When Datuk Seri Johari Abdul Ghani FCCA embarked on his career as an accountant over 25 years ago, little did he envisage he would one day be managing the nation’s finances and overseeing its economic and financial policies as Malaysia’s Second Finance Minister.
Here, Johari describes how his ACCA training, a successful corporate career and his early years in a poor squatter community have influenced him, as well as discussing the challenges facing the accountancy profession.
Q: How did you move from the boardroom to the Cabinet?
A: I have been a professional accountant for more than 25 years, beginning with my first job at Peat Marwick. I went on to manage several public listed companies and became very familiar with the corporate governance aspect of business. This entailed involvement in various corporate oversight committees and implementation of check-and-balance systems. So, when I made the move to the Cabinet and became part of the country’s administration, I found myself in familiar waters due to my background in corporate – albeit at a much bigger scale and expectation.
Q: Was it tough decision to give up corporate life?
A: I grew up among the urban poor in the setinggan [squatter] area of Kampung Pandan in Kuala Lumpur. Being aware of the people’s hardship, I knew back then I must play a part in finding the means and solutions to improve the quality of life of the community that I grew up with.
Coming back from overseas, having obtained the ACCA Qualification, I also involved myself in community works and became politically active. By the time the country’s leadership offered me the chance to run as their parliamentary candidate for Titiwangsa, I was already a relatively well-off corporate figure running a multimillion ringgit business. Having won my first general election and after a two-year stint as a backbencher, I was offered a Cabinet position as a deputy finance minister. Eleven months later, I was appointed as the Minister of Finance II.
The decision to move from the corporate world into government meant I had to take a massive pay cut. Regardless, I find the trade-off was even more satisfying in that I am now in a position where I can make an actual difference in terms of the country’s development and direction, and be in service to the rakyat [people].
Q: What are some of your key goals?
A: I hope to bring about a culture of change in the ministry, in particular on how we conduct business here. On our journey towards becoming a high-income nation, we are experiencing rapid growth and expansion of our infrastructure in key utilities such as roads, railway systems, telecommunications, and so on. These are the determinants and drivers for growth, employment and general income. These, however, require a huge amount of capital and recurrent expenditure. This is the area where the involvement of the private sector as one of the economic drivers to bring about development and improvements becomes one of the key concerns for the government, in particular the Finance Ministry.
We aim to ensure that unnecessary red tape and bureaucracy will not hamper any infrastructure development projects. We need to establish frameworks that include sound fiscal and monetary policies, transparency, good governance and efficient procedures that will offer confidence to investors.
Q: How do you handle the pressure of being responsible for the country’s financial wellbeing?
A: Every job comes with its own set of challenges – even more so when you are tasked with managing and looking after the country’s financial wellbeing. At the ministry, I have had to deal with the biggest challenge of all: the government’s loss of revenue of approximately RM36bn due to the drop in oil prices.
This has greatly affected the government’s ability to help stimulate the economy and help the rakyat in building better infrastructure such as schools, hospitals and rural roads, and improving the economic welfare of the people, be it via healthcare, education or other social services.
We are now experiencing strain on the government’s coffers to continue these activities. My job is significantly focused on making the adjustments necessary in managing the government’s current limited resources to ensure that the economy remains sustainable and that our fiscal deficit is well managed.
Q: What are some key challenges facing the economy?
A: The government has always pursued an open approach in terms of managing the economy and being an open economy. We are not precluded or insulated from the effects of challenges arising from developments in other parts of the world. Prolonged volatility in commodity prices, in particular oil prices, the uncertainties of interest rate hikes in the US, geopolitical tensions, the rebalancing of China’s domestic economy and Brexit are part of these challenges. Notwithstanding these, the government managed to record continued expansion in the economy.
Q: How does your training as an accountant help you?
A: I am foremost a ‘numbers-and-figures’ man. In approaching any situation, I am inclined to evaluate factual premise based on recorded figures that are devoid of any sentiment or bias. My training as an accountant has made me more attentive to details and I am thus comforted that any decisions I make are based on facts and figures.
The tasks in front of us involve a lot of analyzing and interpreting, and we need the ability to come up with comprehensive solutions. Therefore, I totally agree that having an accounting background is definitely handy and, to a certain extent, requisite for my work as Second Finance Minister.
Q: Are you therefore better placed to understand and help tackle the challenges facing the profession?
A: I think the biggest challenge the profession is facing now comes from the advances of digital technology. It demands newer skill sets from accountants as we deal more and more with technical data presented in various forms. We need to tune our approach to accommodate our customers’ expectations. The onslaught of digital technology presents challenges and opportunities to our profession. Faced with the prospect of our services being rendered irrelevant in the future as advances in new technologies such as blockchain, data analytics and robotic process automation may represent credible alternatives to the services and expertise that we currently provide, we need to evolve and adopt these technologies to our advantage.
As for the government, we now find ourselves having to engage with business entities that are purely based on e-commerce platforms such as Uber, Airbnb, Alibaba and Netflix. We need to figure out how the government – and country for that matter – could benefit from the way these businesses operate in terms of taxation. The digital economy alone contributes 18% to the government’s coffers.
Q: What are the key qualities essential to success in the corporate sector?
A: Attention to detail and precision in discharging one’s duties and responsibility is essential. I believe these qualities hold true for any profession and not just for accountants. Another essential quality is the ability to make informed decisions without being influenced by sentimental factors. A good example would be the recent disposal of a 49% stake in Proton, the country’s first national car project, to China’s Zhejiang Geely Holdings. If we were to continue to manage Proton based on sentimental values and allow a misplaced sense of patriotism to play a role in our decision-making process, then the Proton business model would have been unsustainable and the company would continue to bleed unnecessarily at the expense of the country. We have to be pragmatic in our outlook and the partnership with Geely came at the right time.
We have also learned our lesson with Perwaja Steel, which ceased operation in August 2013. Since its inception in the early 1980s, there were several attempts to save Perwaja but all failed, and one of the reasons was that we allowed sentiment to influence our decision-making process. Perwaja Steel was supposed to be a showcase project for Malaysia’s push for industrialization in the 1980s. The company ended up losing billions of ringgit. Basically, pride got in the way of real business.
Q: How has the ACCA Qualification helped you as a corporate figure and government leader?
A: The ACCA Qualification is internationally recognized. What it essentially means is that an ACCA accountant is a person more often than not at the frontline of safeguarding the integrity of financial reporting in any business endeavor. Having the Qualification is like having a valued business calling card, which greatly assists you in instantly being recognized as a reliable person with the integrity and skill to deal with the intricacies of financial challenges.
Source : ACCA GLOBAL