Ethnicity, Foreign Investments and Strong Pragmatic Government: Towards Interpreting Accounting Progress in Malaysia
Authors: Md. Ali Azham 
Published: October 2014

This work applies the interpretive paradigm (Burrell and Morgan, 1979) in understanding the accounting development taking place in Malaysia over a forty year period from 1957 to 1997. To understand accounting in action, the perspective emphasises putting accounting in its particular historical and environmental context and thus leads towards quite rich description of the activity in Malaysia. Following the interpretive approach, accounting here is considered not as a distinct and separable part of the total social system but as an integral to the sociopolitical structure of society (Samuels and Oliga, 1982; Hopwood, 1983; Chua, 1986; Hines, 1988; Morgan, 1988; and Dillard, 1991). This socially constituted view of accounting stresses that accounting is constantly changing and evolving within its dynamic environment. What constitutes the environment surrounding accounting development in Malaysia is comprised of the nation’s social, economic and political arenas. Specifically, these environmental dimensions are represented by the following respective factors: ethnicity, foreign investments and strong pragmatic government. These environmental factors which consist of a set of socio-economic relationships and political conditions have the ability to either constrain or facilitate the accounting process. With interpretive research approach and the socially constituted view of accounting adopted in this study, data are obtained from primary and secondary source documentation and from personal interviews conducted with various parties who can be considered as having significant interests in the country's audit practice. From one accounting episode to another that totalled to eight, the impact of ethnicity, foreign investments and strong pragmatic government may be surmised. The factor of ethnicity seems to have shown its impact in the MIA lying low, rejection of the MIA-MACPA merger proposal, activation of the MIA, the rivalry between the MIA and MACPA and finally the setting up of the MASB and FRF. Foreign investments on the other hand appear influential in the establishment of both the MIA and the MACPA, the MACPA thriving during the era of the New Economic Policy (NEP) while the MIA was lying low, and finally in the activation of the MIA later in 1987. As for the environmental attribute of government acting in a strong and pragmatic manner, this may be seen in all espisodes except perhaps in the establishment of the MACPA. All in all, it may be inferred that racial concern and the operation of strong pragmatic government in contrast to the influence of foreign investments appear to have constraint progress in the manner that accounting has been developing in Malaysia. Their continuing debilitating impact is expected to continue as long as powerful elite comprising those in the government, corporate and accounting sectors stays intact. Although at one level it appears that changes have actually taken place, deeper analysis shows that much of this change is superficial. Accounting development has been implicated in broader ideological and political struggles in the society (Hopper et al., 1987). Thus, accounting in Malaysia cannot be interpreted as simply a technical phenomenon, but rather as a social activity imbedded in its social, economic and political context. The lessons and experience of the past and present suggest that in all probability the future of accounting in Malaysia will continue to be constrained by unresolved problems. Accounting in Malaysia seems to be a case of "the triumph of hope over experience".