Building an Inclusive, Sustainable Capital Market as Malaysia Assumes ASEAN Chairmanship

The Association of Southeast Asian Nations (ASEAN) began with the modest goal of co-operating on economic growth and stability. As a regional grouping, ASEAN has come a long way since its establishment in August 1967.  From five member states, it has grown to encompass 10 nations with a combined GDP of US$3.8 trillion in 2023, making ASEAN the fifth-largest economy in the world.   The chairmanship of ASEAN rotates annually with Malaysia taking on the role in 2025.  

As ASEAN Chair, Malaysia's Securities Commission (SC) will also chair the ASEAN Capital Markets Forum (ACMF). ACMF is a high-level grouping of all 10 regional capital market regulators, formed 20 years ago, under the auspices of the ASEAN Finance Ministers.  With varying levels of capital-market development across ASEAN, there are challenges for market integration and regulatory harmonisation. This is not insurmountable; identifying shared goals and principles for closer co-operation is key. 

As the incoming ACMF Chair, the SC is committed to working with our ASEAN counterparts to deepen, connect and enhance the liquidity of the region’s capital markets. This will facilitate intra-regional trade, drive growth and attract greater investment into regional economies. 

ACMF’s initiatives for 2025 include fostering sustainable growth, facilitating a just transition to low or zero carbon and addressing climate adaptation. The SC will lead the development of the ACMF Action Plan 2026-2030 towards positioning ASEAN as a dynamic, better-connected and inclusive region. 

These initiatives will have implications for our market participants including exchanges and listed companies. Some initiatives, such as the adoption of sustainability disclosures, are global measures with ramifications for markets and companies globally.
 

Continuing Progress on ASEAN Sustainable Finance Ecosystem 

To attract financing and investments for sustainable projects and practices in ASEAN, ACMF recognised that three key pillars were required – taxonomy, transition and disclosures. 

Work on these building blocks started with the release of the ASEAN Taxonomy for Sustainable Finance Version 1 in 2021 and it was followed by the issuance of the ASEAN Transition Finance Guidance (ATFG) Version 1 in 2023.  

ASEAN Taxonomy for Sustainable Finance Version 4 

Developed by the ASEAN Taxonomy Board (ATB), the ASEAN Taxonomy serves as a comprehensive framework for identifying green activities in the region.  

Issuance of criteria for six focused sectors that contribute 85% of greenhouse gas emissions in the region and three enabling sectors will be carried out in phases to ensure adaptability and interoperability.  

To date, technical-screening criteria has been issued for (i) Energy, (ii) Transportation and Storage (iii) Construction and Real Estate and for the carbon capture, storage and utilisation (CCUS) enabling sector.  

Version 4 of the Taxonomy, set to be released in 2025, will cover the remaining focus sectors of Agriculture, Manufacturing and Water and Waste Management and facilitating sectors of Information and Communication and Professional, Scientific and Technical activities. 

To facilitate transition, and taking into consideration ASEAN’s unique needs, the ASEAN Taxonomy introduced ‘Amber’ classifications in the Plus Standards, to further encourage and recognise transition efforts by businesses.

ASEAN Transition Finance Guidance Version 2 

As the ASEAN Taxonomy is a classification guide, companies require a guide for their transition journey. The ASEAN Transition Finance Guidance (ATFG) recognises different starting points and ambitions and helps bridge gaps in transition-finance understanding. 

Version 2 of the ATFG provides further guidance to companies on different types and applications of Transition Finance, and reference pathways for setting transition plans. The aim in 2025 is to secure the ASEAN Finance Ministers and Central Bank Governors’ endorsement of Version 2.

Adopting Global Sustainability Disclosures 

Adoption of the International Sustainability Standards Board’s (ISSB) IFRS Sustainability Disclosure Standards is another key pillar. Most exchanges globally are aligning their listing requirements with ISSB standards. 

Throughout 2025, ASEAN member countries will be encouraged to step up adoption of ISSB standards. Most are expected to take a phased and pragmatic approach. 

For example, Malaysia has committed to a phased rollout under the National Sustainability Reporting Framework (NSRF) that was launched in September 2024.  

A total of 130 large-listed issuers with a market capitalisation above RM2 billion are expected to comply by next year. Another group of Main Market-listed issuers will begin adoption in 2026 with the remaining listed issuers as well as large non-listed companies to start in 2027. 

Such efforts signal ASEAN's willingness to embed sustainability into corporate practices and promote long-term value creation.

Enhancing the ASEAN Prospectus Guidelines 

It has been 10 years since the framework for cross-border offering of securities within ASEAN was introduced.  

Given the low utilisation of the Streamlined Review Framework for ASEAN Prospectus, preliminary consultations with capital-market players have begun with a view to enhance the attractiveness of cross-border IPOs, particularly for investors outside the home market. Reducing fundraising costs is also a focus. 

The aim is to enhance the Streamlined Review Framework for ASEAN Prospectus to encourage more cross-border offerings of securities.

Development of the ACMF Action Plan 2026-2030 

In October 2025, the ACMF will release the next iteration of the ACMF Action Plan for 2026-2030.  

The plan will consider the current economic landscape, as well as key trends, issues and challenges to identify key priorities, strategic objectives and proposed initiatives for the following five years. 

Potential areas of interest include enhancing intra-ASEAN trade and investments, building a sustainable and resilient ASEAN, increasing mobility of skilled capital market professionals and promoting ASEAN as an asset class. 

By aligning priorities, fostering collaboration, and addressing regional challenges, ASEAN is building a regional capital market ecosystem that addresses present needs and future demands. 

As the incoming ACMF Chair, the SC will work closely with regional regulatory peers and industry stakeholders. The aim is to jointly develop a resilient, sustainable and inter-connected ASEAN capital market.