Report highlighted that South-East Asia’s developing markets may be reaching a plateau in financial inclusion growth
by RUPINDER SINGH
MALAYSIA dropped to 20th place for financial inclusion out of 41 markets, down two spots from the previous year, according to the 2024 Global Financial Inclusion Index.
The decline suggests Malaysia’s economy and population have needed less government support compared to other countries.
The nation fell one spot to 24th in government-supported financial inclusion and dropped 11 places to 16th for the availability of government-provided financial education.
However, it improved by one place to 28th for education levels and four spots to 26th for financial literacy.
Malaysia’s financial system support ranking remained steady at 16th, but there were advancements in digitised finance, reflected in improved scores for real-time financial transactions and fintech quality, alongside better online connectivity.
In employer-supported financial inclusion, Malaysia fell eight places to 13th, although it registered gains in employer pay initiatives and pension contributions.
The 2024 Global Financial Inclusion Index, conducted by Principal Financial Group and the Centre for Economics and Business Research, highlights the progress countries have made in improving access to financial services.
The report highlighted that South-East Asia’s developing markets, including Malaysia, Thailand, Indonesia and Vietnam, may be reaching a plateau in financial inclusion growth following rapid fintech expansion.
This could reflect challenges in adapting to economic conditions or signal that these markets have reached a more mature phase of financial development.
Despite Malaysia’s overall drop, it has benefited economically from China’s slowdown by absorbing some of its labour demand and capitalising on higher commodity prices to boost exports.
Principal Asset Management Malaysia CEO Munirah Khairuddin said Malaysia, similar to India, has benefited economically from China’s slowdown by taking on some of its labour demand and capitalising on higher commodity prices to boost exports.
“Similar to the US, its overall drop in the financial inclusion ranking is not indicative of the market moving backwards. Rather, it’s a function of an economy and population that requires less intervention than others.
“What has remained consistent, and we see as a secular trend, is the continued advancement in the financial system based on ongoing investment into digitisation. In this area, markets in South-East Asia are standout world leaders.”
Globally, the report noted that financial inclusion has improved for the second consecutive year, with 32 of 41 markets (78%) reporting higher scores, driven by increased public and private sector efforts in response to economic challenges.
Financial system support grew by 5.9 points, with fintech growth fostering higher savings rates in markets with rapidly developing sectors.
Singapore maintained its top position for the third consecutive year, thanks to strong collaboration between the government, financial system and employers.
Despite ongoing challenges, the report said that financial inclusion improvements reflect positive investment and progress worldwide.
- This article first appeared in The Malaysian Reserve weekly print edition