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Budget 2012: Malaysian ICT industry's careful welcome

AvantiKumar | Oct. 10, 2011
Malaysian PM continues transformation theme in Budget 2012 proposals, which will cost US$74 billion.

Entrepreneurship funding provider Cradle Fund chief executive officer Nazrin Hassan said, "Cradle is pleased that the Prime Minister has announced the Asian Business Angels Forum (ABAF), as one of the two key events in the National Innovation Movement Year 2012. Cradle together with the Virtuous Investment Circle (ViC), had made a bid for the forum for Malaysia and we won the rights to host it, going up against formidable competitors like India and Hong Kong."

"On the funding and financing side, the RM500million (US$160 million) Syariah-compliant Commercialisation of Innovation Fund is a welcome development, as it is a thrust that will get the banking industry to start providing better access to financing for technology companies," said Nazrin. "Many of our local technology companies are restrained from growing at a more accelerated pace due to lack of access to financing (despite being able to secure contracts and purchase orders) and given the financing gap, most have resorted to “grant-hunting” to fill up that void, which makes them even more dependent, in the long-term, on government grants for growth. This is not just a problem for start-ups, but happens to technology companies of all sizes and ages."

He recommended that the government also takes a longer view to funding in future budgets. "We believe that in line with the Government’s wishes to be less reliant on government funding in the medium-term, that the Budget 2012 had missed a key opportunity to insert a tax incentive for angel investors to increase private sector funding. We have to start the efforts today – so that within five years, the source of funding (regardless of the market-oriented mechanism and agencies used) will actually come from the private sector and not be reliant fully on government funding and on government agencies for commercial value-add." 

Looking Ahead

To promote green technology and ensure sustainable development of the nation, full exemption of import and excise duty on hybrid and electric cars to franchise holders until 31 December 2012, said the prime minister. However, energy management specialist Schneider Electric Malaysia's country president Peter Cave said Malaysia should widen the use  of better energy management practices as more green incentives would help to curb the country's energy dilemma and stir economic growth.

"Twenty percent of energy is wasted in buildings due to inefficiency of the traditional infrastructure," said Cave. "Heating, ventilation, air conditioning and lighting consume over 70 percent of energy and energy costs can comprise up to 30 percent of an operating budget. If one looks at the development period of a building, up to 25 percent of a building's life cycle costs are from financing and construction. However, in the next 25 to 30 years of a building life, up to 75 percent of the overall costs are operational. Hence, active energy management through measurement, monitoring, and control of energy usage is critical."

"With the Malaysian power demand expected to rise five percent annually from 2011 to 2015, operating cost pressures are bound to weigh heavily on business bottom line profitability," he said. "Implementing energy efficient solutions can produce savings of up to 30 percent that can help companies hedge against future electricity tariff hikes and significantly reduce carbon emissions and costs."


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