Digital economy initiatives at forefront of Budget 2020

Digital economy initiatives at forefront of Budget 2020
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KUALA LUMPUR (Oct 11): The Government is giving grants to incentivise businesses to automate and digitalise their businesses.

Finance Minister Lim Guan Eng today announced various initiatives and incentives for the development of “digital applications, digital companies, and digital Malaysians” in the National Budget 2020.

This is on top of the five-year National Fiberisation and Connectivity Plan (NFCP) announced earlier, which will be undertaken via a public-private partnership approach involving a total investment of RM21.6 billion.

In his speech in Parliament when tabling the national Budget, Lim said the Government is allocating RM550 million in smart automation matching grants to 1,000 manufacturing and 1,000 services companies to automate their business processes. This grant will be given on a matching basis up to RM2 million per company.

Electrical and electronics (E&E) companies that invest in knowledge-based services, will get a tax exemption for up to 10 years. There is also a special investment allowance for existing E&E companies that have had their reinvestment allowance expired.

In addition, the first 100,000 small and medium enterprises (SMEs) may receive a 50% matching grant of up to RM5,000 a company, for the subscription of digital services for business operations, such as electronic Point of Sale systems (e-POS), Enterprise Resources Planning (ERP) and electronic payroll systems.

To seed Malaysian companies to ride the global 5G wave, Guan Eng said the government is budgeting a 5G ecosystem development grant of RM50 million.

Besides, an RM25 million contestable matching grant fund has been proposed to spur more pilot projects on digital applications, such as drone delivery, autonomous vehicles and blockchain technology, to leverage on Malaysia’s fibre optics and 5G infrastructure.

Guan Eng said tax deductions will be given on companies’ contributions towards the newly coined Digital Social Responsibility (DSR), which is the commitment by businesses to contribute to digital economic development while improving digital skills of the future workforce.

A budget of RM100 million will be allocated to Malaysian Digital Economy Corporation (MDEC), the bulk of which (RM70 million) will be for the setting up of 14 one-stop digital enhancement centres in all States.

The setting up of the centres, as an extension of the ‘100 Go Digital’ programme, is to facilitate access to financing and capacity building of businesses, especially the SMEs, in line with the fourth industrial revolution (IR4.0).

The Government also intends to continue providing funds of RM10 million to MDEC to train micro-digital entrepreneurs and technologists, and another RM20 million to grow local champions in creating digital content, especially in e-Games, animation, and digital arts.

Qualified Malaysians aged 18 and above with annual income less than RM100,000 will get a one-time RM30 digital stimulus, to significantly boost the use of e-wallets given the low adoption of e-wallet at 8% as at January. This will cost the government a total of RM450 million.

Meanwhile, e-Sports will receive an increased allocation of RM20 million in 2020, said the Minister.

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