RMK-12: Malaysia in a sweet spot to ride unstoppable trends

KUALA LUMPUR: Throughout our years scouring the stock markets in search of hidden gems, we have focused on identifying what we call "unstoppable trends."

These are decade-long growth opportunities, driven by innovation and backed by major macroeconomic factors.

By capitalising on some of these trends in the 12th Malaysia Plan (Rancangan Malaysia ke-12 or RMK12), Malaysia can position itself for an exciting half-decade of growth.

As we've seen with the rise of digitalisation, unstoppable trends often create new, massive addressable markets -- or dramatically expand existing ones.

This leads to increased opportunities for value creation, jobs, and entrepreneurship. For nations, this means a a wealthier, happier nation -- and a widened tax base.

To uncover these trends, we apply a data-driven approach to research. We rely on existing facts and figures to cut through the noise -- and find the signal.

After all, John Naisbitt, the late super forecaster, once said the best way to predict the future is "to try to understand the present."

On the surface, things do not look spectacular for Malaysia. Economic growth seems unexciting -- hovering at near 5 per cent since 2004, while the benchmark KLCI has been flat over the past decade.

Yet our findings suggest that the best is yet to come.

For instance, we expect Malaysia to benefit tremendously from the explosive growth of Islam. According to Pew Research Center, the global Muslim population will grow by 70 per cent between 2015 and 2060 -- more than twice as fast as the global population and faster than any other major religion.

Unlike what most people think, the Middle East isn’t exactly where most Muslims live. Nearly 62 per cent of the world's Muslims are living in Asian countries, cited the Pew Research. Indonesia has the world's largest Muslim population followed by India and Pakistan.

Undoubtedly, the rise of Islamisation will turbocharge demand for halal products. And as the global leader in halal standards, Malaysia has the headstart in this multi-trillion dollar market.

Malaysian entrepreneurs are probably already hard at work at the next halal superbrands, and they will need all the help they can obtain.

Beyond consumer products, Malaysia is leading the charge into Islamic finance. It is already the world's biggest sukuk market, capturing over 45 per cent of global sukuk outstanding.

The value of all Islamic financial assets was US$2.9 trillion in 2019 -- a tiny blip compared to the global financial sector's US$400 trillion of assets. Despite Muslims making up 25 per cent of the world's population, the share of Islamic financial assets is less than 1 per cent.

This suggests massive room for growth. Rolling out new, innovative Islamic finance products and securities is a possible step forward. If we play our cards right, the next BlackRock or Vanguard could very well be a Malaysian firm.

Arguably, the road to success is riddled with potholes.

In coming years, Malaysia -- like many other nations -- will have to combat widening economic inequality. It will jostle with regional peers to attract foreign capital and fight to retain its best talent.

Yet, with a head start in some of the defining mega trends of our time, we can still seize the moment.

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* Alvin Vong is chief executive officer of EquitiesTracker Holdings Berhad.

** Views expressed here are strictly of the author's and does not necessarily reflect Astro AWANI's.