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MASB, an intangible asset

Hans Hoogervorst, IASB Chairman

17 December 2017

Kuala Lumpur, Malaysia

 

 

Introduction

Dato' Lee Chee Leong, Deputy Finance Minister II, Tan Sri Azlan Zainol, Chairman of the Financial Reporting Foundation, Chairman Raslan and members of the MASB, Executive Director Bee Leng and other distinguished guests, I am honoured to join you for this celebration dinner to mark the 20th anniversary of the Malaysian Accounting Standards Board.  Let me begin by thanking you for your excellent cooperation.

As Chairman of the IASB, I regularly get invited to events such as this. However, attending this particular event, to honour this particular organisation, was very important to me.  Indeed, I would probably have come along anyway even if I hadn’t been invited!

The reason is that the MASB is a very important partner to the IASB.  Not just representing the views of Malaysia on the global accounting stage – a role that it plays very well.  But also as a role model to others around the world – showing how well-organised, smaller economies really can help shape the rules of global finance. 

In accounting terms, the MASB is an important asset to Malaysia. But like many intangible assets, it is not always easy to measure the value of MASB to the Malaysian economy.  IFRS Standards have limited guidelines for measuring intangible assets, but that is a conversation for another day.  So let me offer some perspectives on why the MASB is so important to us, and how you serve as a role model to other jurisdictions.

Strong technical work

First, the quality of the MASB’s technical work means that Malaysia is able to influence global standards, by which it and another 125 countries abides.

For IFRS-standards to be successful as global standards, they have to be developed through a highly collaborative process.  We are always happy to steal other people’s ideas and claim them as our own, and we steal more from the MASB than many other standard-setters. 

A good example of this is the MASB’s groundbreaking work on how to value bearer biological assets.  The MASB identified a particular issue here in Malaysia and in other countries in this region. You made clear that it was not particularly helpful to fair value palm oil plantations on a continuous basis. It was costly and most users found that the fair value fluctuations created noise in the income statement that made it harder to judge the performance of such companies.   

You did some excellent research work, and managed very effectively the relationship with the IASB.  You convinced us of the merits of your suggested approach, and in 2014 we issued amendments to IAS 16 and IAS 41. 

Everyone benefits from this collaboration.  You get accounting standards that better meet your needs – as do other countries with strong agricultural sectors.  And we benefit from having standards that are capable of being applied on a globally consistent basis, across developed and emerging economies.  The City of London does not have many plantations, or cows, or sheep, so we could not have done this without your knowledge.

Global clout

Second, this experience shows that a well-organised, mid-sized country such as Malaysia is fully capable of contributing to the shaping of rules for global finance. 

Back in 2010, the G20 called on the IASB to improve the involvement of emerging economies in our work.  In response, we created an Emerging Economies Group as a forum to deep-dive into the technical issues faced by such countries when applying IFRS Standards.

When it came to deciding which countries would participate in this group, the obvious choice was to appoint emerging economies who were members of the G20.  However, technical competence was also an important factor for us, and once again the MASB is right up there with the best.  So, we made an exception and to this day, our Emerging Economies Group is made up of the G20 emerging economies plus Malaysia.  Now, this is not an exclusive club, and we are always open to expanding its membership.  But I think it is true to say that without the technical competence of the MASB, Malaysia would not be part of this important group.

Strategic importance

Finally, South East Asia is an important region to the IASB. We find MASB a very effective and friendly counterpart to work with as we support the needs of the region. 

The MASB plays an important role in the Asia Oceania Standard Setters Group, and also across the ASEAN region. As a major centre for Islamic finance and a full adopter of IFRS Standards, you are well placed to help other countries in the region complete their own transitions to IFRS.

From the outset, the MASB has played a pivotal part in helping countries with Islamic Finance to adopt IFRS. As one of the first IFRS adopters, Malaysia came to the conclusion that Islamic Finance transactions can be faithfully reflected in IFRS. Given the principle-based nature of IFRS Standards this should be no surprise, but it took a lot of thoughtful reflection and technical analysis on the part of the MASB to get this done. In the process, the MASB acquired a lot of expertise on which it allows other countries with Islamic Finance to draw.

Last year, the Kingdom of Saudi Arabia followed in the footpath of Malaysia by fully adopting IFRS. We are also very grateful that Mohammad Faiz Azmi, the previous chair of the MASB has kindly agreed to chair the IASB’s Islamic Finance Consultative Group. And the MASB will be hosting next year’s meeting of the IASB Emerging Economies Group here in Kuala Lumpur.

I congratulate Bee Leng for her excellent leadership of the MASB staff and active engagement. As well as being a Member of the IASB’s SME Implementation Consultative Group, Bee Leng features in a video on our website about the importance to us of working closely with national standard-setters.

We also know that the MASB is playing a leading role in the Asian Oceanian region on the IFRS for SMEs project. We look forward to working with the MASB for our next comprehensive review of the IFRS for SMEs Standard, expected in 2019.

As I have said many times before, national standard-setters like the MASB are our ears and eyes on the ground. We need your input to create the best possible accounting standards. Your input, whether you agree with our proposals or not, is vital.

Close

The next few years are going to very busy for the MASB.  Between now and 2021, Malaysian companies will be implementing major new accounting standards covering financial instruments, leasing, revenue recognition and insurance accounting.  Malaysia also needs to remain influential on the global stage as we complete the Conceptual Framework and set out on our journey to improve the communications effectiveness of financial statements.

So, for these and many more reasons, we are grateful to the MASB for the excellent work they have carried out during these last 20 years.  These are not mere platitudes.  They reflect the substance of what the MASB does on a day-to-day basis.  Work that greatly benefits Malaysian interests, as well as the IASB itself. 

 

The MASB is truly an intangible asset – difficult to value, but hugely important to us all.  We look forward to the next 20 years of further cooperation.