FINANCIAL SECTOR BLUEPRINT: CHARTING THE PATH AHEAD, TOGETHER 

Panelists: 

Abdul Rasheed Ghaffour, Deputy Governor, BNM 

Datuk Kamaruddin Taib, FIDE Forum Vice Chair, Chairman of HSBC Amanah Malaysia Berhad and  Director of Great Eastern General Insurance (Malaysia) Berhad 

Datuk Yvonne Chia, Chairman of Standard Chartered Malaysia Berhad and Standard Chartered  Saadiq Berhad 

Alain Yee, Head, ShopeePay Malaysia 

Ong Chin Fong (moderator), Senior Partner & Managing Director, BCG Malaysia 

• Moderator is introduced as a core member of the BCG financial institution team in SEA with  extensive experience in game-changing emission work. He sets the tone for discussion – with uneven economic recovery and domestic inequalities, the Blueprint is spot-on in its  focus of charting a path ahead together. He introduces the panel, a diverse group from  private and public sectors: 

- Abdul Rasheed Ghaffour, Deputy Governor, BNM, who is involved in many areas of  monetary policy, economics and financial markets 

- Datuk Kamaruddin Taib, formerly of the Oil & Gas sector and active in FIDE Forum - Datuk Yvonne Chia from Standard Chartered Malaysia, a trailblazer and first female CEO  of any commercial bank in Malaysia 

- Alvin Yee, with 10 years’ experience in management consultancy, corporate finance and  asset management in telco and digital sectors 

• DG Rasheed touched on how this most recent Blueprint was the hardest one yet to do, set in  a time of uncertainty but, at the same time, possibly the Blueprint that was the most unique  and rewarding as this Blueprint represented also a unique opportunity for the entire  economic sector to come together and build a stronger economy. 

The DG highlighted four important considerations that guided the organisation’s approach  to designing the Blueprint: 

1) The financial sector enters the Blueprint from a position of strength. Hence, it is now  time to push the boundaries of finance, for example pushing non-debt instruments to  help companies that want to grow get funding solutions without the burden of more  debt.

2) The importance of competition and innovation in fostering market dynamism.  Strategies in the digital space enhance existing pathways, for example the Bank’s  revolutionary Sandbox for digital innovation. 

3) The recognition that finance must ultimately help individuals and businesses. Measures  like insurance and protection coverage are key here - such as microtakaful products, to  advance progress on this front. 

4) All actions must serve Bank Negara Malaysia’s core mandate to preserve monetary and  financial stability. In this respect, the one risk that is becoming increasingly important is  the transmission of climate risk and the strategies formulated to mitigate this risk. 

Moderator:  

He raised the issue of post-pandemic borrowers continuing to receive funding when traditional  measures are no longer reliable barometers. This makes forward-looking alternative data more  important. The question then is how to make more use of alternative data and encourage sharing? 

Yvonne Chia: 

- Historical models no longer reflect covid-era behaviour because these traditional models  are based on equilibrium methodology and assumptions. 

- The pandemic has changed this - the traditional basis of repayment capacity being  within 30% of one’s income is not entirely valid. There is a need now to use other data - supply-chain leakage data, e-commerce data - to augment transactional data. 

Moderator: 

He asked the question how best should the private and public sectors partner to advance  digitalisation of the financial sector, for example in the adoption of Central Bank Digital Currency  (CBDC) and Distributed Ledger Technology (DLT)? 

Alvin Yee: 

The world is in the midst of IR 4.0 and the pace of digitalisation is very rapid. To ensure sustainable  gains for the country, he sees four key areas of collaboration: 

1) Development of new infrastructure and capabilities, especially the establishing of new  critical capabilities such as open data eco-systems, national registers, advancing share  payment infrastructure, which are all key enablers of data-driven decisions. 

2) Driving digital literacy and adoption. Banks, e-commerce and e-wallet entities have driven  digital adoption more than five-fold in recent years. In 2021, Shopee, working with the  Ministry of Finance, successfully garnered more than one million uses on their e-wallet,  demonstrating the power of this co-operation.

3) Building human capital by supporting and scaling government programmes like traineeships  and e-learning programmes. 

4) Developing and adopting security solutions , such as developing AI models that identify e fraud with zero human intervention. 

Where CBDC is concerned, the potential is very high that it will make cross-border payments faster  and also important to CBDC is DLT to ensure the system works well. While the prospect is exciting,  there is still a long way to go. 

DG Rasheed: 

He emphasized that the need for strategies to ensure strong cybersecurity, advancing common  standards and governance will be critical in this arena. 

Yvonne Chia: 

Creating value propositions and balancing incumbency and innovation will be the way forward. Datuk Kamaruddin: 

There is a need for a strong task force to swiftly consolidate collaboration. 

Moderator: 

What is the role of private-public collaboration in providing better protection? How can ITO lead  the establishment of such schemes? 

Datuk Kamaruddin: 

- Pandemic has created more awareness of medical benefits and rise in costs at private  hospitals, driven by factors such as equipment, supplies and an aging population. 

- A task force including Ministry and Information Technology Outsourcing (ITOs) is needed to formulate a protection plan that is reasonable and just. 

- He provided an example of Rakyat 1 Malaysia Takaful Scheme where costs are shared by  both private sector and government, with subsidized premiums featuring as a key  characteristic. 

The Moderator then addressed the topic of green financing and asked the panel about the cost,  estimated to be more than $100 billion, for Asia to achieve sustainability. Yvonne Chia pointed out  that the intersection of climate and capital was truly critical – to operationalise this process would  require the re-building of a new economy across all sectors. 

Moderator asked regarding digitalization in Islamic Finance. The panel made the following points: - Viable alternative financial solution if one works with fintech

- Blockchain helps mass adoption 

- It serves the wider community, especially rural population 

 

- Risk-sharing is underutilized and there are tools like wakaf that can be used for social  good 

WHY A SUSTAINABLE CLIMATE-RESISTANT PLANET IS THE ONLY FUTURE WORTH BUILDING  Keynote Address by: Achim Steiner, UNDP Administrator, United Nations Development Programme 

• Presenter introduced his topic on how to harness the power of digital technology to drive COVID recovery, sustainability and inclusion challenges to improve the well-being of people and planet. 
• Escalating climate change, he said, was impacting especially the developing countries and hence, the role of fintech in building a climate-resilient and nature-positive future was becoming increasingly important. He touched on how the recent Task Force on digital  

financing of SDGs explored how digital finance, underpinned by fintech, could put more of  the US$380 trillion in assets managed by the global financial system to the use of people and  planet - for example, how digitalisation of government payments generated US$320 billion  in savings annually which could be re-directed to sustainable development and investment  in recovery from COVID.  

• He noted that the pandemic revealed digital financing’s potential for transformative impact, e.g. crowdfunding mobilising funds for medical purposes and digital transfers helping governments get rapid support out to people in need. But, COVID has also widened the  digital divide, including the digital gender divide, further disadvantaging the unconnected.  Hence, it was important to ensure affordable access to the Internet to ensure all would get  to realise the full potential of the new technology platforms. 
• On the matter of digitalisation aiding the delivery of SDG goals, he noted that technological advances must combine with sound policy that empowers ciotizens wyile enabling financial systems to maximise the impact of investment. He provided these examples: 

- UNDP and the UN Capital Development Fund designed a joint effort on new digital  financing strategies to create enabling environments to propel SME growth 

- Pathfinder initiatives, e.g. in Bangladesh, where digital financial platforms leveraged  citizens’ microsavings to finance green infrastructure projects such as sanitation  schemes and healthcare facilities 

- UNDP SDG Impact Initiative created business cases for investors to align finances  with SDGs. Via this support, development banks in Uzbekistan and China were able  to issue SDG bonds in the US$800 million range in 2021 

- Biodiversity finance initiatives helping countries implement effective solutions to  fund nature, e.g. the government of Fiji issuing its sovereign Blue Bonds later in 2022 

• He emphasised that advancing these initiatives would help achieve SDGs and commended Bank Negara for scaling up its green finance initiatives to drive the nation’s transition to a low-carbon, green economy. He added that this coming February would see a visit to Kuala  Lumpur where UNDP would discuss how it could further assist the SDG Impact Initiative.
• He concluded that for us not to not merely keep up with the on-going technological revolution in fintech but to get ahead of the curve, we must look to transforming ourselves, building our capacity and aligning our efforts. To this end, the UNDP can be counted upon at  both national and regional levels. A sustainable, climate-resistant planet, he said, is the only  future worth building. 

ACCELERATING OUR SUSTAINABILITY JOURNEY: THE ROLE OF FINANCE 

Panelists: 

Nurhisam Hussein (Chief Strategy Officer, EPF) 

Sarah Breeden (Executive Sponsor Climate Change and Executive Director, UK Deposit Takers  Supervision, Bank of England) 

Zoe Knight (MD, Centre for Sustainable Finance) 

Domenic Fuda (CEO, Hong Leong Bank) 

Moderator: Jessica Chew (Deputy Governor, BNM and Co-Chair, Joint Committee on Climate  Change, Malaysia) 

• Moderator made the following introductory remarks:

- Strong action required to intensify sustainability 

- Globally important strides have been made 

- In the forefront is the Central Bank which networks and supervises response to climate  risks in ASEAN as well as domestic levels 

- The challenge ahead lies in mitigation and adaptiation 

- Challenge is also the advancing climate change 

- Technology is the key enabler, as it helps to drive solutions 

Zoe Knight: 

For progress to happen, have to mobilise more capital for green solutions. The green bond market  surpassed the trillion mark in 2021 (87% higher than 2020). There is a massive demand for green  products, as investors move away from fossil fuels. The key to transition is to build more knowledge  on steel, shipping, cement and aviation. Financial sectors have to come up with a transition plan on  how to set targets/goals. The good news is that there is worldwide coalition on these issues. 

Sarah Breeden: 

For finance firms to move to net zero: 

- They should not diversify resources to high emission investments 

- Should improve data and transform risk management – use investment and innovation  to drive transition. 

- Central Banks have to steer the financial eco-system to enable change – be the enabler. - Governments have a role to play by setting out clear guidelines for transition - Unprecedented challenge – there are no manuals or models or data to work with, but  urgent action needed

- Government, private, domestic and international agencies have to work together and  share expertise to build a future. 

Domenic Fuda: 

Economies must continue to operate. Transition in the Malaysian context: 

- Education is key – it also involves engagement with customers. Over the past two years,  banks as lenders are putting policies into place. 

- Working to put targets in place for what we would like to see over the next 18 months,  36 months, or the next five years. 

- What to finance – for transition, you require technology for which you need capital and  financing. 

- Measure transition by identifying what is urgent. Opportunities abound, therefore go for  measurable targets and capture data. 

- On the consumer front, the bank is being more energy efficient – for example solar  panelling, less reliance on air-conditioning. 

- Banks need government policies to spur them on. Financial system will be wheels of  economic transition, but must work mutually with government. 

Nurhisham Hussein: 

- The role of institution as an investor is powerful, as it has funds. 

- Level of understanding of green journey still low, compared to , e.g. U.S. - Great explosion of interest over recent years – global expansion diversifying away from  climate risk. 

- EPF has to engage with investors, to generate greater awareness. 

Sarah Breeden: 

- Long-term institutional investors drive the transition and ensure all players move  forward in a stardardised way, to reduce cost of transition. 

Zoe Knight: 

- HSBC putting its own house in order, and creating coalition and common pathways to  bring together an alliance of banks 

- Impelenting a practitioners guide 

- Use technology to reduce data gap  

To Moderator’s question on how to nudge banks to adapt to climate change, panel responded as  follows:- 

- Develop effective capabilities to identify climate risk 

- Regulate all financial institutions 

- Provide practical help and have a doable timeline 

- Transition must be orderly and untimely exits need to be avoided 

- Government has to set up a climate policy 

POWERING THE GREAT TRANSITION TO A GREENER, MORE SUSTAINABLE ECONOMY Tech Talk Panelists:

Charlotte Wolff-Bye, Chief Sustainability Officer, Petronas 

Faroze Nadar, Executive Director, UN Global Compact Network Malaysia & Brunei 

Atsushi Koresawa, Regional Representative for Asia and the Pacific, UN Human Settlement  Programme (UN Habitat) 

Lead discussant: 

TS Jemilah Mahmood (Special Advisor on Public Health) 

• Charlotte of Petronas said that ¾ of all man-made carbon emissions are from fossil fuels  essential to economic growth. Recent supply hiccups in Europe and China caused energy  prices to shoot to a 40-year high and led to street protests. Petronas’ view is that  decarbonised future is not the solution to deal with emission. Pertronas strongly advocates  natural gas to facilitate transition. The Oil & Gas industry is willing to respond and become  part of the solution. 

Petronas is working on multiple collaborations, and will work with value chain with nett zero  in mind to enable competitive and resilient transition.  

Globally, US$98 trillion will be committed to energy transition. If some of this is captured here, it  will mean new job opportunities for people in Malaysia. 

BIGTECHS IN FINANCIAL SERVICES 

Chat Panelist: 

Reuben Lai (Senior Managing Director, Grab Financial Group) 

Lead discussant: 

Raja Teh Maimunah (MD Wholesale Banking, AmBank Group) 

• Raja Teh of AmBank started the discussion with the thought that there has been a lot of  demonising of Big Tech 
• Reuben of Grab responded that because Grab started as a small ride-hailing service, they  have always worked with regulators to ensure all elements of their business get a fair deal.  He cited three examples: 

1) When MCO first hit, they partnered with government to get both riders and  merchants quickly onboard their digital platform. 

2) When the government wanted to distribute aid, Grab was chose to be one of the  three e-wallets that helped get the job done. 

3) Partnered with Bank Negara Malaysia to educate the public on digital literacy.

• To the question of whether Big Tech should be more regulated, Reuben said that Grab itself  has worked with Big Tech – AWS, Microsoft on Customer Relations Management (CRM) – and  embraces any partnership with any tech that can add value to themselves and their  customers. 
• In addition, Grab is very concerned with privacy and cybersecurity, considering themselves as  guardians of customer engagement with dedicated 24-hour fraud protection. 
• When asked what she thinks of these partnerships, Raja Teh replied that her organisation’s  very existence depends on partnership with tech, and that, when it came to reaching the  underserved, inter-operability was the key. 
• To the question of how her bank viewed the competitive landscape, Raja The replied that the  front end and customer belongs to fintech, while her bank supports the facilitation of all  backroom activity.  
• On the part of Grab, they look to the new generation and what they want – a safe harbour  when the customer knows there is enough money behind the digital bank and good  cybersecurity. 
• Both participants of the chat concluded that open-banking in Malaysia still has away to go.  While such technology is a good way to makes one’s product available to large nujbers of  people, there must also be financial responsibility that stops customers from over-extending  themselves. 

MALAYSIA’S DIGITAL ECONOMY: THE PROMISE OF A BETTER FUTURE 

Panelists: 

Marina Che Mokhtar (Partner, Economics & Policy, PwC) 

Mahadhir Aziz (Chief Executive Officer, Malaysia Digital Economy Corporation)  Fabian Bigar, CEO, MyDigital Corp 

Lead Discussant:  

Smita Kuriakose (Senior Economist, Finance, Competitiveness and Innovation Global Practice, The  World Bank) 

• To the question of how Malaysia’s digital progress can be measured, the answer form Marina  Che Mokhtar is that it ranks 27 out of 64, with its main strength in high-tech export. More  importabtly, she felt, is the kind of opportunities it presents and there is evidence to show  Malaysia does contribute to the digital economy: 

- E-commerce income is up by 70%

- Plenty of government support 

- Much encouragement for start-ups to participate in the digital economy 

• On the status of the MyDigital Plan, Fabian Bigar informed that out of 58 projects, three are  completed while 55 are on-going 
• On the vital role MDEC has played: 

- There are more suppliers now than 25 years ago. 

- There are over 4,000 MSC-status companies making a more than 20% contribution to  the economy. 

- However, neighbouring countries are leap-frogging Malaysia with better offers and  talent. Malaysia must stocktake and ask itself what gaps there are to fill, to develop  talents with better capabilities, discover the next achievers of excellence like Carsome  and Aerodyne. 

To the question of what three priorities are required in the development of more unicorns: 

- Regulation is impeding innovation and the government must look into this. - Purposeful funding, as funds are available at the early stages but less so when scale-up  happens. 

- Finding the right projects for the companies to participate in. 

On the issue that digital is borderless, how does Malaysia both compete and collaborate with its  neighbours? 

- Fabian Bigar replied that MITI is tasked with the framework for digital trade with  neighbours and that DigitalCorp has recently been approached by the Colombian  government. 

- Mahadhir pointed out that COVID has uncovered these weaknesses – a lack of devices;  poor quality of connection; the lack of a set of digital skills that now are expected of  everybody. While these are being looked atk he empahsised there is a need to build up  these resources by working with many agencies to boost both skillsets and businesses.