Thursday 28 Mar 2024
By
main news image

This article first appeared in The Edge Financial Daily, on October 21, 2015.

budget2016_wishlist_theedgemarkets

KUALA LUMPUR: Manufacturers are still hopeful of a corporate tax cut in Friday’s Budget 2016 announcement, even though the government is hard-pressed to impose a tax cut because of shrinking revenue inflows. They are of the view that a lower corporate tax rate will help raise the country’s competitiveness.

Texchem Resources Bhd chairman Tan Sri Fumihiko Konishi hopes for a reduction in corporate tax rate to 20% from 25% currently in Budget 2016 in order to better compete with neighbouring countries such as Thailand.

He also wishes that the government will reduce personal income tax in the upcoming budget.

“We would [also] like to see Budget 2016 dynamically stimulating the economy of the country. As [the] GST (goods and services tax) adversely affected domestic demand which also seriously affected performance of domestic-oriented business, the most effective way is to reduce individual income tax,” he told The Edge Financial Daily via email.

Konishi also urged the government to draw up effective policies to regain both local and foreign investors’ confidence which has affected the value of the ringgit following the controversies surrounding 1Malaysia Development Bhd.

“The minimum wage was fixed on Jan 1, 2013. Since then, whatever costs involving the people at large have been increasing. There is nothing we can do except to try to cut costs and employment. 

“The government should control the cost of utilisation in infrastructure, such as highway toll and electricity tariff, which is not exactly reflecting the drop in international energy prices,” he added.

Poly Glass Fibre (M) Bhd chief executive officer (CEO) Fong Wern Sheng hopes that the government will retain utility tariffs on industrial users, while urging for lower personal and corporate tax in Budget 2016.

On Jan 1 last year, the electricity tariff was raised an average of 16.85% for industrial users, while the gas tariff was raised to RM21.80 per million metric British thermal unit in July this year.

Fong also called for better incentives to promote exports including making the Market Development Grant (MDG) available for RM100,000 per year instead of limiting it to a maximum grant of RM200,000.

“The current grant ceiling is RM200,000. An applicant who has utilised the maximum grant of RM200,000 since the commencement of [the] MDG in 2002 is not eligible for consideration.

“[We urge the government to] make available the same fund for RM100,000 per year. With the currently weakened ringgit, spending on overseas exhibition can easily exceed RM50,000,” he told The Edge Financial Daily.

Lafarge Malaysia Bhd president and CEO Thierry Legrand hopes that Budget 2016 will include allocation for more roads to be built using concrete and cement-based materials as the group uses products that are sourced locally, thus benefiting the local economy.

“[It] contributes positively to the country’s balance of payments by reducing the importation of bitumen. Roads made from concrete are especially suitable in flood-prone areas,” he said.

Legrand is also of the view that there should be political and economic stability, and a stable currency to ensure that Malaysia continues to be an attractive place to do business.

He said Malaysia should continue investing in development, both in housing and infrastructure as it would stimulate the economy and build the conditions for growth.

“[There should also be] a more consistent and centralised incentive programme to promote the green agenda. There are currently multiple agencies offering different incentive programmes to different stakeholders along the construction value chain.

“There would be benefits to standardise and centralise the incentive programme,” he added.

Daibochi Plastic And Packaging Industry Bhd managing director Thomas Lim wants the government to remove capital expenditure (capex) ceilings among industry players in the upcoming budget.

Lim said Budget 2015 had introduced the automation capital allowance incentive of a 200% capital allowance for the first RM4 million expenditure over a three-year period.

“However, capital investment for a number of plastic product manufacturers significantly outweighs this figure, with higher-grade machinery often requiring capex exceeding RM10 million per unit.

“This [removal of capex ceilings] would not only assist in increasing the overall efficiency of our manufacturing sector, but also allow players to emphasise innovation and boost their competiveness in the international arena,” he said.

Lim also said while many domestic players in the manufacturing sector are highly reliant on foreign workers, there are increasing challenges with regard to human resource management and retraining costs due to the legal time frame of their stay of up to 10 years from employment.

This could negatively impact business sustainability in the long run, and hamper local players’ ability to move up the global competitiveness scale.

“We hope for long-term government policies to be formulated, in particular to increase the job-readiness and supply of local talents.

“This would help reduce the manufacturing sector’s reliance on foreign workers to a more sustainable level in the long run,” said Lim.

      Print
      Text Size
      Share