More business-friendly policies to attract investors
10 Apr 2023
Prime Minister Datuk Seri Anwar Ibrahim’s recent visit to China has yielded record investment deals worth RM170bil, proving to be a fruitful albeit short trip. According Anwar at a press conference, the deals were signed after a roundtable meeting among our Cabinet ministers, senior officials and Chinese industry leaders.
We hope the RM170bil investment can be put into action quickly to stimulate the economy.
We are glad that the Prime Minister has made this a top priority after returning to Malaysia to chair a Cabinet meeting to announce the formation of a special committee to oversee the issues at hand.
Aside from the investment commitments, the visit to China marks the 10th anniversary of Malaysia and China comprehensive strategic partnership, as well as the opening of the Malaysia-China Kuantan Industrial Park, which strengthens bilateral cooperation.
China has stated that in the Malaysia-China joint venture projects, it would hire local skilled and professional workers and will only bring in Chinese professionals in fields where there is a shortage.
In addition to exploring new fields such as new age automotive manufacturing and halal industries, the two countries have agreed to strengthen cooperation in vaccine development, high-tech research and development, digital economy, exporting Malaysian agricultural products to China, increasing flight frequencies and inbound tourists between the countries as well as vocational education.
The Prime Minister has also invited Chinese President Xi Jinping and Premier Li Qiang to Malaysia for the 50th anniversary of Malaysia-China diplomatic relations next year.
If this happens, more high-end Chinese-funded enterprises will invest in Malaysia, creating more jobs while also encouraging technology exchanges and industry development.
China is one of our foreign investors and as an open economy that welcomes foreign investments, we must establish Malaysia as a key foreign investment destination and gateway to South-East Asia.
Budget 2023, announced in February, has included tax subsidies and reliefs to attract high-value foreign investments, consolidate local investments as well as increase local employment and earnings.
We have witnessed the importance of digitalisation and its inevitable trend in the global economy over the last three years of the Covid-19 pandemic, so the dudget also prioritised digital projects.
The budget promotes green technology, electric vehicles and food security with tax incentives.
However, in comparison to the previous government’s budget presented in October last year, the revised Budget 2023 appears to ignore several important tax incentives, including the Green Investment Tax Allowance and the Green Technology Income Tax Exemption, which have only been said to be reviewed so far.
The most unexpected part is that the budget did not extend a number of investment tax incentives that were initially announced to have an extended application time.
This included the establishment of a regional centre, a global trade centre and pharmaceutical production in Malaysia – all of which ended in 2022.
Although the three tax breaks were put in place to attract foreign investments during the pandemic, we still need them, especially since our economy has not fully recovered from the pandemic.
Furthermore, encouraging investors to set up regional centres, global trade centres and pharmaceutical production can boost our economy and raise the country’s and people’s incomes in the longer run.
During the recent China visit, the government encouraged Chinese-funded enterprises to establish regional centres in Malaysia.
I hope the government will reinstate this preferential treatment because it is consistent with its goals.
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) had set up a private meeting between the Prime Minister and prominent Malaysian Chinese business leaders during his visit in Beijing.
During the meeting, I urged the Prime Minister and the government to improve the friendliness of investment environment and efficiency of the one-stop service centre to attract foreign investments.
Otherwise, no matter how generous the tax benefits are, foreign investments will be deterred by bureaucracies at the relevant government agencies or unnecessary restrictions upon entry to Malaysia, diverting them away from the country and to our neighbours.
After taking office, the Prime Minister has paid close attention to civil servants’ efficiency and repeatedly reminded them to carry out their duties professionally, honestly, trustworthily, and efficiently.
Our enormous civil service system is undeniably a drain on our finances, accounting for 32% of the RM386.1bil budget allocation for salary and pension payments.
To avoid confusion, we hope the government will make greater efforts to increase civil servant efficiency and ensure the smooth implementation of federal government policies in state and local governments.
After all, the efficiency of the civil service is a major consideration for the foreign and domestic investors.
This year is the mid-term review of the 12th Malaysia Plan (2021-2025) and the first five years of Shared Prosperity Vision 2030 plan.
We must evaluate our progress and devise strategies for a more sustainable and equitable society. After all, no one expected the Covid-19 pandemic or the Russia-Ukraine conflict to cause unprecedented damage to the global economy and irreversible changes to business models, lifestyles, and even global political and economic trends when the Shared Prosperity Vision 2030 was launched in 2019.
Malaysia’s political unrest during the pandemic has impacted the confidence of both domestic and foreign investors.
Regaining the confidence of financial backers is crucial. Good policies must be implemented and promoted from the top down in order to succeed.
We can no longer afford to sit back and wait, instead, the government, corporate sector and people must work together to move forward or Malaysia will fall behind its neighbours.
If it is too late to address some of the issues raised earlier, we hope that all of the suggestions made in response to the China visit that are business and investment friendly will be included in next year’s fiscal plan, Budget 2024, which will be tabled in October.
For the benefit of our economy and people, and as Malaysia and China celebrate their 50th anniversary of diplomatic relations next year, more business-friendly policies will entice high-end Chinese firms to come to Malaysia with more high-value investments.
Datuk Koong Lin Loong is managing partner of Reanda LLKG International and treasurer general cum chairman of SME committee of the ACCCIM. The views expressed here are the writer’s own.
Source: The Star