EPF’s move to bolster investment climate

PETALING JAYA: Fund managers believe the Employees Provident Fund’s (EPF) decision to invest in mid-to-growth stage Malaysian companies is a good move to further galvanise the domestic investment climate.

It was reported on Monday that the fund, through its partnership with Asian venture capital firm Gobi Partners, has allocated RM250mil to catalyse local companies with bright potential for growth, focusing on those in the healthcare, agriculture and food sciences, financial services inclusivity, sustainability, education and social infrastructure sectors.

While recognising that the amount may not be a significant one for the EPF, the largest investor in the domestic market, analysts and investment managers nonetheless lauded the initiative as a step in the right direction.

Tradeview Capital chief investment officer Nixon Wong lauded the EPF for its proactive approach in stimulating interest in the domestic economy, as he explained that in Malaysia, numerous sectors exhibit considerable growth potential.

“Healthcare stands ready for expansion, especially in medical tourism, health technology and elderly care services, driven by an ageing population, while agriculture and food science offer opportunities in agricultural technology, food processing and sustainable farming practices,” he told StarBiz.

Moreover, he said financial inclusivity can be advanced through financial technology (fintech) innovations, Islamic finance and financial literacy programmes that target the underserved communities, coinciding with the education sector’s potential growth in e-learning technologies, skills development initiatives and international collaborations.

He said these sectors serve as catalysts for economic development, job creation and enhanced quality of life in Malaysia, positioning the nation for sustainable progress and prosperity.

Notably, he pointed out that the diversification of the economy away from traditional sectors like commodities also functions to enhance resilience and reduces vulnerability to market fluctuations.

“Job creation across skill levels is expected, mitigating unemployment and uplifting living standards.

“These sectors attract foreign investment, fostering technology transfer and knowledge exchange, which would lead to increased exports, particularly in medical tourism and sustainable agriculture, bolstering trade balance and tourism revenue,” he added.

At the same time, he said that advancement in healthcare, education and financial inclusivity promote human capital development, enhancing productivity and societal well-being.

Rakuten Trade head of equity sales Vincent Lau believes the allotment would serve to nurture Malaysia’s own investment ecosystem, encouraging more entrepreneurs with fresh ideas to step forward.

“To be fair, the investment is most likely not going to affect EPF’s total returns in a notable way but it will provide more investment and entrepreneurial opportunities for those involved,” he told StarBiz.

In addition, he said many companies at earlier-growth stage levels would feel they have been given a shot in the arm as a result of the contribution, akin to a stepping stone that could lift their respective companies to an ACE Market listing, if not becoming a unicorn themselves.

Lau also projected a multiplier effect that could result in more jobs being created, as emerging fintech and digital ideas looking to secure a part of the investment could also indirectly move Malaysia up the value chain.

Commenting on EPF’s partnership with Gobi, Tradeview’s Wong observed that the latter has been recognised as one of the largest venture capital firms in South-East Asia and China, managing hundreds of millions of dollars in capital across multiple funds.

On top of operating across various sectors including technology, healthcare and consumer services, he said the group has made numerous investments in startups and early-stage companies throughout the region.

“Partnering with Gobi can provide access to the necessary funding from both the EPF capital and external capital from Gobi to execute growth strategies, develop infrastructure and scale operations,” he said.

Confident that the partnership can bring expertise in business management, strategy and operations, Wong said Gobi’s involvement can help local companies improve organisational structure, implement best practices and navigate complex regulatory environments, thereby driving growth and maximising value creation.

“Overall, this partnership can provide the necessary financial resources, expertise and strategic guidance to accelerate growth, enhance competitiveness and create long-term value in key sectors of Malaysia’s economy,” he added.