Question

The Fourth Industrial Revolution (4IR) - characterized by the fusion of the digital, biological, and physical worlds, as well as the growing utilization of new technologies such as artificial intelligence (AI), cloud computing, robotics (e.g. RPA), 3D printing, the Internet of Things (IoTs), and advanced wireless technologies, among others-has ushered in a new era of global economic disruption.

Required

(a)   In the area of corporate treasury and credit management, discuss why treasury management systems (TMS) and credit management systems (CMS) and the use of the Fourth Industrial Revolution (4IR) tools are now becoming more important and getting more attention in Malaysia amidst Covid-19 pandemic.

(b)   Moving past Covid-19, what should be in the priority of the to-do list of the Corporate Treasurer (or Finance Manager in Malaysia) in dealing with:
(i) Corporate treasury management?
(ii) Credit control and accounts receivables management?

Answer 1

(a) The following mentioned tools are given importance in Malaysia amid Covid19. The tools and their importance is discussed-

1) TMS- The cash and treasury management system becomes vital in the time of covid 19 crisis. The banks in Malaysia are interlinked with one another and they provide support in case of crisis. Special care is taken by banks to look specifically after cash and liquidity. The Treasurers are expected to play an important role in the unsure times. The banks specifically in Malaysia have slashed their interest rates. Specific care is taken for debt management. Long impending debt is bane for any economy.

2) Credit Management System- The government and the banks of Malaysia are specifically intent to give credit to existing business but not to new businesses that are set up in Covid times. Strict system of credit rating and credit limits are set to deal with finances for pandemic. The banks are willing to help the government but not new businesses.

3) Forth Industrial Revolution- Technology is one thing that cannot stay stable in any circumstances. Technology is ever evolving. Most of the economic activities are carried out through the extensive use of technology. Cash in physical form has taken a step back. Work from home and extensive usage of technology for any economic process is the new norm.

(b) Moving forward the following steps should be taken by government, in the following economic activities post covid-

(1) Corporate Treasury Management- The Malaysian government should nationalize the cash management system. In easy words the government should invest more in nationalized banks. The government should contact with banks and rating agencies to invest more in nationalized banks and make investment an easy process. The government should also try to ease off liquidity and reduce interest rates for more public dealings.

(2) Credit Control and Account receivables- The government increase credit control .Less and less chance should be given to people to purchase goods on credit. Ultimately credit selling is not an viable option since the global economy is in turmoil. Account receivables must also be dealt the same way as Credit management. Payment must be given before the service and the government must monitor all the functioning. The debt of Covid has to be paid in some ways.