THE OPENING OF THE 14TH CONFEDERATION OF ASIAN AND PACIFIC ACCOUNTANTS (CAPA) CONFERENCE, Kuala Lumpur, 7 October 1996
A new Asia is on the rise. Today Asia is a continent of achievement and progress, bringing massive and comprehensive development to all Asians. This new Asia must be a contributing Asia, not only to its constituents' advancement, but to the advancement of mankind as a whole.
The theme of the conference - Asian Renaissance - Powerhouse of the New Millennium is indeed timely and should stimulate wider exchange of ideas and opinion. The Asian Renaissance we are discussing about must be a psychological and cultural rebirth, freeing us from the bonds of mental servitude and enriching our arts and our cultures. It must be an economic renaissance, vigorously propelling our material condition of life forward whilst ensuring social and economic justice for all our citizens.
It must be a political renaissance, founded upon the richest development of different forms of democracy and the greatest respect for and nourishment of all the rights of the individual person in the contact of community rights in which the individual exists. The Asian Renaissance must also be a social renaissance, righting the wrongs of centuries, providing dignity, egalitarianism and opportunity to all regardless of gender, position, race, colour or creed. It will confront no one, no country, no continent.
Asian entrepreneurs must develop market niches, form joint ventures and strategic alliances to succeed in the global market. Businesses now have to conform to global standards. They must be competitive with the best in the world in whatever they do. Globalisation means that an entrepreneur could sell to the world and scan the world for resources, talent and technology. Going global is also an economic imperative for many businesses and it means incorporating "culture fluency" in products and services and the ability to achieve universal appeal. Asia which has just arrived on the global scene, must assert its values more in their products, and market those values. The global economy, driven in part by the activities of the multinationals, has achieved a degree of integration never seen before in any world empire and much of the success of Malaysia's economic growth has been a result of integration.
In line with the government's intention to position Malaysia as a major regional financial center, the institutional infrastructure for financial reporting and corporate governance must clearly be of international standards. The role of financial reporting also takes on greater significance as regulation of capital markets in Malaysia moves towards disclosure based regulation with greater emphasis on high standards and levels of disclosure. Within such an environment the need for the acceptance and compliance with f1nancial reporting standards becomes a cornerstone of a successful disclosure based environment. In this respect, Malaysia has made the commitment and taken the appropriate initiatives to strive towards excellence in financial reporting --- a key component of the financial and capital markets.
However, to achieve a financial reporting environment of international standards, it must be accepted within the wider financial and investment community. It is apparent that those outside the accounting profession generally regarded accounting standards, particularly adherence thereto the domain of accountants. As long as the setting of accounting standards continues to be within the accounting profession, the attitude will prevail and those outside the profession will not have the ownership of the standards and will regard compliance with the standards as not being their responsibility. Therefore, there needs to be a mechanism in place that would give "ownership" to all relevant parties involved in the financial reporting process.
In many countries, the profession together with the preparers, users and regulators has recognised this need. It has initiated and supported moves towards establishment for frameworks for the development of financial reporting standards that are independent of any one particulate interest group, yet reflect the active participation of each of these parties in the financial reporting process. The burden of securing good financial reporting must not be borne entirely by the accounting profession.
The relevant parties must therefore be involved and have a direct say in the developments and setting standards as well - this is what I mean by ownership. The integrity and success of a sound financial reporting process will depend on the assurance that all relevant parties are involved in the process. It must be within a framework that ensures that no one single party "takes over" and therefore there must be independence from any particular interest group.
There must also be in place suitable statutory provisions to ensure compliance with and enforcement of financial reporting standards. Presently, standards can only primarily be enforced by the accounting profession on their members. However, there must be suitable mechanisms in place to ensure compliance with standards and also the enforcement ability to assess levels of compliance.
About a year ago, in delivering my 1996 budget speech, I announced that a two-tier framework comprising the Financial Reporting Foundation (FRF) and a Malaysian Accounting standards Board (MASB) will be established under a separate legislation to be responsible for the development, review and approval of accounting standards in Malaysia
The foundation comprising some very prominent members will advise on financial reporting matters and oversee the operations of MASB. However, the MASB will be technically independent and will be responsible for the development of financial reporting standards applicable in Malaysia. The new framework will be supplemented with the appropriate compliance and enforcement mechanisms through the Securities Commission, Registrar of Companies and Bank Negara.
The accountants will continue to play a significant role within this process, but will now be joined by not only members of the profession, but also preparers, users and regulators. Besides achieving what I have defined as wider ownership and compliance with professional standards, the new framework sets the context for development of Malaysia as a regional financial center.
Taking our place as a constructive member of the new global economy is Malaysia's future. It takes us back to the traditional concept of professional integrity of the accounting profession to a new concept of empowerment for people as genuine owners of their destiny. You as professionals will share the responsibility and like all of us acquire more obligations. We will have to offer and achieve more to sustain our dream of a better future for all our nation in a better world.