KUALA LUMPUR: A US$200 billion (RM933.3 billion) market in Southeast Asia is waiting to be tapped and all it takes is for the Malaysian manufacturing sector to embrace environmental, social and governance (ESG) requirements.
They will even get help from the government, through the National Industry, Environmental, Social and Governance framework (i-ESG) that will be launched in September.
Investment, trade and industry minister Tengku Zafrul Aziz pointed out that thousands of small businesses were already part of their bigger counterparts’ supply chain and ecosystem.
“Hence, financing for small and medium enterprises (SMEs) to help them embrace ESG will go a long way towards helping them remain key parts of the supply chain,” he said in his speech at the second Malaysian banking conference today.
Tengku Zafrul said the ESG framework would encourage manufacturers to embrace ESG practices through clear guidelines for SMEs.
He said SMEs that had ignored ESG standards during the pandemic, as “survival won hands down over sustainability” at that time, must now realign their priorities.
As of 2021, there already were 1.23 million SMEs, accounting for 97.4% of all registered businesses in Malaysia.
Despite their sheer numbers, micro enterprises and SMEs accounted for only 37.4% of all contributions to the gross national product (GDP), 11.7% of exports and 47.8% of total employment.
“These are generally lower than the Southeast Asian average,” Tengku Zafrul said.
He pointed out that Southeast Asia is confronted by major and interlinked ESG challenges.
These include the lack of policy alignment and coordination across borders within the region to address ESG risks and challenges.
“It is clear that we need to support long-term, sustainable broad-based growth in Malaysia. It is crucial to support SMEs in addressing key ESG risks and challenges,” he added.
Source: https://www.freemalaysiatoday.com/category/business/2023/06/27/huge-market-awaits-business-that-embrace-esg/