The 36th MACPA Annual Dinner, Istana Hotel, 17 June 1994
The accounting fraternity in Malaysia has come a long way sine the early days of independence, when much of the industry, like the rest of the economy then, was dominated by foreign firms. Since then, the industry and the country in general has grown. And in the process, the industry has matured and attained a definite Malaysian character, with local firms playing a leading role in shaping the future of the industry. Indeed, local accounting firms have gained international recognition for their high standards of professionalism and expertise, standards that are amongst the best in the region.
This is a crucial achievement for as we strives to secure international status as an investment and financial hub, the country's investment climate is gauged from the way its private and public sectors evaluate and report on their financial perfomance. I need hardly remind you that high accounting and reporting standards are necessary when preparing financial statements. While there is a firm structure of accounting and financial report standards in Malaysia, the compliance of these standards is only mandatory on members of the accountancy profession. It must be recognised that the financial statements are the responsibility of the Boards of Directors and it is their duty to ensure that the statements are properly prepared and comply with statutory and other requirements. It would seem to me unreasonable and unrealistic to leave the burden of ensuring high standards of accounting and financial reporting entirely with accountants since the responsibility of any company accounts lies with its diretors.
As our financial and capital markets become more sophisticated and as we strive to be world class competitors, we need to provide for tighter and more timely standards which can earn the support of preparers, auditors, and users alike by their quality. I believe the time has come for us to consider the establishment of an Accounting Standards Bord backed buy a body which can ensure stronger arrangements for securing complaince and which has the financial resources.
The corporate sector plays a crucial role in leading the economic growth of the nation. Because they have this responsibility, every effort must be made to ensure corporations are properly governed and managed, and account for their perfomance. Accountants, no doubt, have a major role to play in the improvement of corporate governance, whether as auditors in public practice or and whether they are working in the commercial and industrial sectors as management consultants, financial controllers or company directors. The corporate sector should have the commitment to come up with an inspiring model of progress based on culture, accountability, efficient management and moral responsibility if Malaysia is to realise the objectives of Vision 2020.
The last six years have been good to Malaysia with the economy recording an average growth of above 8 per cent. In the first quarter of this year, the Malaysian economy registered a robust growth of 8.6 per cent, compared with 7.6 per cent achieved in the first quarter of 1993. The stronger growth was driven by firmer export growth and higher domestic demand, particularly investment. Leading the growth is the manufacturing sector, which expanded by 13.7 per cent followed by the construction sector with a growth of 12 per cent, services 9.6 per cent and agriculture 2.2 per cent.
In the manufacturing sector, the output of the export-oriented industries expanded by 18.4 per cent and domestic market-oriented industries by 9.4 per cent. Double digit growth were recorded by the export-oriented industries of textile and wearing apparel (20.7 per cent), wood and wood- based products (15.9 per cent) electrical and electrical products (20.2 per cent) in the first quarter of 1994.
On the demand side, most private investment indicators, such as the import of capital goods, recorded double digit growth during the first quarter of this year. The rising investors' confidence is reflected in the applications for investments as well as investment approved by Mida for the manufacturing sector. During the first quarter of 1994, the applications for investment increased by 114.3 per cent to RM4.5 billion, against RM2.1 billion applied during the first quarter of 1993. Approved investment rebounded strongly, with an increase of 93 per cent against a decline of 73 per cent in the same period last year. This is indeed very encouraging for us that we are on track of recording yet another robust year.
While the strength of domestic demand, particularly private sector expenditure, will continue to underpin the growth process, the economy is also expected to receive an additional boost from the external sector, as the long awaited recovery in the OECD countries appears to be getting underway, albeit slowly, and is gradually translated into increased demand for Malaysian goods. Manufactured goods, in particular, had continued to accelerate strongly at 20-30 per cent growth in recent months, and this would certainly contribute towards a better balance in our external payments position in 1994.
On the price front, inflation remained stable at 4.3 per cent during the first four months of this year, similar to the rate recorded during the same period last year. Comparison on month to month basis indicates Consumer Price Index has, in fact, dropped marginally in absolute terms during April 1994 when compared to March and February this year. The CPI in April is lower than March by 0.2 per cent and is 0.6 per cent lower than February. This indicates that inflationary preassures have eased in April 1994, particularly on food, with passing of the passing of the festive season.
The Government is confident that inflation will be kept at about 4 per cent this year. We will continue to monitor developments in prices of consumer goods and is committed to keeping inflationary preassures under control through a combination of tight monetary, prudent fiscal and administrative measures. In our war against inflation, the private sector, our labour force and the public at large play a critical role. Certainly, we must also increase productivity in order to reduce unit labour cost, incalculate saving habits among our young and frugal in our spending to complement the Government measures to contain inflation.
However, the Government can only do so much to ensure that the right policy environment is in place for non-inflationary growth. In the final analysis, the difference between success or failure in the fight against inflation hinges on the commitment and response of the public at large. We must all work together. As accountants, I'm sure you are all to familiar with the importance of cost-benefit analysis and audits, as well as the need to ensure value for money.
Before I end, allow me to touch on the accounting profession in Malaysia again. MACPA had its share of success during the last 36 years. But past success means nothing and is no guarantee for the future. I believe that in order to be better placed to face the current and future challenges and threats, serious consideration should be given to further strengthen the profession by combining the efforts and resources of the two main accounting bodies in Malaysia, MACPA and the Malaysian Institute of Accountants to form a single national body of accountants. I have no doubt a strong and united organisation will better serve the interests of the profession and contribute effectively to the nation's well being.