THOUGHTS
28/10/2020 08:36 AM
Opinions on topical issues from thought leaders, columnists and editors.
By :
Lee Heng Guie

The 2021 Budget expenditure programmes and fiscal measures and initiatives should be targeted and prioritised to help the nation, economy and businesses as well as our workforce to reset, revitalise and recover from the pandemic crisis.

The recovery from the sharp economic fallout inflicted by the COVID-19 pandemic continues, though there remains substantial uncertainty surrounding the strength and pace of that recovery. The budget’s priority is to cement a sustained economic revival and business sustainability, focusing on two-pronged initiatives and strategies.

  1. Immediate and short-term: Fiscal transfers, tax relief and fiscal assistance as well as incentives to targeted households and businesses so as to facilitate quicker recovery amid an occurrence of a third wave of virus. The travel and tourism sector as well as small businesses should be given more fiscal support (such as deferment payment of tax, service tax and tourism tax exemption) as they are the hardest sectors and would take a longer time to recover and back on firm footing.

Medium- and long-term: Measures and initiatives to help the domestic workforce and businesses, especially SMEs, develop new capabilities in digital technologies and set the stage for long-term growth. The National Economic Recovery Plan and 12th Malaysia Plan (2021-2025) will also take on the medium and longer-term economic direction and policies.

The 2021 Budget can take the following measures and initiatives to:

  1. Protect the vulnerable B40 households and affected sectors of society, boost purchasing power, revitalise domestic and foreign investment and create more jobs as well as improve income; and

  2. Priority programmes and initiatives to accelerate the adoption of digital technologies, expand healthcare, industrial development, agriculture and entrepreneurship as well as the empowerment of women and youth. Micro-economic policies that promote small enterprises, self-employment, multiple-skills, productivity, innovation and creativity, must be explored in these challenging times.

Spending on multiplier and productive capacity expansion projects/programmes

  1. Fast-track spending on smaller socio-economic rural and community projects;

  2. Expedite the implementation of ongoing and new public infrastructure projects (such as MRT2, Pan Borneo Highway, LRT3, Gemas-JB Double Track, ECRL, and Singapore-Johor Bahru RTS); and

  3. Focusing on investing in “new smart infrastructure” used for high-tech, digitalisation and sustainable purposes (renewable energy, climate change, eco-green). These include, big data centres, 5G infrastructure, and charging stations for new energy vehicles (NEVs), solar energy, healthcare.

Sustaining consumer spending via financial assistance to targeted households

  1. Tax-free holiday for individuals (chargeable annual income between RM100,000 and RM150,000);

  2. Reduction in personal income tax rate for middle-income earners;

  3. RM100 e-wallet spending voucher for annual income below RM100,000. The online stores and participating merchants to provide a match in a form of discount vouchers that have to be spent in a stipulated time; and

  4. Extension of RM30 public transport subsidy for another year to December 2021.

Support employment; create jobs and skills enhancement

  1. Extend reskilling and upskilling programmes to end-Dec 2021;

  2. Extend hiring and training as well as assistance for business to end-Dec 2021;

  3. Promote job search through both public and private sectors’ jobs portals;

  4. Propose a screening to distinguish between people who may be relatively job ready and those who have more substantial impediments to employment;

  5. Encourage youth involvement in agro-food and agriculture industry through high interest subsidy on agriculture loans and credit facilities; technical support on agricultural production; and

  6. Creative co-sponsors to assist young start-up in digital technologies and data solutions to assist SMEs.

Easing 3Cs (Cash flow, Cost and Credit) and reviving private investment

  1. Extend the wage subsidy programme; utilities discounts; rental relief; increase the amount and enhance the terms and conditions of soft loan facilities for businesses and special grant for small enterprises to increase accessibility. Targeted loan repayment assistance must be greatly facilitated;

  2. Enhance a conducive investment climate. Maintain a competitive tax structure and cost of doing business, transparent and liberal investment policies/guidelines;

  3. Review of company income tax rate: (a) Reduce company income tax rate to 22% from 24% for corporates in YA 2021 and further to 20% for YA 2022; (b) Reduce company tax rate to 15% from 17% for SMEs in YA 2021; (c) Provide tax rebate of 25% on corporate income tax payable up to RM15,000 to RM20,000 for YA 2020-2021; and

  4. Design a “Reconstruct, Resilience, Reimagine Package” for micro and SMEs. The package comprises fiscal, monetary, financial, marketing, technology, digitalisation and automation, technical advisory, product and market development as well as human capital development.

Digitalisation and e-commerce

  1. Expedite the implementation of RM21.6 billion National Fiberisation and Connectivity Plan (NFCP) to improve broadband quality and coverage, reduce broadband prices and provide Internet access across all spectrums of society;

  2. Provide double tax deductions for investment in upskilling and reskilling of employees in ICT;

  3. Provide 100% capital allowance on purchase information and technology (ICT) equipment for YA 2021 and 2022;

  4. Provide a double-tax deduction on developing e-commerce’s website or mobile apps;

  5. Soft grants for digital marketing and training services online; incentives for employers to conduct online learning and e-learning; and

  6. Measures to facilitate online business platforms, namely, no charge for the first 1,000 transactions for Point-of-Sale terminal; lower the merchant Discount Rate (MDR) to 0.1%; lower MDR rates charged by e-Wallet; and Market Development Fund to fund the deployment of Point-of-Sale terminals.

-- BERNAMA

Lee Heng Guie is Executive Director of the Socio-Economic Research Centre (SERC).

(The views expressed in this article are those of the author and do not reflect the official policy or position of BERNAMA)

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