Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 25): Hidden taxes and requirements to convert foreign exchange proceeds to the ringgit are major obstacles to German businesses in Malaysia, according to the Malaysian German Chamber of Commerce and Industry (MGCC).

For most German companies here which export to other countries in the region, the ruling to convert 75% of their export proceeds into the ringgit, instead of holding it in foreign currencies for hedging purposes, has "dramatic effects" and can be a huge deterrent, said Peter Lenhardt, president of MGCC and managing director of A. & H. Meyer Sdn Bhd, at the launch of the AHK World Business Outlook 2017 today.

Hidden taxes including non-deductible taxes on refurbishment, maintenance and legal services also impact the bottom line of companies, leading them to scrimp on such investments, Lendhart added.

Taxes on services that are rendered abroad and soft trade obstacles among Asean nations also deter companies from choosing Malaysia as their regional hub, he said.

However, German companies are still very positive on doing business in Malaysia as they perceive better economic conditions in the next 12 months.

"There is growing demand here and markets are moving, despite protectionist talk (from US president Donald Trump and Brexit happening)," Lendhart said.

The survey of 4,000 German companies worldwide showed that excluding China, 35% are positive on economic conditions in Asia and the Pacific, the highest percentage across the world.

A total of 52.4% of respondents rated ASEAN's business climate as "good" ahead of 37.2% calling it "satisfactory", the survey showed.

On the upcoming Budget 2018, MGCC executive director Daniel Bernbeck said he hopes that more of the budget would be allocated to education, technology infrastructure and enabling innovation.

 

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