KUALA LUMPUR (Sept 23): Malaysia is ranked 20th most financially inclusive market out of 42 markets analysed globally, according to the inaugural 2022 Global Financial Inclusion Index from Principal Financial Group.

Additionally, the country ranks fifth for financial inclusion support provided to employees by their employer.

In a statement on Friday (Sept 23), Principal said Malaysia’s financial system received high scores for enabling business confidence, and its government support ranks in the top 10 for laws and regulations which prioritise financial protection for consumers. 

As such, Principal proposed that Malaysia’s high scores in a number of indicators that were analysed, suggest it is poised to experience an acceleration in its development as a capital and wealth market. 

This would result in rapid economic opportunity and greater output of wealth creation for its population and international participants.

Principal Malaysia country head and chief executive officer Munirah Khairuddin said Malaysia has made significant steps over the past decade to accelerate financial inclusion for its population.  

“The country’s federal statutory body that manages the compulsory savings plan and retirement planning for private sector workers in Malaysia, for example, has one of the most competitive mandatory retirement savings rates in the world. 

“In addition, Malaysian banks are well capitalised, which has increased their ability to finance and loan to small businesses.  

“Equally, as a wealthy middle class grows, there’s been a push to create a retail investment culture by reducing state-owned stakes in government-linked companies and encouraging stock purchases across the population that encourages intelligent risk-taking,” she said. 

Meanwhile, Principal noted that Malaysia ranks in the top half of the table overall, in terms of investment implications, with the country ranking well compared with other emerging economies for employer support.

The firm viewed that Malaysia’s results indicate a stage of development where economic growth, based on the right conditions at the government level, can be accelerated rapidly by the private financial sector.

Principal Southeast Asia Chief Investment Officer for Malaysia and Equities Patrick Chang said Malaysia’s scores across indicators like business confidence and access to credit, suggest the economy has reached a point in its development where businesses can borrow with confidence, enabling investment for the future. 

"We feel positive about Malaysia’s long-term investment prospects, reflected by our equity investments in local companies and significant human capital commitment,” he added.

The Global Financial Inclusion Index, which is built around three pillars — government support, financial system support, and employer support — examines the extent to which each of these pillars provides the relevant tools, services and guidance to enable their populations to achieve greater levels of financial inclusivity.

The index was conducted in partnership with the Centre for Economics and Business Research (CEBR), with methodology that combines various data sources into one unified measure of financial inclusion at the market level.