Further measures could be implemented to help first-time home buyers, ease their home-buying process and accelerate the property industry’s recovery. — Bernama
THE government will be looking at enhancing small and medium enterprises (SMEs) to generate growth and also create more jobs.
While the focus on attracting foreign investments is set to continue, developing domestic investments that have huge potential will be a priority.
According to the mid-term review of the 12th Malaysia Plan (12MP), Malaysia’s economy is on track to grow between 5% and 5.5% per annum for the remainder of the 12MP, with domestic demand as the key driver, particularly private sector expenditure.
With Bank Negara’s announcement in September to maintain its overnight policy rate (OPR) at 3% and expectations that the OPR will remain unchanged this year, the outlook of the property sector appears to be optimistic as a stable OPR will bring confidence to the real estate market and investing in properties might be seen a good hedge against inflation.
Further measures could be implemented to help first-time home buyers, ease their home-buying process and accelerate the property industry’s recovery.
This is particularly important given the significant multiplier effect on many industries, which will then have a broader impact on the overall economy.
One of the tax measures that the government could consider is introducing tax exemption for end-financing interest incurred during construction, an ideal way to promote home ownership as there will be direct tax savings for homebuyers.
The current minimum threshold for foreign property ownership varies according to states. The government should review and standardise the minimum threshold to RM600,000 across all states to encourage foreigners to invest.
Whilst the education and health ministries will be among those that are expected to receive the biggest allocations in Budget 2024, there are obviously other areas that need to be addressed including Malaysia’s ability to establish itself as a prominent player in the global technology landscape.
The government-linked investment companies (GLICs) and government-linked companies (GLCs) play a pivotal role in the country’s technology procurement, but their risk management frameworks often prioritise international products to mitigate potential or assumed risks.
This approach inadvertently stifles the growth of local technology providers. Without support from these major buyers, local companies struggle to achieve the scale necessary to expand regionally and globally in a sustainable manner.
A framework should be formulated, whereby GLCs and GLICs are encouraged to purchase technology solutions from local MD or MySTI certified Malaysian companies.
Currently many GLICs and GLCs are reluctant to procure local technology solutions because of the need to be certified by international certifications that are prohibitively expensive for local startups.
This is not necessary and an MD or MYSTI certification will do an equally good job at verifying local solution providers.
Supportive environment
This move would to incentivise GLICs and GLCs to purchase more technology from certified Malaysian digital companies, thereby creating a supportive environment for these companies to grow and contribute to the country’s economic advancement.
There could be a deeper involvement by GLCs in the digital ecosystem via startup investments or acquisitions. Profitable GLCs could acquire or invest into startups having done the proper due diligences.
There have been some initiatives in the past to get the GLCs to work closely with local startups but there hasn’t been much progress.
Giants like Microsoft, Google and Yahoo acquire smaller companies and by doing so, they are acquiring not just the product and innovation but also the talent of the acquirees.
This is a good practice to create more value and create bigger and innovative companies.
Cybersecurity is a major issue today and SMEs are increasingly being targeted by cybercriminals due to perceived vulnerabilities.
Cybersecurity measures
Robust cybersecurity measures are essential to safeguard sensitive data and intellectual property. With increasing digitisation, it is imperative for SMEs to fortify their cybersecurity infrastructure and acquire certifications like ISO to not only enhance their competitiveness but also safeguard their operations.
Tourism-related associations have expressed hope that the government will increase the sales and services tax (SST) annual threshold for the hospitality industry from RM500,000 to RM1.5mil through Budget 2024.
This is seen as necessary to ensure the sustainability of budget hotel operators affected by competition from unlicensed accommodation providers.
Even though the room rates offered by the budget hotels are similar to that of unlicensed operators, they become more expensive due to the SST.
If the threshold value is raised to RM1.5mil, customers, especially those in the Bottom 40% group, can enjoy affordable room rates without feeling burdened by the SST tax imposed by licensed hotel operators.
Tax evaluation
The government has been evaluating as to whether new taxes such as Capital Gains Tax (CGT) should be introduced.
The rationale behind the introduction of CGT is to have a more equitable distribution of taxes as CGT will be imposed on the disposal of shares in unlisted companies, which would be owned typically by taxpayers that are better off.
The introduction of CGT would provide some avenue for the government to somewhat reduce direct taxes and reduce the tax burden of the lower income group.
Harvindar Singh is the managing partner of Harvey & Associates. The views expressed here are the writer’s own.
