KUALA LUMPUR (Oct 12): With the recession having significant effects on potential output, corporate reforms that bolster long-term growth prospects will be essential, said Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar.
While delivering a keynote speech at the Malaysian Economic Summit 2020, he said transformation programmes for public listed companies (PLCs) covering areas such as key performance indicator settings, talent development and sustainability practices will help in developing robust businesses in the Malaysian marketplace.
“Such reforms will not only aid the country’s recovery but also deliver various positive outcomes that can drive greater market confidence in the economy,” he added.
While the performance of PLCs had generally been on an upward trend between 2004 and 2015, Abdul Wahid said they had shown a decline in key profitability and several growth ratios thereafter.
“Catalysts are needed to help businesses emerge stronger and quicker from the Covid-19 crisis and be future-ready, especially with intensifying competition globally,” he added.
He also said fast action is needed to ensure domestic companies remain competitive on a regional scale and globally to become catalysts for Malaysia’s transition towards becoming a developed market and high value-added, high-income economy.
“We need to relook and possibly replicate past successes such as the GLC Transformation Programme that was introduced in 2004,” he said, adding that lacklustre corporate earnings in recent years would now be further weakened by the impact of the Covid-19 pandemic.
Meanwhile, Abdul Wahid said the pace and strength of Malaysia’s recovery are still subject to several downside risks.
Firstly, he said global economic conditions remain weak with the World Bank projecting a global 2020 gross domestic product (GDP) contraction of 5.2%.
Secondly, he opined that global infection numbers would only continue to surge, and further waves of infections could lead to the reimposition of lockdowns and other containment measures.
Thirdly, he noted that weaknesses in Malaysia’s labour market conditions could weigh on private consumption.
Fourthly, he said the re-escalation of trade tensions between major economies could cause renewed disruption to trade and pose additional challenges to the global economy.
However, he believed Malaysia's solid fundamentals built over the years had accorded it some resilience to deal with Covid-19 shocks.
These fundamentals include a robust healthcare system, a diversified source of growth and external trade structure, continued presence of domestic and institutional investors, as well as deep and liquid financial markets, which remain supportive of the Malaysian economy.
“And the multipronged approach by the government, Bank Negara Malaysia (BNM), the Securities Commission Malaysia (SC) and the private sector in responding concertedly and swiftly have helped us endure and recover to some extent from the economic impact of the Covid-19 pandemic,” he said.