Ekonomi MADANI: RM120 Billion Domestic Direct Investment Boost From Glics Under MoF-Led Programme

In a strategic move to bolster Malaysia’s structural reforms as envisioned in the Ekonomi MADANI framework, the Ministry of Finance (MOF) is spearheading a programme aimed at synergising efforts across Government-Linked Entities to catalyse growth in key economic sectors.

Known as GEAR-uP, the first phase of the programme will see six leading Government-Linked Investment Companies (GLIC) collectively pledge to invest RM120 billion in domestic direct investments (DDI) over the next five years, on top of RM440 billion in public market investments under their steady state investment programmes. These investments are primarily directed towards high-growth highvalue (HGHV) industries such as the energy transition sector, advanced manufacturing especially in the semiconductor space, investments across all life cycle of firms from start-ups, venture capital to mid-tier companies and finally to support listing of such companies.

These investments form the main thrust of GEAR-uP to spur the growth of new economic ecosystems and further drive GLICs’ participation in nation-building. The six GLICs are Khazanah Nasional Berhad (Khazanah), the Employees Provident Fund (EPF), Kumpulan Wang Persaraan (Diperbadankan) [KWAP], Permodalan Nasional Berhad (PNB), Lembaga Tabung Haji, and Lembaga Tabung Angkatan Tentera (LTAT). Additionally, they will leverage on their respective expertise to achieve a common goal of “raising the ceiling” of Malaysia’s economic stature and “raising the floor” of the rakyat’s quality of life.

“Achieving the ambitious targets of the Ekonomi MADANI framework demands a unified effort from the entire nation — including the corporate sector. By getting the GLICs to heighten their focus on domestic investments, this deployed capital can benefit Malaysians equitably and birth new economic ecosystems,” said YAB Dato’ Seri Anwar Ibrahim, Prime Minister and Finance Minister, after a briefing on the programme at the GEAR-uP Gallery Walk yesterday at the Main Hall of the Ministry of Finance, Putrajaya.

“With a combined Assets Under Management (AUM) valued at over RM1.8 trillion, roughly the size of Malaysia’s nominal gross domestic product (GDP), the GLICs have the financial capacity to effect the nation’s ascent in the economic value chain and transform Malaysians’ lives for the better,” he added.

Each of the GLICs will have their respective focus areas to lead in the GEAR-uP programme:

• Khazanah: To embark on its Malaysia investment strategy that is anchored on ‘A Nation That Creates’ framework to increase national productivity and competitiveness. Key focus areas include transforming firms to unlock value, energy transition, digitalisation, capacity building and upskilling and spearhead efforts to enhance Malaysia’s connectivity through its aviation portfolio. Khazanah will ensure semiconductor ecosystem resilience, nurture mid-tier company growth and invest in the venture capital ecosystem, among other initiatives planned to support GEAR-uP. The recent acquisitions of MAVCAP and Penjana Kapital is part of its efforts to establish the National fund of funds (NFOF) which would further enhance capital access for start-ups, driving economic growth and innovation.
  
  
• KWAP: To empower Malaysian private markets across private equity, infrastructure and real estate, with a focus on providing catalyst funds for venture capital and growth-stage firms via Dana Perintis and Dana Pemacu. KWAP has identified eight sectors, including amongst others food security, digital economy, energy transition and advanced manufacturing.
  
  
• PNB: To modernise Malaysian industries and corporates towards higher valueadded and sustainable activities, with specific focus on investments in new industrial parks, supporting automation and smart farming in palm oil, and green and energy transition assets. PNB remains committed to empowering and uplifting the Bumiputera community, including programmes to nurture the next generation of Bumiputera entrepreneurs and corporate leaders; and enhancing financial security and literacy for young Malaysians.
  
  
• EPF: To focus on advancing a dignified and prosperous aging society which involves investing in commercially viable sustainable healthcare solutions in partnership with the Government, including building private wings in public hospitals in line with the Health Transformation agenda championed by the Ministry of Health. In line with its mandate, the EPF will continue to strengthen social protection and pension reforms, emphasising old-age income security for all Malaysians.
  
  
• Lembaga Tabung Haji: To broaden the role of Islamic banks including strengthening sustainable social impact through Islamic finance instruments for more streamlined disbursements to the poor; and augmenting the Islamic financial system through strategic collaborations with other key financial institutions and market players.
  
  
• LTAT: To elevate Malaysia’s pharmaceutical value creation by strengthening its capacity to produce local biopharmaceutical products. Further, LTAT remains committed to uplifting the social well-being of the Malaysian Armed Forces by supporting the transition ecosystem for veterans to transition to second careers.
  
  

Beyond capital investments, the GLICs and Government-Linked Companies (GLC) will lead impactful actions to improve the lives of employees in their organisations and ecosystems, including investee companies. These include committing to ensure permanent Malaysian employees receive a total compensation equivalent to monthly living wages of RM3,100 and aligning future wage benchmarks with the EPF’s annual Belanjawanku report.

The GLICs also pledged ongoing efforts to ensure equal opportunities through fairer gender representation in the workplace; targeted reskilling and upskilling programmes particularly in TVET; and holistic community support through coordinated and streamlined corporate responsibility initiatives such as working with the government on the Kampung Angkat MADANI programme to provide socio-economic interventions to complement the Government’s support on basic infrastructure.

In addition, Kumpulan Wang Amanah Negara (KWAN) will be strengthened as an intergenerational wealth fund of Malaysia with new sources of contributions, revised utilisation guidelines, and strengthened investment mandates to ensure sustainability and a retention of wealth for future generations of Malaysians. Governed by the National Trust Fund Act 1988, KWAN’s current fund size stands at approximately RM20 billion.

Ministry of Finance
Putrajaya
8 August 2024