Malaysia’s recurring floods are increasingly shaping the nation’s investment landscape, particularly for sectors aligned with Environmental, Social, and Governance (ESG) principles. The 2025 floods severely impacted states such as Kelantan, Perlis, Perak, Terengganu, Penang, Kedah, and Selangor, displacing thousands and causing extensive damage to public infrastructure, roads, bridges, and drainage systems.
To address both immediate damage and strengthen long-term climate resilience, the federal government has committed substantial funding across consecutive national budgets. Under Budget 2023, the government allocated RM15 billion for nationwide flood-mitigation and disaster-preparedness programmes through 2030. This long-term plan includes major works such as dam and reservoir construction, river widening, slope reinforcement, enhanced flood-warning systems, sabo dams to reduce debris flows, dual-purpose reservoirs, retention ponds, and upgraded river-management infrastructure.
Building on this foundation, the 2025 Budget provided RM3.1 billion for more immediate flood-mitigation needs, focusing on flash-flood control and emergency response capacity. Additional allocations included support for flood victims through Government-Linked Investment Companies (GLIC) and Government-Linked Companies (GLC), RM250 million for slope repairs, and RM21 million to address land subsidence in Perak, Kedah, and Perlis.
Later, in subsequent budgets aimed at urgent recovery, Budget 2026 earmarked RM2.2 billion for 43 nationwide flood-mitigation and resilience projects. priority flood-mitigation and resilience projects nationwide. Key projects include Sungai Mengkibol RTB (Kluang), Sungai Chaah RTB (Segamat), Sungai Temin/Bata RTB (Kubang Pasu), Sungai Lenggeng RTB (Seremban), and Sungai Gemencheh RTB (Tampin), among others across Penang, Perak, Selangor, Terengganu, and Port Dickson. These include major drainage upgrades, river basin rehabilitation, flood barriers, and climate-resilient infrastructure designed to reduce disaster severity and future losses.
These government measures not only restore damaged assets but also create significant opportunities for ESG-aligned sectors. Infrastructure and construction companies are expected to benefit from extensive rebuilding works. Such contracts also tend to favor firms with strong civil-engineering capabilities and ESG-compliant governance, as flood-mitigation tenders increasingly include sustainability, compliance, and climate-resilience criteria. It was reported that Gamuda has secured a RM5 billion Perak water infrastructure deal. The company brings extensive experience in large-scale water projects, including Phase 3 of the Sungai Selangor Water Supply Scheme and the Stormwater Management and Road Tunnel (SMART). Meanwhile, MRCB is currently involved in the RM380 million Muara Sungai Pahang Phase 3 flood-mitigation project. These initiatives highlight the government’s continued efforts to accelerate critical flood-resilience infrastructure across the country.
At the same time, water utilities and sanitation systems are slated for upgrades that enhance environmental sustainability and reduce future flood vulnerabilities. Reconstruction efforts are also driving the adoption of energy-efficient, low-carbon, and climate-resilient technologies, supporting the growth of renewable energy and green-technology firms.
We believe the government’s commitment to climate resilience will directly benefit ESG-focused sectors such as infrastructure, utilities, renewable energy and social-impact services, for long-term growth. As Malaysia continues strengthening its climate preparedness, companies with strong ESG profiles are emerging as compelling investment opportunities for those seeking sustainability, stability and lasting structural value.
Separately, PCM offers PMART and PMA ESG, a discretionary portfolio that invests in stocks with high ESG ratings from the F4GBM and F4GBMS Indices. There are both conventional and Shariah options available. PMART and PMA ESG is suitable for investors who want to optimise the risk-adjusted return by constructing a diverse sustainable portfolio of ESG companies. Exhibits 1-4 show the performance for PMART ESG Conventional and Shariah. Notably, PCM’s ESG mandates have also delivered commendable YTD 2025 performance despite broad market weakness, outperforming the F4GBM and F4GBMS indices, supported by disciplined stock selection, prudent risk management, and a focus on highly rated ESG companies.
Exhibit 1: Phillip PMART ESG Conservative Portfolio Performance
| YTD | 1Y | 2Y | 3Y | 5Y | |
| Phillip PMART ESG Conservative Portfolio | 2.25% | 4.73% | 22.63% | ||
| F4GBM | -4.11% | -0.37% | 12.67% | 15.29% |
Exhibit 2: Phillip PMART ESG Aggressive Portfolio Performance
| YTD | 1Y | 2Y | 3Y | 5Y | |
| Phillip PMART ESG Aggressive Portfolio | 2.25% | 4.73% | 22.63% | ||
| F4GBM | -4.11% | -0.37% | 12.67% | 15.29% |
Exhibit 3: Phillip PMART ESG Shariah Conservative Portfolio Performance
| YTD | 1Y | 2Y | 3Y | 5Y | |
| Phillip PMART ESG Shariah Conservative Portfolio | 0.76% | 2.36% | 10.46% | 11.85% | |
| F4GBMS | -3.42% | 0.53% | 11.26% | 15.44% |
Exhibit 4: Phillip PMART ESG Shariah Aggressive Portfolio Performance
| YTD | 1Y | 2Y | 3Y | 5Y | |
| Phillip PMART ESG Shariah Aggressive Portfolio | 0.76% | 2.36% | 10.46% | 11.85% | |
| F4GBMS | -3.42% | 0.53% | 11.26% | 15.44% |
Source: PCM, 31 October 2025, link
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Disclaimer
The information contained herein does not constitute an offer, invitation, or solicitation to invest in any product or service offered by Phillip Capital Management Sdn Bhd (“PCM”). No part of this document may be reproduced or circulated without prior written consent from PCM. This is not a unit trust or collective investment scheme and is not an obligation of, deposit in, or guaranteed by PCM. All investments carry risks, including the potential loss of principal.
Performance figures presented may reflect model portfolios and may differ from actual client accounts’ performance. Variations in individual clients’ portfolios against model portfolios and between one client’s portfolio to another can arise due to multiple factors, including (but not limited to) higher relative brokerage costs for smaller portfolios, timing of capital injections or withdrawals, timing of purchases and sales, and mandate change (e.g., Shariah vs. conventional). These differences may impact overall performance.
Past performance is not necessarily indicative of future returns. The value of investments may rise or fall, and returns are not guaranteed. PCM has not considered your investment objectives, financial situation, or particular needs. You are advised to consult a licensed financial adviser before making any investment decisions.
While all reasonable care has been taken to ensure the accuracy and completeness of the information contained herein, no representation or warranty is made, and no liability is accepted for any loss arising directly or indirectly from reliance on this material. This publication has not been reviewed by the Securities Commission Malaysia.
