‘Move will go a long way towards boosting start-ups’ success rate’
KUALA LUMPUR: Economists and industry experts expressed mixed reaction to the government’s move to consider giving tax exemptions to start-ups in the digital economy sector.
“The proposed measure will boost digital start-ups.
“This is in tandem with government efforts to promote and assist digital start-ups to spearhead e-commerce initiatives,” Malaysian Industrial Development Finance Research chief economist Dr Kamaruddin Mohd Nor told the New Straits Times yesterday.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid shared Kamaruddin’s view, saying any tax incentives to promote digital start-ups should be welcomed.
“Perhaps, the best way is to embrace the digital transition in the most effective and efficient manner.
“This includes inculcating entrepreneurship through promoting startups, which will help create job opportunities,” he said.
The executive director of Global Entrepreneurship Movement, Low Ngai Yuen, applauded the move, saying benefits going directly to startups, and tax exemptions on research and development funding would encourage start-ups to be better.
“This will go a long way towards boosting the success rate of start-ups.”
Private investment firm RHL Ventures Sdn Bhd co-founder Raja Hamzah Abidin said the Malaysia Digital Economy Corporation had provided a 10-year tax
exemption to eligible technology start-ups, and the announcement by Prime Minister Datuk Seri Najib Razak yesterday on possible tax exemptions for start-up companies in the digital economy sector was in line with that.
“The 10-year period is enough for start-ups to grow, and while the exemption may not be beneficial in the first couple of years prior to reaching profitability, it is a long enough time for companies
to have tax exemption.
“This is part of government efforts to enrich start-ups, venture capital funds and regulators,” he told the NST.
Internet Alliance and Exabytes Group chief executive officer (CEO) Chan Kee Siak said while giving tax exemption seemed like a good move, it did not help much as start-ups generally did not generate profits for the first three years.
He said even if they did, they were likely to invest their profits back into their companies to grow and scale their businesses.
“Tax exemption for start-ups may sound good, but there are more practical ways to provide support and benefits to them,” Chan said.
Cradle Fund Sdn Bhd group CEO Nazrin Hassan said corporate tax exemption for start-ups was always welcomed, but what would be more helpful was to exempt directors and employees involved in the innovation space.
“This will help entities in the innovation space attract the best candidates and retain more talent,” he said.