The announcement of Budget 2020 in the last quarter of 2019 received generally positive reactions among the public. In line with the Shared Prosperity theme, several initiatives have been announced to boost employment rates among the youth and women in Malaysia, encourage entrepreneurial activity in the small and medium enterprises (SME) sector, as well as more targeted execution of financial aid and subsidies for those in the B40 category. On the business side, the sectors of technology, communication, tourism and property are expected to benefit from tax breaks and allocated stimulus, especially with the move towards the deployment of 5G technology, Visit Malaysia 2020 and the changes in policy for foreign buyers looking for property in the country. Overall, Budget 2020 seems to indicate a more positive outlook for the year ahead, aiming at sustainable long-term growth by investing in social wellness and infrastructure.
In order to fully understand how we can expect to see the year progress, five leaders in the sectors of economy, finance, women development and arts & culture reflect on what’s been set into motion and what more can be done in the coming months.
CREATING MORE COMPETITIVE SURROUNDINGS
MICHEAL FOONG
International Chief Executive Officer of Maybank
Budget 2020 was tailored to help achieve development for all Malaysians, address wealth and income disparities as well as build a united, prosperous and dignified nation.
I believe that Budget 2020 was progressive, in a sense that it has increased the focus on addressing growth and capability building for the new economy and digital age, while also taking steps to amend gaps in terms of social inequalities amongst Malaysians.
I also feel that there was indeed a balance between initiatives to deliver immediate results for the year and the need to carefully allocate resources and investments into economic growth engines that take time to build and bear fruit. I think it is all about getting the right momentum and sequence of incentives that can generate multiplier effects across the economy. An example of this is the mix of short- and medium term measures undertaken for SMEs in Budget 2020, which includes incentives for SMEs to become exporters and regional players, as well as broader changes like the restructuring of the financial institutions supporting them.
Certainly, the initiatives announced to strengthen growth in the manufacturing and construction sector are definitely heartening. I definitely like these measures as they are clear attempts to further invigorate the housing and property sectors. I also found the MYR1 billion in allocations as good incentives to increase FDIs from Fortune 500 companies and global unicorns, as well as those to support tech entrepreneurs to be particularly exciting. We have shown so much potential to be at the forefront of global business, particularly in the tech space, so it is encouraging to see the government doing more to augment this.
But it’s also important for the National Committee on Investment (NCI) to expedite the process in approving foreign and domestic direct investments in Malaysia. This was particularly encouraging as a move towards capitalising on opportunities arising from the US-China trade war and there has been good momentum shown already. In global business, the ability to react faster and accelerate deals is the key to compete successfully against other countries that are also hungry to deliver new growth.
Malaysia has always welcomed FDI particularly from Fortune 500 companies but the competition has increased significantly in the region. The new incentives and the focus on including global unicorns as well are important to improve our attractiveness, and also to attract the right kind of players who are winning in the new economy and have the potential for hyper-growth.
Meanwhile, the announcement of the 5G Ecosystem Development Grant amounting to MYR50 million to seed technological developments by Malaysian companies to ride the global 5G wave is also wonderful, as I believe that the nation is definitely on the cusp of the next big wave in tech.
In the next five years, we will definitely see 5G driving significant new business growth and technology adoption particularly in this region and broader Asia. In ASEAN, Malaysia is seen as one of the key leaders and potential winners in 5G related investments. Helping accelerate our infrastructure and ecosystem is definitely the way to go to make us an even more attractive destination for 5G related investments. If we get this right and make Malaysia a significant component of the global 5G roll-out ecosystem, direct increase in new investments will be a very natural outcome.
I am also keeping a close eye on the Global Testbed initiative to attract next-gen emerging technologies to innovate in Malaysia. This is specifically designed for the fintech, blockchain and drone sectors by attracting global digital talents and interest from investors.
In the course of my work, I have met with many dynamic talents in the digital space here, both Malaysians as well as global talents. They have already been attracted to our country and the region – and it has always astounded me how fast-paced things have been with relatively minimal support in many cases. If you ask me, the landscape is indeed thriving and positioned to lay claim to significant chunks of the global digital stage, perhaps with the right prioritisation and fast-tracking of resources and support to the most promising players and new industries. We have seen how home-grown champions like Grab can spur new job creation, as well as new lifestyle and consumption behaviours in Malaysia and ASEAN. I’d love to see much more of this in the next few years!
ARMAJEET SINGH
Tax Leader of Ernst & Young
Taking a holistic view, all the measures announced with Budget 2020 are, of course, interlinked and part of a larger strategic plan for long-term sustainable growth. I feel that the measures announced covering various areas are meant to lay the foundation in line with the Government’s Shared Prosperity Vision 2030. We are encouraged by the bold, ambitious and comprehensive proposals.
I also feel that the key is really in the implementation of the announced measures. We do have a large government machinery, with many ministries and agencies that would be responsible for executing the measures. However, as some of the initiatives cut across different ministries and agencies, there is a need for an implementation taskforce to ensure these initiatives are carried out in an efficient, streamlined and consistent manner.
I’d also like to point out that the MYR1 billion announced for customised packaged investment incentives annually over the next five years will be a very important move. The customised incentive packages are a strategic push to attract very large investments from Fortune 500 and global unicorn companies into the high technology, manufacturing, creative and new economic sectors in Malaysia.
The incentive packages will go up to MYR1 billion a year for five years for companies that invests at least MYR5 billion in Malaysia. This will generate additional economic activities that support SMEs and create approximately 150,000 high-quality jobs over the next five years. Also, the investment from these companies will also serve as an important source of capital associated with new high-value job opportunities and promote the transfer of technology.
Then, there’s also the Malaysians@ Work initiative that consists of four programmes focusing on different parts of the labour force: Graduate@ Work, Women@Work, Local@Work and Apprentice@Work. This initiative will provide both wage incentives for the workers and hiring incentives for the employers. Therefore, the overall goal of the Malaysians@Work initiative is to create better employment opportunities by creating more than 350,000 job opportunities for Malaysians in the next five years.
I am also very glad to see a specific focus and objective for each of the components. The Graduates@Work component focuses on providing employment to unemployed graduates; while Apprentice@ Work aims to increase technical and vocational education as well as training participation among youth. The Women@Work component, in the meantime, aims to attract talent among qualified women on a career break; while Locals@Work is intended to encourage locals to take up jobs currently held by foreign labour, mainly considered to be the “3D†jobs.
With the above measures in place, I believe that they may also create a cascading/spill-over effect of creating new economic sectors in Malaysia, which will, in turn, support these investors’ businesses. Local companies and employees will also benefit from the transfer of technology and know-how and help shape a more highly skilled local workforce. Business infrastructure, process and productivity should also improve with further collaboration between the investors and local companies; and consequently, the quality of production will also increase.
Malaysia has been placing increasing emphasis on technology adoption. Yet, I’d like to point out that digital adoption by businesses is relatively low still. According to SME Corporation Malaysia, only 32% of the SMEs are leveraging digital in operations. Therefore, the gap in digital coverage and adoption by businesses in Malaysia compared to their international peers could potentially put these businesses at a competitive disadvantage over time.
I certainly believe that the introduction of the new incentives for the development of digital applications, digital companies and digital Malaysians in Budget 2020 will enhance the ability of both large corporations and SMEs to take advantage of the vast opportunities offered by new technologies and innovation. On the whole, I definitely agree that the proposed measures under Budget 2020 are quite comprehensive and bold. More importantly, they underpin a longer-term plan for sustainable growth in Malaysia. But of course, careful implementation is key in ensuring that all its objectives are achieved.
TEXT ELLFIAN RAHIM, NEDA AL-ASEDI & SWAROOPINI UDHAYA NAIR
ILLUSTRATION DEPOSITPHOTOS
