Malaysia’s SWF: ‘We need to take advantage of technology’

Khazanah Nasional's managing director says investors and management teams need to utilise technology to boost productivity and deliver shareholder value.

Technology and its impact on productivity is one of the key focus areas of Malaysian sovereign wealth fund Khazanah Nasional in the next five to 10 years, Ahmad Zulqarnain Onn, deputy managing director of Khazanah, said on Tuesday in Hong Kong.

Speaking at the Credit Suisse Asian Investment Conference, Onn said: “Technology is so cheap today and all chief executives and management teams need to look at how to increase productivity of the businesses and how to utilise technology to make the businesses much more efficient.”

“Managers need to understand that the world has changed, and the easy days of growth are no longer there,” Onn pointed out. “And in the way we manage businesses we need to take into account slowing growth, cost pressures and cost inflation. Therefore, the question is: ‘How do you squeeze productivity for your existing assets?’”

Onn said that technology has already started to disrupt some industries.

“It has already hit telecommunications, banking is on the verge, while power, for example, might be a bit later and further away,” he noted.

Innovation and technology is a favoured sector of Khazanah, making up 5.2 percent of its overall portfolio. Its Americas outpost in San Francisco was set up in September 2013 to focus on tech-related investments.

Khazanah, which manages close to 160 billion Malaysian ringgit ($40 billion; €33 billion) of assets, has backed Chinese tech giant Alibaba Group, digital content provider SEA, and analytics and artificial intelligence company Fractal Analytics, among others.

The investor’s continued focus on innovation and technology is funded primarily by recycling returns from its earlier investment in Alibaba Group, Khazanah wrote on its website.

Asked how Malaysian companies are lagging behind in terms of creating technological advancements, Onn said: “The lowest hanging fruit is about our companies serving their customers and employees better through the use of technology, that should be the first and foremost priority for Malaysian companies.”

“Investors will always have choice and Malaysian don’t need always need to be at the forefront of technology, that’s not our comparative advantage,” he added. “I’d rather focus on delivering shareholder value and one of the levers is productivity. And one of the drivers of productivity has to be technology. And technology is so cheap today, why wouldn’t you take advantage of it?”