PIKOM Upbeat on Digital Economy Measures in Budget 2019

The National ICT Association of Malaysia (PIKOM) is cautiously optimistic that the measures announced in the Budget 2019 speech will spur the digital economy.

1. Allocation of more than RM5 billion for the adoption of Industry 4.0  
PIKOM looks forward to this allocation for years 2019-2021 to encourage the adoption of the Industry 4.0 for the manufacturing sector. This would benefit many of our members who are already providing solutions in Big Data/IoT, Artificial Intelligence, Cloud Computing and Automation.

2. Matching Grant of RM2 Billion between GLIF (Government-linked Investment Fund) and private sector for high growth tech companies  
This will have a catalytic effect on Malaysia’s tech funding ecosystem and encourage the expansion of tech companies and to scale their operations globally.

3. An allocation of RM1 billion for the National Fibre Connectivity Plan:
PIKOM applauds the government’s proposed plan to offer 30Mbps broadband connectivity outside urban centres within five years under the National Fiberisation and Connectivity Plan as part of its commitment towards the digitalisation of Malaysia’s economy. This will have a catalytic effect in the ICT Industry especially spurring the growth of the e-commerce sector in Malaysia.

4. An allocation of RM50 million for the Co-investment Fund for Equity Crowd Funding and Peer-to-Peer (P2P) 
This allocation will help start-ups at the seed and Series A funding-level, resulting in the creation of more local tech Intellectual Property (IP).

5. Allocation of RM10 million for e-Sports  
PIKOM welcomes the news as the association recognises the growing importance of e-Sports through the formation of our new Special Interest Group on e-Sports in 2019. This is part of our drive to attract the e-gaming community.

6. Customs Department to scrutinise online services 
Starting Jan 1, 2019, the government will tax imported services to ensure that local service providers such as architects, graphic designers, software developers can compete more competitively. We urge the government to implement this measure in consultation with the respective industries.

7. Exemption of SST on services for B2B  
We understand this exemption is to address the cascading effects of the SST for services in specific sectors but we will require more details. This would certainly lower the cost to businesses which has been a bane for the industry.

8. Reduction of corporate tax by 1% 
Any reduction of tax is a welcome move as it will increase business spending which will have a ripple effect on the economy.

PIKOM is however concerned with the following:

9. Lack of incentives for corporate sector (beyond manufacturing sector) in ICT and venture capital for increased start up investment and productivity. This includes tax rebates and exemptions.

10. No incentives for personal relief to drive consumer spending. For example, personal tax reduction and Employees Provident Fund withdrawal scheme for purchase of devices.