LAST month, the Federation of Malaysian Manufacturers (FMM) had called for waiver of both corporate and individual incomes taxes for Year of Assessment 2020 and 2021 for a stronger impact and multiplier effect from consumer to business to workers which was not considered in the Budget 2021 announcement yesterday.
In addition, FMM had also called for a more competitive tax regime for both corporate and tax rate.
“We note that the personal tax rate reduction was only a 1% reduction for those under the income bracket of RM50,000-RM70,000. We believe that this reduction could have been extended to the other income brackets as well,” FMM president Datuk Soh Thian Lai in a statement released yesterday.
FMM would also like to highlight that incentives for Industrial Revolution 4.0 (IR4.0) adoption need to be focused and more government resources should be allocated to promote and encourage IR4.0 and digitalisation in Malaysia.
SMEs in particular continue to need assistance to close their automation gaps, review and identify the right technologies which would bring them towards the next level of industrialisation.
On the right track to economic revival
Despite some missed points, FMM still commends the Government for a people’s budget that focuses on the wellbeing of the rakyat and reviving the economy.
Even with the current economic constraints, the budget has focused on protecting jobs and companies by helping ease the cash flow challenges of the people and businesses.
Specifically for the manufacturing sector, the budget has provided initiatives and incentives towards revitalising the economy including facilitating greater access to financing, SME development, attracting investments, driving the acceleration of digital adoption and automation, enhancing job opportunities via reskilling and upskilling.
“We commend the Government’s actions to continue to support job generation and retention via the numerous human capital development initiatives and also welcome the establishment of the National Employment Council,” Soh said.
He also lauded the initiative to support workers who have lost their jobs and the targeted extension of the Wage Subsidy Programme, which was part of FMM’s wish list. (Read the story here)
The extension of the PENJANA special tax incentives to attract FDIs to relocate their manufacturing to Malaysia from 2021 until 2022 is also welcomed.
“The incentive should be extended to existing investors which had received approvals for expansion, diversification or new projects in 2019 as well as to domestic investments,” Soh said.
“These are “captive” investments which can immediately take advantage of the incentives to deliver the desired results more quickly, especially in terms of multiplier effect on their existing suppliers,” he added.
While FMM welcomes the introduction of the Global Trading Centre (GTC), Soh hopes that the details including the conditions and guidelines will be made available soon.
Additionally, Soh also hopes that the various incentives, especially the financial assistance to SMEs and microbusinesses, will relieve their tight cash flow and improve the chances of business recovery and sustainability.
However, FMM is of the view that the government needs to review its Internet connectivity strategies to cover more industry areas with faster and affordable high-speed broadband (HSBB) and implementation of 5G infrastructure in all parts of country as many industries and business rely heavily on the Internet for their business operations.
FMM also welcomes the additional allocation of RM150 mil for the SME Digitalisation Grant Scheme and Automation Grant, accompanied by the relaxation of qualifying criteria to facilitate access by SMEs and start-ups which have been in operation for six months.
“We look forward to receive the full details from the Government on the more relaxed criteria,” Soh said. – Nov 7, 2020
