During a Malaysian Institute of Accountants (MIA) conference on 10 June 2021, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz announced that every payment for government services will be conducted electronically by 2022. The policy forms a core component of the MyDigital national digital‑economy strategy and is presented as a means to curb corruption, improve tax collection and modernise public administration. Speaking to the MIA audience, Zafrul highlighted that digital payments minimise direct interaction between citizens and officials, thereby reducing opportunities for graft.
“The government encourages digitalisation for various purposes, including modernising services and reducing corruption because it reduces direct contact between citizens and government officials,” he said, describing the cashless mandate as a “direct blow to corruption.” The Finance Ministry expects the shift to bring safer transactions, richer strategic intelligence and smoother information exchange across agencies. By removing cash hand‑overs, each payment can be tracked and audited, creating a transparent trail that was previously unavailable.
Malaysia has already introduced electronic identity cards and biometric verification for its population. These tools are intended to speed up direct government support while ensuring integration, accessibility and openness. Zafrul also praised accountants for their influence on decision‑making and their role in advancing digital technology, noting MIA’s own initiatives to promote leadership and digital transformation.
Tax Collection and the Informal Economy
Expanding the tax base is a stated objective of the cashless drive. Zafrul said the government aims to pull revenue from the black economy into the formal system, asserting that better tax compliance and streamlined administration will boost collections.
“Improving tax compliance and administrative issues will improve tax collection, which is crucial for the government to provide more assistance during the crisis and spend more time for national development,” he explained. Digital payments leave a permanent record, making it harder for businesses and individuals to conceal income. The Ministry of Finance believes this will close loopholes that have allowed billions of dollars in untaxed activity to flow through cash transactions. No specific revenue targets were disclosed, but the initiative aligns with broader efforts to strengthen Malaysia’s fiscal position.
Accountants, Governance and Integrated Reporting
At the same MIA meeting, chairman Dr Virinderjit Singh underscored the importance of accountants in upholding corporate governance, tax transparency and ESG integration. Zafrul echoed this sentiment, noting that the Finance Ministry serves as a national lecturer for the International Integrated Reporting Council (IIRC) and has championed integrated reporting adoption. “Listed companies are commendable, and investor relations are part of the story of creating value for the public sector and building public trust through increased transparency and accountability,” he said.
Accrual Accounting as a Reform Pillar
The transition to accrual accounting is another element of the reform agenda. Zafrul described it as “invaluable in improving the financial health of the public sector.” Unlike cash accounting, accrual accounting records revenues and expenses when they are earned or incurred, offering a clearer view of the government’s financial position.
The ministry sees the combination of accrual accounting and digital payments as a way to make the misappropriation of public funds almost impossible to conceal.
Implementation Progress and Outlook
By the end of 2020, 60 % of government expenditures were already processed through electronic means. The three‑day MIA conference, titled “Ensure a Sustainable Future with Flexibility and Resilience,” aimed to equip auditors with skills in corporate sustainability, climate solutions and digital empowerment. The MyDigital blueprint envisions Malaysia moving toward a digital network economy aligned with the Fourth Industrial Revolution.
The cashless deadline of 2022 sets a concrete target for agencies to adopt electronic payment systems, complementing biometric ID, accrual accounting and intensified tax enforcement. If fully realised, the reforms could significantly limit the cash‑based corruption that has long affected public services.
The real test now lies in agencies meeting the 2022 timeline and delivering the promised transparency.
