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Malaysia Budget 2015: the ICT industry reacts

AvantiKumar | Oct. 11, 2014
(UPDATED) Special: Leadership responses include MDeC, PIKOM, IDC, MSTB, OM, Allied Telesis, Brocade, Interactive Intelligence, Juniper, Sophos, Xchanging, MyIX, Microsoft, CA, Cisco, Epicor, Axis, Trend Micro, Symantec, Autodesk, George Kent, Kelly OCG and Rakuten.

Malaysia Prime Minister Datuk Seri Najib Tun Razak modified 

Photo - Datuk Seri Najib Tun Razak, Prime Minister and Finance Minister, Malaysia


The tabling of the 2015 Budget on Friday 10 October 2014 by Malaysian Prime Minister Datuk Seri Najib Razak, which included proposals to attract multinationals to set up hubs in Malaysia, has received a welcome by many local ICT industry leaders and analysts but one which included a call for more ICT focus in the run up to 2020.

Themed 'People Economy', in what is the last budget under the 10th Malaysia Plan [10MP], Najib outlined seven strategies, which included driving human capital and entrepreneurship development as well as increasing the capacity of high speed broadband and supporting the growth of the creative industry and the small and medium enterprise [SME] sector.

The proposals continue the shift to a knowledge based economy by the year 2020. "From an economic perspective, when we achieved independence 57 years ago, we developed the country based on agriculture before progressing to a modern industrialised economy. Next, we moved into the upper-middle income phase. We are now moving towards a services-based economy," said Najib.

The RM273.9 billion [US$84.19 billion] budget is an increase of RM9.8 billion [US$3.01 billion] over the previous year, said the prime minister, who is also the country's finance minister.

Najib said he was 'confident the country would achieve a strong economic growth of between 5.5 per cent and 6.0 per cent this year and 5.0 per cent to 6.0 per cent in 2015 while fiscal deficit would continue to improve to 3.5 per cent this year and reduce further to 3.0 per cent by end 2015.'

In the previous 2014 Budget, Najib's announcement that the new 6 percent GST [Goods and Services Tax] would replace the existing SST [Sales and Services Tax model] in April 2015 has met with generally positive comments by ICT analysts such as IDC and the National Industry Association of Malaysia [PIKOM]. The prime minister added that GST would generate a revenue of RM23.2 billion [US$7.13 billion] in 2015.

Computerworld Malaysia has updated this article to capture below some of the ICT industry reactions to specific Budget proposals. An extended version of this feature article including spokesperson photos will be published in the January-February 2015 special 'Look Ahead'  Computerworld Malaysia print edition, which will be sent to subscribers.

 Not quite enough to achieve Digital Economy

With just five years away to the 2020 target of achieving a developed Digital Economy, Cheah Kok Hoong, Chairman of Malaysia's National ICT Association, PIKOM, said PIKOM believed the measures to be inadequate.

"There should have been more ICT-focused initiatives in Budget 2015 [that were] in line with our aspirations towards creating a digital economy," said Cheah, adding that the association welcomed the proposed reduction of both Personal and Corporate tax. The Personal income tax rates cut 1 to 3 percentage points, would result in 300,000 taxpayers no longer taxable while corporate income tax would reduce 1 percent to 24 percent. The reduction will result an increase of disposable income for the middle class and companies."

The government has also taken heed of our request on increasing broadband uptake, he said. "The investment of RM2.7 billion [US$830 million] over a period of three years augurs well towards increasing broadband subscription. This helps address the issue of availability. PIKOM felt that the Budget did not sufficiently address the issue of broadband services charges which is deemed still high compared to regional neighbours."

"Although we do not see many specific incentives towards ICT industry, there is introduction of Research Incentive Scheme for Enterprise (RISE) totalling RM10 million [US$3.07 million] for Enterprises," said Cheah. We would encourage the ICT players to take advantage on this scheme to fund their research and product development."

"[In addition] the allocation of RM 1.3 billion [US$400 million] allocated to the Ministry of Science, Technology and Innovation (MOSTI) will spur R&D and commercialisation," he added.


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