Chamber comes up with wish list of perks

Publication: NST

Date of publication: Aug 30, 2012

Section heading: Business Times

Page number: 006

Byline / Author: By Rupa Damodaran

  

KUALA LUMPUR: FOR MALAYSIA to achieve a sustainable high-income economy, greater focus must be given to investments in research and development (RD), says the Malaysian International Chamber of Commerce and Industry (MICCI).

In its proposal to the government for the 2013 Budget, it has suggested that incentives be extended to companies. For example, there should be double deduction for acquisition of intellectual property rights used in business.

Incentives should also be considered for companies undertaking appropriate training as a labour force with better education, training and skills will not only result in greater productivity but will also contribute to new technology and innovation.

As an organisation whose members make up the largest private investment sector in the country, the Chamber welcomes the opportunity to play its part in making that private-public sector partnership work, its president Peter Vogt said.

MICCI's 1,000 members include multinational companies, public listed companies and small and medium sized companies (SMEs) from a very wide range of manufacturing, service and professional service sectors. Investments from its members are in excess of RM110 billion in Malaysia.

To enhance the business environment, Vogt pointed out the need to make tax rules simple, adding that 'legitimate business costs' should not be disallowed.

It supports the introduction Goods and Services Tax (GST) but every effort must be made to ensure that the business sector, which will be the collecting agent for tax, buys-in into the system. The introduction of GST is, by and large, a profound change in the nation's tax system, he said, adding that the costs involved by the business community to prepare for this event will not be insubstantial.

One of the main concerns of the members is the lead-time given by the authorities for businesses to prepare for the GST.

They are hoping the time frame will not be less than 18 months from the date that the GST becomes operational.

Generally larger businesses would have to commit substantial resources in terms of time, money and people to prepare for the transaction-based tax which means a detailed mapping of every conceivable transaction in a firm's business before its management can be assured that legal requirements under the tax are met.

Describing the introduction of the GST as a significant step towards reforming the tax system, MICCI stressed that the process of reform should continue with the reduction of corporate tax rate to 20 per cent.

To show seriousness in transforming the nation into a developed nation and in line with GST, this should be announced formally as a policy objective and should include ultimately lowering of the top marginal personal tax rate and the widening of income bands so as to reduce bracket creep.

With a higher income level and greater economic activities, tax revenue collection with GST in place will be much higher but all this means that attracting foreign direct investments and energising local investors must continue in a focused manner.