Budget wish list from the various industries

HEAD honcho’s from rubber glove makers, to insurance companies and hospitals continue to try to steer their companies through these trying times. Here we give a glimpse of what these officials are hoping to see in Budget 2020 that would help their businesses thrive.

Rubber gloves

Malaysia is the biggest exporter of rubber gloves in the world and the country can continue to position itself as the world’s hub of rubber glove manufacturing.

This industry is also becoming more prominent, especially after the Us-china trade war as customers from America find new suppliers due to the tariffs that are being imposed on China.

It can benefit further and see bigger positive spillover effects on the larger economy if it is properly guided and moulded at this crucial time.

Perhaps more incentives for the sector could also see manufacturers from other countries setting up shop here?

Malaysian Rubber Glove Manufacturers Association (Margma)

DENNIS LOW, President

The glove industry exported Rm17.74bil worth of gloves in 2018 and this figure could touch Rm19.2bil this year. Malaysia will export about 195 billion pieces this year or about 65% of the total world requirement.

As the world’s economy heads towards a slowdown, it would be good for the government to take critical steps to redirect any outflow of funds back into our country.

We advocate the expansion and extension of the re-investment allowance for the industry, as neighbouring countries are very enticing in their search for capital and investments.

Malaysia should not lose out to these enticements, and more importantly, we must not give reasons for our own industry to move out. It will be a double whammy if that happens, as it will not only be a cash drain but can also be an expertise drain as well.

Property

The property market, which has been in the doldrums for quite some time now with a high overhang inventory rate, may need further government intervention, given its significance to the greater economy.

A prolonged downturn will stretch into other areas of the economy such as subdued loan growth for banks. Addressing this also frees up money that is stuck in these assets which can become more productive for other uses.

One logical way is to reduce the minimum floor price for foreigners purchasing property from the current Rm1mil. This threshold for foreigners was raised from RM500,000 before by the government due to the overheated property market then.

But the overheated property market is no more and the market is moving too far to the other end of the spectrum.

Mah Sing Group Bhd TAN SRI LEONG HOY KUM, Founder and Group Managing Director

To reduce the present property overhang, we echo the Johor state government’s proposal to ease the process of releasing bumiputra quota residential units that are more than RM600,000.

We hope the government will consider reducing the waiting period for the bumiputra quota release from one year to six months – capped for residential properties over RM600,000, while cutting down on the approval stages from three to two.

Subsequently, we would also like to propose for the reduction of the minimum floor price for foreigners buying property from Rm1mil to RM600,000 to help clear existing stock.

Also, the imposition of the real property gains tax (RPGT) on properties that are sold after five years is affecting the higher-priced residential property segment.

We hope the government can consider terminating the RPGT as an impetus to boost the secondary market, as the perpetual RPGT is affecting those who are considering upgrading their homes.

S P Setia Bhd DATUK KHOR CHAP JEN, President & CEO

We hope that the government will review the financing schemes currently available, in particular for first-time home-buyers, and offer better schemes to suit the needs of the buyers.

With rising interest from foreigners to purchase property in Malaysia, we hope that the threshold price for purchase by foreigners can be reduced, as these investments can help to reduce the current overhang and stimulate the current soft property market.

We would also like to see a further reduction in the cost of doing business, especially the compliance cost where the removal or reduction of such cost can be translated into cost savings for property buyers.

We also hope that the government can consider assuming the role of providing affordable housing for the B40 group, perhaps under a rental scheme, with some contribution from property developers so that private developers can concentrate on free-market housing.

Solar photovoltaic (PV)

This industry is now being thrust into the limelight, given the Pakatan Harapan government’s focus on increasing renewable energy (RE) sources to the country’s total energy mix.

The government has set a target of achieving 20% RE into the capacity mix by 2025 and this would require a lot of investments into the sector.

In light of this, incentives to ensure a sustainable local solar PV industry would allow the sector to be more productive and contribute more to the economy, especially in the wider supply chain through additional job opportunities, for instance.

Solarvest Holdings Bhd DAVIS CHONG, Group CEO

Recent government tax initiatives for the RE sector have led to strong growth in the adoption of solar PV systems in the commercial and industrial segments.

We hope that more can be done to enhance the uptake of solar PV installations in residential homes.

There are many benefits for home-owners to install solar PV panels on rooftops, including a lower electricity bill and a reduced carbon footprint.

For this purpose, the government should incentivise this process by offering individual tax rebates of up to RM10,000 for those who install solar PV panels.

This will lower the initial up-front cost and enhance the return-on-investment period for home-owners.

The eligibility of the Green Technology Financing Scheme (GTFS) 2.0, which is only currently available to companies, should also be expanded to include residential owners.

Under GTFS 2.0, applicants are entitled to a 2% rebate per annum on interest taken on bank loans for the installation of solar PV panels. For home-owners applying under GTFS 2.0, the minimum processing fee should be lowered to RM1,000 from the current RM8,000 for companies.

Insurance

The low and stagnated life insurance penetration rate among the population of 55% is something that has to be tackled to ensure more people have financial buffers against any unforeseen life incidents.

Finance Minister Lim Guan Eng

recently said that insurance policies should also be made more affordable to further boost this figure.

The Barisan Nasional government had earlier aimed for the national insurance penetration rate to be at 75% by the year 2020, which Lim has said is unlikely to be achieved.

Allianz Malaysia Bhd CEO ZAKRI KHIR

For the general insurance industry, premiums are still regulated by a tariff structure.

We hope that the government will allow us to move towards an efficient, completely risk-based pricing approach and do away with the tariff.

We believe that the time is right and the market is ready for this.

Meanwhile, for the life insurance industry, we hope that more Takaful licences will be issued to insurers, as it will benefit a lot of the players in terms of innovative product offerings.

This will also bring about better penetration of Takaful products in the market and better options for customers.

We are also hoping for a regulatory framework that allows for technological disruptions, as the insurance industry is no stranger to innovation.

Technology is also changing the nature of risk and we need to find more innovative ways to meet the changing needs of customers.

Automotive

The local auto industry has always been a strong focal area for Malaysia since its inception, especially after the establishment of Proton back in the 1980s.

Its spillover effects to the country are also clear, especially with the type of jobs that can be created for the local population and the resulting additional supply chains that result through the assembly of completely-knocked-down models, for instance.

If properly incentivised, the local automotive industry can potentially be very beneficial to the economy, given its manifold multiplier effects in the bigger picture.

Proton Holdings Bhd CEO LI CHUNRONG

We look forward to policies that encourage Malaysian automotive players to become modern, globally-competitive companies.

These policies should incentivise local carmakers to develop better technology, products, and allround customer service that are on par with global industry standards.

This is in line with our own aspirations to grow into a global, modern automotive brand that delivers reliable cars with innovative technology and international standards.

We also see this as an opportunity for local talent, as demand for human capital will grow to serve a booming industry.

When more cars built with globally competitive features and technology are introduced into our market, this will also benefit Malaysian consumers in the long run.

Private healthcare

Private hospitals have become more prominent for their increasing returns to the economy and to their stakeholders of late, more so with the continued climb in hospital fees and charges in recent years.

Finance Minister Lim was recently reported as saying that the private healthcare sector is expected to have more than Rm1.8bil in hospital revenue this year.

Medical tourism is also becoming a bigger part of private healthcare and according to Lim, healthcare travel accounts for 7.6% of total tourism revenue.

Healthcare, however, is by and large largely subjected to the ringgit’s performance, as most if not all major medical equipment and drugs are imported.

Association of Private Hospitals of Malaysia (APHM) president DATUK DR KULJIT SINGH

APHM hopes the sales and service tax will not be implemented in private hospitals, as it will increase the patient’s hospital bill.

The goods and services tax was imposed in the past when a patient saw a specialist and it was applicable in some of the hospital charges. This had then raised the patient’s bill.

We also hope for more tax incentives for hospitals that are attracting medical tourists.

Private hospitals which are planning to use innovative and state-ofthe-art equipment will also need further financial incentives so that we continue to be on par with neighbouring Asean countries.

Electronic medical records (EMR) should be a main thrust of private hospitals and hospitals which are planning to deploy EMR should get some tax relief to achieve the national agenda of having EMR.

Drug price control should also be withdrawn to encourage a competitive private sector. The total hospital bill will not be reduced even if drug price control is implemented, and thus, it is best to leave it.

The total cost of running a hospital is fixed, so private hospitals will have to find ways to stay viable, even with the drug price control mechanism.

Should there be not much revenue obtained from mark-ups, then it has to be obtained from elsewhere in the bill.