The Malaysian economy's return to a stronger footing in the first quarter of 2022 (1Q22) with a gross domestic product (GDP) growth of 5% and the latest economic indicators indicate that the economic recovery has begun.
The Ministry of Finance (MoF), in its 95th People's Financial Report issued on Saturday (May 21), said the Malaysian economy is expected to grow between 5.3% and 6.3% this year, supported by higher domestic demand and support from external demand, increased economic activity, and continued labour market recovery.
"With the reopening of the international borders, the tourism sector will also recover. Increased trade activity will have a positive impact on the services sector," the report said.
Besides, growth was also aided by Budget 2022's expansionary measures, projects with high-multiplier effects, and development programmes under the 12th Malaysia Plan.
“Nevertheless, we still need to be vigilant about the latest global and geopolitical developments that could affect the momentum of the country’s economic recovery, particularly inflation when commodity prices continue to rise, as well as supply chain disruptions," the report said.
However, it said the government will continue to monitor the development of various economic risks so that external shocks that could affect the well-being of the people and businesses could be managed.
Meanwhile, the report said the ministry also placed great emphasis on awareness of environmental, social and governance (ESG), sustainable development goals (SDGs), and principles for good governance (PGG) to achieve various goals such as diversity, social equity, environmental protection or helping the underprivileged.
"To raise awareness on the SDGs, the ministry has taken several measures, including identifying existing funding gaps for SDG-related programmes and projects at ministerial level.
"The MoF has matched all programmes and projects under the Ministry Development Expenditure to the appropriate SDGs," it said, adding that the measures are also part of efforts to establish the principle of sustainability in public spending.
The MoF has allocated RM450 million under Budget 2022 for environmental and biodiversity conservation, including tree planting and nature conservation projects.
Through collaboration with the United Nations, the ministry has established the Malaysia Sustainable Development Goals Trust Fund (MySDG Trust Fund) with an initial allocation of RM20 million to the MySDG Trust Fund.
For PGG, the good governance principles initiative will build business resilience in the face of future challenges, especially in terms of providing guidance to small and medium enterprises (SMEs) in the government-linked investment companies (GLICs) ecosystem to achieve Malaysia's ESG and SDG goals.
“This is important to ensure that companies are prepared for growth in market demand with respect to ESG, where the principles of good governance suggest the establishment governance structures for ESG regulatory in their investment strategies.
“Equally important and thing that needs to be emphasised is the need to increase capacity and expertise on ESG in ensuring the sustainability of these efforts in the future,” it said.
The report said there were various data showing that companies that focus on ESG issues managed to reduce costs, increase employee productivity, reduce various risks, and create more business opportunities.