Keynote Address at the MAICSA Regulatory Forum 2024 Evolving Regulatory Landscape
Speaker: Salmah Bee Mohd Mydin, Executive Director, Market Development, Securities Commission Malaysia
Location: Kuala Lumpur 
Delivered: 24 July 2024
Key Highlights:
  • Regulation is the cornerstone of a strong, transparent and resilient business environment.
  • The SC’s twin mandates of development and regulation has shaped the regulatory landscape that we have enabled in the past 30 years.
  • Micro, small, and medium-sized enterprises (MSMEs) and mid tier companies (MTCs) are vital engines of growth.
  • The role of guardians of corporate governance has never been more pivotal.
  •  The Asian Corporate Governance Association (ACGA) issued the CG Watch 2023 report, following their onsite assessment of Malaysia last year. Malaysia is ranked 5th in the Asia Pacific region. Malaysia's audit oversight is commended for its effectiveness, with our audit standards leading the region.
  • Next year, Malaysia will undergo the next round of FATF Mutual Evaluations, which will assess Malaysia’s technical compliance with FATF Recommendations
  • The National Sustainability Reporting Framework (NSRF) by the Advisory Committee on Sustainability Reporting (ACSR) is chaired by the SC. By adopting the International Sustainability Standards Board Standards, the NSRF aims to enhance the availability of consistent, comparable, and reliable sustainability information, including on climate-related risks and opportunities.
  • Look into the near future. A future that will only see the pace of regulatory change accelerating further.
  • To thrive in this dynamic environment, continuous improvement and innovation will be the cornerstone of success. Our ability to adapt and lead in this evolving landscape is crucial.

Full Speech:

Introduction
Bismillahirahmanirahim
Assalamualaikum w.b.t and salam sejahtera,
Yang Berbahagia Dato’ Akbar Moidunny, President of the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA),
MAICSA immediate past president Simon Yeoh Seng Leong,
Esteemed Council members,
Distinguished speakers, Ladies and gentlemen,

  1. Let me first begin by thanking MAICSA for inviting the Securities Commission Malaysia (SC) to deliver the address this morning. Congratulations also to MAICSA on your 65th anniversary, the rich tradition and achievements.
  2. This forum takes place at an exciting and challenging time with mixed economic prospect for the global economy and geopolitical tensions still occupying much attention. In addition, we are collectively facing significant advances in technology, innovation and disruptions that will have major consequences and transform the way businesses operate.
  3. Given these factors, the focus of this well curated forum, "Evolving Regulatory Landscape" is timely, as we are facing a future that will likely be more competitive, complex and interconnected.
  4. Regulation is the cornerstone of a strong, transparent and resilient business environment. Technological advancements, economic fluctuations and demands for greater accountability and sustainability will continue to significantly impact regulatory frameworks.
  5. This is the context that sets Malaysia’s twin ambitions to be a high value economy through economic reforms, driven by sustainable growth based on a pledge to decarbonise our economy.
  6. For the SC, we remain focused on the development of a capital market that supports economic transformation for large, medium and small businesses, as deep and broad markets are prerequisites to achieving sustainable, sustained growth with striving social prosperity.
  7. A vibrant and resilient funding ecosystem that has deeper private sector involvement and wider investor base is necessary. The two segments are particularly important to provide continued funding across the diverse lifecycle of businesses, which may range from equity, debt instruments to alternative funding, with investors having differing risk outlook and investment horizon.
  8. The SC’s twin mandates of development and regulation has shaped the regulatory landscape that we have enabled in the past 30 years, one that is fit for purpose, relevant and future proof.

    Embracing Regulatory Opportunities

  9. Regulations may at times be seen as a hindrance, constraining business activities and increasing compliance costs. However, as regulators and governance professionals, we recognise that regulations have mixed blessings. We see both the challenge and the opportunity it presents.
  10. The evolving landscape offers a unique opportunity for governance professionals to continually redefine your roles and demonstrate your strategic value. The ongoing challenges and uncertainty in our operating environment demand strategic thinking and decisive action. By embracing changes in the environment, governance professionals can drive businesses and organisations to mitigate risks, capitalise on new opportunities, and push for measures that drive transparency, ethical behaviour, and long-term sustainability.
  11. I mentioned earlier the need to drive wider private investors to support the country’s pathway towards being a high income, high value and green economy. Malaysia has more than sufficient domestic financial resources to finance higher levels of domestic investments to achieve high growth.
  12. And the demand side is equally immense. Our micro, small, and medium-sized enterprises (MSMEs) and mid-tier companies (MTCs) are vital engines of growth. MSMEs comprise 97.4% of total enterprises, contributing 38% to GDP, and accounting for more than 48% of employment. We have approximately 10,000 MTCs in Malaysia and despite being just 2% of all Malaysian companies, MTCs collectively contribute around 40% of the country's GDP and employ over 16% of the workforce.
  13. While we have made significant strides in scaling up financing for MSMEs, a considerable opportunity for growth remains. In 2022, the financing gap for MSMEs was estimated at RM290 billion. Several factors contribute to this gap, including the distinctive characteristics of MSMEs, information flow challenges, market infrastructure, and the stringent lending criteria. However, this also opens up avenues for enhancing access to financing from alternative spaces.
  14. To encourage greater private sector and investor participation in market-based funding for both small and larger companies, strong value creation objectives beyond financial performance are required. Investors are looking for an approach that shows social and environmental impacts of businesses are sufficiently considered, as they participate in the growth of such businesses through their investments.

    The Role of Governance Professionals

  15. As governance professionals, you can assume a critical role in influencing regulatory policies and practices that can foster inclusive growth. This segment of the regulatory landscape is uniquely positioned to influence corporate culture, ensuring that ethical considerations and stakeholder interests are embedded in decision-making processes.
  16. Collectively, we can build trust, strengthen the ecosystem and manage wider stakeholder interests. While we recognise that the primary purpose of every business is to maximise profit, creating value is also an important step to maintain a profitable and lasting business.

  17. The role of guardians of corporate governance has never been more pivotal. We are at the intersection of multi factors while being able to provide strategic oversight. With rapid regulatory changes and increasing stakeholder expectations, our responsibilities are expanding, and so too is our potential to value add and provide strategic oversight.

    Ladies and gentlemen,

    Malaysia's Regulatory Assessment

  18. Malaysia's stable regulatory landscape is crucial to encourage domestic and foreign investors as we aim to be a gateway to regional markets. As you are aware, Malaysia’s regulatory frameworks are subjected to several assessments against international standards to ensure that it remains effective and credible in meeting market integrity and investor protection objectives.
  19. Among the key assessments that the financial sector is subjected to include those undertaken by the Asian Corporate Governance Association (ACGA) and the Financial Action Task Force (FATF).

    Outcome of ACGA Assessment

  20. Recently, the ACGA issued the CG Watch 2023 report, following their onsite assessment of Malaysia last year. We rank 5th in the Asia Pacific region as we have seen progress in our CG journey, particularly in board diversity and disclosure practices. Malaysia's audit oversight is commended for its effectiveness, with our audit standards leading the region. Our CG rules are robust and well-regarded, aligning with international standards such as the Organisation for Economic Co-operation and Development’s Principles of Good Governance.

  21. While Malaysia performs well in several areas, opportunities for improvements identified include the importance of transparent and comprehensive disclosure practices, as well as robust enforcement mechanisms. These will continue to be addressed.

    Upcoming FATF Mutual Evaluation

  22. Next year, Malaysia will undergo the next round of FATF Mutual Evaluations, which will assess Malaysia’s technical compliance with FATF Recommendations and the effectiveness of our Anti-Money Laundering (AML), Counter Financing of Terrorism (CFT), and Counter Proliferation Financing (CPF) systems.
  23. The FATF evaluation will examine how well we implement these standards, identify any gaps, and provide recommendations for improvement. Successfully meeting these standards will bolster our international reputation and strengthen our financial system against unlawful activities.

    National Sustainability Reporting Framework (NSRF)

  24. Another important milestone is the National Sustainability Reporting Framework (NSRF) by the Advisory Committee on Sustainability Reporting (ACSR) chaired by the SC. The Committee has engaged extensively with stakeholders through consultations and discussions on a forward-looking approach.
  25. By adopting the International Sustainability Standards Board Standards, the NSRF aims to enhance the availability of consistent, comparable, and reliable sustainability information, including on climate-related risks and opportunities. This initiative will strengthen Malaysia’s attractiveness as an investment destination and align investment flows with our national targets and aspirations.

    Ladies and gentlemen,
    Conclusion

  26. Let me conclude my remarks by looking into the near future. A future that will only see the pace of regulatory change accelerating further.
  27. We will see greater pace in technologies such as AI, generative AI, digital currencies and tokenisation. This will introduce new regulatory challenges and opportunities. The ongoing global focus on climate change will drive further regulatory developments aimed at promoting sustainability and resilience.
  28. To thrive in this dynamic environment, continuous improvement and innovation will be the cornerstone of success. We must leverage technology to enhance our governance practices, foster a culture of compliance, and engage with stakeholders in a meaningful way. Our ability to adapt and lead in this evolving landscape is crucial.
  29. By staying informed, proactive, and innovative, we can navigate these changes effectively and create significant value for our stakeholders.
  30.  The SC looks forward to the insightful discussions ahead and collaborations that this forum will certainly spark.


Thank you.

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