Government spending on rebuilding and upgrading of basic infrastructure such as city roads, last mile transportation solutions, and digital infrastructure would be greatly welcomed. Spending on infrastructure development projects has the potential to support economic growth by stimulating spending as well as improving trade logistics capabilities, which increases business activity.
Digital infrastructure spending in particular, through 5G connectivity services for example, can continue to promote the rapidly growing e-commerce sector as well as facilitate the adoption of 4IR technologies into commercial and industrial operations, particularly within the agricultural and manufacturing sectors.
This was the lead sentiment of 27Group’s Founder Girish Ramachandran (pic) for Malaysia’s upcoming Budget 2024. His outlook represents how Budget 2024 would possibly factor in the most vital concerns of the business community and of Malaysians this time around and what needs to be given due consideration.
Rebalancing Taxes – Girish feels the tax system need rebalancing. The Budget should look into the reintroduction of a revised Goods and Services Tax (GST) to replace the Current Sales and Services Tax (SST) merits consideration as a means of stimulating fiscal activity and improving trade conditions. GST has the potential to reduce costs for business owners while increasing the competitiveness of Malaysian products. Albeit the government would need to assess its full implications before placing the associated burden on consumers. Tax benefits which favour the M40 group would also be much welcomed.
Strengthening Investment – Facilitating increases in both Domestic Direct Investment (DDI) and Foreign Direct Investment (FDI) are vital to support sustained economic growth in the country. Initiatives which improve DDI are favourable as these have the potential to not only spur infrastructure development and commercial activity, but also attract greater FDI inflows, as foreign investors weigh DDI figures heavily when considering the market potentials of various economies.
The benefits of DDI and FDI inflows would have the greatest impact within the energy transition, industrial manufacturing, electronic semiconductors, agrifood and commodities, and tourism sectors.
Focusing on Productivity Improvements – Funnelling investments into areas which improve productivity output, for instance by growing sub sector education through the training of software developers and advanced engineers, would have far reaching benefits for the economy. Complementing such initiatives with the most applicable skills development programs and opting for impact-driven versus outcome-driven measurements for KPIs would also be highly beneficial.
Tax Incentives for RDCI – Providing tax exemptions to SME’s and entrepreneurs engaged in RDCI initiatives over the next 5 years would be an effective means of promoting a landscape of innovation as well as improving product diversification and competitiveness in both domestic and international markets.
Girish was also keen to raise the aspect of Enhancing Procedural Efficiencies – Greater investment into initiatives which effectively streamline all processes and procedures pertaining to the conduct of business, including approvals, permits and public-private sector coordination would be highly favourable. Such efforts would go a long way towards promoting domestic economic growth and facilitating greater fluidity in export trade.
Improving International Workforce Inflow – Initiatives which support the efficient absorption of skilled international workers specialising in all digital related sectors including AI, Analytics, Software Development, Cloud Computing and the broader IT segments would be highly favourable for improving digital technology proficiency within local business operations.
Other aspects of the expectations towards the Budget include, Partial Private Funding of Public Sector Workforce – Initiatives which enable the public sector workforce to receive funding from the private sector through partial privatisation or monetisation business models would be favourable.
Girish said: “These would serve to reduce the burden on tax payers and allow the delivery of GLIC and GLC services to have greater impact on the economy and the Rakyat.”
Reduce the cost of transacting a property – Girish cited that Malaysia has the highest stamp duties, valuation reports, legal fees to prepare SPAs etc. Reducing these additional costs will uplift the real estate segment.
He also hopes to see a fairer allocation mechanism to be based on a percentage formula to allocate sufficient Federal revenue towards State and Local District spending, as development, especially in rural areas based on state or council revenue is crucial for the right quality of life for the Rakyat.
