NURTURING OPEN BUSINESS ENVIRONMENT

Private investments, SMEs and digital economy to remain as economic drivers, says AmBank Research head

PRIVATE investments and small and medium enterprises (SMEs) will continue to drive Malaysia’s economic growth, supported by digital economic contribution, says AmBank Group.

Its chief economist and head of research Dr Anthony Dass said private investment growth eased to 9.3 per cent last year from 21.4 per cent in 2012 due to challenges like cost competitiveness and competition for foreign direct investment.

“We hope the 2019 Budget will continue to nurture a flexible and open business environment alongside simplifying and streamlining the systems, processes and regulations to set up businesses,” said Dass in the bank’s budget wish list yesterday.

AmBank suggested that the budget would revisit all the tax exemptions, credits and allowances, and streamline them based on their effectiveness.

“The 2019 Budget should look at ways to dismantle some of these tax exemptions, credits and allowances and translate them to a lower corporate tax,” it said.

Dass hopes the government will look at ways and means to plough back a portion of foreign workers’ levies, around RM2.8 billion per year, collected probably by establishing a “special investment fund”, to support automation and technology upgrading.

With 40 per cent projection of SMEs’ contribution to gross domestic product (GDP), AmBank said the government must lay out clear direction on manpower with clearer classification under manufacturing or service providers for the purpose of the Sales and Services Tax.

“We hope there will be measures or incentives for the SMEs to strengthen and promote the development of the technology industry with the aim of embarking on new technologies and invest in value-added equipment, a move that will also help reduce foreign workers,” he said.

With the 20 per cent contribution target from the digital economy to GDP by 2020, AmBank said the budget would present a holistic strategy to benefit everyone and help contribute to the development of the economy.

“We hope the Budget 2019 will include initiatives to accelerate the fourth industrial revolution by developing and regulating the tech industry and promoting digital technology.

“By regulating the technology industry, the authorities can look forward to a new stream of revenue while tech companies will increase their reported earnings,” said Dass.

AmBank said the budget should also focus on exports by increasing the market development grant from RM200,000 to RM500,000 for export promotion programmes — branding, packaging and international marketing.