Private equity and venture capital are economic multipliers that have tremendous growth potential in ASEAN, and can contribute more extensively to Research and Development (R&D) and are capable of driving employment, said Tan Sri Mohamed Nazir Bin Abdul Razak, the co-founder and Chairman of Ikhlas Capital, noting that there is growth potential in ASEAN’s private equity industry.
In 2023, the percentage of private equity and venture capital deployment in ASEAN as a whole was only 0.5% of the regional GDP, compared to the 1.5% level of India and Brazil, and the more than 2% level seen in developed economies – Australia, the United Kingdom and the United States.
ASEAN also faces another pressing issue, that is, its member nations have uneven maturity level in the private equity market that has given rise to the percentage figure of 0.5% on average, according to the former Chairman of CIMB Bank.
Country-wise, the percentage of private equity to GDP was 0.5% for Malaysia, 0.4% for the Philippines, 0.1% for Thailand, Indonesia and Vietnam, and 2.5% for Singapore, which is considered the most matured capital market in the region. These varying degrees of maturity, in a way, have amplified the growth potential of the private equity industry in ASEAN.
For the period from 2018 to 2023, the private equity deployed in Malaysia declined from RM36 billion to RM19 billion, marking a 47% decrease. The global decline figure, on the other hand, was just 15% within the same time period, stated the veteran financier.
