1. National economic growth forecast
Based on research by MIDF (Malaysian Industrial Finance Berhad), the Malaysian economy is projected to grow between 4.5% and 5.5% in 2025. This projection is driven by continued economic growth momentum backed by government support. However, this strong and positive economic outlook will have several implications for financial reporting standards in Malaysia. Read on below to find out:
- Accurate and timely financial information: As the economy grows, businesses must provide more accurate and timely financial information to investors, lenders, and other stakeholders. This will require robust financial reporting systems and processes.
- Increase in sustainability reporting: Growing environmental and social concerns will likely lead to increased demand for sustainability reporting. Companies must disclose their environmental, social, and governance (ESG) performance to meet the expectations of investors and other stakeholders.
- Increase scrutiny from regulators: As the economy grows, regulators will likely increase their scrutiny of financial reporting to ensure that companies provide accurate and reliable information. This may lead to stricter enforcement of accounting standards and increased penalties for non-compliance.
2. Focus on sustainability
As more focus is being placed on (ESG), environmental, social, and governance, companies in Malaysia will be more likely to integrate sustainability factors into their reporting. Here are some topics that have been taking place progressively:
- With the encouragement of Malaysia’s Security Commission, this will include the disclosures of ESG matters, such as human rights, diversity, and climate changes, in the financial reporting and is expected to continue in the future.
- Adoption of international sustainability reporting frameworks: The Malaysian Accounting Standards Board (MASB) may consider adopting or aligning with international standards such as the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB).
3. The digital revolution of financial reporting
Digitalisation has revolutionised financial reporting in recent years. In 2025, the Malaysian financial reporting landscape will undergo a significant transformation driven by the rapid advancement of digital technologies. With the full enforcement of eInvoicing by the third quarter, Access UBS is determined to provide unparalleled support to drive businesses towards meeting the regulatory compliance set by LHDN.
This shift towards digitalisation promises to enhance efficiency, transparency, and accuracy in financial reporting processes.
- This can be seen with the adoption of eXtensible Business Reporting Language (XBRL), which is expected to gain further momentum. Learn more about XBRL here.
- As Artificial Intelligence and Machine Learning (AI & ML) are implemented, algorithms are being employed to automate tasks such as data entry, reconciliation, and fraud detection, leading to increased efficiency and reduced human error.
- Informed decision-making with Data analytics and visualisation. Advanced data analytics and visualisation tools enable companies to gain deeper insights into their financial performance, identify trends, and make more informed business decisions.
4. Cybersecurity and data privacy
Digitalising financial reporting in Malaysia raises significant security and data privacy concerns. As companies increasingly rely on technology, protecting sensitive financial information becomes paramount. Companies are implementing stronger cybersecurity measures to protect sensitive financial information and comply with data privacy regulations like the Personal Data Protection Act 2010.
The types of cybersecurity concerns can be identified below:
- Data breaches: Malicious actors targeting financial institutions and companies to steal sensitive data, including financial statements, customer information, and intellectual property.
- Phishing and social engineering: Tricking employees into revealing sensitive information through fraudulent emails or other deceptive tactics.
- Data breaches leading to identity theft or financial loss: Compromised data can be used for identity theft, fraud, or other financial crimes.
- Non-compliance with regulations: Failure to comply with data privacy regulations, such as the Personal Data Protection Act 2010 (PDPA), can result in hefty fines and reputational damage.
- Unauthorised data access: Accidental or intentional access to sensitive data by unauthorised personnel.
- Ransomware attacks: Disrupting business operations by encrypting critical data and demanding a ransom for its release.
Understanding the severity of these concerns, Access UBS is introducing its own artificial intelligence, Access EVO, which provides holistic protection with 3-tier security that integrates seamlessly with your security framework. This ensures data privacy, upholds user permissions, and safeguards confidentiality.
5. Geopolitical uncertainty
Given the current global economic outlook, which includes geopolitical unrest in Western Europe and the Middle East, ongoing trade tensions between China and the US, and possible unexpected changes in US policies, the financial performance of Malaysian Companies will continue to be impacted. The volatility of the Malaysian Ringgit may affect the financial statements of companies with significant foreign exchange exposure.
In Conclusion
The financial construct of economics is soon to thrive even further in the digital landscape. The Malaysian economy is soon to thrive even further in the digital landscape, and there is no better time to embrace the shift than right now. Following the financial reporting trend would be a good starting point for any business to stay competitive in the market, but with the rapid progression, a full digital transformation is required, and Access EVO is here to help you achieve that.