muhammad bin ibrahim : audit as a partner of change remarks by mr muhammad bin ibrahim, governor of the central bank of malaysia ( bank negara malaysia ), at the 5th petronas board audit committee ( bac ) forum “ audit as a partner of change ”, kuala lumpur, 16 august 2016. * * * the theme of today ’ s forum “ audit as a partner of change ” is highly relevant and timely, as the events in the global market today, involving failures of large firms, frauds and market manipulation activities, underscores the criticality of the three lines of defenses in organizations. for confidence and trust to be restored in the marketplace, the role of the bac and internal auditors as the third line of defense will be even more critical than ever. our role as members of audit committees is much broader than what we may perceive it to be. organisations such as petronas are widely regarded as amongst the few key flag bearers for the country. hence, it is incumbent upon the board and the bac members to be strong and energetic in upholding the highest standards of professionalism, ethics and integrity in discharging their roles and responsibilities. the people of malaysia must have confidence and pride that an institution entrusted with much strategic natural resources are run with utmost integrity and professionalism. before i proceed further on the topic for today, allow me to touch briefly on the current outlook on the global and domestic economy. the global economy has experienced multiple shocks in recent years, with its effects reverberating across the globe. global growth has continuously underperformed expectations and is expected to remain moderate going forward. the divergence in monetary policy in advanced and emerging economies as well as the unexpected policy adjustments in several economies have also culminated in a global environment of heightened volatility and uncertainties. one of the most significant developments we have experienced thus far is the sharp volatility in commodity prices which has created destabilising implications on commodity - driven countries. amid a confluence of shocks, ranging from weaker - than - expected growth prospects to geopolitical uncertainty and moderation in china ’ s economic growth, oil prices declined by more than 50 % in a span of 6 months in 2014. the volatility in oil prices has also been heightened by unanticipated economic and geo - political developments. the events unfolding in the united kingdom and consequent effect to the european region have also contributed to the increased volatility in oil prices

a disadvantage by creating space for regulatory arbitrage. policy uncertainty in many countries, specifically the uncertainty arising from the tax proposals in the united states, also warrants careful attention. furthermore, more aggressive monetary policy actions than currently anticipated could tighten global financial conditions, causing disruptions to capital flows to emerging market and developing economies ( emdes ) like south africa. so while the short - term outlook is an optimistic one, there is general recognition that we cannot afford to be complacent. securing a sustained recovery over the medium term requires stronger international cooperation. allow me to highlight some of the initiatives in this regard. international cooperation page 2 of 7 international forums such as the g201 and brics2 continue to give attention to initiatives aimed at supporting stronger, more sustainable, balanced, and inclusive growth. as part of that, the g20 and brics also give much attention to improving the resilience of the global financial system. structural reforms have been a key objective of the g20 and have consequently been receiving greater emphasis since the australian presidency of the g20 in 2014. these reforms are aimed at raising the collective g20 gdp3 by an additional 2 % by 2018. each g20 country has devised a growth strategy, highlighting the key structural reforms to be undertaken to raise potential output. every year, member countries update their growth strategies ( which are peer - reviewed ), new measures are committed to ( where possible ), and progress towards the stated objectives is assessed. under china ’ s g20 presidency in 2016, the structural reform agenda was further enhanced by the development of a set of priorities and guiding principles as a reference for g20 reform efforts. an indicator system was devised to assist with the monitoring and assessment of the implementation of structural reforms and their adequacy to address the structural challenges. this year, under germany ’ s presidency, the g20 has devised a set of principles as a means of enhancing member countries ’ resilience to shocks. there is little doubt that progress is being made in building a more resilient global financial architecture. the imf is currently reviewing its lending toolkit to make it more relevant and more balanced, and to also work towards closing the existing gaps within the global financial safety net. numerous discussions are also continuing on developing macroprudential policies and devising ways of improving the availability and quality of relevant data to enhance economic policy formulation and implementation. 1 group of twenty 2 brazil, russia, india, china, south africa 3