PETALING JAYA: As Southeast Asia’s economies race to strengthen resilience and attract global capital, Malaysia is positioning itself not only as a hub for trade and investment but also as a regional leader in corporate ethics.
Experts believe that building a strong ethical culture among businesses – particularly micro, small and medium enterprises – will be a defining factor for sustainable growth across Asean.
With MSMEs making up 97% of Malaysia’s businesses and contributing 11.6% gross domestic product growth in 2022, outpacing the national average of 8.7%, their importance cannot be understated.
Yet, they remain under the microscope for ethical lapses, from industrial pollution to procurement irregularities. Cases of collusive tendering and corruption complaints tied to licensing and enforcement underscore the urgency of reform.
“MSMEs form the backbone of not only Malaysia’s economy but the regional supply chain,” said Ivlynn Yap, crisis communication and corporate liability consultant.
“If we want to see Asean compete at a global scale, building ethical culture cannot remain optional, it has to be the new business currency.”
Malaysia is already laying the groundwork. Bursa Malaysia’s corporate governance guidance, coupled with frameworks like those from the Institute of Business Ethics, point to a future where companies are assessed not just by profit but by how they integrate environmental, social and covernance standards and diversity, equity and inclusion principles into operations.
According to Yap, nine building blocks will define the region’s ethical business landscape: governance, risk assessment, codes of ethics, communication, training, open culture, recruitment, reward systems and monitoring.
“Embedding these values is what will distinguish tomorrow’s competitive enterprises from those stuck in yesterday’s mindset,” she told SunBiz.
Industry observers argue that by 2030, international investors and supply chains will increasingly demand verifiable proof of ethical practices. From carbon disclosures to fair labour audits, Asean businesses that lack such structures risk exclusion from lucrative markets.
But policies alone will not drive change. Ethical leadership will become the cornerstone of Malaysia’s and Asean’s business future. A study of Malaysian SMEs in the ICT industry found ethical leadership significantly improved organisational effectiveness.
“Consistency, integrity, empathy and sustainability are no longer just leadership traits. They will be non-negotiable standards for CEOs in the next decade,” Yap said.
“Future leaders must empower teams, foster equality, and make decisions with the long-term societal impact in mind. This is how businesses will gain trust and outlast competition.”
Examples already exist. Sunway, founded on sustainability principles, demonstrates how embedding ethics into the DNA of operations attracts global partnerships and talent. Across Asean, companies adopting similar practices could form a new class of corporations defined by transparency, accountability and resilience.
The flipside is stark. Research shows that unethical leadership not only damages reputation but also undermines mental health and productivity. A 2023 Workforce Institute study found that 69% of employees said managers had the greatest impact on their mental health, even more than their partners or doctors.
The Harmful Leader Behaviour Model identifies patterns such as intimidation, excessive pressure and self-centredness as corrosive to organisational health. These behaviours create toxic cultures, fuel attrition and erode stakeholder confidence.
“When businesses cut corners or embrace unethical practices, they don’t just risk fines or sanctions. They risk irrelevance in a world that is moving towards conscious capitalism,” Yap warned.
As Asean economies chase ambitious growth targets, Malaysia’s ethical transformation could set a regional benchmark. Analysts believe the nation’s RM44 billion allocation for MSME support under Budget 2024 provides a unique opportunity: to tie financial aid to ethical compliance, ensuring that expansion does not come at the expense of integrity.
By embedding ethics as a competitive differentiator, Malaysia could lead a shift where corporate governance becomes a regional growth driver. Such a move would also align with the bloc’s aspirations to be among the world’s top 30 economies by 2030.
“Profit and ethics are not enemies,” Yap emphasised. “In fact, the businesses that successfully balance both will be the ones shaping the future of Asean’s economy.”
