The Malaysian information and communications technology (ICT) industry has cautiously welcomed IT-related proposals in the Budget 2009, tabled by Prime Minister Datuk Seri Abdullah Ahmad Badawi (picture above, file photo), but says that more is needed.
“Budget 2009 is people-friendly but one that offers limited incentives for the development and growth of the information and communications technology (ICT) industry,” said David Wong Nan Fay (picture), chairman, the Association of the Computer and Multimedia Industry, Malaysia (PIKOM).
Government agency Multimedia Development Corporation (MDeC) chief executive officer, Dato’ Badlisham Ghazali (picture, below), welcomed the various incentives in the Budget speech, which focused on empowering the people’s lives through socio-economic improvements.
Badlisham said: “The proposals are empathetic and meticulous in light of the global financial climate, yet hopeful with a realistic growth forecast of 5.4 per cent in 2009. The service sector, which is projected to grow by 6.9 per cent, would be driven by growth in tourism, transportation, finance and banking as well as ICT-related industries, as noted in the recent Budget Speech.”
He added that the Budget 2009 proposals also focused on human capital development and offered more benefits for small and medium enterprises (SMEs) as well as the people.
Developing human capital
Badlisham explained that the proposed human capital development programmes are in parallel with the MSC Malaysia initiatives, as laid out in the Ninth Malaysia Development Plan (RMK9).
“This is particularly relevant in the support for professional development, which will further enhance MSC Malaysia programs such as the Knowledge Workers Development Initiatives and MSC Malaysia Technopreneur Development Programs,” said Badlisham. “Focus also is given to enhance the facilities in polytechnics and community colleges, which will increase the enrolment in the institutions. In line with this, MSC Malaysia looks forward to promoting ICT related courses to meet the demand of 100,00 ICT jobs to be created by 2010.”
“Additionally, the double deduction to employers, for sponsoring their employees to pursue postgraduate studies in ICT, will definitely encourage more talent into the industry, which will provide the growing demand for knowledge workers in MSC Malaysia Status companies.”
Key offerings
PIKOM’s Wong said: “While we are excited about the key offerings in Budget 2009 that the ICT industry can look forward to, certain critical areas are not addressed.”
“We welcome the Accelerated Depreciation Allowance (ADA) on expenses incurred on ICT equipment to one year (from two years) ,” said Wong. “This will spur demand for ICT solutions especially among the small and medium enterprises.”
He said the double tax deduction, for employers sponsoring employees to pursue post-graduate studies in fields including ICT, would encourage companies to invest in the development of their human capital to enhance competitiveness.
“The proposal to allow venture capital companies that invest at least 30 per of their funds in start-up, early stage financing or seed capital be eligible for a 5-year tax exemption would also encourage more private venture companies to be more active in this area, which is currently predominantly supported by Government-owned funds,” he said.
Wong added that the broadening of the scope for tax incentive for Corporate Social Responsibility to include conservation and preservation of the environment augurs well as PIKOM is embarking on an e-Waste recycling programme.
Overlooked issues
“However, PIKOM is of the opinion that Budget 2009 falls short of addressing the needs of the ICT industry in moving forward,” said Wong.
He explained that while the Budget placed emphasis on developing quality human capital, no specific incentive addressed the ICT industry. “This is a serious concern as skills shortages remain acute in the industry. Unless it is addressed aggressively and decisively, it will lead to erosion of our competitive edge.”
In addition, Wong added, that here is nothing specific to give a boost to Business Process Outsourcing, despite it being recognised as an opportunity area for growth.
He said that PIKOM’s proposed for incentives for the Malaysian Outsourcing industry as well as tax rebate on PC purchase were also not addressed and urged for these incentives to be forthcoming across the year.
Industry roundup
Security solutions provider Symantec Malaysia managing director Suzie Tan (picture) welcomed the Budget proposals, and called them well balanced. “Symantec commends the Government’s initiative in encouraging greater utilisation of ICT in the small and medium business sector (SMB), which should help them to remain competitive.
Tan said that in July 2008, Symantec conducted an SMB survey in Malaysia on the IT security and storage behaviours of SMBs and found that the top two reasons preventing respondents from implementing Internet security solutions are a lack of budget and a lack of expertise.
In addition, she said, “The Government’s proposal for the Accelerated Capital Allowance on expenses incurred on ICT equipment, which is currently claimed over two years be accelerated to one year, will certainly boost the capability of SMBs to adopt ICT by easing the burden on expenses to purchase, replace and upgrade ICT assets.”
Technology solutions firm Sun Microsystems Malaysia managing director CP Loo said, “Sun applauds the Government’s continued focus on enhancing human capital development to make Malaysia more competitive and attractive to foreign investors. Sun believes the RM2.4 billion (US$710 million) allocation to enhance facilities as well as undertake training and skills programmes will spur entrepreneurial activities amongst unemployed graduates, and also increase the demand for skilled and knowledge workers in the country as we transform towards a knowledge-based economy.”
Network solutions company Cisco Malaysia managing director Kumaran Singaram (picture) welcomed the Budget proposals and added, “A key initiative is the establishment of energy-efficient data centers with world-class facilities in Malaysia. As energy costs continue to escalate, data centers need to be re-architectured to minimise power consumption, while at the same time maximise data availability, storage efficiency, security and compliance.”
