.1 0.5
Net Exports of Goods and
Services
6.0 -3.5 -1.7 1.0
Exports 69.1 2.6 7.5 16.3
Imports 63.1 6.1 9.2 15.2
Change in Stocks 1.3 3.0 -1.0 0.8
Real GDP 100.0 -4.5 8.9 14.2
Real GDP
(Ppt contribution, %)
Share1, %
(2021)
2021 2022
3Q 2Q 3Q
Services 57.0 -2.8 6.8 9.5
Manufacturing 24.3 -0.2 2.2 3.2
Agriculture 7.1 -0.2 -0.2 0.1
Mining and Quarrying 6.7 -0.2 0.0 0.6
Construction 3.7 -0.9 0.1 0.5
Real GDP 100.0 -4.5 8.9 14.2
Add. Info
2
31
Financial Account by Components
Outflows from other investment account more than offset net inflows in the direct and portfolio investment accounts
RM bil
2021 2022
3Q
1Q-
3Q
1Q 2Q 3Q
1Q-
3Q
Direct Investment 8.0 17.9 20.8 2.6 2.0 25.4
Direct Investment Abroad
(DIA)*
-1.5 -11.8 -3.6 -14.7 -10.3 -28.6
Foreign Direct Investment
(FDI)*
9.5 29.7 24.4 17.3 12.3 54.0
Portfolio Investment -3.7 16.2 -10.1 -14.7 0.1 -24.6
Residents -4.9 -29.7 -13.9 -4.4 2.6 -15.7
Non-residents 1.2 45.9 3.8 -10.3 -2.5 -9.0
Financial Derivatives 0.7 -0.4 0.2 -0.2 -0.4 -0.5
Other Investment -5.2 -21.3 19.6 12.5 -16.6 15.6
Financial Account Balance -0.2 12.4 30.4 0.2 -14.9 15.9
Continued FDI inflows amid lower
DIA outflows
Net outflows in other investment
account
Net inflows in portfolio investment
Add. Info
3
*As per the IMF’s BPM5 classifications (i.e. directional basis)
Note: Numbers may not add up due to rounding
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
32
22.6
16.2
2.2
0.2*
Banks Corporates Fed. Gov. BNM
Net change: +RM41.2 bil
60.0*
45.4
21.6
1998 3Q-22
FCY-denominated debt
Ringgit-denominated debt Total: 67.0%
Malaysia’s external debt remains manageable
Foreign currency-denominated debt
remains low relative to Asian Financial
Crisis
Banks are resilient to face potential
external shocks
L
External Debt Breakdown by Currency
(% of GDP)
* Consist of deposit & interbank placements, bonds and notes, and
money market instruments.
** Consist of short-term financial institutions’ deposits, interbank
borrowings and loans from unrelated counterparties.
Higher external debt driven by banks and
corporates who are subject to prudential
safeguards
Add. Info
4
Changes in External Debt by Institution
(from 2Q 2022) (RM bil)
* Inclusive of RM0.2 billion increase in BNM external debt (allocation
of SDR) due to exchange rate valuation changes
Banks’ FCY Liquid External Assets* and FCY
External Debt-at-Risk** (RM bil)
* Based on previous definition of External Debt
166.6
80.4
FCY liquid external
assets
FCY external
debt-at-risk
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
33
External debt amounted to 67.0% of GDP as at end-3Q 2022
0
200
400
600
800
1,000
1,200
4Q-21 1Q-22 2Q-22 3Q-22
Short-term FCY assets
Short-term FCY liabilities
Adequate buffers to weather external shocks
Sustained net creditor position… … and further supported by
L
External Assets Minus External
Liabilities (3Q 21 – 3Q 22)
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
… with large net short-term foreign-
currency assets …
5.6 5.5
3.0
3.7
4.1
0
2
4
6
8
0
20
40
60
80
100
120
3Q-21 4Q-21 1Q-22 2Q-22 3Q-22
Net IIP Position (LHS)
% of GDP (RHS)
RM bil % of GDP
Sustained foreign income
Continued current account surplus reduces
external financing requirements
Sufficient international reserves to
facilitate international transactions
… to finance 5.1 months of imports of goods
& services and is 1.0 time total short-term
external debt as at 31 October 2022*
Add. Info
5
Short-term FCY Assets and Liabilities
RM bil
* The short-term FCY assets are excluded of reserves.
34
*Note: The reserves adequacy ratios differ from those published in
the press statement on international reserves as at 31 October 2022
as they reflect the latest 3Q data on imports of goods & services and
short-term external debt.
Structural reforms after the AFC have improved Malaysia’s external resilience,
making a hard peg an unfitting policy solution to current economic challenges
Malaysia’s economy and financial sector have strengthened significantly over the years, improving our resilience to external shocks
Add. Info
9
Add. Info
6
1 Data as at end-1999. 2Data as at end-2001
Source: Bank Negara Malaysia, Bursa Malaysia, Department of Statistics Malaysia and Ministry of Finance
-47
-11.2
AFC
(1998)
YTD up to 9
Nov
USDMYR
-76
-7.7
AFC
(1998)
YTD up to 9
Nov
KLCI
-137.62
76.3
AFC
(1998)
3Q-2022
RM bil
Net IIP
37.4
50.8
AFC
(1998)
2022
Forecast
CA balance
18.6
1.8
AFC
(1998)
3Q-2022
%
Banks’ NPL
11.8
17.8
AFC
(1998)
3Q-2022
Total Capital Ratio
-7.4
6.5 – 7.0
AFC
(1998)
2022 Forecast
Real GDP
Financial conditions Banking sectorExternal sector
11.0
2.75
AFC
(1998)
Latest as at
Nov 2022
%
Policy rate
16.41
2.4
AFC
(1998)
3Q-2022
Government’s FCY
borrowing
Real GDP
(%)(%)
% share % of total risk-
weighted asset
Annual change (%)
-1.8
6.4
AFC
(1998)
3Q-2022
Banks’ Loan Growth
Annual change (%) RM bil
35
Implementation of structural reform vital to secure a stronger and more
sustainable growth
Key Structural Reforms
Hasten Implementation of
National Investment Policy
Accelerate Digitalisation and
Automation
Enhance Social Safety Nets and
Social Protection Framework
Address Malaysia’s
Talent Needs Holistically
Advance the
Sustainability Agenda
Add. Info
7
36
Box Article: Recent inflation dynamics reflect price increases related to
commodities and recovery in demand
“Overshooting” inflation for some CPI categories amid high cost
environment and release of pent-up demand
1/ Based on the difference between actual inflation rates in September 2022 versus the implied growth
from linear extrapolation of the pre-pandemic (2019) trend of CPI categories at the two-digit level.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates.
7.8
3.9 3.8 2.7
1.5 0.6
-1.2 -1.7
-3.0 -3.6 -3.8 -4.1
-8.0
-4.0
0.0
4.0
8.0
12.0
F
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Percentage points 1/
47% of CPI basket
Global
commodity
prices
Imported
content
CPI
inflation
Exchange
rates
Freight
Domestic
conditions
Restraints on Persistently Higher Inflation
Price controls on fuel and
some staple food items
Spare capacity in labour market
Limited impetus for wage-price spiral
dynamics
Stage 1 Stage 2
37
Add. Info
8
Strength of demand allows for pass-through of
costs domestically (Stage 2)
Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services
27Quarterly Bulletin | 4Q 2021
Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to
Imports of Goods and Services
One of the indicators used by the Bank to measure international reserve adequacy is the reserve coverage
of retained imports,1 which is communicated on a fortnightly basis. As the economy grew and evolved with
higher share of the services sector, this has raised the prominence of services imports in the measure of
reserve adequacy. Given this consideration and in line with the international best practice, future fortnightly
reporting of Malaysia’s international reserves will include the indicator on reserve coverage of imports of
goods and services, effective from 22 February 2022.2
1 Defined as gross imports subtracted with re-exports. The 12-month average retained imports can be derived from the Monthly Highlight and Statistics Table
3.6.8 (Imports by End-Use; see Appendix 1).
2 For the international reserves position as at 15 February 2022.
3 Defined as imports plus exports.
4 From RM101.3 billion to RM351.3 billion, or a compound annual growth rate (CAGR) of 6.4%.
5 Based on JP Morgan’s Government Bond Index for Emerging Markets.
Services tradeC1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM billion
Travel1
Computer and information
Transport
Manufacturing
Other business3
Other2
Perdagangan perkhidmatanR1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM bilion
Perjalanan1
Komputer dan informasi
Pengangkutan
Pembuatan
Perniagaan Lain3
Lain-lain2
Nota: Data sebelum tahun 2005 adalah berdasarkan garis panduan dalam Edisi Kelima Manual Imbangan Pembayaran dan Kedudukan
............Pelaburan Antarabangsa (BPM5) IMF. Data bagi tahun 2005 dan selanjutnya adalah berdasarkan BPM6.
1 Termasuk perbelanjaan perjalanan bagi aktiviti pelancongan.
2 Termasuk pembinaan, caj penggunaan harta intelek, perkhidmatan persendirian, kebudayaan dan rekreasi.
3 Perkhidmatan perniagaan lain termasuk perkhidmatan penyelidikan dan pembangunan, profesional, teknikal, berkaitan perdagangan dan
...perkhidmatan perniagaan lain.
Sumber: Jabatan Perangkaan Malaysia dan Bank Negara Malaysia
Note: Data prior to 2005 are based on the guideline in the Fifth Edition of the Balance of Payments and International Investment Position
............Manual (BPM5) of the IMF. Data for 2005 and beyond are based on BPM6.
1 Includes travel spending for tourism activity.
2 Includes construction, charges for intellectual property use, personal, culture & recreational services.
3 Other business services comprise research and development, professional, technical, trade-related and other business services.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
The Bank’s reporting of the reserve coverage of retained imports was published as early as in the 1990s. Data
on retained imports are available on monthly basis and thereby closely match the fortnightly release of the
international reserves data. However, retained imports do not include payment for services, which has grown
over the past two decades. From 1999 to 2019, services trade3 has increased by 246.9%4 (Chart 1). This was
mainly due to higher tourism activity as well as payments for foreign transport services for goods trade. In
addition, there was also an expansion in goods import, largely in support of domestic investment activities
and production of manufactured goods.
Malaysia’s performance on this indicator is in line with regional and peer5 economies. On historical basis,
reserve coverage of imports of goods and services indicator has been in the range of between 5 and 8
months since 2008 – well above the generally-accepted ‘rule of thumb’ adequacy threshold of 3-months, and
demonstrates the ability of the Malaysian economy to withstand against external shocks.
28 Quarterly Bulletin | 4Q 2021
It is also important to emphasize that the assessment of reserve adequacy should not be solely based
on the face value of these indicators. This needs to be complemented with deeper understanding about
the country’s external position, financial system and broad economic policies. In particular, international
reserves is not the only means to meet external obligations.6 Prevailing assessment indicates that the
country’s external position7 is underpinned by its strong economic fundamentals including healthy current
account surplus, large foreign currency external assets held by domestic entities8 and the flexible ringgit
exchange rate.
References
Department of Statistics, Malaysia. ‘External Sector’, Jabatan Perangkaan Malaysia, Putrajaya.
Greenspan, A., ‘Currency reserves and debt’. Remarks before the World Bank Conference on Recent Trends in
Reserves Management, Washington, DC, 29 April 1999.
International Monetary Fund, (2016). ‘Guidance Note on the Assessment of Reserve Adequacy and Related
Considerations’.
Appendix 1: Calculation of international reserves coverage of retained imports
aFor example, to calculate monthly retained imports for December 2019, the retained imports for the months of
January to December 2019 is summed up (i.e. rolling 12-months of retained imports). This number is then divided
by 12, to obtain a monthly average. The figures can be obtained from BNM’s MHS Table 3.6.8, column S.
6 Further information can be found in the box article “Malaysia’s Resilience in Managing External Debt Obligations and the Adequacy of International Reserves”
in BNM’s Annual Report 2018.
7 In addition, it has also been emphasized that Malaysia’s external debt position, including short-term external debt, remains manageable. This is supported by
the favourable currency and maturity profile on its external debt as well as domestic entities’ resilient repayment capacity. Foreign-currency external debt of
corporates are also mainly subject to prudential and hedging requirements (refer to the latest assessment on external debt developments on page 25)
8 Amounting to RM1.1 trillion as at end-2021.
| Press Release |
09 Nov 2022 | Supporting decarbonisation efforts of SMEs through the Greening Value Chain Programme | https://www.bnm.gov.my/-/cop27-gvc-lctf | null | null |
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Supporting decarbonisation efforts of SMEs through the Greening Value Chain Programme
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Supporting decarbonisation efforts of SMEs through the Greening Value Chain Programme
Embargo :
For immediate release
Not for publication or broadcast before
1247 on
Wednesday, 9 November 2022
9 Nov 2022
In conjunction with the Finance Day at COP-27[1], Bank Negara Malaysia (BNM) in collaboration with financial institutions and strategic partners launched the Greening Value Chain (GVC) Programme.
The GVC programme aims to assist Malaysian SMEs in implementing impactful, long-term change to green their operations. This can be achieved through offering of technical advice by participating organisations[2] and transition financing from the Low Carbon Transition Facility (LCTF)[3]. The GVC programme employs a blended approach of facilitation, comprising technical training and on-site diagnosis.
BNM Governor Tan Sri Nor Shamsiah said, “Malaysia is an exporting nation. Many Malaysian SMEs form part of global supply chains[4] that need to adapt to the changing policies of our trade partners to remain resilient and globally competitive. This includes addressing value chain emissions to keep pace with the global race towards Net Zero and to prepare for policies that may be imposed by our trading partners. The GVC programme is one step in helping SMEs make this important transition.”
For further enquiries about GVC, please contact BNMLINK through telelink.bnm.gov.my.
Footnotes
[1] United Nations Framework Convention on Climate Change Conference of Parties in Egypt.
[2] Malaysia Green Technology and Climate Change Corporation (MGTC), Pantas Software, Kossan Rubber Industries, Joint Committee of Climate Change Sub Committee 3 (JC3 SC3) Product and Innovation
[3] Further information on funds available for SMEs including the LCTF can be found at bnm.gov.my/funds4sme.
[4] SMEs play an important role in the Malaysian economy and society, contributing 37.4% of GDP and 47.8% of total employment.
Bank Negara Malaysia
9 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
07 Nov 2022 | International Reserves of Bank Negara Malaysia as at 31 October 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-31-october-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
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International Reserves of Bank Negara Malaysia as at 31 October 2022
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International Reserves of Bank Negara Malaysia as at 31 October 2022
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7 Nov 2022
The international reserves of Bank Negara Malaysia amounted to USD105.2 billion as at 31 October 2022. The reserves position is sufficient to finance 5.5 months of imports of goods and services[1], and is 1.1 times of the total short-term external debt.
[1] Under the previous import coverage measure, reserves is sufficient to finance 6.2 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021.
Related Assets
BNM Statement of Assets & Liabilities - 31 October 2022
Bank Negara Malaysia
7 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
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n
-2
2
F
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b
-2
2
M
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2
2
A
p
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2
2
M
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-2
2
J
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-2
2
J
u
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2
2
A
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-2
2
S
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-2
2
O
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2
2
N
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-2
2
D
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-2
2
J
a
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-2
3
F
e
b
-2
3
M
a
r-
2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
03 Nov 2022 | Monetary Policy Statement | https://www.bnm.gov.my/-/monetary-policy-statement-03112022 | https://www.bnm.gov.my/documents/20124/8737479/MPS_Snapshot_2022_11_en.pdf | null |
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Monetary Policy Statement
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Monetary Policy Statement
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Thursday, 3 November 2022
3 Nov 2022
At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to increase the Overnight Policy Rate (OPR) by 25 basis points to 2.75 percent. The ceiling and floor rates of the corridor of the OPR are correspondingly increased to 3.00 percent and 2.50 percent, respectively.
The global economy continues to be weighed down by rising cost pressures, tighter global financial conditions, and strict containment measures in China. These factors more than offset the support from positive labour market conditions, and the full reopening of most economies and international borders. Inflationary pressures were more persistent than expected due to strong demand, tight labour markets, and elevated commodity prices, despite improvements in global supply chain conditions. Consequently, many central banks are expected to continue raising interest rates to manage inflationary pressures. In particular, continued aggressive adjustments in US interest rates and expectations of a higher terminal rate in the US, have contributed to a persistently strong US dollar environment. This has resulted in higher volatility in financial markets, affecting other major and emerging market currencies, including the ringgit. Going forward, the global growth outlook will continue to face headwinds from tighter financial conditions amid elevated inflation in major economies and the domestic challenges in China. The growth outlook remains subject to downside risks, including escalation of geopolitical tensions, worsening of domestic headwinds in China and potential energy rationing in Europe.
For the Malaysian economy, latest indicators show that economic activity strengthened further in the third quarter, driven primarily by robust domestic demand. Going forward, despite the challenging global environment, domestic demand will remain the key driver of growth. Household spending will continue to be underpinned by improvements in labour market conditions and income prospects. Tourist arrivals have increased following the reopening of international borders and will further lift tourism-related sectors. Investment activity and prospects will be supported by the realisation of multi-year projects. Nevertheless, external demand is expected to moderate following softening global growth. Despite bouts of heightened volatility in the global financial and foreign exchange markets, these developments are not expected to derail Malaysia's growth. Domestic liquidity remains sufficient, with continued orderly functioning of the financial and foreign exchange markets. Financial institutions also continue to operate with strong capital and liquidity buffers. These will ensure financial intermediation remains supportive of the economy. Downside risks to the domestic economy continue to stem from a weaker-than-expected global growth, higher risk aversion in global financial markets amid more aggressive monetary policy tightening in major economies, further escalation of geopolitical conflicts, and worsening supply chain disruptions.
In line with earlier assessments, headline inflation is likely to have peaked in 3Q 2022 and is expected to moderate thereafter, albeit remaining elevated. Underlying inflation, as measured by core inflation, is projected to average closer to the upper end of the 2.0% - 3.0% forecast range in 2022, having averaged 2.7% year-to-date, given some demand-driven price pressures amid the high-cost environment. Moving into 2023, headline and core inflation are expected to remain elevated amid both demand and cost pressures, as well as any changes to domestic policy measures. The extent of upward pressures to inflation will remain partly contained by existing price controls, subsidies, and the remaining spare capacity in the economy. The balance of risk to the inflation outlook in 2023 is tilted to the upside and continues to be subject to domestic policy measures on subsidies, as well as global commodity price developments arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions.
Against the backdrop of continued positive growth prospects for the Malaysian economy, the MPC decided to further adjust the degree of monetary accommodation. The adjustment would also pre-emptively manage the risk of excessive demand on price pressures consistent with the recalibration of monetary policy settings that balances the risks to domestic inflation and sustainable growth. At the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth. The MPC is not on any pre-set course, which means that monetary policy decisions will continue to depend on evolving conditions and their implications on the overall outlook to domestic inflation and growth. Any adjustments to the monetary policy settings going forward would continue to be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support sustainable economic growth in an environment of price stability.
The meeting also approved the schedule of MPC meetings for 2023. In accordance with the Central Bank of Malaysia Act 2009, the MPC will convene six times during the year. The Monetary Policy Statement will be released at 3 p.m. on the final day of each MPC meeting.
Schedule of Monetary Policy Committee Meetings for 2023
MPC Meeting No
Dates
1st
18 and 19 January 2023 (Wednesday and Thursday)
2nd
8 and 9 March 2023 (Wednesday and Thursday)
3rd
2 and 3 May 2023 (Tuesday and Wednesday)
4th
5 and 6 July 2023 (Wednesday and Thursday)
5th
6 and 7 September 2023 (Wednesday and Thursday)
6th
1 and 2 November 2023 (Wednesday and Thursday)
See also:
Frequently Asked Questions
Monetary Policy Statement (MPS) Snapshots: Nov 2022Bank Negara Malaysia
3 November 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services
27Quarterly Bulletin | 4Q 2021
Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to
Imports of Goods and Services
One of the indicators used by the Bank to measure international reserve adequacy is the reserve coverage
of retained imports,1 which is communicated on a fortnightly basis. As the economy grew and evolved with
higher share of the services sector, this has raised the prominence of services imports in the measure of
reserve adequacy. Given this consideration and in line with the international best practice, future fortnightly
reporting of Malaysia’s international reserves will include the indicator on reserve coverage of imports of
goods and services, effective from 22 February 2022.2
1 Defined as gross imports subtracted with re-exports. The 12-month average retained imports can be derived from the Monthly Highlight and Statistics Table
3.6.8 (Imports by End-Use; see Appendix 1).
2 For the international reserves position as at 15 February 2022.
3 Defined as imports plus exports.
4 From RM101.3 billion to RM351.3 billion, or a compound annual growth rate (CAGR) of 6.4%.
5 Based on JP Morgan’s Government Bond Index for Emerging Markets.
Services tradeC1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM billion
Travel1
Computer and information
Transport
Manufacturing
Other business3
Other2
Perdagangan perkhidmatanR1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM bilion
Perjalanan1
Komputer dan informasi
Pengangkutan
Pembuatan
Perniagaan Lain3
Lain-lain2
Nota: Data sebelum tahun 2005 adalah berdasarkan garis panduan dalam Edisi Kelima Manual Imbangan Pembayaran dan Kedudukan
............Pelaburan Antarabangsa (BPM5) IMF. Data bagi tahun 2005 dan selanjutnya adalah berdasarkan BPM6.
1 Termasuk perbelanjaan perjalanan bagi aktiviti pelancongan.
2 Termasuk pembinaan, caj penggunaan harta intelek, perkhidmatan persendirian, kebudayaan dan rekreasi.
3 Perkhidmatan perniagaan lain termasuk perkhidmatan penyelidikan dan pembangunan, profesional, teknikal, berkaitan perdagangan dan
...perkhidmatan perniagaan lain.
Sumber: Jabatan Perangkaan Malaysia dan Bank Negara Malaysia
Note: Data prior to 2005 are based on the guideline in the Fifth Edition of the Balance of Payments and International Investment Position
............Manual (BPM5) of the IMF. Data for 2005 and beyond are based on BPM6.
1 Includes travel spending for tourism activity.
2 Includes construction, charges for intellectual property use, personal, culture & recreational services.
3 Other business services comprise research and development, professional, technical, trade-related and other business services.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
The Bank’s reporting of the reserve coverage of retained imports was published as early as in the 1990s. Data
on retained imports are available on monthly basis and thereby closely match the fortnightly release of the
international reserves data. However, retained imports do not include payment for services, which has grown
over the past two decades. From 1999 to 2019, services trade3 has increased by 246.9%4 (Chart 1). This was
mainly due to higher tourism activity as well as payments for foreign transport services for goods trade. In
addition, there was also an expansion in goods import, largely in support of domestic investment activities
and production of manufactured goods.
Malaysia’s performance on this indicator is in line with regional and peer5 economies. On historical basis,
reserve coverage of imports of goods and services indicator has been in the range of between 5 and 8
months since 2008 – well above the generally-accepted ‘rule of thumb’ adequacy threshold of 3-months, and
demonstrates the ability of the Malaysian economy to withstand against external shocks.
28 Quarterly Bulletin | 4Q 2021
It is also important to emphasize that the assessment of reserve adequacy should not be solely based
on the face value of these indicators. This needs to be complemented with deeper understanding about
the country’s external position, financial system and broad economic policies. In particular, international
reserves is not the only means to meet external obligations.6 Prevailing assessment indicates that the
country’s external position7 is underpinned by its strong economic fundamentals including healthy current
account surplus, large foreign currency external assets held by domestic entities8 and the flexible ringgit
exchange rate.
References
Department of Statistics, Malaysia. ‘External Sector’, Jabatan Perangkaan Malaysia, Putrajaya.
Greenspan, A., ‘Currency reserves and debt’. Remarks before the World Bank Conference on Recent Trends in
Reserves Management, Washington, DC, 29 April 1999.
International Monetary Fund, (2016). ‘Guidance Note on the Assessment of Reserve Adequacy and Related
Considerations’.
Appendix 1: Calculation of international reserves coverage of retained imports
aFor example, to calculate monthly retained imports for December 2019, the retained imports for the months of
January to December 2019 is summed up (i.e. rolling 12-months of retained imports). This number is then divided
by 12, to obtain a monthly average. The figures can be obtained from BNM’s MHS Table 3.6.8, column S.
6 Further information can be found in the box article “Malaysia’s Resilience in Managing External Debt Obligations and the Adequacy of International Reserves”
in BNM’s Annual Report 2018.
7 In addition, it has also been emphasized that Malaysia’s external debt position, including short-term external debt, remains manageable. This is supported by
the favourable currency and maturity profile on its external debt as well as domestic entities’ resilient repayment capacity. Foreign-currency external debt of
corporates are also mainly subject to prudential and hedging requirements (refer to the latest assessment on external debt developments on page 25)
8 Amounting to RM1.1 trillion as at end-2021.
| Press Release |
31 Oct 2022 | Monetary and Financial Developments in September 2022 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-september-2022 | https://www.bnm.gov.my/documents/20124/8705828/i_en.pdf | null |
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Monetary and Financial Developments in September 2022
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Monetary and Financial Developments in September 2022
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Monday, 31 October 2022
31 Oct 2022
Headline inflation declined to 4.5% in September
Headline inflation declined to 4.5% in September (August: 4.7%), as lower inflation in the prices of fresh chicken, fresh vegetables and fuel more than offset higher core inflation.
Core inflation[1] increased to 4.0% (August: 3.8%) largely reflecting higher inflation in the prices for repair and maintenance of personal transport, food away from home, and bread and bakery products.
Core inflation increased more moderately by 0.3% on a month-on-month basis (August: 0.6%).
Wholesale and retail trade growth remained strong in August
The Index of Wholesale and Retail Trade (IOWRT) continued to record double digit, though lower, growth of 27.0% in August 2022 (July: 33.4%). The strong growth was driven mainly by the motor vehicle segment. In addition to the low base in August 2021, when showrooms were closed during the implementation of the National Recovery Plan (NRP) in the first half of the month, continued strength in purchases of motor vehicles also provided a lift to growth.
This, together with stronger activity in the retail segment contributed to the acceleration in month-on-month seasonally adjusted growth of 3.1% (July: -1.6%).
Net financing[2] growth moderated in September
Net financing grew by 5.6% as at end-September (August: 6.1%), reflecting lower growth in both outstanding loans (6.4%; August: 6.8%) and corporate bonds (3.5%; August: 4.3%).
Growth in outstanding household loans remained unchanged at 6.6%, reflecting steady growth across most purposes. Despite some moderation, loan disbursements continued to record high growth, amid sustained repayment trends.
For businesses, growth in outstanding loans declined to 5.2% (August: 6.8%), partly due to a higher base effect. Nonetheless, loan disbursements remained sustained, driven particularly by the wholesale trade, consumer manufacturing, and civil engineering segments.
Domestic financial conditions tightened further in September, driven mainly by external developments
In September, global bond yields rose, equity markets declined and the US dollar strengthened further. This reflected expectations of further monetary policy tightening, especially by the US Federal Reserve to address persistent inflationary pressures amid a more moderate global growth outlook.
Notwithstanding this, average trading volume and FX volatility in the domestic financial markets remained healthy.
The 10-year MGS yields continued to rise by 43.0 bps (regional* average: 58.0 bps) while the FBM KLCI declined by 7.8% (regional* average: -6.9%), driven by non-resident portfolio outflows from the domestic bond and equity markets.
The ringgit depreciated by 3.5% against the US dollar (regional* average: -3.8%) amid continued strength of the US currency.
Banks maintained strong liquidity and funding positions to support intermediation
Banks continue to record healthy liquidity buffers with the aggregate Liquidity Coverage Ratio at 152.5% (Aug-22: 141.1%).
Sustained deposit growth riding on recovery in economic activities, continue to support banks’ lending activities.
The aggregate loan-to-fund ratio remained stable at 82.5% (Aug-22: 82.6%).
Asset quality in the banking system remained intact
Overall gross and net impaired loans ratios remained broadly stable at 1.82% (Aug-22: 1.84%) and 1.12% (Aug-22: 1.13%), respectively.
Loan loss coverage ratio (including regulatory reserves) remains at a prudent level of 115.2% of impaired loans, with total provisions accounting for 1.8% of total loans.
As of end-September 2022, the banking system recorded RM 41.9 billion of total provisions and regulatory reserves.
Monthly Highlights [PDF]* Regional countries include Singapore, Thailand, Philippines, Indonesia and Korea.
[1] Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of tax policy changes.
[2] Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)) and outstanding corporate bonds. Data from July 2022 onwards are based on the new set of loan/financing data reflecting the latest requirements. Figures may not add up due to rounding.
Related Assets
Monthly Highlights & Statistics in September 2022
Bank Negara Malaysia
31 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
A
p
r-
2
3
M
a
y
-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
A
p
r
2
3
M
a
y
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
a
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2
2
J
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2
2
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2
2
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2
2
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2
2
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2
2
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2
D
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2
2
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2
3
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2
3
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2
3
A
p
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2
3
M
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y
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
31 Oct 2022 | Detailed Disclosure of International Reserves as at end-September 2022 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-september-2022-1 | null | null |
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Detailed Disclosure of International Reserves as at end-September 2022
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Detailed Disclosure of International Reserves as at end-September 2022
Embargo :
For immediate release
Not for publication or broadcast before
1200 on
Monday, 31 October 2022
31 Oct 2022
In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV.
As shown in Table I, official reserve assets amounted to USD106,076.6 million, while other foreign currency assets amounted to USD5.4 million as at end-September 2022.
As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD11,176.2 million. The short forward positions amounted to USD22,524.4 million as at end-September 2022, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD1,839.7 million in the next 12 months.
As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD399.4 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-September 2022, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (30 September 2022)
Bank Negara Malaysia
31 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
29 Oct 2022 | BNM further advancing e-payment adoption and financial inclusion | https://www.bnm.gov.my/-/e-duit-itekad-launch | null | null |
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BNM further advancing e-payment adoption and financial inclusion
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BNM further advancing e-payment adoption and financial inclusion
Embargo :
For immediate release
Not for publication or broadcast before
1200 on
Saturday, 29 October 2022
29 Oct 2022
e-Duit to accelerate e-payment adoption with a 15% annual growth target over the next five years
Five new participating financial institutions support iTEKAD, marking another phase of the social finance programme development
Bank Negara Malaysia (BNM) today launched the e-Duit campaign and the official logo of the iTEKAD programme.
Speaking at the launch, BNM Deputy Governor Datuk Abdul Rasheed Ghaffour said, “BNM is fully committed to realising the strategic thrusts set out in the Financial Sector Blueprint (FSBP) 2022-2026. The e-Duit campaign and expansion of iTEKAD are a testament to our continued commitment. We aim to accelerate e-payment adoption among businesses and households by 15% per year and increase e-payment transactions per capita from 221 to 400 by 2026. At the same time, we welcome five new participating financial institutions to the iTEKAD programme. This will certainly broaden the outreach of this blended financing scheme to assist low-income microentrepreneurs.[1]”With the tagline “Selamat, Senang, Segera” (Secure, Simple, Swift), e-Duit is an awareness campaign aimed at encouraging more Malaysians to adopt e-payments, and to do so safely. The campaign will seek to elevate public awareness and build user confidence in e-payment adoption, and in turn, support efforts to digitalise the Malaysian economy. Visit bnm.gov.my/eduit for more information.First launched in 2020, iTEKAD is a blended social finance programme to support low-income microentrepreneurs. The programme provides business assets funded by social finance instruments (donations, social impact investment, zakat, and cash waqf), microfinancing, and structured training. The iTEKAD programme has shown promising results. As of August 2022, 95% of iTEKAD microentrepreneurs have successfully built online capabilities to enhance sales. The programme is expected to have benefitted over 4,000 low-income microentrepreneurs by 2023. Further information on iTEKAD is available at bnm.gov.my/social-finance.
Financial Literacy Month 2022
The e-Duit campaign and the official logo of the iTEKAD programme were launched at an exhibition held at IPC Shopping Centre Mutiara Damansara on 29 and 30 October 2022 in conjunction with the closing of Financial Literacy Month 2022 (FLM2022).
Organised by the Financial Education Network (FEN), FLM2022 is an annual flagship event to enhance the awareness of consumers on key financial issues and improve financial literacy among Malaysians. Throughout October, a mobile coach travelled to 61 locations across seven states, bringing free and independent financial education resources to over 20,000 people. These resources cover personal financial management, digital financial literacy, financial scam awareness and debt management advisory services. For more information, visit fenetwork.my.
[1] iTEKAD is currently offered by eight participating financial institutions, namely Bank Islam Malaysia Berhad, Bank Muamalat Malaysia Berhad, CIMB Islamic Bank Berhad, RHB Islamic Bank Berhad, Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat), Bank Simpanan Nasional (BSN), Bank Pertanian Malaysia Berhad (Agrobank), and Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank).BNM Deputy Governor Datuk Abdul Rasheed Ghaffour (Left 6); BNM Assistant Governor Dr. Norhana Endut (Left 5); accompanied by BNM Payment Services and Policy Department Director Qaiser Iskandar Anwarudin; BNM LINK dan Pejabat BNM Director Thomas Tan Koon Peng; Maybank Malaysia Head of Community Financial Services YBhg. Datuk Hamirullah Boorhan; Merchantrade Managing Director Ramasamy a/l K Veeran; HLISB CEO Jasani Abdullah; Bank Muamalat CEO Khairul Kamarudin; Grab Head of Payments and e-Commerce Tien Ming Lim; TNG Digital CEO Alan Ni; Paynet Director of Corporate Services Azleena Idris; Boost Merchant Business CEO Eric Chong Tiong Beng; ShopeePay Director and Country Head Sea Malaysia Terence Siau
BNM Deputy Governor Datuk Abdul Rasheed Ghaffour (Left 6); BNM Assistant Governor Suhaimi Ali (Left 7); accompanied by BNM Financial Inclusion Department Director Nor Rafidz bin Nazri; CIMB Islamic Regional Head Nazzi Beck; SME Bank Group CSO YBhg. Datuk Dr. Mohammad Hardee Ibrahim; Bank Rakyat CEO Dr. Mohammad Hanis Osman; Agrobank CEO YM Tengku Ahmad Badli Shah; BSN CEO Jay Khairil; RHB Islamic CEO YBhg. Dato' Adisadikin Ali; Bank Islam CEO Muazzam Mohamed; Bank Muamalat CEO Khairul Kamarudin
Bank Negara Malaysia
29 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
21 Oct 2022 | International Reserves of Bank Negara Malaysia as at 14 October 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-14-october-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
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International Reserves of Bank Negara Malaysia as at 14 October 2022
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International Reserves of Bank Negara Malaysia as at 14 October 2022
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Friday, 21 October 2022
21 Oct 2022
The international reserves of Bank Negara Malaysia amounted to USD104.5 billion as at 14 October 2022. The reserves position is sufficient to finance 5.5 months of imports of goods and services[1], and is 1.1 times of the total short-term external debt.
[1] Under the previous import coverage measure, reserves are sufficient to finance 6.1 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021.
Related Assets
BNM Statement of Assets & Liabilities - 14 October 2022
Bank Negara Malaysia
21 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
a
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-2
2
F
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-2
2
M
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2
2
A
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2
2
M
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-2
2
J
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-2
2
J
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2
2
A
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-2
2
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-2
2
O
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2
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-2
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-2
2
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-2
3
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-2
3
M
a
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2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
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2
2
A
p
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2
2
M
a
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2
2
J
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2
2
J
u
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2
2
A
u
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2
2
S
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2
2
O
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t
2
2
N
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2
2
D
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c
2
2
J
a
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2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
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2
2
J
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2
2
A
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2
2
S
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2
2
O
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2
2
N
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2
2
D
e
c
2
2
J
a
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2
3
F
e
b
2
3
M
a
r
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
07 Oct 2022 | International Reserves of Bank Negara Malaysia as at 30 September 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-30-september-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
Reading:
International Reserves of Bank Negara Malaysia as at 30 September 2022
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6
International Reserves of Bank Negara Malaysia as at 30 September 2022
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Friday, 7 October 2022
7 Oct 2022
The international reserves of Bank Negara Malaysia amounted to USD106.1 billion as at 30 September 2022. The reserves level has taken into account the quarterly foreign exchange revaluation changes. The reserves position is sufficient to finance 5.6 months of imports of goods and services [1], and is 1.1 times of the total short-term external debt.
[1] Under the previous import coverage measure, reserves is sufficient to finance 6.2 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021. Related Assets
BNM Statement of Assets & Liabilities - 30 September 2022
Bank Negara Malaysia
7 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
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p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
07 Oct 2022 | BNM Instructs iPay88 to Further Strengthen Cyber Security Controls | https://www.bnm.gov.my/-/ipay88-to-further-strengthen-cyber-security-controls | https://www.bnm.gov.my/documents/20124/938039/PD+Credit+Card.pdf, https://www.bnm.gov.my/documents/20124/943361/Debit+Card.pdf | null |
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BNM Instructs iPay88 to Further Strengthen Cyber Security Controls
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BNM Instructs iPay88 to Further Strengthen Cyber Security Controls
Embargo :
For immediate release
Not for publication or broadcast before
1445 on
Friday, 7 October 2022
7 Oct 2022
We refer to our statement on 12 August 2022 on iPay88 (M) Sdn. Bhd., a provider of payment gateway services to banks and merchants.
Following the completion of the independent forensic investigation, iPay88 has taken the necessary containment and rectification measures to address gaps that were identified. In addition, BNM has also instructed iPay88 to undertake additional measures to further strengthen its cyber security controls and IT infrastructure. These measures are aimed at ensuring that similar incidents do not recur in the future and to safeguard against future threats. BNM will continue to closely monitor iPay88’s implementation of these measures and where appropriate, will undertake further supervisory or enforcement action.
BNM has also directed banks and card issuers to maintain heightened vigilance over activities of cards that may be at risk. Customers will be contacted if any suspicious activity is detected through the monitoring activities of their banks or card issuers.
BNM would like to reassure members of the public that Malaysia’s banking and payment systems remain safe and secure. Under existing payment card rules, customers will not be liable for any fraudulent or unauthorised transactions, as long as customers have taken reasonable precautions to safeguard their payment cards. For further information, please refer to the Credit Card Policy Document and Debit Card Policy Document.
Customers are advised to immediately notify their banks if they observe any irregular or unauthorised card transactions.
For further enquiries or complaints, members of the public can contact BNMTELELINK at 1-300-88-5465 or eLink.
See also:
BNM Reassures Nation's Payment System Remains Safe And Secure, 12 August 2022
Bank Negara Malaysia
7 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
35.8
33.4
27.0
-20
-10
0
10
20
30
40
Jun-21 Aug-21 Oct-21 Dec-21 Feb-22 Apr-22 Jun-22 Aug-22
Wholesale
Retail
Motor vehicles
Distributive trade
6.4
5.2
6.6
0
1
2
3
4
5
6
7
Sep-21 Dec-21 Mar-22 Jun-22 Sep-22
Total loans
Business loans
Household loans
Annual growth (%)
Contribution to Net Financing1 Growth and Outstanding Loan
Growth
New dataset
• The Index of Wholesale and Retail Trade
(IOWRT) continued to record double digits,
though lower, growth of 27% in August 2022 (July:
33.4%). The strong growth was driven mainly by
the motor vehicle segment. In addition to the low
base in August 2021 - when showrooms were
closed during the implementation of the National
Recovery Plan (NRP) in the first half of the month
- continued strength in purchases of motor
vehicles also provided a lift to growth.
• This, together with stronger activity in the retail
segment contributed to the acceleration in month-
on-month seasonally adjusted growth of 3.1%
(July: -1.6%).
Index of Wholesale and Retail Trade
September 2022
1
Headline inflation declined to 4.5% in September
4.7 4.5
3.8
4.0
-4.0
-2.0
0.0
2.0
4.0
6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
J
a
n
-2
1
F
e
b
-2
1
M
a
r-
2
1
A
p
r-
2
1
M
a
y
-2
1
J
u
n
-2
1
J
u
l-
2
1
A
u
g
-2
1
S
e
p
-2
1
O
c
t-
2
1
N
o
v
-2
1
D
e
c
-2
1
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
It also excludes the estimated direct impact of tax policy changes.
Source: Department of Statistics Malaysia (DOSM), Bank Negara Malaysia estimates
• Headline inflation declined to 4.5% in September
(August: 4.7%), as lower inflation in the prices of
fresh chicken, fresh vegetables and fuel more
than offset higher core inflation.
• Core inflation increased to 4.0% (August: 3.8%)
largely reflecting higher inflation in the prices for
repair and maintenance of personal transport,
food away from home, and bread and bakery
products.
• Core inflation increased more moderately by
0.3% on a month-on-month basis (August: 0.6%).
Wholesale and retail trade growth remained strong in August
Source: Department of Statistics Malaysia
Ppt, %yoy
Net financing growth moderated in September
1 Refers to outstanding loans of the banking system (excluding development financial
institutions (DFIs)) and outstanding corporate bonds. Data from July 2022 onwards
are based on the new set of loan/financing data reflecting the latest requirements.
Figures may not add up due to rounding.
Source: Bank Negara Malaysia
4.2 4.9 4.6
1.0
1.2
1.0
5.3
6.1
5.6
Jul-22 Aug-22 Sep-22
Corporate Bonds
Banking System Loans
Net Financing
Contribution to growth (ppt)
• Net financing grew by 5.6% as at end-September
(August: 6.1%), reflecting lower growth in both
outstanding loans (6.4%; August: 6.8%) and
corporate bonds (3.5%; August: 4.3%).
• Growth in outstanding household loans remained
unchanged at 6.6%, reflecting steady growth
across most purposes. Despite some
moderation, loan disbursements continued to
record high growth, amid sustained repayment
trends.
• For businesses, growth in outstanding loans
declined to 5.2% (August: 6.8%), partly due to a
higher base effect. Nonetheless, loan
disbursements remained sustained, driven
particularly by the wholesale trade, consumer
manufacturing, and civil engineering segments.
Monthly Highlights
September 2022
2
Banks maintained strong liquidity and funding positions to support intermediation
Asset quality in the banking system remained intact
• Banks continue to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
152.5% (Aug-22: 141.1%).
• Sustained deposit growth riding on recovery in
economic activities, continue to support banks’
lending activities.
• The aggregate loan-to-fund ratio remained
stable at 82.5% (Aug-22: 82.6%).
Source: Bank Negara Malaysia
Source: Bank Negara Malaysia
Domestic financial conditions tightened further in September, driven mainly by
external developments
Financial Markets Performance in September 2022
Source: Bank Negara Malaysia, Bursa Malaysia
*Regional countries include Singapore, Thailand, Philippines, Indonesia and
Korea
• In September, global bond yields rose, equity
markets declined and the US dollar strengthened
further. This reflected expectations of further
monetary policy tightening, especially by the US
Federal Reserve to address persistent inflationary
pressures amid a more moderate global growth
outlook.
• Notwithstanding this, average trading volume and
FX volatility in the domestic financial markets
remained healthy.
• The 10-year MGS yields continued to rise by
43.0 bps (regional* average: 58.0 bps) while the
FBM KLCI declined by 7.8% (regional* average:
-6.9%), driven by non-resident portfolio outflows
from the domestic bond and equity markets.
• The ringgit depreciated by 3.5% against the US
dollar (regional* average: -3.8%) amid continued
strength of the US currency.
10.0
1.3
-0.6
43.0
-7.8
-3.5
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -10 0 10 20 30 40 50
Sep-22 Aug-22
Banking System Liquidity and Funding Ratios
82.5
152.5
0
40
80
120
160
70
75
80
85
90
95
S
e
p
2
1
O
c
t
2
1
N
o
v
2
1
D
e
c
2
1
J
a
n
2
2
F
e
b
2
2
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Banking System Asset Quality
%
1.8
1.1
1.8
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
S
e
p
2
1
O
c
t
2
1
N
o
v
2
1
D
e
c
2
1
J
a
n
2
2
F
e
b
2
2
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
Total Provisions to Total Loans Ratio
Gross Impaired Loans
Ratio
Net Impaired Loans Ratio
% • Overall gross and net impaired loans ratios
remained broadly stable at 1.82% (Aug-22:
1.84%) and 1.12% (Aug-22: 1.13%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remains at a prudent level of 115.2%
of impaired loans, with total provisions
accounting for 1.8% of total loans.
• As of end-September 2022, the banking system
recorded RM 41.9 billion of total provisions and
regulatory reserves.
PRESS RELEASE
Ref. No.: 10/22/17 EMBARGO: Not for publication or
broadcast before 1500 hours on
Monday, 31 October 2022
Monthly Highlights – September 2022
Headline inflation declined to 4.5% in September
• Headline inflation declined to 4.5% in September (August: 4.7%), as
lower inflation in the prices of fresh chicken, fresh vegetables and fuel
more than offset higher core inflation.
• Core inflation1 increased to 4.0% (August: 3.8%) largely reflecting higher
inflation in the prices for repair and maintenance of personal transport,
food away from home, and bread and bakery products.
• Core inflation increased more moderately by 0.3% on a month-on-month
basis (August: 0.6%).
Wholesale and retail trade growth remained strong in August
• The Index of Wholesale and Retail Trade (IOWRT) continued to record
double digit, though lower, growth of 27.0% in August 2022 (July: 33.4%).
The strong growth was driven mainly by the motor vehicle segment. In
addition to the low base in August 2021, when showrooms were closed
during the implementation of the National Recovery Plan (NRP) in the
first half of the month, continued strength in purchases of motor vehicles
also provided a lift to growth.
1 Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated
direct impact of tax policy changes.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• This, together with stronger activity in the retail segment contributed to
the acceleration in month-on-month seasonally adjusted growth of 3.1%
(July: -1.6%).
Net financing2 growth moderated in September
• Net financing grew by 5.6% as at end-September (August: 6.1%),
reflecting lower growth in both outstanding loans (6.4%; August: 6.8%)
and corporate bonds (3.5%; August: 4.3%).
• Growth in outstanding household loans remained unchanged at 6.6%,
reflecting steady growth across most purposes. Despite some
moderation, loan disbursements continued to record high growth, amid
sustained repayment trends.
• For businesses, growth in outstanding loans declined to 5.2% (August:
6.8%), partly due to a higher base effect. Nonetheless, loan
disbursements remained sustained, driven particularly by the wholesale
trade, consumer manufacturing, and civil engineering segments.
Domestic financial conditions tightened further in September, driven
mainly by external developments
• In September, global bond yields rose, equity markets declined and the
US dollar strengthened further. This reflected expectations of further
monetary policy tightening, especially by the US Federal Reserve to
address persistent inflationary pressures amid a more moderate global
growth outlook.
• Notwithstanding this, average trading volume and FX volatility in the
domestic financial markets remained healthy.
• The 10-year MGS yields continued to rise by 43.0 bps (regional* average:
58.0 bps) while the FBM KLCI declined by 7.8% (regional* average: -
6.9%), driven by non-resident portfolio outflows from the domestic bond
and equity markets.
2 Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)) and
outstanding corporate bonds. Data from July 2022 onwards are based on the new set of loan/financing data
reflecting the latest requirements. Figures may not add up due to rounding.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The ringgit depreciated by 3.5% against the US dollar (regional* average:
-3.8%) amid continued strength of the US currency.
*Regional countries include Singapore, Thailand, Philippines, Indonesia and
Korea.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continue to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 152.5% (Aug-22: 141.1%).
• Sustained deposit growth riding on recovery in economic activities,
continue to support banks’ lending activities.
• The aggregate loan-to-fund ratio remained stable at 82.5% (Aug-22:
82.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios remained broadly stable at
1.82% (Aug-22: 1.84%) and 1.12% (Aug-22: 1.13%), respectively.
• Loan loss coverage ratio (including regulatory reserves) remains at a
prudent level of 115.2% of impaired loans, with total provisions
accounting for 1.8% of total loans.
• As of end-September 2022, the banking system recorded RM 41.9 billion
of total provisions and regulatory reserves.
Bank Negara Malaysia
31 October 2022
6. MSB September 22_Consolidated_post-G to JKK
20221031_BNM Press Release_Monthly Highlights-Sept 2022_eng
Sorotan Bulanan
• Pada bulan Ogos 2022, Indeks Perdagangan Borong
dan Runcit (Index of Wholesale and Retail Trade,
IOWRT) terus mencatatkan pertumbuhan dua angka
meskipun lebih rendah, iaitu sebanyak 27.0%
(Julai: 33.4%). Pertumbuhan kukuh ini didorong
terutamanya oleh segmen kenderaan bermotor.
Pertumbuhan yang meningkat ini juga disebabkan oleh
asas yang rendah pada bulan Ogos 2021, apabila bilik
pameran ditutup semasa pelaksanaan Pelan Pemulihan
Negara (PPN) pada separuh pertama bulan itu, serta
pembelian kenderaan bermotor yang terus kukuh.
• Hal ini berserta dengan aktiviti yang lebih giat dalam
segmen runcit menyumbang kepada peningkatan pesat
pertumbuhan yang terlaras secara bermusim pada asas
bulan ke bulan sebanyak 3.1% (Julai: -1.6%).
Indeks Perdagangan Borong dan Runcit
35.8
33.4
27.0
-20
-10
0
10
20
30
40
Jun-21 Ogo-21 Okt-21 Dis-21 Feb-22 Apr-22 Jun-22 Ogo-22
Borong
Runcit
Kenderaan bermotor
Perdagangan pengedaran
September 2022
1
Inflasi keseluruhan menurun kepada 4.5% pada bulan September
4.7 4.5
3.8
4.0
-4.0
-2.0
0.0
2.0
4.0
6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
J
a
n
-2
1
F
e
b
-2
1
M
a
c
-2
1
A
p
r-
2
1
M
e
i-
2
1
J
u
n
-2
1
J
u
l-
2
1
O
g
o
-2
1
S
e
p
-2
1
O
k
t-
2
1
N
o
v
-2
1
D
is
-2
1
J
a
n
-2
2
F
e
b
-2
2
M
a
c
-2
2
A
p
r-
2
2
M
e
i-
2
2
J
u
n
-2
2
J
u
l-
2
2
O
g
o
-2
2
S
e
p
-2
2
Makanan & minuman bukan alkohol (29.5%) Perumahan & utiliti (23.8%)
Pengangkutan (14.6%) Lain-lain (32.1%)
Inflasi keseluruhan (skala kanan) Inflasi teras¹ (skala kanan)
Sumbangan kepada inflasi
Sumbangan mata peratusan %, tahun ke tahun
1 Pengiraan inflasi teras tidak termasuk barangan yang harganya tidak menentu dan
barangan yang harganya ditadbir. Pengiraan juga tidak termasuk anggaran kesan langsung
perubahan dasar cukai
Sumber: Jabatan Perangkaan Malaysia dan anggaran Bank Negara Malaysia
• Inflasi keseluruhan menurun kepada 4.5% pada bulan
September (Ogos: 4.7%) apabila inflasi yang lebih
rendah untuk harga ayam segar, sayur-sayuran segar
dan bahan api lebih daripada mengimbangi (offset)
peningkatan inflasi teras.
• Inflasi teras meningkat kepada 4.0% (Ogos: 3.8%),
sebahagian besarnya mencerminkan inflasi yang lebih
tinggi untuk harga pembaikan dan penyelenggaraan
pengangkutan peribadi, makanan di luar rumah serta
produk roti dan bakeri.
• Inflasi teras meningkat lebih sederhana sebanyak 0.3%
pada asas bulan ke bulan (Ogos: 0.6%).
Pertumbuhan perdagangan borong dan runcit kekal kukuh pada bulan Ogos
Sumber: Jabatan Perangkaan Malaysia
mata peratusan, % tahun ke tahun
Pertumbuhan pembiayaan bersih menjadi sederhana pada bulan September
1 Merujuk pinjaman terkumpul sistem perbankan (tidak termasuk institusi kewangan
pembangunan (IKP)) dan bon korporat terkumpul. Data mulai bulan Julai 2022 adalah
berdasarkan data pinjaman/pembiayaan baharu yang mencerminkan keperluan
terkini. Angka-angka tidak semestinya terjumlah disebabkan oleh penggenapan.
Sumber: Bank Negara Malaysia
4.2 4.9 4.6
1.0
1.2
1.0
5.3
6.1
5.6
Jul-22 Ogo-22 Sep-22
Bon Korporat
Pinjaman Sistem Perbankan
Pembiayaan Bersih
Sumbangan kepada pertumbuhan
(mata peratusan)
• Pembiayaan bersih meningkat 5.6% pada akhir bulan
September (Ogos: 6.1%), mencerminkan pertumbuhan
yang lebih rendah dalam pinjaman terkumpul
(6.4%; Ogos: 6.8%) dan bon korporat (3.5%; Ogos: 4.3%).
• Pertumbuhan dalam pinjaman isi rumah terkumpul kekal
tidak berubah pada 6.6%, mencerminkan pertumbuhan
yang stabil merentas kebanyakan tujuan. Pengeluaran
pinjaman terus mencatatkan pertumbuhan yang tinggi
meskipun pada kadar sederhana, dalam keadaan trend
bayaran balik pinjaman yang mampan.
• Bagi sektor perniagaan, pertumbuhan pinjaman terkumpul
menurun kepada 5.2% (Ogos: 6.8%), sebahagiannya
disebabkan oleh kesan asas yang lebih tinggi. Namun
begitu, pengeluaran pinjaman kekal mampan, didorong
terutamanya oleh segmen perdagangan borong,
perkilangan pengguna dan kejuruteraan awam.
6.4
5.2
6.6
0
1
2
3
4
5
6
7
Sep-21 Dis-21 Mac-22 Jun-22 Ogo-22
Jumlah pinjaman
Pinjaman perniagaan
Pinjaman isi rumah
Pertumbuhan tahunan (%)
Sumbangan kepada Pertumbuhan Pembiayaan Bersih1 dan
Pertumbuhan Pinjaman Terkumpul
Set data
baharu
Sep-22
Sorotan Bulanan
September 2022
2
Bank mengekalkan kedudukan mudah tunai dan pendanaan yang kukuh untuk
menyokong pengantaraan
Kualiti aset sistem perbankan kekal utuh
• Bank-bank terus mencatatkan tahap penampan
mudah tunai yang kukuh dengan Nisbah Perlindungan
Mudah Tunai agregat pada 152.5% (Ogos: 141.1%).
• Pertumbuhan deposit yang mampan susulan kegiatan
ekonomi yang kembali pulih terus menyokong aktiviti
pemberian pinjaman oleh bank-bank.
• Nisbah pinjaman kepada dana agregat kekal stabil
pada 82.5% (Ogos: 82.6%).
Sumber: Bank Negara Malaysia
Sumber: Bank Negara Malaysia
Keadaan kewangan domestik bertambah ketat pada bulan September, didorong
terutamanya oleh perkembangan luaran
Prestasi Pasaran Kewangan pada Bulan September 2022
Sumber: Bank Negara Malaysia dan Bursa Malaysia
*Negara serantau terdiri daripada Singapura, Thailand, Filipina, Indonesia dan
Korea
• Pada bulan September, kadar hasil bon global
meningkat, pasaran ekuiti merosot dan dolar AS terus
mengukuh. Keadaan ini mencerminkan jangkaan bahawa
dasar monetari akan diketatkan lagi terutamanya oleh
Federal Reserve AS bagi menangani tekanan inflasi yang
berterusan dalam keadaan prospek pertumbuhan global
yang lebih sederhana.
• Walaupun begitu, purata jumlah dagangan dan volatiliti
FX dalam pasaran kewangan domestik kekal baik.
• Kadar hasil MGS 10 tahun terus meningkat sebanyak
43.0 mata asas (purata serantau*: 58.0 mata asas)
manakala FBM KLCI menurun sebanyak 7.8% (purata
serantau*: -6.9%), didorong oleh aliran keluar portfolio
bukan pemastautin daripada pasaran bon dan ekuiti
domestik .
• Ringgit menurun nilai sebanyak 3.5% berbanding dengan
dolar AS (purata serantau*: -3.8%) berikutan mata wang
AS yang terus kukuh.
10.0
1.3
-0.6
43.0
-7.8
-3.5
MGS 10 tahun
(mata asas, bulan ke bulan)
Ekuiti
(%, bulan ke bulan)
Ringgit
(%, bulan ke bulan)
-20 -10 0 10 20 30 40 50
Sep-22 Ogo-22
Nisbah Mudah Tunai dan Pendanaan Sistem Perbankan
82.5
152.5
0
40
80
120
160
70
75
80
85
90
95
S
e
p
-2
1
O
k
t-
2
1
N
o
v
-2
1
D
is
-2
1
J
a
n
-2
2
F
e
b
-2
2
M
a
c
-2
2
A
p
r-
2
2
M
e
i-
2
2
J
u
n
-2
2
J
u
l-
2
2
O
g
o
-2
2
S
e
p
-2
2
% %
Nisbah Perlindungan Mudah Tunai (skala kanan)
Nisbah Pinjaman kepada Dana
Kualiti Aset Sistem Perbankan
%
1.8
1.1
1.8
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
S
e
p
-2
1
O
k
t-
2
1
N
o
v
-2
1
D
is
-2
1
J
a
n
-2
2
F
e
b
-2
2
M
a
c
-2
2
A
p
r-
2
2
M
e
i-
2
2
J
u
n
-2
2
J
u
l-
2
2
O
g
o
-2
2
S
e
p
-2
2
Nisbah Jumlah Peruntukan kepada Jumlah Pinjaman
Nisbah Pinjaman Terjejas Kasar
Nisbah Pinjaman Terjejas Bersih
% • Secara keseluruhan, nisbah pinjaman terjejas kasar
dan bersih pada amnya kekal stabil, masing-masing
pada 1.82% (Ogos: 1.84%) dan 1.12%
(Ogos: 1.13%).
• Nisbah perlindungan kerugian pinjaman (termasuk
rizab kawal selia) kekal pada tahap berhemat
sebanyak 115.2% daripada pinjaman terjejas, dengan
jumlah peruntukan mencakupi 1.8% daripada jumlah
pinjaman.
• Setakat akhir bulan September 2022, sistem
perbankan mencatatkan jumlah peruntukan dan rizab
kawal selia sebanyak RM41.9 bilion.
SIARAN AKHBAR
No. Ruj.: 10/22/17 EMBARGO: Tidak boleh dicetak
atau disiarkan sebelum pukul 1500
hari Isnin, 31 Oktober 2022
Sorotan Bulanan – September 2022
Inflasi keseluruhan menurun kepada 4.5% pada bulan September
• Inflasi keseluruhan menurun kepada 4.5% pada bulan September (Ogos:
4.7%) apabila inflasi yang lebih rendah untuk harga ayam segar, sayur-
sayuran segar dan bahan api lebih daripada mengimbangi (offset)
peningkatan inflasi teras.
• Inflasi teras1 meningkat kepada 4.0% (Ogos: 3.8%), sebahagian
besarnya mencerminkan inflasi yang lebih tinggi untuk harga pembaikan
dan penyelenggaraan pengangkutan peribadi, makanan di luar rumah
serta produk roti dan bakeri.
• Inflasi teras meningkat lebih sederhana sebanyak 0.3% pada asas bulan
ke bulan (Ogos: 0.6%).
Pertumbuhan perdagangan borong dan runcit kekal kukuh pada bulan
Ogos
• Pada bulan Ogos 2022, Indeks Perdagangan Borong dan Runcit (Index
of Wholesale and Retail Trade, IOWRT) terus mencatatkan pertumbuhan
dua angka meskipun lebih rendah, iaitu sebanyak 27.0% (Julai: 33.4%).
Pertumbuhan kukuh ini didorong terutamanya oleh segmen kenderaan
bermotor. Pertumbuhan yang meningkat ini juga disebabkan oleh asas
1 Pengiraan inflasi teras tidak termasuk barangan yang harganya tidak menentu dan barangan yang harganya
ditadbir. Pengiraan juga tidak termasuk anggaran kesan langsung perubahan dasar cukai.
D i t e r b i t k a n o l e h :
J a b a t a n K o m u n i k a s i S t r a t e g i k , T i n g k a t 1 4 , B l o k B , B a n g u n a n B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m e l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
yang rendah pada bulan Ogos 2021, apabila bilik pameran ditutup
semasa pelaksanaan Pelan Pemulihan Negara (PPN) pada separuh
pertama bulan itu, serta pembelian kenderaan bermotor yang terus
kukuh.
• Hal ini berserta dengan aktiviti yang lebih giat dalam segmen runcit
menyumbang kepada peningkatan pesat pertumbuhan yang terlaras
secara bermusim pada asas bulan ke bulan sebanyak 3.1%
(Julai: -1.6%).
Pertumbuhan pembiayaan bersih2 menjadi sederhana pada bulan
September
• Pembiayaan bersih meningkat 5.6% pada akhir bulan September (Ogos:
6.1%), mencerminkan pertumbuhan yang lebih rendah dalam pinjaman
terkumpul (6.4%; Ogos: 6.8%) dan bon korporat (3.5%; Ogos: 4.3%).
• Pertumbuhan dalam pinjaman isi rumah terkumpul kekal tidak berubah
pada 6.6%, mencerminkan pertumbuhan yang stabil merentas
kebanyakan tujuan. Pengeluaran pinjaman terus mencatatkan
pertumbuhan yang tinggi meskipun pada kadar sederhana, dalam
keadaan trend bayaran balik pinjaman yang mampan.
• Bagi sektor perniagaan, pertumbuhan pinjaman terkumpul menurun
kepada 5.2% (Ogos: 6.8%), sebahagiannya disebabkan oleh kesan asas
yang lebih tinggi. Namun begitu, pengeluaran pinjaman kekal mampan,
didorong terutamanya oleh segmen perdagangan borong, perkilangan
pengguna dan kejuruteraan awam.
Keadaan kewangan domestik bertambah ketat pada bulan September,
didorong terutamanya oleh perkembangan luaran
• Pada bulan September, kadar hasil bon global meningkat, pasaran ekuiti
merosot dan dolar AS terus mengukuh. Keadaan ini mencerminkan
jangkaan bahawa dasar monetari akan diketatkan lagi terutamanya oleh
2 Merujuk pinjaman terkumpul sistem perbankan (tidak termasuk institusi kewangan pembangunan (IKP)) dan bon
korporat terkumpul. Data mulai bulan Julai 2022 adalah berdasarkan data pinjaman/pembiayaan baharu yang
mencerminkan keperluan terkini. Angka-angka tidak semestinya terjumlah disebabkan oleh penggenapan.
D i t e r b i t k a n o l e h :
J a b a t a n K o m u n i k a s i S t r a t e g i k , T i n g k a t 1 4 , B l o k B , B a n g u n a n B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m e l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Federal Reserve AS bagi menangani tekanan inflasi yang berterusan
dalam keadaan prospek pertumbuhan global yang lebih sederhana.
• Walaupun begitu, purata jumlah dagangan dan volatiliti FX dalam
pasaran kewangan domestik kekal baik.
• Kadar hasil MGS 10 tahun terus meningkat sebanyak 43.0 mata asas
(purata serantau*: 58.0 mata asas) manakala FBM KLCI menurun
sebanyak 7.8% (purata serantau*: -6.9%), didorong oleh aliran keluar
portfolio bukan pemastautin daripada pasaran bon dan ekuiti domestik.
• Ringgit menurun nilai sebanyak 3.5% berbanding dengan dolar AS
(purata serantau*: -3.8%) berikutan mata wang AS yang terus kukuh.
*Negara serantau terdiri daripada Singapura, Thailand, Filipina, Indonesia dan
Korea
Bank mengekalkan kedudukan mudah tunai dan pendanaan yang kukuh
untuk menyokong pengantaraan
• Bank-bank terus mencatatkan tahap penampan mudah tunai yang kukuh
dengan Nisbah Perlindungan Mudah Tunai agregat pada 152.5% (Ogos:
141.1%).
• Pertumbuhan deposit yang mampan susulan kegiatan ekonomi yang
kembali pulih terus menyokong aktiviti pemberian pinjaman oleh bank-
bank.
• Nisbah pinjaman kepada dana agregat kekal stabil pada 82.5% (Ogos:
82.6%).
Kualiti aset sistem perbankan kekal utuh
• Secara keseluruhan, nisbah pinjaman terjejas kasar dan bersih pada
amnya kekal stabil, masing-masing pada 1.82% (Ogos: 1.84%) dan 1.12%
(Ogos: 1.13%).
• Nisbah perlindungan kerugian pinjaman (termasuk rizab kawal selia) kekal
pada tahap berhemat sebanyak 115.2% daripada pinjaman terjejas,
dengan jumlah peruntukan mencakupi 1.8% daripada jumlah pinjaman.
• Setakat akhir bulan September 2022, sistem perbankan mencatatkan
jumlah peruntukan dan rizab kawal selia sebanyak RM41.9 bilion.
D i t e r b i t k a n o l e h :
J a b a t a n K o m u n i k a s i S t r a t e g i k , T i n g k a t 1 4 , B l o k B , B a n g u n a n B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m e l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Bank Negara Malaysia
31 October 2022
20221031_BNM Monthly Highlights-September_bm
20221031_BNM Press Release_Monthly Highlights-September 2022_bm
| Press Release |
05 Oct 2022 | Financial Stability Review First Half 2022 | https://www.bnm.gov.my/-/fsr22h1_en_pr | https://www.bnm.gov.my/documents/20124/8440087/fsr22h1_en_ch0a.pdf | null |
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Financial Stability Review First Half 2022
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5
Financial Stability Review First Half 2022
Embargo :
For immediate release
Not for publication or broadcast before
1437 on
Wednesday, 5 October 2022
5 Oct 2022
Bank Negara Malaysia (BNM) released the Financial Stability Review for the First Half of 2022 today.
Domestic financial market remains orderly
Despite continued heightened volatility in the domestic financial markets, market conditions have remained orderly with the smooth intermediation of two-way flows in the bond and equity markets. The US dollar has strengthened significantly and has remained at a two-decade high due to aggressive policy rate hikes in the US and flight to perceived safe US dollar assets. Continued onshore foreign exchange market liquidity is enabling orderly adjustments to external developments. This will support businesses and market participants in managing their foreign exchange exposures.
Diagram 1: Liquidity conditions in the bond and foreign exchange (FX) markets remain healthy
* Data as at 23 September 2022
Source: Bank Negara Malaysia
Businesses continued to show improvement in financial performance
The financial performance of businesses continued to improve in line with the full resumption of economic activities and reopening of international borders. However, recovery remains uneven and has been slower in certain economic sub-sectors. Overall business loan impairments remain low at 1.1% of total banking system loans. The share of business loans with higher credit risk has continued to decline to 14.4% of total business loans in line with the gradual improvement in business conditions. The share of SME loans under repayment assistance has halved to 13.1% of total SME loans (or 2.3% of total loans from the banking system and development financial institutions). SMEs that have exited repayment assistance programmes have largely been able to resume their loan repayments.
Businesses are expected to face continued headwinds, including tightening global financial conditions and exchange rate developments. However, additional business defaults under simulated severe stress scenarios are expected to remain manageable. Importantly, various targeted debt management programmes remain in place for SMEs that continue to experience temporary financial challenges.
Household resilience continued to be supported by improving economic and labour market conditions
The ratio of household debt-to-GDP has reverted closer to pre-pandemic levels at 84.5%. Banks continue to maintain prudent lending standards amid a sustained recovery in household lending. This is helping to preserve healthy loan servicing buffers among households and their ability to manage the impact of higher borrowing and other costs. The share of household debt under repayment assistance has declined significantly from 18.8% in December 2021 to 2.4% as of June 2022, with a lower share of household debt reported by banks to be of higher credit risk. Household impairment and delinquency ratios increased marginally but continue to remain low and within expectations at 1.2% and 0.6%, respectively.
Some segments of household borrowers with high leverage and lower financial buffers could come under financial stress from rising living costs and higher repayments on floating rate loans. Borrowers under an extended period of repayment assistance are also likely to present higher risks. Risks associated with such borrowers are expected to be contained. The share of household loans classified by banks as exhibiting higher credit risk (Stage 2 loans) has continued to decline to 7.9% (December 2021: 8.5%). It is expected to decline further over the course of the year as more borrowers that have exited repayment assistance programmes complete a minimum “observation” period of loan servicing. Banks have set aside sufficient provisioning buffers against these risks. Banks also continue to extend appropriate support to household borrowers who still face financial challenges.
Ensuring operational and cyber resilience of financial institutions continues to be a high priority
Financial institutions are directing significant resources to maintain strong cyber defences and technology risk controls. Bank Negara Malaysia Governor Tan Sri Nor Shamsiah says, “we continue to work closely with the industry, key agencies and law enforcement authorities to address emerging threats. Enhancing the financial industry’s capacity to recover from various operational incidents remains our top priority. Some of these efforts include simulated live tests to ensure the practical ability of financial institutions and payment system operators to execute cyber incident response plans effectively.”
Financial institutions are required to implement additional countermeasures against online banking fraud. In parallel, the Bank is coordinating efforts with the industry, Royal Malaysia Police (RMP), and the Malaysian Communications and Multimedia Commission (MCMC) to further improve fraud incident response and recovery efforts and educate the public on using digital financial services safely.
Diagram 2: Initiatives taken to combat online banking fraud
Domestic financial system remains well-positioned to withstand shocks and support economic recovery
The strong buffers of banks, insurers and takaful operators will continue to preserve the resilience of financial institutions against potential unexpected losses. Assuming additional severe shocks applied on top of the Bank's stress test, post-shock aggregate capital ratios as at end-2023 remain comfortably above regulatory minimum levels at 15.4% for banks and 209% for insurers and takaful operators. This will enable them to continue supporting households’ and businesses’ financing and protection needs as economic activities resume.
See also:
BNM Financial Stability Review - First Half 2022
Key Highlights
Bank Negara Malaysia
5 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Issued on: 2 December 2016 BNM/RH/PD 036-2
Debit Card
Applicable to:
1. Debit card issuers
2. Debit card acquirers
Issued on: 2 December 2016
Table of contents
PART A OVERVIEW ............................................................................................... 1
1 Introduction ................................................................................................ 1
2 Applicability ............................................................................................... 1
3 Legal provisions ........................................................................................ 1
4 Effective date ............................................................................................. 1
5 Interpretation ............................................................................................. 2
6 Policy documents superseded ................................................................... 3
PART B BUSINESS CONDUCT ............................................................................. 4
7 Guiding principles on fees and charges .................................................... 4
8 Liability for unauthorised transactions ....................................................... 4
9 Pre-contractual stage ................................................................................ 6
10 At the point of entering into a contract ....................................................... 6
11 During the term of the contract .................................................................. 8
12 Advertisement ........................................................................................... 9
13 Issuers’ other obligations ........................................................................... 9
14 Opt-in requirement for card-not-present and overseas transactions ....... 10
15 Cardholder information ............................................................................ 10
16 Complaints management......................................................................... 10
17 Usage of debit card for unlawful activities ............................................... 11
PART C RISK MANAGEMENT ............................................................................. 12
18 Effective management oversight ............................................................. 12
19 Comprehensive security policies, procedures and controls ..................... 12
20 Robust operational reliability and business continuity ............................. 15
21 Outsourcing risk management ................................................................. 15
22 Fraud risk management........................................................................... 16
23 Specific requirements for acquirers ......................................................... 21
24 Compliance with other requirements ....................................................... 22
Appendix 1 Product Disclosure Sheet - Debit Card ........................................ 23
Debit Card 1 of 24
Issued on: 2 December 2016
PART A OVERVIEW
1 Introduction
1.1 These requirements aim to safeguard the integrity of the debit card system,
thereby preserving consumer confidence and promoting its wider adoption in
Malaysia.
1.2 Part B of this policy document outlines specific requirements and minimum
standards to be observed by debit card issuers and acquirers.
1.3 Part C of this policy document outlines risk management principles and
requirements for debit card issuers and acquirers.
2 Applicability
2.1 This policy document is applicable to all debit card issuers and acquirers.
2.2 The requirements of this policy document apply to debit card products offered
to:
(a) individuals;
(b) micro, small and medium enterprises (SMEs); and
(c) corporate cardholders,
with the exception of requirements under sections 7 to 13 under Part B which
only apply to debit card products issued to individuals, micro and small
enterprises. However, issuers are encouraged to adopt similar standards
under these sections for debit card products offered to medium and large
enterprises.
3 Legal provisions
3.1 The requirements in this policy document are issued pursuant to:
(a) Section 33(1), 47(1) and 123(1) of the Financial Services Act 2013
(FSA); and
(b) Sections 41 and 42(C)(1) of the Development Financial Institutions Act
2002 (DFIA).
4 Effective date
4.1 This is an enhanced version of the Debit Card policy document which came
into effect on 28 February 2014. Requirements which have effective dates
other than 28 February 2014 are as follows:
(a) Paragraphs 8.2, 8.3, 8.4, 8.6 and 11.1: 1 January 2017;
Debit Card 2 of 24
Issued on: 2 December 2016
(b) Paragraphs 10.3, 10.4, 11.4(a) and 22.13(b): 1 April 2017;
(c) Paragraph 22.8 - Implementation of “Chip and PIN” technology:
(i) at automated teller machine (ATM): 1 January 2015; and
(ii) at point-of-sale (POS) terminals: 1 January 2017
5 Interpretation
5.1 The terms and expressions used in this policy document shall have the same
meanings assigned to them in the FSA or DFIA, as the case may be, unless
otherwise defined in this policy document.
5.2 For the purpose of this policy document–
“S” denotes a standard, an obligation, a requirement,
specification, direction, condition and any interpretative,
supplemental and transitional provisions that must be
complied with. Non-compliance may result in enforcement
action;
“G” denotes guidance which may consist of statements or
information intended to promote common understanding and
advise or recommendations that are encouraged to be
adopted;
“debit card” refers to a payment instrument that is linked to a deposit
account, current account, savings account or other similar
account at a financial institution that can be used-
(i) to pay for goods and services;
(ii) to withdraw cash from automated teller machine or
withdraw cash at participating retail outlets through
debit card usage by debiting the user’s account; or
(iii) for the purposes of (i) and (ii).
“issuer” refers to a person who has obtained approval from Bank
Negara Malaysia (the Bank) under section 11 of the FSA to
issue debit card;
“user” refers to any person whom a debit card has been issued to
and here on referred to as cardholder;
“acquirer”
refers to any person that provides merchant acquiring
services;
“financial
institution”
refers to any person licensed under the FSA or Islamic
Financial Services Act 2013 (IFSA) or prescribed under the
DFIA;
Debit Card 3 of 24
Issued on: 2 December 2016
“micro, small
and medium-
sized
enterprises”
is as per the definition in the circular on New Definition of
Small and Medium Enterprises (SMEs) issued by the Bank.
6 Policy documents superseded
6.1 This policy document supersedes the policy document on Debit Card issued
on 28 February 2014.
Debit Card 4 of 24
Issued on: 2 December 2016
PART B BUSINESS CONDUCT
A. FEES AND CHARGES
7 Guiding principles on fees and charges
S 7.1 In determining the type and quantum of fees and charges on debit cards,
issuers shall ensure compliance with the Guidelines on Imposition of Fees and
Charges on Financial Products and Services.
S 7.2 Upon the issuance of a debit card, issuers may impose a fee for the card.
However, issuers shall not charge cardholders an annual fee during the same
year the debit card is issued.
B. LIABILITY
8 Liability for unauthorised transactions
S 8.1 Issuers shall provide an effective and convenient means including having a
dedicated contact number by which cardholders can notify the issuers of any
lost, stolen or unauthorised use of their debit cards. Issuers shall also
implement procedures for acknowledging receipt and verification of the
notification of the lost, stolen or unauthorised use of the debit card.
S 8.2 Issuers shall not hold cardholders liable for card-present unauthorised
transactions which require Personal Identification Number (PIN) verification,
unless issuers can prove that the cardholder has:
(a) acted fraudulently;
(b) delayed in notifying the issuer as soon as reasonably practicable after
having discovered the loss or unauthorised use of the debit card;
(c) voluntarily disclosed the PIN to another person; or
(d) recorded the PIN on the debit card, or on anything kept in close
proximity with the debit card, and could be lost or stolen with the debit
card.
S 8.3 Issuers shall not hold cardholders liable for card-present unauthorised
transactions which require signature verification or the use of a contactless
card, unless issuers can prove that the cardholder has:
(a) acted fraudulently;
(b) delayed in notifying the issuer as soon as reasonably practicable after
having discovered the loss or unauthorised use of the debit card;
(c) left the debit card or an item containing the card unattended, in places
visible and accessible to others, except at the cardholder’s place of
residence. However, cardholders are expected to exercise due care in
safeguarding the debit card even at cardholder’s place of residence; or
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(d) voluntarily allowed another person to use the debit card.
S 8.4 Issuers must ensure that appropriate investigations are carried out on all
unauthorised transactions. Any decision to pass on liability for unauthorised
transactions must be supported by sufficient evidence to prove that one of the
conditions specified in paragraph 8.2 or 8.3, as the case may be, has been
met.
S 8.5 Issuers shall have clear processes in place to register any notification of lost,
stolen or unauthorised use of debit cards and take immediate action upon
notification by the cardholders, to prevent further use of the debit card.
Cardholders shall not be held liable for any unauthorised transactions charged
to the debit cards after the cardholders have notified issuers verbally or in
writing, of the lost, stolen or unauthorised use of the debit card.
S 8.6 Issuers shall not hold cardholders liable for losses incurred if the cause of the
losses is due to any of the following:
(a) failure of the issuer to send reminders to cardholders as per the
requirements in paragraphs 10.3 and 11.4(a);
(b) failure of the issuer to provide customer hotlines which are operational at
all times for cardholders to notify the issuer of any lost, stolen or
unauthorised use of the debit card;
(c) a technical breakdown or other deficiency in issuer’s systems or
equipment;
(d) weaknesses or vulnerability in security features and controls adopted by
the issuer;
(e) a transaction that involved the use of a forged debit card;
(f) for transactions requiring PIN verification, a transaction that occurred
before the cardholder received the PIN or changed the default PIN for the
first time;
(g) fraudulent or negligent conduct of the employees or agents of the card
issuer or merchants; or
(h) a transaction, excluding a recurring transaction, that occurred after the
cardholder has notified the issuer of the lost, stolen or unauthorised use
of the debit card.
C. DISCLOSURE AND TRANSPARENCY REQUIREMENTS
S This section shall be read together with the general policy requirements stipulated in
the Guidelines on Product Transparency and Disclosure.
G Disclosure is effective when product information is given to the cardholders at a time
that is most relevant to enable the cardholders to make informed decisions at each of
the three stages of the contractual process, which is the pre-contractual stage, at the
point of entering into a contract, and during the term of the contract.
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S Issuers shall provide a product disclosure sheet (as per the format provided in
Appendix 1 of this policy document) containing key information for cardholders to
make informed decisions. The product disclosure sheet shall be provided before the
cardholders sign up for the debit card, and at the point of entering into a contract, if
there are material changes in the information. Issuers shall also ensure that the
product disclosure sheet is made available in Bahasa Malaysia, upon request.
9 Pre-contractual stage
S 9.1 Basic features
(a) Issuers shall inform cardholders of the key features of the debit card.
(b) If an ATM card also functions as a debit card, issuers shall clearly inform
cardholders of such feature.
S 9.2 Fees and other charges
(a) Issuers shall disclose to the cardholders in the product disclosure sheet
all applicable fees and charges in relation to the debit card, including the
amount and frequency of payment.
S 9.3 Promotional items
(a) Cardholders shall be made aware of the conditions tied to any
promotional item and the implications of not complying with such
conditions, if any.
10 At the point of entering into a contract
S 10.1 Terms and conditions
(a) Issuers shall make written terms and conditions for usage of the debit
card readily available to cardholders. The document shall contain a clear
and concise description of the major terms and conditions which impose
liabilities or obligations on cardholders (in respect of both principal and
supplementary cards). Such terms shall be described in plain language,
which is easily understood by cardholders.
(b) Issuers shall advise cardholders to read and understand the terms and
conditions before signing the agreement and using the debit card. Issuers
shall take reasonable steps to draw cardholders’ attention to the terms
that have implications on liability.
(c) Issuers shall inform cardholders on the pre-authorisation amount which
will be charged to cardholders’ accounts when cardholders use the debit
card at automated fuel dispensers for petrol purchases. Cardholders shall
also be informed that the issuers may hold the amount up to 3 working
days after the transaction date before releasing any excess amount held
from the cardholders’ account.
(d) Issuers shall ensure that customer service staff and the sales and
marketing representatives are able to answer queries on the debit card
terms and conditions. The hotlines for the customer service shall be
published in the brochures, account statements, web pages and at the
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back of the debit card.
S 10.2 Usage of debit card outside Malaysia
(a) Cardholders shall be informed of the relevant charges for retail
transactions made outside Malaysia.
(b) Cardholders shall also be informed of the transaction fees and currency
conversion fees applicable on the use of the debit card for making cash
withdrawals overseas.
S 10.3 Cardholders’ responsibilities
Issuers shall provide a clear and prominent notice to cardholders at the point of
entering into a contract, of cardholders’ responsibilities to:
(a) abide by the terms and conditions for the use of the debit card;
(b) take reasonable steps to keep the debit card and PIN secure at all times,
including at the cardholder’s place of residence. These include not:
i. disclosing the debit card details or PIN to any other person;
ii. writing down the PIN on the debit card, or on anything kept in close
proximity with the card;
iii. using a PIN selected from the cardholder’s birth date, identity card,
passport, driving licence or contact numbers; and
iv. allowing any other person to use the debit card and PIN.
(c) notify the issuer as soon as reasonably practicable after having
discovered that the debit card is lost, stolen, an unauthorised transaction
had occurred or the PIN may have been compromised;
(d) notify the card issuer immediately upon receiving short message service
(SMS) transaction alert if the transaction was unauthorised;
(e) notify the card issuer immediately of any change in the cardholder's
contact number;
(f) use the debit card responsibly, including not using the debit card for
unlawful activity; and
(g) check the account statement and report any discrepancy without undue
delay.
S 10.4 Liability for unauthorised transactions
(a) Issuers shall inform cardholders, through clear and prominent notices,
that they would not be liable for card-present unauthorised transactions
which require PIN verification, provided the cardholders have not:
(i) acted fraudulently;
(ii) delayed in notifying the issuers as soon as reasonably practicable
after having discovered the loss or unauthorised use of the debit
card;
(iii) voluntarily disclosed the PIN to another person; or
(iv) recorded the PIN on the debit card or on anything kept in close
proximity with the card.
(b) Issuers shall inform cardholders, through clear and prominent notices,
that cardholders would not be liable for card-present unauthorised
transactions which require signature verification or the use of a
contactless card, provided the cardholders have not:
(i) acted fraudulently;
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(ii) delayed in notifying the issuers as soon as reasonably practicable
after having discovered the loss or unauthorised use of the debit
card;
(iii) left the debit card or an item containing the card unattended in
places visible and accessible to others; or
(iv) voluntarily allowed another person to use the debit card.
11 During the term of the contract
S 11.1 Statement
(a) For accounts without a passbook, issuers shall at least provide a monthly
e-statement to cardholders, containing transaction details and the dates
when those transaction amounts were posted to the account.
(b) If there are requests from cardholders for hardcopy statements, issuers
shall facilitate the requests without any fee, unless otherwise approved by
the Bank.
S 11.2 Closure of account
(a) Issuers shall allow cardholders to close their accounts at any time without
being subjected to a cumbersome account closure procedure.
(b) Issuers shall disclose any penalty charge applicable to early closure of
account within a specified time frame.
S 11.3 Change to the terms and conditions
(a) Should there be any change in the terms and conditions, issuers shall
provide at least 21 calendar days’ notice to cardholders before the new
terms and conditions take effect.
(b) Any change in fees and charges applicable to the accounts shall be
communicated by the issuers to cardholders at least 21 calendar days
prior to the effective date of the change.
(c) Communication shall be done in writing or via electronic means to the
cardholders.
S
11.4 Cardholders’ responsibilities and awareness of fraud prevention measures
(a) Issuers shall send notices to cardholders at least once in every calendar
year after card issuance to remind cardholders of the cardholders’
responsibilities in paragraph 10.3.
(b) Issuers shall maintain on-going efforts to raise cardholders’ awareness on
potential liability for card-present unauthorised transactions due to the
conditions specified in paragraphs 8.2 and 8.3, measures to prevent debit
card fraud, including the need to safeguard the debit card and PIN.
(c) The reminders and information on fraud prevention measures shall be
communicated to cardholders using channels that are effective in
reaching the cardholders.
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D. MARKETING REQUIREMENTS
12 Advertisement
S 12.1 Issuers shall ensure that advertisements and promotional materials on debit
card products are clear, fair and not misleading.
S 12.2 Issuers shall establish processes for an independent review of advertisement
and promotional materials on debit card products, for instance by the
Compliance Unit or Legal Unit, to ensure that they are clear and not misleading.
S 12.3 For print media advertisement, the advertisement shall clearly and
conspicuously disclose material information about any debit card offer that is
likely to affect cardholders’ decisions. Legible font size shall be used to bring
cardholders’ attention to any important information, relevant fees and charges
and eligibility criteria to enjoy the benefits being offered.
S 12.4 Promotional materials shall provide adequate information on the key terms and
conditions of the debit card product. The materials shall also contain information
on the annual fee and any other applicable charges to facilitate comparisons by
cardholders. The information shall be presented in plain language and in legible
font size.
S 12.5 Issuers shall state prominently important terms and conditions associated with
offers of free gifts, prizes, discounts or vouchers for the promotion of debit cards
in print advertisements, or in the marketing materials for new cardholders, or
together with the account statements for existing cardholders.
S 12.6 In advertising special features or promotions in print or electronic media, the
applicable eligibility criteria to enjoy the privileges shall be disclosed up-front
with the announcement. The “applicable eligibility criteria” are those that are
imperative to the advertised feature/promotion in addition to the basic terms and
conditions of holding the debit cards. Issuers shall not merely indicate in a
footnote that “terms and conditions apply”.
S 12.7 Advertisements or other promotional materials shall not describe any debit card
feature as “free” or at “no cost” if there are conditions attached or other forms of
charges will be imposed on cardholders.
13 Issuers’ other obligations
S 13.1 Issuers shall ensure that sales and customer service representatives (including
call centres) are adequately trained and knowledgeable in the key features,
benefits and risks of the debit card products.
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S 13.2 Issuers shall apply due care and diligence when preparing information for use
by sales and customer service representatives so that the information is
sufficient, accurate, appropriate and comprehensive in substance and form. This
is to ensure that cardholders are adequately informed by the sales and
marketing representatives of the terms (including fees and charges), benefits
and material limitations of the debit card product or services being offered.
S 13.3 Issuers shall establish procedures and take reasonable steps to ensure that
cardholders’ expressed preference (e.g. not to be contacted on new product
offers) are duly respected.
S 13.4 Issuers shall put in place adequate verification procedures to confirm the identity
of debit card applicant to prevent the use of stolen information (e.g. identity
theft) for debit card applications
E. OTHER REQUIREMENTS
14 Opt-in requirement for card-not-present and overseas transactions
S 14.1 Subject to paragraph 14.2 below, issuers must by default block cardholders from
making any card-not-present transaction which is not authenticated via strong
authentication method such as dynamic password or any overseas transaction
using a debit card.
S 14.2 Issuers shall only allow cardholders to make a card-not-present transaction
which is not authenticated via strong authentication method such as dynamic
password or an overseas transaction using a debit card, provided that the
cardholders have expressly opted-in to conduct such transactions. For
cardholders who wish to opt-in card-not-present or overseas transactions,
issuers are required to inform the cardholders of the risks of such transactions,
and also provide the cardholders with an option to subsequently disable such
transactions.
15 Cardholder information
S 15.1 Issuers shall comply with the requirements on disclosure of customer
information as specified under section 10 (under general policy requirements) of
the Guidelines on Product Transparency and Disclosure.
16 Complaints management
S 16.1 Issuers shall comply with the complaints management requirements as specified
in the “Guidelines on Complaints Handling” issued by the Bank.
S 16.2 Issuers shall provide cardholders with information on how complaints may be
made and the contact details of the issuer’s complaints unit.
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S 16.3 In the event an issuer extends the time period for the completion of an
investigation beyond 14 calendar days from the date a disputed transaction is
first reported, whether orally or in writing, the issuer shall:
(a) At a minimum, provisionally credit the full amount of the disputed
transaction or RM5,000, whichever is lower (including any interest where
applicable), into the cardholder’s account no later than 14 calendar days
from the date the cardholder provides the issuer with the following
information, whether orally or in writing:
(i) cardholder’s name;
(ii) affected account;
(iii) date of disputed transaction;
(iv) amount of the disputed transaction; and
(v) reason why the cardholder believes that it is a disputed transaction;
(b) Credit the remaining amount of the disputed transaction (including any
interest where applicable) no later than 30 calendar days from the date of
the first crediting in accordance with paragraph 16.3(a) which is lesser
than the amount of the disputed transaction; and
(c) Allow the cardholder the full use of the provisionally credited funds.
S 16.4 In implementing paragraph 16.3, issuers shall provide adequate warning to
cardholders of the actions that can be taken by the issuers against cardholders
for any attempt to make false claims on the disputed transactions.
17 Usage of debit card for unlawful activities
S 17.1 Issuers shall include in the terms and conditions a clause specifying that the
debit cards are not to be used for any unlawful activities1. Issuers shall
immediately terminate the debit card facility if the cardholders are discovered to
have used the debit card for an unlawful activity.
1
Activities which are forbidden by the law such as illegal online betting.
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PART C RISK MANAGEMENT
S The rapid pace of technological innovations has changed the scope, complexity and
magnitude of risks that issuers and acquirers face in carrying out the debit card
business. Issuers and acquirers shall have adequate processes and controls in place
to manage and respond to such risks, including operational risks associated with the
debit card business.
18 Effective management oversight
S 18.1 The Board of Directors and senior management of issuers and acquirers shall
establish effective oversight measures, checks and balances and risk
management mechanism over the risks associated with their debit card
operations, which include, among others, the following:
(a) Establishment of a comprehensive risk management process and internal
controls for managing and monitoring risks associated with the debit card
operations.
(b) Establishment of processes for the review, approval and implementation
of appropriate policies and procedures governing the debit card
operations to ensure that the risks in the debit card operations are
adequately mitigated.
(c) Oversight of the development and continued maintenance of the security
infrastructure that safeguards the debit card systems and data from
internal and external threats.
(d) Audit by an independent party2 shall be conducted and undertaken with
reasonable frequency to ascertain and detect weaknesses for prompt
corrective measures to be taken in a timely manner.
(e) Establishment of a comprehensive and on-going due diligence and
oversight process to manage outsourced arrangements and other third-
party arrangements supporting the debit card operations.
S 18.2 The Board of Directors and senior management of issuers and acquirers shall
also ensure that a strong management information system (MIS) is in place to
support decision making, analysis and risk management.
19 Comprehensive security policies, procedures and controls
S Issuers and acquirers shall implement and enforce relevant policies and procedures to
ensure confidentiality, integrity and availability of data as well as to ensure that the
system and network infrastructure are safe and secure.
S 19.1 Robust security controls such as, intrusion detection and intrusion prevention
systems and firewalls shall be put in place to secure the system and network
infrastructure. In this regard, penetration tests shall be performed regularly to
detect vulnerabilities for timely corrective measures to be taken to address
security weaknesses.
2
Internal or external auditor
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S 19.2
Procedural and administrative controls on critical processes shall be put in
place. Critical processes include, but are not limited to, the following:
(a) PIN generation and printing
PIN generation and printing processes are tasks that shall be performed
in a highly secure environment. In this regard, the following shall, at the
minimum, be observed:
(i) Usage of hardware-based PIN generation and verification.
(ii) Generated PINs shall be protected from being accessed or viewed
by unauthorised persons.
(iii) The process of generating the PIN has to be strictly controlled. In
this regard, PIN generation and printing area shall be strictly
restricted to authorised personnel only.
(iv) Regeneration of the same PIN for the same card/account shall be
prohibited.
(v) At least one independent party (which may be personnel
independent of the process) shall be present to observe and check
that the PIN generation and printing processes are undertaken in
accordance with accepted procedures.
(b) Personalisation3 process
(i) Personalisation process shall be performed in a secure environment.
Access to personalisation machine, reader and data shall be strictly
restricted and controlled.
(ii) Data used for personalisation shall be classified as confidential
information and issuers shall ensure confidentiality and safety of the
data that has been sent, stored and processed. These data shall be
deleted upon completion of the process.
(iii) Sensitive keys used to perform personalisation shall be kept in a
secure manner. Adequate policy and procedures shall be
established to govern the management of such keys to ensure that
they are safeguarded to prevent any unauthorised usage.
(iv) Periodic card inventory reconciliation and audit shall be performed
on blank cards.
(v) Card personalisation centre shall ensure that the following controls
are in place:
Adequate physical and logical security controls.
Segregation of duties and dual control.
Network security control.
When the card personalisation process is outsourced, controls shall
be in place to ensure that the data sent for personalisation to the
outsourced vendors are secured. The issuers must monitor the
outsourced vendor to ensure that the above requirements are met.
3
A process of injecting/encoding customer data into the blank card’s chip/magstripe; and embossing the
cards with customer's details, e.g. name and expiry date.
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S 19.3 Effective segregation of functions on handling of debit card and PIN shall be
observed at all stages of processing, particularly the following:
(a) Card processing (e.g. embossing and encoding processes) and PIN
generation functions.
(b) Physical management of card and PIN, including mailing (if applicable).
S 19.4 Effective dual control over critical functions shall be implemented. Critical
functions include the following:
(a) Setting and maintaining all system parameters.
(b) PIN generation processes and handling of secret keys or codes and other
security features.
(c) Handling and safekeeping of blank cards.
(d) Handling of returned and undelivered debit card.
S 19.5 Necessary measures shall be taken to ensure the confidentiality of debit card
data and information.
(a) Confidential data and sensitive information shall be protected from
unauthorised viewing or modification during transmission and storage.
(b) Sensitive information shall be encrypted from end to end during
transmission over the network.
(c) Minimal account information shall be printed on sales draft to minimise
the risk of misuse of information to conduct fraudulent “card-not-present”
transactions.
(d) Storage of sensitive authentication data, e.g. magnetic stripe data, PIN
and validation code (e.g. card verification value (CVV) used to verify card-
not-present transactions) shall not be allowed as this information may be
used by fraudsters to generate fake debit cards and create fraudulent
transactions.
(e) Confidential data and sensitive information shall only be accessible and
managed by authorised parties.
S 19.6 Proper identification and authentication method (e.g. passwords and PINs)
shall be adopted to avoid unauthorised usage of debit card as well as
unauthorised access to system, network and data. For more robust security,
the following shall be adopted at the minimum:
(a) PIN shall be at least six digits in length. Password shall be alphanumeric
and at least six characters in length. Where possible, the use of strong
PIN/password shall be adopted.
(b) Maximum PIN/password tries shall be limited to three on an accumulated
basis.
(c) PIN shall not be stored permanently in any format or media. Passwords
shall be securely maintained.
(d) If the PIN/password is computer-generated and is not chosen by the
cardholder, mandatory PIN/password change shall be adopted before the
first transaction is permitted.
(e) Cardholders shall be allowed to change the PIN/password at any time.
(f) Cardholders shall be advised that they shall not use a PIN/password
selected from their birth date, identity card, passport, driving licence or
contact numbers to mitigate unauthorised use of their debit cards in the
event their cards are lost or stolen.
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S 19.7 Disposal of debit card related materials/assets, such as damaged or returned
cards, reports and embossing machines shall be performed in a controlled
environment.
20 Robust operational reliability and business continuity
S A high level of system availability is required to maintain public confidence. Issuers
and acquirers shall ensure that they have the resources and capacity in terms of
hardware, software and other operating capabilities to deliver consistently reliable and
secure services.
S 20.1 Measures to ensure operational reliability include, but are not limited to, the
following:
(a) Strong internal controls for system and personnel administration.
(b) Comprehensive and well-documented operational and technical
procedures to ensure operational reliability.
(c) System shall have sufficient capacity to support business requirements.
(d) System has a robust business continuity and disaster recovery plan,
including a highly reliable backup system.
21 Outsourcing risk management
S Outsourcing does not reduce the fundamental risk associated with debit card
operations. Neither does it absolve the issuers and acquirers from their responsibilities
of having to manage the risks of their debit card operations. As such, issuers and
acquirers that outsource any part of their debit card operations shall observe the
minimum requirements set out below.
S 21.1 Prior to entering into any outsourcing arrangement, the following shall, at the
minimum, be considered:
(a) Availability of sufficient expertise within the issuer/acquirer to oversee and
manage the outsourcing relationship.
(b) Scope and nature of services/operations to be outsourced would not
compromise the controls and risk management of debit card business:
(i) The outsourcing of such processes does not take away the critical
decision making function of the issuers and acquirers.
(ii) The outsourcing of such processes does not threaten strategic
flexibility and process control of the issuers and acquirers.
(iii) The outsourcing of such functions would not impair the image,
integrity and credibility of the issuers and acquirers.
S 21.2 Issuers and acquirers shall also perform appropriate due diligence review of
the integrity, competency and financial viability of the outsourcing service
provider before the arrangements are formalised.
S 21.3 Approval from the Board of Directors of issuers and acquirers to outsource their
functions must be obtained and documented.
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S 21.4 The outsourcing service providers must provide a written undertaking to the
issuers and acquirers to comply with the secrecy provision pursuant to section
133 of the FSA and section 145 of the IFSA.
S 21.5 The external and internal auditors of the issuers and acquirers must be able to
review the books and internal controls of the outsourcing service providers.
Issuers and acquirers shall ensure that any weaknesses highlighted during the
audit are well-documented and promptly rectified by the outsourcing service
providers especially where such weaknesses may affect the integrity of the
internal controls of the issuers and acquirers.
S 21.6 The outsourcing agreement shall be comprehensive and include the following:
(a) Clearly defined roles, responsibilities and obligations of the service
provider.
(b) Clear provisions for the Bank to enter the premises of the service provider
to conduct examination and investigation with regard to the services
outsourced, should the need arise.
(c) Conditions under which the outsourcing arrangement may be terminated.
S 21.7 The issuers and acquirers must also have a contingency plan in the event that
the arrangement with the outsourcing service provider is suddenly terminated.
This is to mitigate any significant discontinuity in the work that is supposed to
be conducted by the service provider.
(a) The contingency plan must be reviewed from time to time to ensure that
the plan is current and ready for implementation in the event of sudden
termination of the service provider.
(b) The contingency plan must also be approved by the Board of Directors of
the issuers and acquirers.
S 21.8 Although the operational activities of debit card are outsourced, reporting and
monitoring mechanisms shall be put in place by issuers and acquirers to
ensure that the integrity and quality of work conducted by the outsourced
service provider is maintained.
S 21.9 Regular reviews shall be conducted on the outsourcing service provider to
ensure the suitability and performance of the service providers.
S 21.10 Periodic independent internal and/or external audits shall be conducted on the
outsourced operations with at least the same scope of review as if the
operations had been conducted in-house.
22 Fraud risk management
S Issuers and acquirers shall be vigilant of the evolving typologies of fraud and monitor
such developments on an on-going basis.
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S 22.1 Issuers and acquirers shall deploy effective and efficient fraud detection and
monitoring mechanism.
(a) Fraud detection and monitoring of transactions shall be conducted on an
online real time basis.
(b) The fraud detection and monitoring mechanism shall be able to capture
high risk transactions and trigger any detection of unusual transactions.
(i) Issuers shall put in place criteria for high risk transactions and
merchants to facilitate early detection of fraud.
(ii) Issuers shall put in place procedures to facilitate early detection of
unusual transaction pattern or trend that could be indicative of fraud
and take necessary action to block/delay these transactions for
further investigation.
S 22.2 Issuers and acquirers shall establish comprehensive fraud investigation,
analysis and reporting procedures.
(a) Issuers and acquirers shall conduct regular analysis to understand the
fraud trend and modus operandi.
(b) Adequate risk management processes, systems and controls shall be in
place, and where necessary, strengthened, to mitigate fraud risk. This
include taking into account developments in fraud trend and material
changes in the business strategy which may increase exposure to
potential fraud risk.
(c) Assessment of fraud incidents shall be reported to senior management
and the Board on a regular basis. Reporting to the Bank shall be in
accordance to the fraud reporting requirement imposed by the Bank from
time to time.
Fraud prevention mechanism
S Fraud may take place at different stages of the debit card process, i.e. card
application, card delivery, card activation, change of cardholder’s contact details as
well as when the card is used by the cardholder. In this regard, issuers and acquirers
shall put in place effective measures to address fraud risk. The fraud risk
management measures shall be reviewed periodically for proactive actions to be
taken to address any inadequacies in such measures.
Minimum fraud mitigation measures for card application, delivery and activation
S 22.3 The following shall be observed at the point of collecting debit card
applications from applicants:
(a) Issuers shall ensure the confidentiality of the data and information
provided by the applicant. Necessary measures shall be put in place to
ensure that the information provided by the applicant would not be
misused by the persons authorised by the issuer to collect the
application(s).
(b) Issuers or any persons acting on behalf of the issuers to collect debit card
applications are prohibited from photocopying the applicants’ other debit
cards. This is because debit card security features which are used for
cardholder authentication are available on the card itself such as card
number, CVV and expiry date of the debit card.
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S 22.4 The following controls shall be taken into consideration when processing debit
card applications:
(a) The identity of the applicant must be verified to ensure that the applicant
exists and is the person applying for the card.
(b) Key information provided by the applicant must be verified for accuracy.
(c) Issuers must ensure the confidentiality of the data and information
provided by the applicant.
S 22.5 Issuers are prohibited from sending out active debit cards to its cardholders.
Stringent activation procedures, which shall include proper verification process
that cannot be easily bypassed by fraudsters and by its own employees, must
be implemented.
Requirements when changing cardholder’s contact details
S 22.6 To mitigate the risk of account takeover, issuers shall put in place effective
measures to verify any request it receives for change of mailing address,
shipment of new or replacement card or PIN and telephone numbers.
G 22.7 The following are some practices that issuers may consider to adopt to mitigate
the risk of account takeover:
(a) Allow request for change of contact details only if it is made in person at
the issuer’s premises.
(b) Allow such request through secured electronic mode (e.g. electronic
banking) but subject to further verification before updating the contact
details.
(c) Send written correspondence to the previous address for verification
before shipping any card or PIN to the new address.
Implementation of “Chip and PIN” technology
S 22.8 In line with efforts to enhance the security features of debit card, all issuers and
acquirers shall enable chip and PIN verification for debit card transactions at
point-of-sale (POS) terminals and cash withdrawals at automated teller
machines (ATMs).
Implementation of strong authentication method for non face-to-face transactions
S 22.9 Non face-to-face transactions, i.e. card-not-present transactions, especially
online payments, present a higher fraud risk level compared to face-to-face
debit card transactions. Issuers and acquirers shall authenticate cardholders
for online transactions using strong authentication method, such as dynamic
password/PIN and multi-factor authentication (e.g. mobile PKI), to mitigate the
risk of unauthorised use of debit cards for online transactions.
Debit Card 19 of 24
Issued on: 2 December 2016
Implementation of transaction alerts
S 22.10 Issuers shall provide transaction alerts via SMS to their cardholders, unless
cardholders have opted to receive transaction alerts via other channels, such
as e-mail. This shall be applicable to the following:
(a) Purchase transactions at POS terminals.
(b) Online transactions.
(c) Cash withdrawal transactions.
(d) Mail and telephone order transactions.
S 22.11 Issuers shall provide an alternative way to alert cardholders if they do not wish
to send transaction alerts via SMS to foreign-registered mobile numbers.
Issuers shall obtain written consent from the cardholders for this arrangement.
S 22.12 Issuers shall take into consideration the following criteria to identify high risk
transactions and trigger transaction alerts:
(a) Transaction type, e.g. transaction at high risk merchants4.
(b) Transaction location, e.g. transaction in high risk countries5.
(c) Transaction amount, e.g. transaction exceeding certain amount.
(d) Transaction velocity, e.g. transaction exceeding certain number per day.
S 22.13 Issuers shall provide transaction alerts to cardholders in the event any of the
following triggers are met:
(a) Transactions exceeding a specified threshold amount. In this regard,
issuers shall set the threshold amount to trigger an alert. The threshold
amount or any upward revision to the threshold amounts require
endorsement from the Bank. Issuers shall also allow cardholders to set
their own preferred threshold amounts for the transaction alert. If
cardholders do not set the preferred threshold amounts, issuers shall
send transaction alerts based on the default threshold amounts set by the
issuer. Cardholders shall be informed of their rights to set their own
preferred threshold amounts for the alert.
(b) For contactless transactions, a reasonable threshold amount shall be
set. Issuers shall notify the Bank of the threshold amount or any upward
revision to the threshold amount.
(c) First time use of new card.
(d) All card-not-present transactions.
(i) Issuers are not required to send transaction alerts for recurring auto-
debit transactions. However, issuers shall take the necessary steps to
ensure the auto-debit transaction is a genuine transaction and
disputes, if any, are handled appropriately so that cardholders are
sufficiently safeguarded.
(e) High risk transactions (please refer to paragraph 22.12).
4,5
To be identified by the issuer/industry.
Debit Card 20 of 24
Issued on: 2 December 2016
S 22.14 By default, the alert must be sent for transactions meeting the specified criteria
as stated in paragraphs 22.10 and 22.13, except where the cardholders opt not
to receive any alerts. In this regard, issuers must ensure that the cardholders:
(a) understand the risks associated with their decision; and
(b) submit such request in writing.
G 22.15 Issuers may consider sending transaction alerts for circumstances other than
the above.
S 22.16 To ensure the effectiveness of the alerts, issuers must ensure that the contact
numbers of their cardholders are kept up-to-date. As such, issuers must
highlight to their cardholders the criticality of providing updated contact
numbers to them. Issuers shall authenticate that the contact details are
provided by the debit cardholders.
S 22.17 To mitigate abuse, issuers shall not provide any contact number as part of the
message in the SMS alert.
G 22.18 Issuers should advise cardholders to contact their card centre and use the
contact number indicated at the back of their debit cards.
S 22.19 Issuers shall not transfer the cost of sending SMS alerts to their cardholders.
G 22.20 Issuers may stop sending transaction alert for transactions which require PIN
verification at POS terminals and withdrawal/cash advance transactions only
after the full implementation of chip and PIN technology and for online
transactions after the adoption of strong authentication method.
Transaction and ATM withdrawal limit
S 22.21 Cardholders shall be allowed to set their preferred limit for transactions at POS
terminal and ATM withdrawals.
Exchange of information and dissemination
G 22.22 Sharing of information regarding fraud experiences and modus operandi is
encouraged among issuers and acquirers as this will enhance efforts to combat
fraud.
G 22.23 Issuers and acquirers should also be resourceful in gathering relevant
information from the industry, their overseas counterparts and the card
associations. Having first-hand information will assist them to decide on
specific measures to strengthen their defence mechanism against fraudsters.
G 22.24 Close cooperation with law enforcers and regulators should also be established
to facilitate sharing of fraud experiences and modus operandi to combat fraud.
Debit Card 21 of 24
Issued on: 2 December 2016
Contactless verification requirements
S 22.25 Issuers shall set a maximum amount for each contactless transaction as well
as an appropriate cumulative limit for contactless transactions which do not
entail any cardholder verification.
S 22.26 To promote confidence in the use of contactless debit card by providing
cardholders with the ability to manage the cumulative transaction limit, issuers
shall undertake the following:
(a) Provide cardholders with the facility to set a lower cumulative transaction
limit for contactless transactions minimally via issuers’ branches;
(b) Provide cardholders with the facility to turn off the contactless
functionality in contactless debit card minimally via issuers’ branches; and
(c) Raise awareness among cardholders about the facilities set out in
paragraphs (a) and (b) minimally via the issuers’ websites and product
disclosure sheet.
S 22.27 Issuers shall ensure that verification is conducted once transactions exceed the
maximum amount or the cumulative limit for contactless transactions, i.e. either
in signature or PIN until 31 December 2016. From 1 January 2017, which is the
date that chip and PIN is mandated, the cardholder verification method for all
payment cards shall only be done via chip and PIN.
23 Specific requirements for acquirers
S Acquirers shall be vigilant to ensure that they are not used by merchants as a means to
obtain funds through illegal means and fraudulent acts. Controls must be put in place
both prior to engaging the merchant and on an on-going basis.
S 23.1 Acquirers shall establish the criteria for merchant selection and recruitment,
and establish policies and procedures for on-going monitoring of their merchant
accounts, which shall include risk criteria to evaluate the risk profile of their
merchants for appropriate risk management measures to be taken on a timely
basis.
Merchant recruitment
S 23.2 Acquirers shall establish prudent underwriting criteria and procedures for
approving new merchants. The criteria for assessing new merchants shall also
cover financial strength and relevant background details (e.g. has not been
declared a bankrupt, has a clean fraud track record and has not been
blacklisted by other acquirers).
S 23.3 Acquirers must ensure that the merchant has a legitimate business and is not
involved in, or associated with, any illegal activities or schemes, including
business activities that are meant to deceive consumers, such as schemes like
“scratch and win” and “get-rich-quick”.
Debit Card 22 of 24
Issued on: 2 December 2016
S 23.4 If a third party merchant recruitment agent is engaged, acquirers shall ensure
that proper controls are in place to ensure that the third party merchant
recruitment agent complies with relevant requirements set out in this policy
document.
Merchant monitoring and audit
S 23.5 Acquirers shall monitor the trend in chargebacks and the merchants’ capacity
to repay these chargebacks and act accordingly to mitigate any risks
associated with engaging such merchants.
S 23.6 Acquirers shall take appropriate risk management measures on their high risk
merchants, including conducting more frequent audit/checks on these
merchants and more stringent monitoring of transactions that pass through
these merchants.
S 23.7 The relationship with merchants with confirmed fraudulent or illegal activity
must be immediately terminated. Whenever the merchant has been terminated
or blacklisted due to fraud-related matters by one of the acquirers, other
acquirers shall be vigilant and gather relevant information and evidence on the
conduct of the said merchant.
S 23.8 Acquirers shall conduct continuous due diligence on their merchants to ensure
that merchants are not involved in any fraudulent or illegal activity and maintain
a “watch list” of suspected collusive merchants, if any. The activities of these
merchants shall be closely monitored and investigated. Once identified as
collusive, acquirers shall immediately terminate their acquiring relationship with
the merchant.
S 23.9 Acquirers shall conduct periodic audits on the merchants to ensure that
merchants adhere to card acceptance and authorisation procedures to
minimise chargeback and disputes.
24 Compliance with other requirements
S 24.1 Issuers shall comply with other relevant requirements issued by the Bank from
time to time.
Debit Card 23 of 24
Issued on: 2 December 2016
Appendix 1 Product Disclosure Sheet - Debit Card
PRODUCT DISCLOSURE SHEET
(Read this Product Disclosure Sheet before you
decide to take out the <Name of Product>. Be
sure to also read the general terms and
conditions.)
<Name of Financial Service Provider>
<Name of Product>
<Date>
1. What is this product about?
This is a debit card, a payment instrument which allows you to pay for goods and services from your deposit
account at participating retail and service outlets. You are required to maintain a deposit account with us, to
be linked to your debit card. If you close your deposit account maintained with us, your debit card will be
automatically cancelled.
2. What are the fees and charges I have to pay?
Annual fee
Domestic ATM withdrawal fee
Overseas transaction conversion fee
Card replacement fee
Sales draft retrieval fee
Additional statement request fee
Others
3. What are the key terms and conditions?
Pre-authorisation for payment using debit card
Pre-authorisation amount of RMxx will be charged to your payment instrument account / banking
account when you make payment using your debit card at automated fuel dispenser. We will only post
the exact amount of transaction and release any extra hold amount from your account within 3 working
days after the transaction date.
4. What if I fail to fulfil my obligations?
You will be liable for PIN-based unauthorised transactions if you have:
acted fraudulently;
delayed in notifying us as soon as reasonably practicable after having discovered the loss or
unauthorised use of your debit card;
voluntarily disclosed your PIN to another person; or
recorded your PIN on the debit card, or on anything kept in close proximity with your debit card.
Debit Card 24 of 24
Issued on: 2 December 2016
You will be liable for unauthorised transactions which require signature verification or with contactless
card, if you have:
acted fraudulently;
delayed in notifying us as soon as reasonably practicable after having discovered the loss or
unauthorised use of your debit card;
left your debit card or an item containing your debit card, unattended in places visible and accessible
to others; or
voluntarily allowed another person to use your debit card.
(To highlight other key terms and conditions)
5. What are the major risks?
Your card being stolen or lost. You should notify us immediately after having discovered that your debit card
is lost or stolen.
6. What do I need to do if there are changes to my contact details?
It is important that you inform us of any change in your contact details to ensure that all correspondences
reach you in a timely manner.
7. Where can I get further information?
If you have any enquiries, please contact us at:
ABC Bank Berhad
51, Jalan Sultan Ismail
50122 Kuala Lumpur
Tel:
Fax:
E-mail:
8. Other debit card packages available
Abc
Xyz
The information provided in this disclosure sheet is valid as at dd/mm/yy.
| Press Release |
05 Oct 2022 | Announcement of Emerging Leader Prize and Impact Challenge Prize Winners | https://www.bnm.gov.my/-/raif2022-prize-winner-en | null | null |
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Announcement of Emerging Leader Prize and Impact Challenge Prize Winners
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Announcement of Emerging Leader Prize and Impact Challenge Prize Winners
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5 Oct 2022
Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC) are pleased to announce the recipients of the Emerging Leader Prize and Impact Challenge Prize in conjunction with The Royal Award for Islamic Finance 2022. The awards were presented today at the Global Islamic Finance Forum 2022 by the Governor of Bank Negara Malaysia and the Chairman of the Securities Commission Malaysia.
The Emerging Leader Prize recognises young international talent who have made outstanding contributions in advancing innovative ideas in the field of Islamic finance. The inaugural prize was awarded to Mr. Umar Abdullah Mahmud Munshi, the co-founder and Group Managing Director of Ethis Group, which is involved in fintech, impact investment, and Islamic crowdfunding platforms and which has facilitated impact investments from over 50 countries to fund small and medium enterprises (SMEs) and social housing projects. The Islamic finance community widely recognises Umar as a pioneer in fintech and crowdfunding for Islamic finance. He is the president of the Islamic Fintech Alliance founders' group, a global group that encourages collaboration and learning among members, from more than 10 countries. Umar also serves in numerous advisory capacities to advance Islamic social finance, community empowerment, and social enterprises.
Meanwhile, the Impact Challenge Prize recognises digital and innovative solutions based on Islamic finance principles, that aim to improve the economic and social resilience of financially impacted communities worldwide. This Impact Challenge Prize is jointly organised with the World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia and the Malaysia Digital Economy Corporation (MDEC). The organisers received 50 applications from 14 countries. Twenty-five teams were then shortlisted to join an Accelerator Programme, and two winners were selected by a panel of judges, comprising senior representatives from BNM and SC, Islamic Development Bank, World Bank Group, and the venture capital industry. Further information on the 25 teams is available at www.theroyalaward.com.
The Impact Challenge Prize was awarded to duithape and Pod for their innovative solutions in Islamic finance.
“duithape”, with roots in Indonesia, is a biometric-based mass payment system focusing on the unbanked. The digital payment system enables financial providers to disburse Shariah-compliant microfinancing via a cashless in-merchant transaction to micro and SME borrowers, including those in remote areas.
“Pod” is a financial well-being platform for gig workers and the underserved in Southeast Asia. This Malaysian homegrown solution helps users save money and access Shariah microfinancing and financial products while leveraging artificial intelligence to provide borrowers with an alternative way to build credit records which in turn enable them to access financing products from banks.
See also: Governor Shamsiah’s Keynote Address at Global Islamic Finance Forum 2022
Members of the Media may contact the Media Team at;
Roziah Mohd. Hanifa (roziah@bnm.gov.my), Delyana Nordin (delyanaN@seccom.com.my)
NOTE TO THE EDITOR
About Malaysia's Islamic Finance Marketplace
Since its origin nearly 40 years ago, Islamic finance in Malaysia has evolved into a well-developed and comprehensive marketplace capable of meeting the diverse needs of the economy and society. The marketplace is characterised by a robust regulatory, supervisory, Shariah and legal framework, deep and progressive Islamic financial markets, diverse set of players, multi-asset commodity and exchange platforms, efficient multi-channel payment gateways to facilitate financial intermediation as well as talent base with global capabilities and connectivity for business deals anywhere in the world.
Malaysia’s Islamic finance marketplace is open to global industry players and market participants to collaborate with and benefit from a highly conducive business environment of innovation, expertise and deal flow. Our marketplace is a comprehensive Islamic finance ecosystem and business environment of infrastructure, innovation, expertise and deal flow, served by the Malaysia International Islamic Financial Centre (MIFC) community, which comprised the financial institutions, professional firms, regulators and government agencies.
For more information on Malaysia’s Islamic finance marketplace, please visit www.mifc.com and follow us on Twitter (@MalaysiaIF) / LinkedIn (@Malaysia World's Islamic Finance Marketplace).
About Bank Negara Malaysia
Bank Negara Malaysia (BNM) is Malaysia’s central bank. Its principal objective is to promote monetary and financial stability conducive to the sustainable growth of the Malaysian economy. To this end, BNM has played a key role in developing both the conventional and Islamic financial systems with the view that a well-developed financial system contributes to the country’s resilience. Over the years, BNM has also led the promotion of Malaysia as an international Islamic financial centre.
For more information, log on to bnm.gov.my and follow us on Facebook (bnm.official), Twitter (@BNM_official), Instagram (@banknegaramalaysia), LinkedIn (Bank Negara Malaysia), Telegram (banknegaramalaysia), and Youtube (BNMOfficial).
About Securities Commission Malaysia
The Securities Commission Malaysia (SC), a statutory body reporting to the Minister of Finance, was established under the Securities Commission Act 1993. It is the sole regulatory agency for regulating and developing capital markets. The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Capital Markets and Services Act 2007. More information about the SC is available on its website at www.sc.com.my. Follow the SC on Twitter at @SecComMy for more updates.
About The World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia
The World Bank Group Inclusive Growth and Sustainable Finance Hub in Malaysia is a partnership between Malaysia and the World Bank. The Hub works closely with counterparts in country and beyond by conducting analytical, advisory, and research work to support inclusive growth, promote sustainable finance and inclusive finance and to enhance good governance.
Log on to www.wbg.org/my or www.facebook.com/worldbankmalaysia for more information.
Bank Negara Malaysia
5 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
05 Oct 2022 | MIFC Leadership Council to drive the next phase of development in positioning Malaysia as an international Islamic financial centre | https://www.bnm.gov.my/-/mifc-leadership-council-estd | null | null |
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MIFC Leadership Council to drive the next phase of development in positioning Malaysia as an international Islamic financial centre
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5 Oct 2022
Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC) today announced the establishment of the Malaysia International Islamic Financial Centre (MIFC) Leadership Council. The Council serves as a platform to provide industry stewardship in enhancing Malaysia’s proposition as a global marketplace and an international gateway for Islamic finance.
The roles of the MIFC Leadership Council include providing thought leadership as well as driving strategy formulation and monitoring industry initiatives to solidify Malaysia’s leading position in Islamic finance. The Council is expected to catalyse industry developments towards nurturing new ideas, deepen and diversify strategic linkages with international partners and strengthen MIFC global advocacy. Tan Sri Azman Mokhtar will lead the Council as the Chairman, with the Council members[1] comprising prominent local and international industry figures as well as representatives from BNM and SC. Appointed for a term of three years, the Council members will be guided by national strategic development plans, including BNM’s Financial Sector Blueprint 2022 - 2026 and the SC’s Capital Market Masterplan 3 (CMP3).
In undertaking its mandates, the Council will leverage the expertise of and collaborate with experts from the financial, corporate and academic fraternity as well as relevant authorities and agencies, to advance areas of mutual interest and support deliberation of industry’s initiatives.
The formation of the Council was announced at the Global Islamic Finance Forum (GIFF) 2022 which was attended by more than 1,000 international and local participants from more than 35 countries. Themed “Take The Reins”, GIFF 2022 focuses on emerging developments in Islamic finance such as fintech and digitalisation, value-based innovation and global opportunities for the Islamic finance industry to promote balanced, inclusive and sustainable growth.Bank Negara Malaysia
Securities Commission Malaysia
5 October 2022
See also: Governor Shamsiah’s Keynote Address at Global Islamic Finance Forum 2022
Members of the Media may contact the Media Team at;
Roziah Mohd. Hanifa (roziah@bnm.gov.my), Delyana Nordin (delyanaN@seccom.com.my)
About Malaysia's Islamic Finance Marketplace
Since its origin nearly 40 years ago, Islamic finance in Malaysia has evolved into a well-developed and comprehensive marketplace capable of meeting the diverse needs of the economy and society. The marketplace is characterised by a robust regulatory, supervisory, Shariah and legal framework, deep and progressive Islamic financial markets, diverse set of players, multi-asset commodity and exchange platforms, efficient multi-channel payment gateways to facilitate financial intermediation, as well as a talent base with global capabilities and connectivity for business deals anywhere in the world.
Malaysia’s Islamic finance marketplace is open to global industry players and market participants to collaborate with and benefit from a highly conducive business environment of innovation, expertise and deal flow. Our marketplace is a comprehensive Islamic finance ecosystem and business environment of infrastructure, innovation, expertise and deal flow, served by the Malaysia International Islamic Financial Centre (MIFC) community, which comprised financial institutions, professional firms, regulators and government agencies.
For more information on Malaysia’s Islamic finance marketplace, please visit www.mifc.com and follow us on Twitter (@MalaysiaIF) / LinkedIn (@Malaysia World's Islamic Finance Marketplace).
Members of MIFC Leadership Council
Bank Negara Malaysia
5 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
04 Oct 2022 | Tan Sri Dr. Mohd Daud Bakar named recipient of The Royal Award for Islamic Finance 2022 | https://www.bnm.gov.my/-/raif2022 | null | null |
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Tan Sri Dr. Mohd Daud Bakar named recipient of The Royal Award for Islamic Finance 2022
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Tan Sri Dr. Mohd Daud Bakar named recipient of The Royal Award for Islamic Finance 2022
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4 Oct 2022
The Royal Award for Islamic Finance 2022 (The Royal Award) was bestowed to Tan Sri Dr. Mohd Daud Bakar by the King of Malaysia, His Majesty the Yang di-Pertuan Agong at an award presentation ceremony held in Kuala Lumpur today.
Tan Sri Dr. Mohd Daud Bakar, an eminent Shariah scholar, is widely recognised for his contributions to the development of the global Islamic finance industry. Tan Sri Dr. Mohd Daud Bakar currently serves as Chairman of the Shariah Advisory Council for both Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC). He is also a Shariah board member of international financial institutions and organisations such as Amundi Asset Management (France), Bank of London and Middle East, Dow Jones Islamic Market Index (New York), Morgan Stanley (Dubai), and Sedco Capital (Saudi Arabia). He was also instrumental in developing the first Shariah standard on gold issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). His multi-disciplinary knowledge has helped bridge the application of Shariah principles in modern Islamic finance, leading to further advancement of the industry.
Apart from his active involvement globally, Tan Sri Dr. Mohd Daud Bakar was also a former President of International Islamic University Malaysia (IIUM). In addition, he has established a few Shariah advisory services and fintech companies contributing to Shariah-related framework and policies, product structuring, human capital development and technology solutions.
A prominent figure in Islamic finance thought leadership, Tan Sri Dr. Mohd Daud Bakar is also an award-winning author, with more than 40 books written in various genres. His books shed light on modern scholars’ interpretation of Shariah rulings and its practical application in the Islamic finance industry. He has published numerous articles in academic journals, some of which were presented at established international conferences.
Commenting on the recipient of The Royal Award, Jury Chairman Tun Musa Hitam said, “The Jury went through a stringent and rigorous selection process on the merits and achievements of each nominee before arriving at a final decision. As a respected Shariah scholar, author and entrepreneur, Tan Sri Dr. Mohd Daud Bakar has played a prominent role in shaping the global Islamic finance industry. He is widely recognised for his contributions in advancing Shariah thought leadership in Islamic finance.”
The Royal Award, established in 2010, is a biennial award[1] jointly organised by Bank Negara Malaysia and the Securities Commission Malaysia as part of the Malaysia International Islamic Financial Centre (MIFC) initiative to recognise and honour individuals who have excelled in advancing Islamic finance globally through their outstanding contributions and achievements.
Past Royal Award recipients are Tan Sri Dr. Zeti Akhtar Aziz, former Governor of Bank Negara Malaysia (2018); Professor Datuk Dr. Rifaat Ahmed Abdel Karim, former Chief Executive Officer of International Islamic Liquidity Management Corporation (2016); Dato’ Dr. Abdul Halim Ismail, founding member of Malaysia’s first Islamic bank (2014); Dato’ Paduka Iqbal Khan, CEO of Fajr Capital (2012); and the late Shaikh Saleh Abdullah Kamel, founder of the Dallah al Baraka Group (2010).
Members of the Media may contact the Media Team at;
Roziah Mohd. Hanifa (roziah@bnm.gov.my), Delyana Nordin (delyanaN@seccom.com.my)
NOTE TO THE EDITOR
About Malaysia's Islamic Finance Marketplace
Since its origin nearly 40 years ago, Islamic finance in Malaysia has evolved into a well-developed and comprehensive marketplace capable of meeting the diverse needs of the economy and society. The marketplace is characterised by a robust regulatory, supervisory, Shariah and legal framework, deep and progressive Islamic financial markets, diverse set of players, multi-asset commodity and exchange platforms, efficient multi-channel payment gateways to facilitate financial intermediation, as well as a talent base with global capabilities and connectivity for business deals anywhere in the world.
Malaysia’s Islamic finance marketplace is open to global industry players and market participants to collaborate with and benefit from a highly conducive business environment of innovation, expertise and deal flow. Our marketplace is a comprehensive Islamic finance ecosystem and business environment of infrastructure, innovation, expertise and deal flow, served by the Malaysia International Islamic Financial Centre (MIFC) community, which comprised financial institutions, professional firms, regulators and government agencies.
For more information on Malaysia’s Islamic finance marketplace, please visit www.mifc.com and follow us on Twitter (@MalaysiaIF) / LinkedIn (@Malaysia World's Islamic Finance Marketplace).
About Bank Negara Malaysia
Bank Negara Malaysia (BNM) is Malaysia’s central bank. Its principal objective is to promote monetary and financial stability conducive to the sustainable growth of the Malaysian economy. To this end, BNM has played a key role in developing both the conventional and Islamic financial systems with the view that a well-developed financial system contributes to the country’s resilience. Over the years, BNM has also led the promotion of Malaysia as an international Islamic financial centre.
For more information, log on to bnm.gov.my and follow us on Facebook (bnm.official), Twitter (@BNM_official), Instagram (@banknegaramalaysia), LinkedIn (Bank Negara Malaysia), Telegram (banknegaramalaysia), and Youtube (BNMOfficial).
About Securities Commission Malaysia
The Securities Commission Malaysia (SC), a statutory body reporting to the Minister of Finance, was established under the Securities Commission Act 1993. It is the sole regulatory agency for regulating and developing capital markets. The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses and regulating all persons licensed under the Capital Markets and Services Act 2007. More information about the SC is available on its website at www.sc.com.my. Follow the SC on Twitter at @SecComMy for more updates.
[1] Due to the pandemic, the Royal Award was deferred in 2020.
Bank Negara Malaysia
4 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
04 Oct 2022 | Financial Literacy Month 2022 goes Nationwide to Promote Digital Financial Literacy | https://www.bnm.gov.my/-/flm2022-launch | null | null |
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Financial Literacy Month 2022 goes Nationwide to Promote Digital Financial Literacy
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Financial Literacy Month 2022 goes Nationwide to Promote Digital Financial Literacy
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4 Oct 2022
The Financial Education Network (FEN) launched the Financial Literacy Month 2022 (FLM2022) at Sasana Kijang, Bank Negara Malaysia (BNM), on 1 October 2022. The FLM2022 is an annual flagship event to enhance the awareness of consumers on key financial issues and improve financial literacy among Malaysians. The FLM2022 will run throughout the month of October 2022.
During the launch of FLM2022, Deputy Governor Jessica Chew highlighted that financial education is critical to the safe and effective use of digital financial services. “The low level of digital financial literacy is deeply concerning. The Financial Capability and Inclusion Demand Side (FCI) 2021 Survey commissioned by BNM revealed that one in three individuals surveyed stated they would be willing to share their bank account passwords or PIN numbers with close friends. This increases the risk of online fraud. It also includes being used knowingly or unknowingly as 'mule accounts’ to perpetrate fraud. Almost two-thirds of individuals surveyed do not pay attention to the security features of a website before they perform online transactions. As a result, individuals are far more likely to be deceived into providing their banking credentials through a fake website that enables scammers to use their information to commit fraud. Using mobile devices and apps inappropriately has also led individuals to fall victim to fraud such as phishing, hacking, and data theft.” Further details of the survey will be published in BNM’s Financial Stability Review 1H2022, due to be released on 5 October 2022.
The nationwide roadshow aims to impart financial awareness and education, especially on digital financial literacy. The initiative will feature engaging activities on strengthening the cyber hygiene of financial consumers and personal financial management talks. The "Sembang dan Sebar" discussions during the roadshow will highlight the latest financial scams modus operandi and the 3S (Spot, Stop and Share) concept to protect the rakyat from financial scams. In addition, the roadshow will drive e-payment awareness and the importance of insurance and takaful, especially the Perlindungan Tenang initiative, which targets the underserved segment. In addition to the nationwide roadshow, FEN members, partners, and strategic collaborators will be conducting various financial education programmes, such as the FLM2022 Exhibition, National Financial Literacy Symposium, financial planning consultation sessions #FINPLAN4U, Financial Literacy Week talk on various topics, including digital financial literacy, scams awareness, and retirement planning, Semak Sebelum di Scam webinar series, InvestSmart® Fest 2022, MyDuitStory 3.0 on #TakNakScam Video Competition, MyMoney&Me and Fun(d) for Life educational programmes.
During FLM2022, the FEN Mobile coach will also travel to 61 locations throughout the country, from city centres to rural areas. The FEN Mobile coach provides free and independent financial education resources covering personal financial management, digital financial literacy, awareness of financial scams, and advisory services on debt management by AKPK. The public can also get help registering for the e-Central Credit Reference Information System (e-CCRIS) to access credit reports online. Details of the locations can be found at www.fenetwork.my.
For more information on FLM2022 programmes, visit www.fenetwork.my or its social media sites on Facebook at facebook.com/myfenetwork and Instagram at instagram.com/myfenetwork
Financial Education Network
4 October 2022
See also:
Deputy Governor Jessica Chew's Opening Remarks at the launch of Financial Literacy Month 2022
About Financial Education Network (FEN)
Established in November 2016, FEN serves as an inter-agency platform to increase the impact of financial education initiatives and identify new opportunities to elevate financial literacy among Malaysians through greater alignment, closer collaboration and a strong focus on impact assessments. Its members include the Ministry of Education Malaysia, Ministry of Higher Education, Bank Negara Malaysia, Securities Commission Malaysia, Employees Provident Fund, Agensi Kaunseling dan Pengurusan Kredit, Perbadanan Insurans Deposit Malaysia and Permodalan Nasional Berhad.
Bank Negara Malaysia
4 October 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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30 Sep 2022 | Monetary and Financial Developments in August 2022 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-august-2022 | https://www.bnm.gov.my/documents/20124/8387827/i_en.pdf | null |
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Monetary and Financial Developments in August 2022
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Monetary and Financial Developments in August 2022
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Headline inflation increased to 4.7% in August
Headline inflation increased to 4.7% in August (July: 4.4%), in line with market expectations.
Core inflation increased to 3.8% during the month (July: 3.4%). The increase largely reflected higher prices for rental and food away from home.
Notwithstanding the higher annual inflation, 10 of the 12 main Consumer Price Index (CPI) categories registered moderating month-on-month increases.
Robust export growth in August
Exports registered a robust growth of 48.2% (July: 38%) in August 2022.
Manufactured export growth was driven by E&E and petroleum products. Meanwhile, exports of commodities continued to be supported mainly by crude palm oil, liquefied natural gas and crude petroleum shipments.
Moving forward, the moderation in global growth and lower commodity prices are expected to weigh on Malaysia’s export growth. Malaysia’s diversified exports across products and markets should help cushion this impact.
Sustained net financing growth in August
Net financing grew by 6.1% as at end-August (July: 5.3%), driven by higher growth in both outstanding loans (6.8%; July: 5.9%) and corporate bonds (4.3%; July: 3.7%).
Outstanding household loans grew by 6.5% (July: 6.1%) amid steady growth across most purposes. Notably, growth in loan disbursements reflected sustained growth in loan applications, particularly for the purchase of houses and cars.
For businesses, growth in outstanding loans rose to 6.7% (July: 5.9%), mainly driven by the wholesale trade, manufacturing and utilities sectors. By segment, credit flows to SMEs remained particularly forthcoming, with outstanding loan growth higher at 7.5% (July: 6.6%).
Domestic financial markets were supported by foreign portfolio inflows
In August, global financial conditions tightened as the US Federal Reserve reaffirmed its commitment to bring US inflation down despite lower US growth expectations. Domestic financial market adjustments remained orderly amid low foreign exchange volatility and sufficient trading volume.
The 10-year MGS yield increased by 10 bps (regional* average: +11.7 bps) alongside the higher 10-year US Treasury bond yield (+45.4 bps).
The ringgit depreciated by 0.8% (regional* average: -1.3%) amid continued strong US dollar environment, while the FBM KLCI rose by 1.3% (regional* average: +2.8%) supported by foreign inflows and stronger-than-expected 2Q Malaysia GDP growth.
Banks remained well-capitalised to support economic recovery
Banks’ capital position remained strong to withstand potential stress and continue supporting credit flows to the economy.
This enabled some banks to sustain dividend payouts during the month.
As at end-August, the banking system recorded RM126.7 billion excess capital buffers.[1]
The resilience of banks continued to be underpinned by sound asset quality
Overall gross and net impaired loans ratios remained broadly stable at 1.84% (July: 1.85%) and 1.1% (July: 1.2%), respectively.
Loan loss coverage ratio (including regulatory reserves) remained at a prudent level of 113.7% of impaired loans, with total provisions accounting for 1.8% of total loans.
As at end-August, the banking system recorded RM 41.5 billion of total provisions and regulatory reserves.
Monthly Highlights [PDF]
* Regional countries comprise Singapore, Thailand, Philippines, Indonesia and Korea
[1] Refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5%) and bank-specific higher minimum requirements.
Related Assets
Monthly Highlights & Statistics in August 2022
Bank Negara Malaysia
30 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
J
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2
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2
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-2
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3
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-2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
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M
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2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
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3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Sep 2022 | Detailed Disclosure of International Reserves as at end-August 2022 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-august-2022-1 | null | null |
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Detailed Disclosure of International Reserves as at end-August 2022
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Detailed Disclosure of International Reserves as at end-August 2022
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In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV.
As shown in Table I, official reserve assets amounted to USD108,239.3 million, while other foreign currency assets amounted to USD5.3 million as at end-August 2022.
As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD9,399.8 million. The short forward positions amounted to USD15,079.5 million as at end-August 2022, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,044.9 million in the next 12 months.
As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD399.5 million. There are no foreign currency loans with embedded options, and no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-August 2022, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (31 August 2022)
Bank Negara Malaysia
30 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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28 Sep 2022 | Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of Kilang Wang Bank Negara Malaysia | https://www.bnm.gov.my/-/kilangwang50 | null | null |
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Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of Kilang Wang Bank Negara Malaysia
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Issuance of Commemorative Coins in Conjunction with the 50th Anniversary of Kilang Wang Bank Negara Malaysia
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Bank Negara Malaysia is pleased to announce that it will be issuing commemorative coins in conjunction with the 50th anniversary of its mint, Kilang Wang. Established on 10 July 1971, Kilang Wang is the official mint for Malaysia’s coins.
The commemorative coins are available for purchase starting today, Wednesday, 28 September 2022 at https://duit.bnm.gov.my.
The Governor of Bank Negara Malaysia, Tan Sri Nor Shamsiah binti Mohd Yunus said, “For the past five decades, Kilang Wang has been minting beautiful coins with designs that Malaysians love. With their distinctive shapes and designs, the commemorative coins issued in conjunction with the 50th anniversary of the Kilang Wang celebrates our country’s cultural heritage, while showcasing the mint’s expert craftsmanship and technology.”
The commemorative coins will be issued in two denominations:
Copper Commemorative Coin (proof) - Wau, Gasing dan Congkak shaped
These coins are made of copper with 99.9 purity and will be issued in three shapes - Wau, Gasing and Congkak, each weighing 36.6 grams, 21.7 grams dan 22.8 grams, respectively. The coins have a face value of RM5 and will be sold at RM220 a piece. The mintage quantity is 1,200 pieces for each type.
Nordic Gold Brilliant Uncirculated (B.U.) Commemorative Coin
This coin is made of copper and several other metals, weighing 8.5 grams. The coin has a face value of RM1 and will be sold at RM13.20 per piece. The mintage quantity is 5,000 pieces.
The commemorative coins are also available in a Set of 3. The Set of 3 is priced at RM605 per set and comprises one of each Wau, Gasing and Congkak copper proof coins. A total of 1,200 sets will be available for purchase.
Detailed specifications of these commemorative coins are set out in Appendix I.
Note: Prices stated above are inclusive of 10% Sales and Services Tax (SST).
Coin design
The design of the commemorative coins is as follows:
Copper Commemorative Coin (proof) – Wau-shaped
Obverse – The top left corner features the words “50 TAHUN PENGHASILAN DUIT SYILING” in conjunction with 50 years of coin minting by the Kilang Wang. The numerals five and zero are styled to mimic the shape of two coins. The top right features the wau – a traditional moon-kite – with a floral motif, flying high across a trail of stars. This symbolises movement and progress, emblematic of Kilang Wang’s evolution over the years.
Reverse – The top centre features the text “BANK NEGARA MALAYSIA” to depict the issuing authority, followed by “5 RINGGIT” in the middle, representing its face value. These text elements are placed against a traditional background inspired by both the wau and a floral motif.
Copper Commemorative Coin (proof) – Gasing-shaped
Obverse Reverse
Obverse – The left side features the words “50 TAHUN PENGHASILAN DUIT SYILING” to commemorate 50 years of coin minting by Kilang Wang. The numerals five and zero are styled to mimic the shape of two coins. The right side features circuitry and mechanical gears symbolising progress, modernisation and technology. The background features linear stripes depicting movement and speed, inspired by the traditional gasing leper, a traditional Malay spinning tops.
Reverse – The top centre features the text “BANK NEGARA MALAYSIA” to depict the issuing authority, followed by “5 RINGGIT” in the middle, representing its face value. The background features the numbers 1, 5, 10, 20 and 50 in various typefaces to depict the different series of coins issued over the years, while also symbolising five decades of coin minting.
Copper Commemorative Coin (proof) – Congkak-shaped
Obverse - The left corner features the words “50 TAHUN PENGHASILAN DUIT SYILING” to commemorate 50 years of coin minting by Kilang Wang. The numerals five and zero are styled to mimic the shape of two coins. Against a textured background resembling a mengkuang mat are seven images and motifs from the various series of coins issued by Kilang Wang over the years – the Parliament Building from the first coin series; the wau, rebana and gasing from the second coin series; and Mah Meri motif and sulur kacang from the third coin series.
Reverse - On this side of the coin which is made to look like a congkak board, the left storehouse features the text “BANK NEGARA MALAYSIA” to depict the issuing authority, while the right storehouse features the text “5 RINGGIT” representing its face value. The middle features two rows of congkak houses containing marbles with frosted tones designed to reveal an optical illusion of the digits “50”, signifying 50 years of coin minting by Kilang Wang.
Nordic Gold Brilliant Uncirculated (B.U.) Commemorative CoinObverse - The face of the coin features the words “50 TAHUN PENGHASILAN DUIT SYILING” and “JUBLI EMAS” to commemorate 50 years of coin minting by Kilang Wang. The numerals in the middle, five and zero, are styled to mimic the shape of two coins. The circumference features a decorative circular motif symbolising market circulation. Within the digit five stands a kijang, representing Bank Negara Malaysia.
Reverse - The right circumference features the text “BANK NEGARA MALAYSIA” to depict the issuing authority, followed by “1 RINGGIT” next to it, representing its face value. The top left circumference features the image of a 5 sen coin issued in 1971, when Kilang Wang first started minting coins. The bottom left circumference features a 50 sen coin issued in 2021, commemorating 50 years of coin minting by Kilang Wang.
Sale of commemorative coins
To provide a fair opportunity for members of the public to buy these limited-edition coins, there will be a purchase limit of one Set of 3, one copper coin (proof) for each shape (Wau, Gasing and Congkak) and up to five Nordic gold (B.U.) coins.
Members of the public can place their orders at https://duit.bnm.gov.my from 12.00 noon, Wednesday, 28 September 2022 to 11.00 p.m., Sunday, 9 October 2022.
Members of the public are advised to place their orders through the Bank Negara Malaysia online system and not with any other party or unauthorised ordering facility. All orders will be considered and there will be no preference given to orders based on order date and time. In the event of oversubscription, balloting will take place.
Appendix I - Technical Specifications
Category
Metal
Alloy
Face Value (RM)
Diameter
(mm)
Weight
(g)
Mintage Quantity (pcs/ set)
Price
(RM)
Single
Copper (proof) - Wau
Cu 99.9
5
50
36.6
1,200
220
Copper (proof) - Gasing
Cu 99.9
5
50
21.7
1,200
220
Copper (proof) - Congkak
Cu 99.9
5
60
22.8
1,200
220
Nordic Gold (B.U.)
Cu89 Zn5 Al5 Sn1
1
30
8.5
5,000
13.20
Set of 3
Copper (proof) – Wau, Gasing and Congkak
Cu 99.9
Cu 99.9
Cu 99.9
5
5
5
50
50
60
36.6
21.7
22.8
1,200
605
Note: Prices stated above are inclusive of 10% SST
Bank Negara Malaysia
28 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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27 Sep 2022 | Renewal of Local Currency Bilateral Swap Agreement between Bank Negara Malaysia and Bank Indonesia | https://www.bnm.gov.my/-/bnm-bi-currency-bilateral-swap-en | null | null |
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Renewal of Local Currency Bilateral Swap Agreement between Bank Negara Malaysia and Bank Indonesia
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Renewal of Local Currency Bilateral Swap Agreement between Bank Negara Malaysia and Bank Indonesia
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27 Sep 2022
Bank Negara Malaysia and Bank Indonesia renewed the Local Currency Bilateral Swap Agreement (LCBSA) of up to RM8 billion / IDR28 trillion on 23 September 2022. This follows the first agreement which was signed in 2019. The agreement is effective for a period of three years. This renewal reinforces the ongoing cooperation by both central banks.
“Given the significant trade flows[1] between Malaysia and Indonesia, we are pleased to continue our cooperation with Bank Indonesia by renewing the LCBSA. The LCBSA supplements the Local Currency Settlement Framework (LCSF) between our two countries, an arrangement that facilitates settlement of trade and investments in local currency,” said Bank Negara Malaysia Governor Tan Sri Nor Shamsiah Mohd Yunus.
“Bank Indonesia believes that the swap arrangement renewal reflects the strong ongoing financial cooperation between Bank Indonesia and Bank Negara Malaysia. The renewal also shows our commitment to strengthen financial market stability by promoting more extensive use of local currencies for bilateral transactions between Indonesia and Malaysia,” said Bank Indonesia Governor Perry Warjiyo.
[1] RM95 billion in 2021
Bank Negara Malaysia
Bank Indonesia
27 September 2022
Bank Negara Malaysia
27 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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26 Sep 2022 | Bank Negara Malaysia Museum and Art Gallery Launches Financial Crime Exhibition | https://www.bnm.gov.my/-/financial-crime-exhibition-pr-en | null | null |
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Bank Negara Malaysia Museum and Art Gallery Launches Financial Crime Exhibition
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Bank Negara Malaysia Museum and Art Gallery Launches Financial Crime Exhibition
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Bank Negara Malaysia (BNM) and the Royal Malaysia Police (RMP) today launched a virtual exhibition by BNM Museum and Art Gallery, ‘Financial Crime Exhibition’. The exhibition seeks to educate members of the public against financial scams and can be accessed at https://museum.bnm.gov.my/fce
The virtual exhibition was jointly officiated by the Inspector-General of Police (IGP), Tan Sri Acryl Sani Abdullah Sani and the Governor of Bank Negara Malaysia, Tan Sri Nor Shamsiah Mohd Yunus.
The exhibition lays out various types of financial crimes seen in Malaysia and how they have evolved over time. It features interactive exhibits that allow the public to simulate financial scam scenarios. Through the various exhibits, the public will be able to learn strategies – Spot, Stop, and Share (3S) – to protect themselves and others from becoming victims.
During the launch, Tan Sri Nor Shamsiah Mohd. Yunus announced additional measures that will be undertaken by the banking industry to combat financial scams. These are (i) the migration of SMS One Time Passwords (OTP) to a more secure form of authentication; (ii) further tightening of detection rules and triggers for the blocking of scams-related transactions; (iii) subjecting first-time enrolments of online banking services and secure devices to a cooling-off period; (iv) customers will be restricted to one mobile device or secure device for the authentication of online banking transactions; and (v) banks will be required to set up dedicated scam hotlines.
"Together with the financial industry, BNM will continue to ensure that banking and payment channels remain secure and equipped with the latest security controls. The effort to combat financial crimes also requires the support of all parties. As consumers, each of us are responsible for protecting ourselves from the threat of scams. Our hope is that the Financial Crime Exhibition can help in this effort to educate members of the public in protecting themselves against scams", she said.
The Governor added that BNM continues to highlight on latest scams-related information through the Amaran Scam Facebook page at https://facebook.com/amaranpenipuan
Tan Sri Acryl Sani Abdullah Sani, in his speech, said “The ability of cybercriminals to exploit technological changes and creatively trap victims with a variety of new modus operandi, paired with only moderate level of public awareness on cybercrime are among reasons for increasing cases. Therefore, RMP sees the need to disseminate as much knowledge as possible to the community so they can avoid becoming victims of such criminal activities”.
The public is advised to safeguard their personal information and avoid downloading files or applications from unverified sources onto mobile devices. Account holders who encounter suspicious transactions involving their bank accounts should immediately:
Notify their banks;
Contact the Commercial Crime Investigation Department (CCID) Scam Response Centre at 03-2610 1559/1599 or BNMTELELINK at 1-300-88-5465; and
Lodge a police report to facilitate the investigation.
For more information about BNM Museum and Art Gallery and its upcoming programmes and exhibitions, visit https://museum.bnm.gov.my or its social media sites on Facebook at https://www.facebook.com/BNM.MAG, Instagram at https://www.instagram.com/bnmmag and Twitter at @BNM_MAG.
See also:
Speech by Governor Tan Sri Nor Shamsiah in Conjunction with Financial Crime Exhibition Launch
BNM steps up collaboration with banks and law enforcement agencies to combat new modus operandi by financial fraudstersBank Negara Malaysia
26 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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23 Sep 2022 | International Reserves of Bank Negara Malaysia as at 15 September 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-15-september-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
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International Reserves of Bank Negara Malaysia as at 15 September 2022
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International Reserves of Bank Negara Malaysia as at 15 September 2022
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The international reserves of Bank Negara Malaysia amounted to USD106.3 billion as at 15 September 2022. The reserves position is sufficient to finance 5.3 months of imports of goods and services[1], and is 1.0 time of the total short-term external debt.
[1] Under the previous import coverage measure, reserves is sufficient to finance 5.9 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021. Related Assets
BNM Statement of Assets & Liabilities - 15 September 2022
Bank Negara Malaysia
23 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
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Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
r-
2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
g
-2
2
S
e
p
-2
2
O
c
t-
2
2
N
o
v
-2
2
D
e
c
-2
2
J
a
n
-2
3
F
e
b
-2
3
M
a
r-
2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
23 Sep 2022 | Press Release on Ringgit | https://www.bnm.gov.my/-/bnm-ringgit-en | null | null |
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Press Release on Ringgit
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Press Release on Ringgit
Embargo :
For immediate release
Not for publication or broadcast before
1246 on
Friday, 23 September 2022
23 Sep 2022
Bank Negara Malaysia (BNM) continues to closely monitor and ensure orderly financial market conditions amidst external developments that have led to persistent strength in the US dollar against almost all currencies, including the ringgit. The US dollar has strengthened significantly due to aggressive monetary policy tightening in the US.
The tighter global financial conditions and higher volatility in the foreign exchange markets are not expected to derail Malaysia's economic growth. The economy expanded by 8.9% in the second quarter and will continue to be driven by further improvements in labour market conditions and higher tourism activity. Exports are underpinned by our highly diversified products and markets. The domestic financial system is well capitalised with ample liquidity, and financial intermediation continues to be supportive of the economy.
Ringgit movements will continue to be market determined. The foreign exchange market continues to function and intermediate effectively. Daily onshore FX transaction volume has been increasing throughout, reaching a current average of USD13.3 billion against USD11.3 billion in 2021, amid two-way flows. Bond market activity remains healthy, well supported by institutional investors and financial institutions. BNM’s market operations will ensure sufficient liquidity and orderly functioning of financial markets.
“Malaysia remains an open economy. Rather than resorting to capital controls or re-pegging of the ringgit, the policy priority now is to sustain economic growth in an environment of price stability and to further strengthen domestic economic fundamentals through structural reforms. This will provide a more enduring support for the ringgit,” said Bank Negara Malaysia Governor Tan Sri Nor Shamsiah Mohd Yunus.
Bank Negara Malaysia
23 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |
08 Sep 2022 | Monetary Policy Statement | https://www.bnm.gov.my/-/monetary-policy-statement-08092022 | https://www.bnm.gov.my/documents/20124/8737415/MPS_Snapshot_2022_09_en.pdf | null |
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Monetary Policy Statement
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Monetary Policy Statement
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Thursday, 8 September 2022
8 Sep 2022
At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to increase the Overnight Policy Rate (OPR) by 25 basis points to 2.50 percent. The ceiling and floor rates of the corridor of the OPR are correspondingly increased to 2.75 percent and 2.25 percent, respectively.
The global economy continued to expand, albeit at a slower pace, weighed down by rising cost pressures, tighter global financial conditions, and strict containment measures in China. However, global growth continues to be supported by improvements in labour market conditions, and the full reopening of most economies and international borders. Inflationary pressures have remained high, due to elevated commodity prices and tight labour markets, despite continued easing in global supply chain conditions. Consequently, central banks are expected to continue adjusting their monetary policy settings, some at a faster pace, to reduce inflationary pressures. In particular, aggressive adjustments in US interest rates have contributed to a strong US dollar environment. This has resulted in higher volatility in financial markets, affecting other major and emerging market currencies, including the ringgit. Going forward, the global growth is expected to face challenges from the impact of monetary policy tightening in most economies, and pandemic management measures in China. The growth outlook is subject to downside risks, including elevated cost pressures, the potential energy crisis in Europe, and sharp tightening in financial market conditions.
For the Malaysian economy, the transition to endemicity and policy measures have contributed to the stronger growth performance in the second quarter of 2022. Going forward, indicators point to continued growth, underpinned by support from private sector spending. Labour market conditions and income prospects remain positive, with unemployment and underemployment declining further. The reopening of international borders will lift tourism-related sectors. Investment activity and prospects would be supported by the realisation of multi-year projects. Nevertheless, external demand is expected to moderate following softening global growth. Despite the increased volatility in the global financial and foreign exchange markets, these developments are not expected to derail Malaysia's growth. Domestic liquidity remains sufficient, with continued orderly functioning of the financial and foreign exchange markets. Financial institutions also continue to operate with strong capital and liquidity buffers. These will ensure financial intermediation remains supportive of the economy. Going forward, downside risks to the domestic economy continue to stem from a weaker-than-expected global growth, further escalation of geopolitical conflicts, and worsening supply chain disruptions.
Year-to-date, headline inflation has averaged at 2.8%. Headline inflation is projected to peak in 3Q 2022 before moderating thereafter, due to dissipating base effects and in line with the expected easing of global commodity prices. Underlying inflation, as measured by core inflation, is expected to average closer to the upper end of the 2.0% - 3.0% forecast range in 2022, with some signs of demand-driven pressures amid the high-cost environment. The extent of upward pressures to inflation will remain partly contained by existing price controls, fuel subsidies, and the prevailing spare capacity in the economy. The inflation outlook, however, continues to be subject to domestic policy measures, as well as global commodity price developments arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions.
With the positive growth prospects for the Malaysian economy remaining intact, the MPC decided to further adjust the degree of monetary accommodation. At the current OPR level, the stance of monetary policy continues to remain accommodative and supportive of economic growth. The MPC is not on any pre-set course and will continue to assess evolving conditions and their implications on the overall outlook to domestic inflation and growth. Any adjustments to the monetary policy settings going forward would be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support a sustainable economic growth in an environment of price stability.
See also:
Frequently Asked Questions
Monetary Policy Statement (MPS) Snapshots: Sep 2022Bank Negara Malaysia
8 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Sustained net financing growth in August
August 2022
1
Robust export growth in August
• Exports registered a robust growth of 48.2%
(July: 38%) in August 2022.
• Manufactured export growth was driven by E&E
and petroleum products. Meanwhile, exports of
commodities continued to be supported mainly
by CPO, LNG and crude petroleum shipments.
• Moving forward, the moderation in global growth
and lower commodity prices are expected to
weigh on Malaysia’s export growth. Malaysia’s
diversified exports across products and markets
should help cushion this impact.
Malaysia’s Exports by Product
RM billion
38.7
38.0
48.2
0
10
20
30
40
50
60
70
0
50
100
150
Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22
E&E Resource-based
Non-resource based Commodities
Others Gross exports (%, yoy)
%, yoy
Source: Department of Statistics, Malaysia and MATRADE
1 Refers to outstanding loans of the banking system (excluding development
financial institutions (DFIs)) and outstanding corporate bonds. Data from July
2022 onwards are based on the new set of loan/financing data reflecting the
latest requirements. Figures may not add up due to rounding.
Source: Bank Negara Malaysia
• Net financing grew by 6.1% as at end-August
(July: 5.3%), driven by higher growth in both
outstanding loans (6.8%; July: 5.9%) and
corporate bonds (4.3%; July: 3.7%).
• Outstanding household loans grew by 6.5% (July:
6.1%) amid steady growth across most purposes.
Notably, loan disbursements growth reflected
sustained growth in loan applications, particularly
for the purchase of houses and cars.
• For businesses, growth in outstanding loans rose
to 6.7% (July: 5.9%), mainly driven by the
wholesale trade, manufacturing and utilities
sectors. By segment, credit flows to SMEs
remained particularly forthcoming, with outstanding
loan growth higher at 7.5% (July: 6.6%).
Headline inflation increased to 4.7% in August
4.4 4.7
3.4
3.8
-4.0
-2.0
0.0
2.0
4.0
6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
Ja
n-
21
Fe
b-
21
M
ar
-2
1
Ap
r-2
1
M
ay
-2
1
Ju
n-
21
Ju
l-2
1
Au
g-
21
Se
p-
21
O
ct
-2
1
N
ov
-2
1
D
ec
-2
1
Ja
n-
22
Fe
b-
22
M
ar
-2
2
Ap
r-2
2
M
ay
-2
2
Ju
n-
22
Ju
l-2
2
Au
g-
22
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
It also excludes the estimated direct impact of tax policy changes.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia estimates
• Headline inflation increased to 4.7% in August
(July: 4.4%), in line with market expectations.
• Core inflation increased to 3.8% during the
month (July: 3.4%). The increase largely
reflected higher prices for rental and food away
from home.
• Notwithstanding the higher annual inflation, ten
of the 12 main CPI categories registered
moderating month-on-month increases.
6.8
6.7
6.5
0
1
2
3
4
5
6
7
Aug-21 Nov-21 Feb-22 May-22 Aug-22
Total loans
Business loans
Household loans
Annual growth (%)
Contribution to Net Financing1 Growth and Outstanding
Loan Growth
New dataset
4.0 4.2 4.9
0.9 1.0
1.2
5.0 5.3
6.1
Jun-22 Jul-22 Aug-22
Corporate Bonds
Banking System Loans
Net Financing
Contribution to growth (ppt)
Monthly Highlights
August 2022
2
Domestic financial markets were supported by foreign portfolio inflows
Financial Markets Performance in August 2022 • In August, global financial conditions tightened
as the US Federal Reserve reaffirmed its
commitment to bring US inflation down
despite lower US growth expectations.
Domestic financial market adjustments
remained orderly amid low FX volatility and
sufficient trading volume.
• The 10-year MGS yield increased by 10.0 bps
(regional* average: +11.7 bps) alongside the
higher 10-year US Treasury bond yield (+45.4
bps).
• The ringgit depreciated by 0.8% (regional*
average: -1.3%) amid continued strong US
dollar environment, while the FBM KLCI rose
by 1.3% (regional* average: +2.8%) supported
by foreign inflows and stronger-than-expected
2Q Malaysia GDP growth.
-38.0
3.3
-1.0
10.0
1.3
-0.8
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-50 -40 -30 -20 -10 0 10 20
Aug-22 Jul-22
Source: Bank Negara Malaysia, Bursa Malaysia
*Regional countries comprise Singapore, Thailand, Philippines, Indonesia and Korea
Banks remained well-capitalised to support economic recovery
The resilience of banks continued to be underpinned by sound asset quality
• Banks’ capital position remained strong to
withstand potential stress and continue
supporting credit flows to the economy.
• This enabled some banks to sustain dividend
payouts during the month.
• As at end-August, the banking system
recorded RM126.7 billion excess capital
buffers1.
1 Refers to total capital above the regulatory minimum, which
includes the capital conservation buffer (2.5%) and bank-
specific higher minimum requirements
14.4
15.0
18.1
8
10
12
14
16
18
20
Au
g-
21
Se
p-
21
O
ct
-2
1
N
ov
-2
1
D
ec
-2
1
Ja
n-
22
Fe
b-
22
M
ar
-2
2
Ap
r-2
2
M
ay
-2
2
Ju
n-
22
Ju
l-2
2
Au
g-
22
Common Equity Tier 1 (CET1) Capital Ratio
Tier 1 Capital Ratio
Total Capital Ratio
% Banking System Capital Adequacy
Source: Bank Negara Malaysia
1.8
1.1
1.8
0.4
0.8
1.2
1.6
2.0
Au
g-
21
Se
p-
21
O
ct
-2
1
N
ov
-2
1
D
ec
-2
1
Ja
n-
22
Fe
b-
22
M
ar
-2
2
Ap
r-2
2
M
ay
-2
2
Ju
n-
22
Ju
l-2
2
Au
g-
22
Total provisions to total loans ratio
Gross impaired loans ratio
Net impaired loans ratio
% Banking System Asset Quality • Overall gross and net impaired loans ratios
remained broadly stable at 1.84% (July:
1.85%) and 1.1% (July: 1.2%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of
113.7% of impaired loans, with total provisions
accounting for 1.8% of total loans.
• As at end-August, the banking system
recorded RM 41.5 billion of total provisions
and regulatory reserves.
Source: Bank Negara Malaysia
PRESS RELEASE
Ref. No.: 09/22/12 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 30 September 2022
Monthly Highlights – August 2022
Headline inflation increased to 4.7% in August
• Headline inflation increased to 4.7% in August (July: 4.4%), in line with
market expectations.
• Core inflation increased to 3.8% during the month (July: 3.4%). The
increase largely reflected higher prices for rental and food away from
home.
• Notwithstanding the higher annual inflation, 10 of the 12 main Consumer
Price Index (CPI) categories registered moderating month-on-month
increases.
Robust export growth in August
• Exports registered a robust growth of 48.2% (July: 38%) in August 2022.
• Manufactured export growth was driven by E&E and petroleum products.
Meanwhile, exports of commodities continued to be supported mainly by
crude palm oil, liquefied natural gas and crude petroleum shipments.
• Moving forward, the moderation in global growth and lower commodity
prices are expected to weigh on Malaysia’s export growth. Malaysia’s
diversified exports across products and markets should help cushion this
impact.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Sustained net financing growth in August
• Net financing grew by 6.1% as at end-August (July: 5.3%), driven by
higher growth in both outstanding loans (6.8%; July: 5.9%) and corporate
bonds (4.3%; July: 3.7%).
• Outstanding household loans grew by 6.5% (July: 6.1%) amid steady
growth across most purposes. Notably, growth in loan disbursements
reflected sustained growth in loan applications, particularly for the
purchase of houses and cars.
• For businesses, growth in outstanding loans rose to 6.7% (July: 5.9%),
mainly driven by the wholesale trade, manufacturing and utilities sectors.
By segment, credit flows to SMEs remained particularly forthcoming, with
outstanding loan growth higher at 7.5% (July: 6.6%).
Domestic financial markets were supported by foreign portfolio inflows
• In August, global financial conditions tightened as the US Federal Reserve
reaffirmed its commitment to bring US inflation down despite lower US
growth expectations. Domestic financial market adjustments remained
orderly amid low foreign exchange volatility and sufficient trading volume.
• The 10-year MGS yield increased by 10 bps (regional∗ average: +11.7
bps) alongside the higher 10-year US Treasury bond yield (+45.4 bps).
• The ringgit depreciated by 0.8% (regional* average: -1.3%) amid
continued strong US dollar environment, while the FBM KLCI rose by 1.3%
(regional* average: +2.8%) supported by foreign inflows and stronger-
than-expected 2Q Malaysia GDP growth.
Banks remained well-capitalised to support economic recovery
• Banks’ capital position remained strong to withstand potential stress and
continue supporting credit flows to the economy.
∗ Regional countries comprise Singapore, Thailand, Philippines, Indonesia and Korea
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• This enabled some banks to sustain dividend payouts during the month.
• As at end-August, the banking system recorded RM126.7 billion excess
capital buffers.1
The resilience of banks continued to be underpinned by sound asset
quality
• Overall gross and net impaired loans ratios remained broadly stable at
1.84% (July: 1.85%) and 1.1% (July: 1.2%), respectively.
• Loan loss coverage ratio (including regulatory reserves) remained at a
prudent level of 113.7% of impaired loans, with total provisions accounting
for 1.8% of total loans.
• As at end-August, the banking system recorded RM 41.5 billion of total
provisions and regulatory reserves.
Bank Negara Malaysia
30 September 2022
1 Refers to total capital above the regulatory minimum, which includes the capital conservation buffer
(2.5%) and bank-specific higher minimum requirements.
20220930_MSB Charts for August 2022
Slide Number 1
Slide Number 2
20220930_BNM PR MSB August 2022_ENG
Monthly Highlights – August 2022
| Press Release |
07 Sep 2022 | International Reserves of Bank Negara Malaysia as at 30 August 2022 | https://www.bnm.gov.my/-/international-reserves-of-bank-negara-malaysia-as-at-30-august-2022 | https://www.bnm.gov.my/documents/20124/6118085/qb2021q4_en_box_imports.pdf | null |
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International Reserves of Bank Negara Malaysia as at 30 August 2022
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56
International Reserves of Bank Negara Malaysia as at 30 August 2022
Embargo :
For immediate release
Not for publication or broadcast before
1500 on
Wednesday, 7 September 2022
7 Sep 2022
The international reserves of Bank Negara Malaysia amounted to USD108.2 billion as at 30 August 2022. The reserves position is sufficient to finance 5.4 months of imports of goods and services[1], and is 1.1 times of the total short-term external debt.
[1] Under the previous import coverage measure, reserves is sufficient to finance 6.2 months of retained imports of goods. For more information on the new indicator, please refer to the article on “Expansion of the Measure on Reserve Coverage of Imports – from Retained Imports to Imports of Goods and Services” in BNM’s Quarterly Bulletin for the Fourth Quarter of 2021 publication, page 27, which can be accessed at Quarterly Bulletin 4Q 2021. Related Assets
BNM Statement of Assets & Liabilities - 30 August 2022
Bank Negara Malaysia
7 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights
Headline inflation declined to 3.4% in March
March 2023
1
3.7 3.4
3.9 3.8
0.00
2.00
4.00
0.0
2.0
4.0
J
a
n
-2
2
F
e
b
-2
2
M
a
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2
2
A
p
r-
2
2
M
a
y
-2
2
J
u
n
-2
2
J
u
l-
2
2
A
u
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-2
2
S
e
p
-2
2
O
c
t-
2
2
N
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-2
2
D
e
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-2
2
J
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-2
3
F
e
b
-2
3
M
a
r-
2
3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation declined to 3.4% in March
(February: 3.7%) due mainly to lower inflation for
fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation moderated slightly to 3.8% during
the month (February: 3.9%), driven largely by
lower inflation for food away from home.
1
Robust growth in volume index driven by retail and motor vehicles
Index of Wholesale and Retail Trade
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded by 10.6% in February 2023
(January: 8.5%).
• The higher growth was driven mainly by retail
sales in non-specialised stores (e.g., department
stores) followed by continued strength in
purchases of motor vehicles amid the ongoing
fulfilment of backlog orders.
• On a month-on-month seasonally adjusted basis,
the index accelerated by 5.5% (January: 0.2%).
9.5 8.510.6
0
10
20
30
40
Feb-
22
Mar-
22
Apr-
22
May-
22
Jun-
22
Jul-
22
Aug-
22
Sep-
22
Oct-
22
Nov-
22
Dec-
22
Jan-
23
Feb-
23
ppt, %yoy
Motor vehicles Retail Wholesale
2.4
5.2
4.4
0
1
2
3
4
5
6
7
Mar-22 Jul-22 Nov-22 Mar-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Growth in credit to the private non-financial sector moderated
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
2.7 2.6 2.7 2.6
1.0 0.6 0.7 0.7
1.0
1.1 1.1 0.9
4.7 4.3 4.5 4.2
Dec-22 Jan-23 Feb-23 Mar-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Contribution to growth (ppt)
• Credit to the private non-financial sector grew by
4.2% as at end-March (February: 4.5%), attributed
to slower growth in credit to businesses (3.2%;
February: 3.7%).
• While growth in outstanding corporate bonds
moderated (4.4%; February : 5.5%), outstanding
business loan growth was sustained at 2.4%
(February: 2.4%). This was supported by the
continued growth in both working capital (2.2%;
February: 1.9%) and investment-related loans
(4.3%; February: 4.2%).
• Outstanding household loan growth remained
broadly stable (5.2%; February: 5.3%), supported
by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan
growth for the purchase of securities (-6.9%;
February: -3.3%).
Credit to the Private Non-Financial Sector1,2
Monthly Highlights
March 2023
Domestic financial market conditions remained orderly
Financial Market Performance in March 2023
Source: Bank Negara Malaysia, Bursa Malaysia
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
11.0
-2.1
-5.3
0.0
-2.2
1.7
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-10 -5 0 5 10 15
Mar-23
Feb-23
• In March, global financial markets were affected by
the emergence of banking sector stress in some
major economies. As spillovers were contained thus
far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds
improved.
• In line with the performance of regional currencies,
the ringgit appreciated by 1.7% against the US
dollar. Conditions in the domestic bond market
also remained stable.
• The FBM KLCI declined by 2.2% during the month.
2
Banks maintained strong liquidity and funding positions to support intermediation
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.9
157.4
0
40
80
120
160
70
75
80
85
90
95
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
increased slightly to 1.8% (February-23: 1.8%) and
1.2% (February-23: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory
reserves) continue to record a prudent level of
110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
%
1.8
1.2
1.7
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
M
a
r
2
2
A
p
r
2
2
M
a
y
2
2
J
u
n
2
2
J
u
l
2
2
A
u
g
2
2
S
e
p
2
2
O
c
t
2
2
N
o
v
2
2
D
e
c
2
2
J
a
n
2
3
F
e
b
2
3
M
a
r
2
3
Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
157.4% (February-23: 152.7%).
• The aggregate loan-to-fund ratio remained stable at
81.9% (February-23: 81.6%).
PRESS RELEASE
Ref. No.: 04/23/05 EMBARGO: Not for publication or
broadcast before 1500 hours on
Friday, 28 April 2023
Monthly Highlights – March 2023
Headline inflation declined to 3.4% in March
• Headline inflation declined to 3.4% in March (February: 3.7%) due mainly
to lower inflation for fuel, air fares and selected food items, in line with
the easing global commodity prices.
• Core inflation1 moderated slightly to 3.8% during the month
(February: 3.9%), driven largely by lower inflation for food away from
home.
Robust growth in volume index driven by retail and motor vehicles
• The Index of Wholesale and Retail Trade (IOWRT) expanded by 10.6%
in February 2023 (January: 8.5%).
• The higher growth was driven mainly by retail sales in non-specialised
stores (e.g., department stores) followed by continued strength in
purchases of motor vehicles amid the ongoing fulfilment of backlog
orders.
• On a month-on-month seasonally adjusted basis, the index accelerated
by 5.5% (January: 0.2%).
1 Core inflation is computed by excluding price-volatile and price-administered items.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
Growth in credit to the private non-financial sector2,3 moderated
• Credit to the private non-financial sector grew by 4.2% as at end-March
(February: 4.5%), attributed to slower growth in credit to businesses
(3.2%; February: 3.7%).
• While growth in outstanding corporate bonds moderated (4.4%;
February: 5.5%), outstanding business loan growth was sustained at
2.4% (February: 2.4%). This was supported by the continued growth in
both working capital (2.2%; February: 1.9%) and investment-related
loans (4.3%; February: 4.2%).
• Outstanding household loan growth remained broadly stable (5.2%;
February: 5.3%), supported by growth in loans for car purchases (8.7%;
February: 7.6%). This was amid weaker loan growth for the purchase of
securities (-6.9%; February: -3.3%).
Domestic financial market conditions remained orderly
• In March, global financial markets were affected by the emergence of
banking sector stress in some major economies. As spillovers were
contained thus far due to early action by authorities, investors’ risk
appetite for emerging market currencies and bonds improved.
• In line with the performance of regional currencies, the ringgit
appreciated by 1.7% against the US dollar. Conditions in the domestic
bond market also remained stable.
• The FBM KLCI declined by 2.2% during the month.
Banks maintained strong liquidity and funding positions to support
intermediation
• Banks continued to record healthy liquidity buffers with the aggregate
Liquidity Coverage Ratio at 157.4% (February: 152.7%).
2 Comprises loans to households and non-financial corporations from the banking system and development financial
institutions (DFIs), and corporate bonds issued by non-financial corporations (including short-term papers).
3 Starting with the publication of December 2022 Monthly Highlights and Statistics (MHS), this series was introduced
to enhance the quality of financing data. This new data series is available in the MHS Table 2.18.
P u b l i s h e d b y :
S t r a t e g i c C o m m u n i c a t i o n s D e p a r t m e n t , L e v e l 1 4 , B l o c k B , B a n k N e g a r a M a l a y s i a ,
J a l a n D a t o ’ O n n , 5 0 4 8 0 K u a l a L u m p u r , M a l a y s i a .
E - m a i l : c o m m u n i c a t i o n s @ b n m . g o v . m y
W e b : w w w . b n m . g o v . m y
• The aggregate loan-to-fund ratio remained stable at 81.9%
(February: 81.6%).
Asset quality in the banking system remained intact
• Overall gross and net impaired loans ratios increased slightly to 1.8%
(February: 1.8%) and 1.2% (February: 1.1%), respectively.
• Loan loss coverage ratio (including regulatory reserves) continues to
record a prudent level of 110.5% of impaired loans, with total provisions
accounting for 1.7% of total loans.
Bank Negara Malaysia
28 April 2023
20230428_BNM Monthly Highlights-March_en
Slide 1
Slide 2
20230428_BNM PR_Monthly Highlights-Mar 2023_eng
| Press Release |
01 Sep 2022 | Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Updates at the 8th Joint Committee on Climate Change (JC3) Meeting | https://www.bnm.gov.my/-/jc3-8th-meeting-en | https://www.bnm.gov.my/documents/20124/5949839/ADB_WBG_Report_on_Climate_Risk_Country_Profile_Malaysia.pdf | null |
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Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Updates at the 8th Joint Committee on Climate Change (JC3) Meeting
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8
Joint Statement by Bank Negara Malaysia and Securities Commission Malaysia: Updates at the 8th Joint Committee on Climate Change (JC3) Meeting
Embargo :
For immediate release
Not for publication or broadcast before
1457 on
Thursday, 1 September 2022
1 Sep 2022
The Joint Committee on Climate Change (JC3) held its eighth meeting on 29 August 2022.
The Committee reviewed the ongoing work of sub-committees[1] established under JC3. It was noted that with greater awareness and efforts by financial institutions to strengthen their response to climate risk, this has led to an increased demand for practical tools and urgency to address key gaps needed to support transition.
The Committee will continue to focus on the following priorities:
Financial institutions have submitted the first report on the application of the Climate Change and Principle-based Taxonomy (CCPT) to Bank Negara Malaysia. While financial institutions have demonstrated capability to assess new financing and investments based on the CCPT, JC3, through the CCPT Implementation Group (CCPT IG), is working with the industry and partners to further improve the consistency and quality of classifications under the CCPT for existing outstanding financing and investments. Information gaps for existing exposures continue to pose the biggest challenge. CCPT IG will publish and maintain a set of CCPT FAQs on application issues to promote more consistent practices across financial institutions, and has developed a due-diligence questionnaire together with World Wide Fund (WWF) Malaysia on selected CCPT guiding principles. The questionnaire aims to help financial institutions capture important information from their customers and counterparties in a more consistent manner. This will serve to promote robust classifications of climate supporting and transitioning activities and reduce additional burdens for customers and counterparties of banks to provide such information to multiple financial institutions.
Following the issuance of the TCFD[2] Application Guide for Malaysian Financial Institutions[3], JC3 is now supporting Capital Markets Malaysia (CMM), an affiliate of the Securities Commission Malaysia, to develop an ESG Disclosure Guide (Guide) tailored to Malaysian Small and Medium Enterprises (SMEs). The Guide aims to improve the quality of and access to information on business resilience to ESG-related risks to ensure practical adoption by SMEs and larger businesses. Members emphasised the importance of ensuring alignment in the disclosure initiatives undertaken by JC3 with global disclosure frameworks, including that being developed by the International Sustainability Standards Board (ISSB), to promote comparability and minimise compliance costs for businesses and financial institutions going forward.
JC3 welcomed the issuance of the Sustainable and Responsible Investment-linked (SRI-linked) Sukuk Framework by Securities Commission Malaysia on 30 June 2022 to facilitate companies to issue SRI-linked Sukuk to support their transition towards low-carbon activities. More financial institutions are also expanding their offerings of green products and solutions. To further scale up sustainable financial offerings by financial institutions, JC3 is actively exploring suitable pilot programmes to test new green solutions and instruments such as blended finance to support the development of climate-friendly projects.
The Data Catalogue developed by JC3 remains on track for publication by end-2022. This will be accompanied by a brief report on the data availability, gaps and specific recommendations to bridge data gaps. The data catalogue is a key deliverable of JC3 to address the data needs of the financial sector by pointing users to credible sources of critical climate data needed to support identified use cases, noting however, that material gaps still exist within existing data sources. This is partly due to legal impediments to data sharing. JC3 also endorsed governance arrangements for maintaining and refreshing the data catalogue going forward. As data remains a key challenge, JC3 continues to actively engage and collaborate with relevant Government ministries and other stakeholders to improve the accessibility to good quality, comparable and consistent climate data. JC3 will continue to explore solutions to this end, including open data modalities and climate data platforms.
JC3 members also discussed The World Bank Group (WBG) and Asian Development Bank (ADB) – Climate Risk Country Profile: Malaysia Report (report can be found here). The report addresses climate risks faced by Malaysia, and highlights that the impact to communities, livelihoods and the economy from rapid onset and long-term changes in climate parameters are already underway. Members discussed the implications of this for financial institutions and their response to climate change, including adaptation priorities with a particular focus on human health, the agriculture sector and coastal zones.
Jessica Chew, Deputy Governor, Bank Negara Malaysia and Co-Chair of JC3, said “We are encouraged by the increasing focus and concrete actions being taken by financial institutions to manage climate-related risks. Further progress will however critically depend on key enablers, including accessibility to data and better disclosures being in place. The JC3 remains committed to addressing these challenges, alongside increased efforts to scale up transition finance.”
JC3 continues to engage with the relevant ministries, government agencies and corporates to identify climate and sustainable financing needs that can be mobilised through the financial sector. According to Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive, Securities Commission Malaysia and Co-Chair of JC3, “In progressing climate action in Malaysia, it is important for the JC3 to have close engagement and collaboration with relevant stakeholders. Towards this end, the JC3 has conducted a series of engagements, including a meeting with four key ministries in July to forge closer collaboration with the government. Such engagements have brought greater clarity on the national plans and initiatives that both the financial sector and Government can pursue and collaborate. Both parties can align their climate actions in developing an ecosystem that is conducive for sustainable finance to flourish.”
Bank Negara Malaysia
Securities Commission Malaysia
1 September 2022
About the JC3
The JC3 is a platform established in September 2019 to pursue collaborative actions for building climate resilience within the Malaysia financial sector. The JC3 is co-chaired by Datuk Jessica Chew Cheng Lian, Deputy Governor Bank Negara Malaysia and Datuk Zainal Izlan Zainal Abidin, Deputy Chief Executive Securities Commission Malaysia with members comprising senior officials from Bursa Malaysia and 21 financial industry players as well as relevant experts. The JC3’s initiatives and priorities are undertaken by its five sub-committees, namely Risk Management; Governance and Disclosure; Product and Innovation; Engagement and Capacity Building; and Bridging Data Gaps.
Members: Allianz General Insurance Company (Malaysia) Berhad, AmBank (M) Berhad, Bank Islam Malaysia Berhad, Bank Pembangunan Malaysia Berhad, Bank Pertanian Malaysia Berhad (Agrobank), BIMB Investment Management Berhad, BNP Paribas Asset Management Sdn. Bhd., Bursa Malaysia Berhad, CIMB Bank, Etiqa Family Takaful Berhad, HSBC Amanah Malaysia Berhad, Kenanga Investors Berhad, Maybank Berhad, MIDF Amanah Investment Bank Berhad, MSIG Insurance (Malaysia) Berhad, RHB Islamic Bank Berhad, RHB Islamic International Asset Management Bhd., Standard Chartered Bank Malaysia Berhad, Swiss Re Asia Pte. Ltd. (Swiss Retakaful), Syarikat Takaful Malaysia Am Berhad, UOB Asset Management (Malaysia) Berhad and Zurich General Insurance Malaysia Berhad.
[1] Risk Management; Governance and Disclosure; Product and Innovation; Engagement and Capacity Building; and Bridging Data Gaps
[2] Task Force on Climate-related Financial Disclosures
[3] Issued on 29 June 2022
Bank Negara Malaysia
1 September 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Peluasan Ukuran Liputan Rizab Bagi Import – daripada Import Tertangguh kepada Import Barangan dan Perkhidmatan
27Buletin Suku Tahunan | S4 2021 27
Peluasan Ukuran Liputan Rizab Bagi Import – daripada Import Tertangguh kepada
Import Barangan dan Perkhidmatan
Salah satu penunjuk yang digunakan oleh Bank untuk mengukur kecukupan rizab antarabangsa ialah liputan
rizab bagi import tertangguh,1 yang disiarkan setiap dua minggu. Apabila ekonomi berkembang dengan bahagian
sektor perkhidmatan yang lebih besar, keadaan ini telah meningkatkan kepentingan import perkhidmatan
dalam pengukuran kecukupan rizab. Dengan mengambil kira perkara ini dan selaras dengan amalan terbaik
antarabangsa, laporan rizab antarabangsa Malaysia secara dwimingguan pada masa hadapan akan merangkumi
penunjuk tentang liputan rizab bagi import barangan dan perkhidmatan, berkuat kuasa mulai 22 Februari 2022.2
1 Ditakrifkan sebagai import kasar ditolak dengan eksport semula. Import tertangguh purata 12 bulan boleh didapati daripada Sorotan Bulanan dan Statistik,
Jadual 3.6.8 (Import oleh Pengguna Akhir; lihat Lampiran 1).
2 Bagi kedudukan rizab antarabangsa pada 15 Februari 2022.
3 Ditakrifkan sebagai import ditambah dengan eksport.
4 Daripada RM101.3 bilion kepada RM351.3 bilion, atau kadar pertumbuhan tahunan terkompaun (compound annual growth rate, CAGR) sebanyak 6.4%.
Services tradeC1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM billion
Travel1
Computer and information
Transport
Manufacturing
Other business3
Other2
Perdagangan perkhidmatanR1
0
100
200
300
400
1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021
RM bilion
Perjalanan1
Komputer dan informasi
Pengangkutan
Pembuatan
Perniagaan Lain3
Lain-lain2
Nota: Data sebelum tahun 2005 adalah berdasarkan garis panduan dalam Edisi Kelima Manual Imbangan Pembayaran dan Kedudukan
............Pelaburan Antarabangsa (BPM5) IMF. Data bagi tahun 2005 dan selanjutnya adalah berdasarkan BPM6.
1 Termasuk perbelanjaan perjalanan bagi aktiviti pelancongan.
2 Termasuk pembinaan, caj penggunaan harta intelek, perkhidmatan persendirian, kebudayaan dan rekreasi.
3 Perkhidmatan perniagaan lain termasuk perkhidmatan penyelidikan dan pembangunan, profesional, teknikal, berkaitan perdagangan dan
...perkhidmatan perniagaan lain.
Sumber: Jabatan Perangkaan Malaysia dan Bank Negara Malaysia
Note: Data prior to 2005 are based on the guideline in the Fifth Edition of the Balance of Payments and International Investment Position
............Manual (BPM5) of the IMF. Data for 2005 and beyond are based on BPM6.
1 Includes travel spending for tourism activity.
2 Includes construction, charges for intellectual property use, personal, culture & recreational services.
3 Other business services comprise research and development, professional, technical, trade-related and other business services.
Source: Department of Statistics, Malaysia and Bank Negara Malaysia
Pelaporan Bank berhubung dengan liputan rizab bagi import tertangguh telah diterbitkan seawal tahun 1990-an.
Data bagi import tertangguh tersedia setiap bulan dan oleh itu sangat sepadan dengan siaran kedudukan
rizab antarabangsa setiap dua minggu. Walau bagaimanapun, import tertangguh tidak merangkumi bayaran
untuk perkhidmatan, yang telah berkembang sepanjang dua dekad yang lalu. Dari tahun 1999 hingga 2019,
perdagangan perkhidmatan3 telah meningkat sebanyak 246.9%4 (Rajah 1). Hal ini disebabkan terutamanya
oleh aktiviti pelancongan yang lebih tinggi serta pembayaran untuk perkhidmatan pengangkutan asing bagi
perdagangan barangan. Selain itu, import barangan juga berkembang, sebahagian besarnya bagi menyokong
aktiviti pelaburan dalam negeri dan pengeluaran barangan perkilangan.
28 Buletin Suku Tahunan | S4 202128
Prestasi Malaysia berhubung dengan penunjuk ini selaras dengan ekonomi serantau dan ekonomi yang
setara.5 Data sebelum ini menunjukkan liputan rizab bagi import barangan dan perkhidmatan berada dalam
julat antara lima hingga lapan bulan sejak tahun 2008. Paras ini jauh melebihi nilai ambang yang diterima
pakai secara meluas iaitu tiga bulan. Hal ini menunjukkan keupayaan ekonomi Malaysia untuk bertahan
daripada kejutan luaran.
Penting juga untuk ditekankan bahawa penilaian kecukupan rizab tidak seharusnya berdasarkan semata-
mata nilai muka penunjuk-penunjuk ini. Penilaian ini perlu dilengkapi dengan pemahaman yang mendalam
mengenai kedudukan luaran, sistem kewangan dan dasar ekonomi negara secara am. Khususnya, rizab
antarabangsa bukan sahaja cara untuk memenuhi obligasi luaran.6 Penilaian semasa menunjukkan
kedudukan luaran negara7 disokong oleh asas-asas ekonomi yang utuh termasuk lebihan akaun semasa
yang kukuh, aset luaran mata wang asing yang besar yang dipegang oleh entiti dalam negeri8 dan kadar
pertukaran ringgit yang fleksibel.
Rujukan
Department of Statistics, Malaysia. ‘External Sector’, Jabatan Perangkaan Malaysia, Putrajaya.
Greenspan, A., ‘Currency reserves and debt’. Remarks before the World Bank Conference on Recent Trends in
Reserves Management, Washington, DC, 29 April 1999.
International Monetary Fund, (2016). ‘Guidance Note on the Assessment of Reserve Adequacy and Related
Considerations’.
Lampiran 1: Pengiraan liputan rizab antarabangsa bagi import tertangguh
aSebagai contoh, untuk mengira import tertangguh setiap bulan bagi bulan Disember 2019, import tertangguh
bagi bulan Januari hingga Disember 2019 dicampurkan (iaitu import tertangguh bagi 12 bulan secara berturut-
turut). Jumlah ini kemudiannya dibahagikan dengan 12, bagi mendapatkan purata bulanan. Angka-angka
boleh didapati daripada Jadual 3.6.8, kolum S MHS yang dikeluarkan oleh BNM.
5 Berdasarkan JP Morgan’s Government Bond Index for Emerging Markets.
6 Maklumat lanjut boleh didapati dalam rencana “Daya Tahan Malaysia dalam Mengurus Obligasi Hutang Luar Negeri dan Kecukupan Rizab Antarabangsa” dalam
Laporan Tahunan BNM 2018.
7 Selain itu, turut diberikan penekanan ialah kedudukan hutang luar negeri Malaysia, termasuk hutang luar negeri jangka pendek, yang kekal terurus. Hal ini
disokong oleh profil mata wang dan tempoh matang yang bersesuaian terhadap hutang luar negeri serta daya tahan keupayaan bayaran balik pinjaman oleh
entiti dalam negeri. Hutang luar negeri dalam mata wang asing oleh syarikat-syarikat juga sebahagian besarnya tertakluk pada keperluan berhemat dan lindung
nilai (rujuk penilaian terkini tentang perkembangan hutang luar negeri di halaman [xx])
8 Berjumlah RM1.1 trilion pada akhir tahun 2021.
| Press Release |
30 Aug 2022 | Monetary and Financial Developments in July 2022 | https://www.bnm.gov.my/-/monetary-and-financial-developments-in-july-2022 | https://www.bnm.gov.my/documents/20124/8072384/i_en.pdf | null |
Reading:
Monetary and Financial Developments in July 2022
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Monetary and Financial Developments in July 2022
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30 Aug 2022
Headline inflation increased to 4.4% in July
Headline inflation rose to 4.4% in July (June: 3.4%). As anticipated, this largely reflected the base effect from the discount on electricity tariffs implemented in 3Q 2021, which contributed 0.5 ppt to headline inflation. Food & non-alcoholic beverages also contributed to higher inflation, increasing by 6.9% during the month.
Core inflation[1] also increased to 3.4% in July (June: 3.0%). The increase largely reflected higher prices for discretionary services, such as food away from home (7.8%), due to improving demand amid the high-cost environment.
Wholesale and Retail Trade expanded in June
The Index of Wholesale and Retail Trade (IOWRT) grew by 35.8% in June 2022 (May: 14.7%). The higher growth was driven mainly by the motor vehicle segment. This was on account of accelerated purchases ahead of the expiration of Sales and Services Tax exemption on 30 June and the low base in June 2021, when showrooms were closed during the implementation of the full movement control order (FMCO).
On a month-on-month seasonally adjusted (m-o-m SA) basis, growth continued to decelerate to -2.3% (May: -0.7%) from the strong m-o-m SA increase in April of 7.9%.
Continued increase in net financing growth
Net financing[2] grew by 5.3% (June: 5.0%) driven by higher growth in both outstanding loans (5.9%; June: 5.6%) and corporate bonds (3.7%; June: 3.4%).
Outstanding household loan growth stood at 6.1% as the growth in loan disbursements outpaced that of loan repayments. Credit flows to households continued to be mainly for the purchase of houses and cars.
For businesses, outstanding loans grew by 5.8%, mainly driven by lending to SMEs. By purpose, working capital loans remained the key driver, although the growth in loan repayments outpaced that of disbursements, likely reflecting the continued lapse in repayment assistance.
10Y MGS yields declined, in line with lower global bond yields
Global financial market conditions eased noticeably in July, reflecting expectations of slower global growth. Domestic financial market adjustments had remained orderly and was also supported by healthy trading volumes.
The 10-year MGS yield fell by 38.0 bps alongside the 10-year US Treasury yield (-36.4 bps) and other regional* bond yields (average: -39.7 bps).
The FBM KLCI rose by 3.3% (regional[3] average: 2.5%), supported by positive domestic growth prospects while the ringgit weakened by 1.0% against the US dollar, in line with the movement in regional* currencies (average: -0.6%).
Banks remain well-capitalised to support economic recovery
Banks’ capital position remained strong to withstand potential stress and continue supporting credit flows to the economy.
Banking system capital ratios improved in July, driven by half-yearly recognition of profits and valuation gains on available-for-sale financial instruments as bond yields reversed marginally.
As at end-July 2022, the banking system recorded RM129.6 billion excess capital buffers[4].
The resilience of banks continued to be underpinned by sound asset quality
Overall gross and net impaired loans ratio increased slightly to 1.85% (Jun-22: 1.78%) and 1.2% (Jun-22: 1.1%), respectively.
Loan loss coverage ratio (including regulatory reserves) remains at a prudent level of 112.8% of impaired loans, with total provisions accounting for 1.8% of total loans.
As of end-July 2022, the banking system recorded RM 41.1 billion of total provisions and regulatory reserves.
Monthly Highlights [PDF]
[1] Core inflation is computed by excluding price-volatile and price-administered items. It also excludes the estimated direct impact of tax policy changes.
[2] Refers to outstanding loans of the banking system (excluding development financial institutions (DFIs)) and outstanding corporate bonds. Data on outstanding loans for July 2022 are based on the new set of loan/financing data reflecting the latest requirements. Figures may not add up due to rounding.
[3] Regional countries include Singapore, Thailand, Philippines, Indonesia and Korea
[4] Refers to total capital above the regulatory minimum, which includes the capital conservation buffer (2.5%) and bank-specific higher minimum requirements
Related Assets
Monthly Highlights & Statistics in July 2022
Bank Negara Malaysia
30 August 2022
© Bank Negara Malaysia, 2022. All rights reserved.
|
Monthly Highlights May 2023
Monthly Highlights
Headline inflation declined further to 2.8% in May
May 2023
Contribution to Inflation
ppt. contribution %, yoy
1 Core inflation is computed by excluding price-volatile and price-administered items.
Source: Department of Statistics, Malaysia & Bank Negara Malaysia estimates
• Headline inflation moderated to 2.8% (April 2023:
3.3%). This decline was largely due to non-core
CPI components, particularly lower inflation for
fuel (-0.2 percentage points, ppt) and fresh food
(-0.1ppt).
• Core inflation also declined slightly to 3.5% (April
2023: 3.6%) amid lower inflation for
communication services.
3.3
2.8
3.6 3.5
0.00
2.00
4.00
0.0
2.0
4.0
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2
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3
Food & non-alcohol (29.5%) Housing & utilities (23.8%)
Transport (14.6%) Others (32.1%)
Headline inflation (RHS) Core inflation¹ (RHS)
1.6
5.1
4.6
0
1
2
3
4
5
6
7
May-22 Sep-22 Jan-23 May-23
Business loans
Household loans
Corporate bonds
Annual growth (%)
Credit to the Private Non-Financial Sector1,2
1
Growth in credit to the private non-financial sector improved in May
1 Comprises loans to households and non-financial corporations from the
banking system and development financial institutions (DFIs), and corporate
bonds issued by non-financial corporations (including short-term papers).
2 Starting with the publication of December 2022 Monthly Highlights and
Statistics (MHS), this series was introduced to enhance the quality of
financing data. This new data series is available in the MHS Table 2.18.
Source: Bank Negara Malaysia
Contribution to growth (ppt)
• Credit to the private non-financial sector expanded
by 4.0% as at end-May (April 2023: 3.7%), driven
mainly by higher growth in credit to businesses
(2.8%; April 2023: 2.5%).
• Outstanding corporate bonds grew by 4.6% (April
2023: 4.4%), while outstanding business loans
expanded by 1.6% (April 2023: 1.0%). The higher
business loan growth reflected improvement in
loans for both working capital and investments to
SMEs and non-SMEs.
• In the household segment, outstanding loan
growth was sustained at 5.1% (April 2023: 5.0%),
supported by higher growth across most loan
purposes. Of note, household loan growth
continued to be driven by loans for the purchase of
houses and cars, which grew by 7.0% and 8.4%,
respectively (April 2023: 6.8% and 8.0%).
2.7 2.6 2.5 2.6
0.7 0.7 0.3 0.5
1.1 0.9
0.9 1.0
4.5 4.2
3.7 4.0
Feb-23 Mar-23 Apr-23 May-23
Corporate Bonds
Business Loans
Household Loans
Credit to the Private Non-
Financial Sector
Index of wholesale and retail trade growth moderated in April
Source: Department of Statistics, Malaysia
• The Index of Wholesale and Retail Trade
(IOWRT) expanded more moderately by 4.7% in
April 2023 (March 2023: 9.4%). The lower growth
was due mainly to the decline in the motor vehicle
segment.
• However, the retail segment continued to record a
double-digit growth of 10.0% (March 2023:
13.8%), supported by sales in non-specialised and
other specialised stores1.
• On a month-on-month seasonally adjusted basis,
the index increased at a faster pace of 6.5%
(March 2023: -0.9%).
1 Other goods in specialised stores includes clothing, footwear,
pharmaceuticals, cosmetics, watches, jewellery and optical goods.
10.6
9.4
4.7
-2
3
8
13
18
23
28
33
Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23
ppt, %yoy
Motor vehicles Retail Wholesale
Index of Wholesale and Retail Trade
Monthly Highlights
2
May 2023
Domestic financial markets were largely affected by external factors
Financial Market Performance in May 2023
-18.0
-0.5
-1.1
-3.0
-2.0
-3.4
10-year MGS
(bps, mom)
Equity
(%, mom)
Ringgit
(%, mom)
-20 -15 -10 -5 0
May-23 Apr-23
Note: The exchange rate data is the noon-rate in the Kuala Lumpur Interbank Foreign Exchange Market
1Regional countries comprise Singapore, Thailand, Philippines, Indonesia, and Korea
Source: Bank Negara Malaysia, Bursa Malaysia
• Global investors maintained a risk-off approach
throughout May, as concerns over the impact of the
US debt ceiling crisis and the weaker-than-
expected rebound in China’s economy weighed on
global financial markets.
• As a result, the ringgit depreciated against the US
dollar by 3.4% (regional1 average: -1.2%). Similarly,
the FBM KLCI declined by 2.0% (regional1 average:
-1.3%).
• Nonetheless, the 10-year MGS yields decreased
slightly by 3 basis points, supported by non-resident
inflows into the domestic bond market.
Banks maintained strong liquidity and funding positions to support intermediation
• Banks continued to record healthy liquidity buffers
with the aggregate Liquidity Coverage Ratio at
151.2% (April 2023: 154.3%).
• The aggregate loan-to-fund ratio remained stable at
81.8% (April 2023: 82.1%).
Source: Bank Negara Malaysia
Banking System Liquidity and Funding Ratios
81.8
151.2
0
40
80
120
160
70
75
80
85
90
95
M
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% %
Liquidity Coverage Ratio (RHS)
Loan-to-Fund Ratio
Asset quality in the banking system remained intact
Banking System Asset Quality
Source: Bank Negara Malaysia
• Overall gross and net impaired loans ratios
remained broadly unchanged at 1.80% (April
2023: 1.78%) and 1.10% (April 2023: 1.10%),
respectively.
• Loan loss coverage ratio (including regulatory
reserves) remained at a prudent level of 114.1%
of impaired loans, with total provisions accounting
for 1.7% of total loans.
%
1.8
1.1
1.7
0.5
1.0
1.5
2.0
M
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Gross Impaired Loans Ratio
Total Provisions to Total Loans Ratio
Net Impaired Loans Ratio
April 2023 Monthly Highlights
Slide 1
Slide 2
| Press Release |
30 Aug 2022 | Detailed Disclosure of International Reserves as at end-July 2022 | https://www.bnm.gov.my/-/detailed-disclosure-of-international-reserves-as-at-end-july-2022-1 | null | null |
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Detailed Disclosure of International Reserves as at end-July 2022
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Detailed Disclosure of International Reserves as at end-July 2022
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In accordance with the IMF SDDS format, the detailed breakdown of international reserves provides forward-looking information on the size, composition and usability of reserves and other foreign currency assets, and the expected and potential future inflows and outflows of foreign exchange of the Federal Government and Bank Negara Malaysia over the next 12-month period.
The detailed breakdown of international reserves based on the SDDS format is shown in Tables I, II, III and IV.
As shown in Table I, official reserve assets amounted to USD109,177.3 million, while other foreign currency assets amounted to USD5.3 million as at end-July 2022.
As shown in Table II, for the next 12 months, the pre-determined short-term outflows of foreign currency loans, securities and deposits, which include among others, scheduled repayment of external borrowings by the Government and the maturity of foreign currency Bank Negara Interbank Bills, amounted to USD8,479.6 million. The short forward positions amounted to USD14,927.8 million as at end-July 2022, reflecting the management of ringgit liquidity in the money market. In line with the practice adopted since April 2006, the data excludes projected foreign currency inflows arising from interest income and the drawdown of project loans. Projected foreign currency inflows amount to USD2,164.4 million in the next 12 months.
As shown in Table III, the only contingent short-term net drain on foreign currency assets are Government guarantees of foreign currency debt due within one year, amounting to USD399.5 million. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organisations, banks and other financial institutions. Bank Negara Malaysia also does not engage in foreign currency options vis-à-vis ringgit.
Overall, the detailed breakdown of international reserves under the IMF SDDS format indicates that as at end-July 2022, Malaysia’s international reserves remain usable. Related Assets
International Reserves and Foreign Currency Liquidity (31 July 2022)
Bank Negara Malaysia
30 August 2022
© Bank Negara Malaysia, 2022. All rights reserved.
| null | Press Release |