Malaysia On Track For Further Growth

After two years of tackling the challenges arising from the Covid-19 pandemic, Malaysia is on the road to recovery.

Kuala Lumpur, Malaysia

In its latest report, Bank Negara Malaysia noted that the country saw a stronger growth of 8.9% in the second quarter of 2022 compared to 5% in the first quarter.

It attributed this strong showing to an increase in domestic demand, underpinned by the steady recovery in labor market conditions and ongoing policy support. The central bank also said the higher growth was reflective of normalizing economic activity as the country moved towards endemicity and reopened international borders.

The country’s Finance Ministry said foreign direct investment flowing into Malaysia in Q2 2022 remained positive, totaling US$3.63 billion (RM17.3 billion), buoyed by sectors such as manufacturing, financial and insurance, wholesale and retail trade primarily from the United States and Singapore.

Malaysia’s trade performance has also seen an uptrend. The Malaysian External Trade Development Corporation noted that trade surged by 56.7% to US$55.7 billion (RM265.7 billion) compared to August 2021.

Bright Outlook for Local Companies

As recovery gains momentum, Malaysian companies, such as Silverlake Axis, have also done well and experienced marked growth this year despite the impact of the pandemic. The company has a strong reputation in Southeast Asia and counts over 40% of the top 20 banks and three of the five largest financial institutions in ASEAN among its customers.

But despite its success, the Singapore-listed company has recognized the need to diversify its business and adapt to new market demands. The company is developing cloud-based and software-as-a-service solutions to compete more effectively with newer financial technology companies. It has also successfully made inroads into Thailand with these new products, with Indonesia as its next growth target.

Another company that is diversifying into new business is Gentari, a wholly-owned subsidiary of PETRONAS, which has identified the world’s need for clean energy demand within three important areas: renewable energy, hydrogen and green mobility.

The newly-formed company aspires to be a low carbon hydrogen producer that will supply its hydrogen value chain to industrial, power and transportation customers in domestic and export markets. It has plans to build an overall energy capacity of 30 to 40 gigawatt in key markets by 2030 through utility-scale projects across solar, onshore and offshore wind, and battery storage.

Open for Business

Meanwhile, Malaysia’s international financial center, the Tun Razak Exchange (TRX), has opened its doors to three financial institutions—Affin Bank, HSBC and Prudential Assurance.

The 70-acre development has been benchmarked against the most stringent international standards and offers a unique proposition to potential investors and tenants as it employs biophilic designs, which bring in natural light and better air circulation.

These innovative designs support the future of work, where workers want to be agile and mobile and have seamless connection between outdoor and indoor spaces. TRX also emphasizes sustainability, with 23% of the district dedicated to green and open spaces and where the buildings are sustainably-designed and user-oriented.

Looking forward, Malaysia’s future looks bright following the country’s transition to the endemic phase and the opening of international borders. Its economic growth is expected to be supported by more vigorous economic and social activities, as well as strong domestic and foreign demand.

“While external demand could face headwinds from slower global growth, the Malaysian economy will continue to be supported by firm domestic demand. Growth would also benefit from improving labor market conditions and higher tourist arrivals, as well as continued implementation of multi-year investment projects,” says Nor Shamsiah, Governor of Bank Negara Malaysia.

Toward a Cleaner Future With Gentari

Gentari’s integrated net zero solutions aim to boost clean energy adoption globally.

Gentari’s foray into the clean energy market is set to electrify pathways toward net zero carbon emissions.

A new player has entered the clean energy market with big plans. Gentari, wholly-owned by PETRONAS, hopes to meet global clean energy demand within these foremost sectors: renewable energy, hydrogen and green mobility. It differentiates itself from others by offering integrated solutions that target to achieve net zero carbon emissions.

Following a brand introduction in June this year, Gentari was officially launched on September 15 by the Malaysian Prime Minister. The independently managed entity will help local customers transition to cleaner energy sources, thus contributing toward meeting Malaysia’s renewable energy goals.

Its name itself speaks volumes. Gentari combines “generation” with “lestari”, which means sustainable in Malay. With its slew of comprehensive offerings, it is already meeting demands for sustainable solutions and opportunities within the commercial, industrial and retail sectors.

Chairman of Gentari Datuk Tengku Muhammad Taufik says , “Since our announcement earlier this year, Gentari has been making steady progress in its efforts to supply lower carbon energy and help its customers in Malaysia and beyond to reduce their carbon emissions…by providing affordable and accessible solutions and systems, enabled by scale of production and infrastructure.”

Investment and Innovation in Key Areas

Gentari will forge ahead to build on its existing global portfolio of 1.1 gigawatt-peak of renewable energy capacity that is already operational or under development. It intends to build an overall energy capacity of 30 to 40 gigawatt in key markets by 2030 through utility-scale projects across solar, onshore and offshore wind, and even battery storage.

Aspiring to be a low carbon hydrogen producer, it will spread its hydrogen value chain to industrial, power and transportation customers in domestic and export markets. Capitalizing on its proximity to key hydrogen demand centers in Asia, Gentari will chalk up to 1.2 million tonnes per annum of clean hydrogen.

Malaysian Prime Minister Dato’ Sri Ismail Sabri
Yaakob officiated the launch of Gentari.

With 12 Memoranda of Understanding signed with international partners and customers for low carbon hydrogen projects in Malaysia, India, the Middle East and East Asia, Gentari continues to forge meaningful links. The company believes that partnerships and collaboration—with industry players, policymakers and customers—are the way forward to explore opportunities in the clean energy space.

Motorized vehicles running on conventional fuel contribute tremendously to greenhouse gas emissions, impacting climate change. Gentari is ready to tackle that issue by being a preferred green mobility solutions provider in the electric vehicle ecosystem. It is eyeing a 10% regional market share, equating to around 25,000 charging points by 2030, by stepping up its presence in Malaysia and India. This is a giant stride from the present 190 charging points that power over 250 electric two- and three-wheelers under the Vehicle-as-a-Service (VaaS) model in those two countries. VaaS provides access to a clean fleet of electric vehicles within a subscription model that covers charging fees and maintenance costs. Businesses seeking to transition their fleet requirements to electric vehicles find this proposition attractive, as high ownership cost is no longer an item in their bookkeeping.

Through the VaaS offering in India, Gentari has achieved around 1 million clean kilometers, equivalent to 83.4 tonnes of CO2 emissions reduction.

The diverse offering and purposeful expansion will propel Gentari toward its mission of becoming one of the world’s leading clean energy companies.

Welcome to TRX, Malaysia’s New International Financial Center

A decade in the making, the 70-acre global financial services hub is primed to offer clients the workplace of the future.

Dato’ Azmar Talib, CEO of TRX City Sdn Bhd (TRXC)

Amid the skyline in Kuala Lumpur stands a new, majestic 1,460-foot building called Exchange 106. This iconic building is much more than just a skyscraper—it is the centerpiece of Malaysia’s only international financial center (IFC), the Tun Razak Exchange (TRX).

With an estimated gross development value of US$8.8 billion (RM40 billion), the 70-acre TRX is set to become a global financial hub and Kuala Lumpur’s new central business district.

According to Dato’ Azmar Talib, CEO of TRX City Sdn Bhd (TRXC), the project’s master developer, TRX is not just another real estate development but is a national aspiration for the country.

“It will encompass grade A office space underpinned by world-class residential, hospitality, retail, leisure and cultural offerings. A host of marquee incentives were also approved for selected financial services firms to support TRX as an IFC. The bottom line is that we want TRX to be the best international address in Kuala Lumpur, one that is the best in which to live, work and play,” he says.

Malaysia’s International Financial Center, the Tun Razak Exchange

Work began on the massive project in 2013 and given its scale, its development was undertaken in phases. The first phase of the project was completed in 2019 with the opening of one of Southeast Asia’s tallest buildings, Exchange 106—the only office building specifically designed for rent and lease, and Menara Prudential, home to Prudential Malaysia’s new headquarters.

“The bottom line is that we want TRX to be the best international address in Kuala Lumpur, one that is the best in which to live, work and play.”

– Dato’ Azmar Talib

Malaysia’s International Financial Center, the Tun Razak Exchange

This is followed by the opening of the new headquarters for HSBC Malaysia and Affin Bank in 2022. To date, almost all of the district’s common infrastructure has been completed, including 8 miles of roads and tunnels, Southeast Asia’s first on-site wastewater recycling plant, and pocket parks and plazas. The district’s lifestyle quarter, The Exchange TRX, is currently preparing for the opening of its retail components and iconic rooftop park.

While this sounds typical of most mega real estate development projects, Azmar says it is anything but. When designing TRX, the company determined what investors, workers and eventual residents want from a globally recognized IFC by benchmarking TRX against other IFCs in developed countries.

“TRX is beyond a workplace; it is a vibrant IFC with world-class infrastructure, services, facilities and technology with a lifestyle center at its heart set within an iconic public realm.

“It is a carefully thought-out campus-like setting with solutions for evolving workplace needs including ample green spaces, good ventilation, smart solutions for safety, security and hygiene—all of which makes it future-proof and distinct from other workplaces.

“TRX is also built to be an eco-friendly, safe and secure district to live in and to be connected to the surrounding central tourist areas so it can promote a holistic life inside and outside of work, thereby improving work-life balance,” he says.

Unique Offerings

One of TRX’s unique propositions to its investors and clients is how it envisions the workplace of the future. Driven in part by the pandemic, work today has changed from a traditional setting to a hybrid model, where workers want to be agile and mobile, and have seamless connection to outdoor and indoor spaces that support their health and well-being.

A 2020 survey by Savills entitled, “What Workers Want,” indicated that while 81% of Malaysian workers want to return to an office environment, a hybrid working arrangement is the preferred model and is likely to remain.

Respondents of the survey also indicated that the office experience is enhanced by amenities such as cafes/restaurants, gymnasiums, retail and leisure facilities in and around the workplace. It also noted that workers prefer greenery and open spaces, adequate lighting and better air quality and a safe environment to work in.

Azmar says clients can enjoy all these features because TRX has anticipated the evolving needs of workers in and outside the office with an emphasis on delivering adaptable workspaces that foster collaboration coupled with safety, convenience and livability in mind.

Malaysia’s International Financial Center, the Tun Razak Exchange

In this respect, TRX has chosen to employ biophilic designs, which bring in natural light and better air circulation and to provide holistic amenities and services that support work-life balance such as food and beverage, retail and greenery.

“We have designed our buildings to have breakout areas and flexible spaces to inspire creativity and collaboration. People here can choose to work in a cafe or breakout space in our centrally located 10-acre rooftop park without even leaving their work site.

“Our master plan follows a framework that drives sustainability, with 23% of the district dedicated to green and open spaces where the buildings are sustainably designed and user-oriented,” Azmar says.

He adds that due to the sustainability considerations that were put in place during the ideation stage of TRX 10 years ago, the district is well on track to support the city’s aspirations to reduce 70% of greenhouse gas emissions by 2030.

Behind all of this is a digital backbone that is scalable and fully fiberized to support future growth with no limitations for those engaged in hybrid work.

Another important feature workers and residents can bank on in TRX is enhanced physical safety, which is aided by a centralized platform that monitors real-time security, traffic and critical infrastructure. This is complemented by the presence of on-site security personnel to attend to any needs quickly.

Besides this, clients can expect easy accessibility, eco-friendly infrastructure that has achieved the Green Building Index Township Platinum certification, and connectivity to surrounding communities.

“We are connected by road via 12 highways and main roads; it is the only property in town where both MRT 1 and MRT 2 underground trains interchange. Our on-site wastewater treatment plant recycles at least 80% of district-wide water usage and is equipped with smart sensors to minimize waste. Our buildings use smart lighting technology, making it energy efficient.

“Workers can connect to surrounding communities by using the extensive network of shaded pedestrian footpaths. Also, the integration between public and retail space leaves workers spoilt for choice on where to eat, meet, shop, or socialize,” he says.

The Future Looks Bright

TRXC celebrated a major milestone when financial clients such as HSBC Bank, Prudential and Affin Bank took up residency in their designated buildings.

Malaysia’s International Financial Center, the Tun Razak Exchange

“The investments by these large financial institutions augur well for our aspirations to be a recognized IFC. It shows their commitment to invest in TRX as an IFC,” Azmar says.

“Our goal is to realize our vision to be an internationally recognized IFC and deliver on our promise of providing high quality service levels to our investors and clients. I believe that when all our developments come into fruition in the next two years, the whole TRX district will be abuzz with life and activities, and will be a catalyst to elevate Kuala Lumpur to the next level.”

Silverlake Axis Transforms to Stay Ahead

Having experienced success over three decades, Silverlake Axis is not resting on its laurels as it looks forward to staying relevant in the financial industry.

Andrew Tan, Group Managing Director of Silverlake Axis

As a stalwart in the financial software industry for over 30 years, Silverlake Axis Ltd has managed to thrive decade after decade. Behind this success lies its ability to transform itself to meet the industry’s needs thanks to three “Es,” says Andrew Tan, Group Managing Director of Silverlake Axis Ltd.

“Experience, Expertise and Execution—we believe these ingredients have not only kept us relevant in the financial industry but have helped us attain new heights,” he says.

Amid an increasingly highly competitive landscape of new fintech players today, Silverlake Axis remains the preferred vendor for financial software. The company has a strong reputation in Southeast Asia, and counts over 40% of the top 20 banks and three of the five largest financial institutions in ASEAN among its customers.

The Singapore-listed company posted an 18% increase in revenue along with a 27% jump in net profit for the nine-month period ending March 31, 2022. The company’s deals pipeline is at a healthy total gross of US$370 million (RM1.7 billion) with the third quarter of 2022 contract wins totaling US$20.8 million (RM96.7 million).

Tan says Silverlake Axis has been able to thrive because it has a bird’s eye view of the changes taking place in the industry and it understands banking needs and market trends.

He acknowledges that competition has increased over the years and fintech players are now able to use new technologies to offer financial institutions some innovative solutions.

But while fintechs may have some edge, they do not have scale and brand presence; they struggle to build credibility and reputation among customers, and may not have the know-how in the regulatory space, Tan says.

“This is where we see our edge over our competitors as we have what fintechs lack. We have also had a 100% success rate in implementing our suite of solutions and platforms for our clients and we have been able to do this by being swift and nimble to respond with different solutions for different markets,” Tan adds.

Tan believes that Silverlake Axis has also grown because financial institutions are driven to transform digitally even before the pandemic struck, a trend influenced by the convenience and power of technology.

The pandemic has been a major driving factor, forcing the industry to offer a whole new array of services and products such as digital lending.

“Consumers today may not know what kind of financial products they want. They are asking financial institutions to proactively figure out this gap.

“In turn, financial players depend on us to provide them with the personalized solutions to serve their customers better. This can only be done with technologies like cloud, machine learning and advanced analytics,” says Tan.

“Experience, Expertise and Execution—we believe these ingredients have not only kept us relevant in the financial industry but have helped us attain new heights.”

– Andrew Tan

Balancing Tradition and Innovation

Silverlake Axis’ crown jewel has been its core banking software called SIBS, which is still its main revenue generator. But in recent years, the company transformed itself as it recognized the need to diversify its business and adapt to new market demands by developing cloud-based and software-as-a-service (SaaS) solutions.

“Historically, we have always been focused on core banking software,” says Goh Shiou Ling, Deputy CEO of Silverlake Axis. “We have a lot of capabilities beyond that but we have to align ourselves to make sure we can meet our customers’ needs.”

Goh Shiou Ling, Deputy CEO of Silverlake Axis

Goh, who leads Silverlake Axis’ strategic investment and transformation initiatives, says what financial institutions want today is to be able to deliver new, innovative products and services to their customers in a cost-effective and speedy manner through cloud and SaaS.

“Despite buzzwords such as embedded finance and banking-as-a-service, we cannot merely focus on financial services. This is why in 2018, we launched MÖBIUS, our modular, cloud-based open banking software for the emerging financial ecosystems and marketplaces that are looking to transform their services digitally but at their own pace. Clients can use it to digitalize parts of the business in phases and make the next step when they are ready to do so,” she says.

Besides introducing new financial products, Silverlake Axis is making investments into companies that have cloud and data analytics capabilities, particularly in the insurance technology (insurtech) and retail sectors.

One example of this is the launch of Fermion in 2019, a subsidiary that works in the insurtech space to connect partners and offer complementary services across the insurance value chain.

“Our Fermion services can help customers mine data from travel insurance policies and match that to wealth management products, creating cross synergy and business opportunities between different verticals,” Goh says.

The retail sector, on the other hand, benefits from Silverlake Axis’ AgoraCloud product suite.

“AgoraCloud gives retailers data pooling and analytics capabilities. For example, we can mine data from a retailer and then match it to other products that it needs, such as trade financing. This creates new value for our customers,” Goh says.

“It is important to have a balance between our core banking software and newer, more innovative cloud- and SaaS-based products. While the former is our main revenue stream, we need to look at partnerships and collaborations with other ecosystems, be creative, think outside the box, and engage our best talents to help ensure that we have a roadmap for the future.”

Great Potential

As the economies in Southeast Asia open up further, Silverlake Axis is heading in the right direction, carried by strong momentum from deal opportunities made in the past few years.

Last year, Silverlake Axis won a major contract to deploy MÖBIUS for Thailand’s Siam Commercial Bank. This year, it won a project with Bank Mandiri, Indonesia, and is close to securing another deal in Thailand.

“From a strategic point of view, we are doubling down on growth markets in Southeast Asia. Outside of the region, we are exploring the Middle East and South Asia. The potential is there because financial institutions are resuming their digitalization programs post pandemic, so the next two years for us will be very exciting from a business perspective,” says Tan.

Despite some global challenges facing businesses such as the rise in inflation and currency fluctuations, Tan believes that Silverlake Axis is in a good position with a strong balance sheet and earnings.

“We posted a record order book of over US$138 million (RM600 million) and we are prepared to invest or acquire to further scale growth. Our strategy will include building capacity, hiring skilled talent and seeking the right partners to tap new opportunities.”

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