This article first appeared in The Edge Malaysia Weekly on March 3, 2025 - March 9, 2025

MALAYSIAN companies are no longer growing as aggressively in Asean as before, says Tan Sri Nazir Razak, urging them to step up lest they fall behind their regional counterparts.

The former banker, now chairman of the Asean Business Advisory Council, believes that for many companies, the fear of taking risks and making mistakes has replaced ambition.

“I want to ask this question — what happened to Malaysian companies going Asean?

If you think about what’s happened in Corporate Malaysia in the last 10 years, I would argue that most companies, especially government-linked companies (GLCs), have replaced ambition with fear.

“We’re not aggressively growing our companies across the region. We’re not building scale,” Nazir laments.

He was expressing his view at a panel discussion during the Asean banking and finance summit in Kuala Lumpur last Tuesday (Feb 25).

His comments came a day after Indonesia launched a new sovereign wealth fund, known as Danantara, that will consolidate funds from state-owned enterprises (SOEs) to invest in strategic projects.

Danantara, which will start off with US$20 billion (RM89.2 billion) from several key SOEs, including the country’s largest lender Bank Mandiri, is projected to eventually manage more than US$900 billion. This would make it one of the world’s largest sovereign wealth funds.

“This is a [huge] sovereign wealth fund that is backing Mandiri and other companies. What do you think is going to happen next? Indonesia will start being aggressive in expanding its banks and corporates across the region,” says Nazir.

“Malaysia used to be in the lead. We took our eye off the ball for one reason or another. We need to have a rethink — how to get back that growth momentum, for Malaysians to think big and be ambitious again.”

It is not just companies that need to regain that regional growth mindset.

“It is also the owners, regulators and governments,” he says, pointing out that this is where the support comes from.

Nazir, who was group CEO of CIMB Group Holdings Bhd (KL:CIMB) from 1999 to 2014 and then its chairman until end-2018, notes that more than a decade ago, Malaysian companies, including GLCs, were trailblazers in Asean through moves such as mergers and acquisitions (M&A).

CIMB, Axiata Group Bhd (KL:AXIATA) and Malayan Banking Bhd (KL:MAYBANK) were among those considered regional champions.

Speaking with The Edge on the sidelines of the banking summit, Nazir recalls: “In those days, one of the most important reasons we could do all this M&A was that we had the backing [of our key shareholders].

“CIMB had Khazanah Nasional Bhd, Maybank had Permodalan Nasional Bhd, and there was the whole GLC transformation plan at the time. They provided the air cover. Basically, I just dealt with Khazanah, and if they said ‘go’, they would worry about the politics.”

Nazir says it is high time Malaysian companies considered expanding more strongly in Asean once again to build scale in order to compete more effectively with larger rivals.

“The economy is doing well, foreign direct investment is coming back and it looks like a fairly stable political environment,” he notes.

One would need to consider sectoral dynamics, though.

“For instance, in banking, the economics of banking mergers have changed dramatically. I think it’s still very much an economies-of-scale game, though it’s not as obvious as before, and valuations need to adjust accordingly. In those days, we used to be willing to pay 2½ times book [value] for a bank. With duplication [of branches and so on], those kinds of numbers just don’t hold anymore. But there is a value,” he says.

It was under Nazir’s leadership that CIMB either ventured into or expanded its presence in key Asean markets such as Singapore, Indonesia and Thailand through an acquisition spree. In June 2005, CIMB acquired GK Goh Securities, enabling it to hold market-leading positions in stockbroking in Asean.

In 2008, it acquired BankThai (now CIMB Thai Bank). That year, it also created the sixth-largest bank in Indonesia, CIMB Niaga, from the merger of Bank Niaga and Bank Lippo. That merger was initiated by Khazanah, the ultimate shareholder of CIMB, and the Indonesian banks. These three markets accounted for 42% of CIMB’s group profit before tax of RM10.4 billion in the financial year ended Dec 31, 2024. 

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