KUALA LUMPUR (June 10): Trade policy restrictions could disrupt Malaysia’s export-oriented economy, which accounts for 66.1% of Malaysia’s GDP in 2023, according to KPMG Malaysia.

In a statement on Monday, KPMG Malaysia managing partner Datuk Johan Idris said global businesses are forecasted to struggle with slow growth and challenges to long-term sustainability.

KPMG Malaysia also said there was an urgent need for Malaysia to navigate the evolving landscape of artificial intelligence (AI) governance, which will ensure the responsible integration of this transformative technology into the nation's economic fabric.

Johan said that on the AI front, while the Malaysian government is developing a governance and ethics code framework, companies must proactively shape their own AI strategies.

He said rapid advancements in AI mean that anyregulatory measures will quickly become outdated, so businesses must stay ahead by taking the initiative in AI integration and governance.

"AI presents a significant opportunity to revolutionize Malaysia’s industries. However, it is equally important to establish clear guidelines that address ethical considerations and mitigate potential risks associated with AI deployment,” said Johan.

Meanwhile, a recent report by KPMG International attributed these struggles to three critical risks termed ‘bottom lines’, which it suggests should be urgently addressed.

The three bottom lines included trade policy restrictions (approximately 3,000 restrictions have been imposed since 2019), increasing vulnerability within the geopolitical landscape (increasing global conflict having around 12.9% impact on global GDP) and AI governance gaps (investments in this sector increased fivefold between 2013 and 2023).

Johan said recent global events have revealed the fragility of the global trade ecosystem and disruptions will continue to impact organisations unable to shore up ample defenses.

He emphasised that the way forward would be an approach of top-down policy mandates from the side of the government and bottom-up corporate capabilities for businesses, in order to overcome this ongoing fragility.

This was further elaborated in the KPMG report which outlined five initial steps CEOs should take moving forward. These included the following: