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TITLE: Speech by YB Datuk Chua Tee Yong, Deputy Minister of International Trade And Industry at the MIA International Accountants Conference 2017

DATE: 07/11/2017

SPEECH BY

YB DATUK CHUA TEE YONG

DEPUTY MINISTER OF

INTERNATIONAL TRADE AND INDUSTRY

AT THE

MIA INTERNATIONAL ACCOUNTANTS CONFERENCE

7TH NOVEMBER 2017, TUESDAY AT 11.00 AM, KUALA LUMPUR

Salutations

  • Yang Berusaha Encik Salihan Abang, President, Malaysian Institute of Accountants
  • Yang Berusaha Dr Nurmazilah Dato’ Mahzan, Chief Executive Officer, Malaysian Institute of Accountants
  • Yang Berbahagia Dato’ Mohammad Faiz Azmi, Conference Organising Chairman, Malaysian Institute of Accountants
  • Yang Berusaha Tuan Haji Sudirman Masduki, Registrar, Malaysian Institute of Accountants
  • Distinguished Guests, Conference Delegates
  • Members of The Media
  • Ladies and Gentlemen

A very good morning to all of you, and Salam Satu Malaysia

1. First and foremost, I would like to thank the organiser, for inviting me here today to deliver the keynote address.

2. This event resonates very closely with me, because I am also a professional accountant and a member of MIA. As a member, I am very grateful for the continuous learning and development provided by MIA, which has helped me in my chosen career. Furthermore, as a representative of the Government and the Ministry of International Trade and Industry (MITI) which works closely with MIA on national development initiatives, I can see first-hand that the efforts and the initiatives of the Malaysian accountancy profession and MIA are integral to strengthening business and industry, and social wellbeing. Simply said, I am proud to be part of the profession.

ASEAN

Ladies and gentlemen,


3. As part of the frontline for MITI, a key part of my role is to promote international and regional linkages, in order to enhance sustainable development for all in a non-zero-sum-game. Under our multilateral and bilateral approach, the Malaysian government works to strengthen bonds with multiple and diverse partners all over the world. Nevertheless, as a founding member of ASEAN and as a good neighbour, ASEAN’s interests and wellbeing are very close to our hearts. As such, one of our key initiatives is to champion the ongoing development of ASEAN and the ASEAN Economic Community (AEC).

4. This year marks the 50th anniversary of ASEAN, and the bloc has grown impressively since it was established on 8th August 1967. Asia is considered the global engine of growth and ASEAN is a fundamental to that growth. With a combined current GDP of approximately US$2.6 trillion, ASEAN collectively is the world’s sixth largest economy and Asia’s third largest, and we have consistently outperformed global growth rates over recent years. We are the world’s fourth largest trading power. ASEAN’s merchandise trade in 2016 was recorded at US$2.22 trillion, and we are now a net exporter of services. The services sector accounted for 53.1 percent of ASEAN’s Gross Domestic Product (GDP) in 2016, up from 50.0 percent in 2006. We are a preferred investment destination. Foreign Direct Investment (FDI) to ASEAN reached US$96.72 billion in 2016, 24.8% of which was intra-ASEAN while the top three sources of FDI inflows were the EU, Japan, and the US.

TALENT

Ladies and Gentlemen,


5. Of course, none of these feats could have been achieved without the key factor – talent. To go forward, ASEAN needs the right quality and quantity of talent who can help us to reach our future goals – regional economic and social integration and equitable and sustainable development by 2025.

6. In particular, we need not just financially skilled but agile and savvy talent to achieve further sustainable economic and financial development in ASEAN. This is where the profession plays a vital role. The Government is cognizant and highly appreciative of MIA’s efforts to build up the capacity and competency of talent in order to support development – at the national and regional levels especially.

7. From MITI’s perspective, we have been working very closely with MIA – and will continue to do so - to develop sufficient talent at the ASEAN level. Many thanks must go to MIA for its leadership and excellent work in implementing the ASEAN-level Mutual Recognition Agreement (MRA), that will drive the trade liberalisation of the key professional services sector in the AEC. MIA was pivotal in drafting Malaysia’s Assessment Statement to the ASEAN Coordinating Committee on Services and the ASEAN CPA Coordinating Committee, which was approved in May 2017. A very important outcome of this Assessment Statement is the breakthrough “ASEAN CPA designation”, that will improve talent mobility for the AEC; enabling talent to go where it is demanded by markets in the ASEAN member states and hopefully enhancing talent recruitment and retention for employers. We believe that opening up the ASEAN market and widening and enriching prospects for ASEAN accountants, the ASEAN CPA is key to this. Hence, the Government would like to extend its heartiest congratulations to MIA and the ASEAN profession for successfully advancing the MRA for accountancy services liberalisation, and driving the ASEAN CPA. Congratulations to all the new ASEAN CPAs present in the audience, and I hope that many more ASEAN delegates will sign up as ASEAN CPAs, to serve the AEC.

Ladies and gentlemen,

8. As the advisor to businesses, the accountancy profession is perfectly positioned to help the entire business ecosystem, including SMEs. The health of an enterprise and its growth are strongly influenced by financial management abilities. Indeed, financial mismanagement ranks as a key contributor to business failure, eventually impacting overall enterprise and trade performance.

9. As such, I exhort the MIA to impart financial literacy and financial management skills at all stages of organisational development, to bridge the skill and knowledge gap. Accountants can play an important role as trusted business partners by providing financial management and relevant business support. The goal is not just to improve the financial capability of business owners, but enhance business formalisation and professionalism among all businesses and institutions. This will eventually generate a more resilient economic growth and among other benefits, improve tax compliance to support nation building.

SME

Ladies and gentlemen,


10. MITI and MIA are collaborating closely in SME development, and its importance cannot be overemphasized. Due to the nature of SME being 98.5% of total businesses in the country and of local establishments, any economic growth with direct linkage to SMEs would directly benefit the people. By this virtue, the Government view SME as the driver and backbone of the Malaysian and ASEAN economy.

11. The size of Malaysian SMEs has grown from 638,790 in 2010 to 907,065 in 2015 with an increase of more than 260,000 new businesses or 7.3% per annum growth and now they contribute 36.6% to the national economy, 18.6% to exports and 65.3% of the national employment.

12. The RM20 billion allocation announced under Budget 2018 is a welcome addition and it is the largest ever allocation for SME development purposes eclipsing the 2017 and 2016 Budget of RM5.9 billion and RM8 billion respectively. The additional allocation for SMEs is aligned with the nation's aim for SMEs to achieve 21 per cent total exports and contribute 41 per cent to the economy by 2020, under the SME Masterplan.

13. The programme and measures under these allocations includes RM200 million training, grants, and soft-loans under SMECorp; RM150 million allocation for promotion and export expansion programme under SMECorp, MATRADE and MIDA; RM245 million Smart Manufacturing Grant under the Domestic Investment Strategic Fund and RM200 million High Impact Strategic Fund under MIDA to develop strategic capability and advantage in anticipation of the challenges in the future such as the Industrial Revolution 4.0.

14. In addition, tax incentives are also provided to help SMEs and businesses transform in line with contemporary developments including

i) Accelerated Capital Allowance of 200% on automation equipment;

ii) Accelerated Capital Allowance of 200% on manufacturing and manufacturing-related services sector; and

iii) Capital allowance for ICT equipment.

Ladies and gentlemen,

15. Malaysia is in a better and strong position. Its strong fundamentals have enabled us to attain 5.8% GDP growth in the second quarter 2017 and 5.7% for the first half of the year. In fact, due to growing and sustainable momentum Malaysia economic outlook for 2017 was revised upward by World Bank, International Monetary Fund and economist. Now the national economy is forecast to grow between 5.2 per cent and 5.7 per cent this year and between 5.0 per cent and 5.5 per cent in 2018. MITI has furthermore targeted a 16-17 per cent increase in total trade this year amid challenging global and regional headwinds.

16. From MITI’s perspective, I’d also like to draw attention to two notable allocations in the Budget: one, for automation and two, for Industry 4.0.

17. By channelling an allocation of RM245 million automation whereby companies adopting the smart manufacturing concept will be given matching grants, Malaysia is clearly abreast of the digitalisation trend. Going digital is critical to ensure that Malaysia becomes a more competitive nation, and to heighten trade and investment.

18. Moving forward to attain the top 20 nation status as charted in TN50 initiative, businesses has too keep abreast of latest developments and embrace upcoming mega-trends such as the globalization, digital future, industrial revolution 4.0, community living and rise of entrepreneurship.

19. Business interaction with customers will change as people become increasingly a “mobile first” world with the adoption of cloud, smart phones, tablets and social technologies. It is estimated that globally there will be more devices connected to the internet than people with 50 billion devices in a 7.5 billion population by 2020 and the difference between urban and rural area will be blurred.

20. The very same “mobile first” world will also digitize business and delivery model with big data, social platform advertising, drones, artificial intelligence, and on-line platform to name a few. This also will give rise to greater entrepreneurship participation by the youth with lower barrier-of-entry and higher adoption of new technologies and innovation. The face of entrepreneurship will become increasingly younger and diversified including greater participation of women. According to Department of statistics, employer and self-employed make up 22.9% of total workforce in the country in 2016. Employer and self-employed among men was at 25.3% and women was 18.7% respectively.

Ladies and gentlemen,

21. As one of the initiative to help businesses to gain an advantage, the Government has just launched the Digital Free Trade Zone or DFTZ which has the encouraging participation of over 1,900 export-ready Malaysian SMEs. The eFullfillment Hub for the region host a cluster of facilities for customs clearance, warehousing and logistics which is to optimise cross-border trade and optimise clearance and handling of goods from six hours to just three hours with Service Level Agreement and improve the Cargo Terminal Operations from four hours to 90 minutes in addition services from the 20 top global freight forwarders. The eServices Platform will offer SMEs global market access through an integrated trade facilitation platform in addition to cloud computing services.

22. I’m pleased to note that the MIA Conference topics are highly focused and relevant to digitalisation and automation, and will surely be useful in “Expanding Horizons” for the profession, which is the Conference theme. Obviously, MIA has put a lot of thought and research into crafting these sessions that are absolutely on trend, and delivered by leaders in the tech field.

23. Another area where MIA is also right on trend is Integrated Reporting. I would like to congratulate MIA on its advocacy in Integrated Reporting and the release of its inaugural integrated report. I understand that thanks to MIA’s efforts, Malaysia is on the radar as an exemplar for Integrated Reporting among emerging markets, and several local organisations and PLCs have pledged to adopt Integrated Reporting Promoting better quality corporate reporting – both quantitative and qualitative - is essential to improving the transparency, confidence and competitiveness of the Malaysian market in the global landscape. More Integrated Reporting will draw more investment and business. I am sure that many delegates here today are influential decision-makers within your organisation’s financial and reporting functions. I encourage you to have a look at the MIA’s Integrated Reporting and other similar Integrated Reporting, and see how these can be applied to your own organisations to enhance your own brand, and your home markets’ reputation and brand.

Conclusion

Ladies and gentlemen,


24. Lastly, I would like to once thank MIA again for inviting me here today. I hope that this Conference will be enlightening for everyone, and that your learning today provides inspiration to take you on a new and exciting journey. Together, we chart a new path for Malaysia and ASEAN.

Thank you.