• The government reaccelerates its effort to champion the ESG cause thanks to wideranging measures in Budget 2023, the most aggressive in any fiscal budget amid 29 actions plans and commitments, impressive by any measure.

• It remains resolute to reach a carbon free economy by 2050 as it pushes for a clear road map via various action plans.

• Renewable energy sector the biggest winner in the Budget 2023 thanks to attractive measures for EV cars and solar as the country ramp up efforts towards sustainable and responsible economy.

• MOF’s plan to smoothen the investment standard and ensure the sustainability agenda in GLC investment process, is lauded.

• No issuance of Green Sukuk, its first absence in 2 years, not a surprise given a rising interest rate environment

• 29 points initiatives with at least RM5bn in committed investment, not to mention nonmonetary ones, will lift Malaysia’s standing in global sustainable economy.

Introduction

Budget 2023 marks at least the 5th year where the government lay down measures towards sustainable and responsible economy via the Environment, Social and Government (ESG) causes. We notice a more wide-ranging causes this year (note: in Budget 2023) which covers the whole spectrum of ESG value chain, with a strong emphasis on governance as the government pushes the efforts to boost the quality of institutions especially for GLCs and GLiCs. Issuance of sustainable or green sukuk was missing this year, compared to the last 2 years, where the government opted to raise RM10bn for ESG causes in Budget 2022. The biggest cheer was for equality cause and hence, the social aspect of ESG following the surprise tax reduction proposal for the M40 group annual income (up to RM100k). An increase in targeted financial transfer for the vulnerable groups (B40, single mother, singleton, senior citizens) provide a huge relief and therefore, the cost of living and disposable income as Malaysians reaccelerate efforts to boost savings post pandemic.

This will boost the quality of living and hence, equality for the group especially with the high cost of living as a result of inflationary environment. The RM10mn grant to push for the Green Campus initiative among public universities is long overdue and apt given that the initiative should begin during tertiary years if not much earlier before it can be ingrained in the next generation. Budget 2023 also made a wide-ranging push towards realizing a multitude of sustainable cause thanks to Sustainable Development Financing Fund totaling RM1.5bn to support efforts towards realizing 17 Sustainable Development Goals (SDGs). Though no details were given for the 17 SDGs, we opine that social and environment causes will take the front seat for this purpose.

We give below the highlights of Budget 2023 ESG causes along with the previous years in the following tables (note: Budget 2018-2022).

Source: BIMB Securities Research - 10 Oct 2022