KPMG in Malaysia encouraged with bold measures to boost investments into country
By Digital News Asia June 9, 2020
- Quick release of unambiguous guidelines for new FDI tax exemptions
- Training under e-commerce campaign, grants, loans for digitalisation services
In a statement issued on the 5 June announced National Economic Recovery Plan (PENJANA), KPMG in Malaysia, described the continued emphasis on accelerating the recovery of SMEs and micro businesses in Malaysia, as a step in the right direction as these organisations are the backbone of the Malaysian economy representing 98.5% of businesses.
Tai Lai Kok (pic), Head of Tax at KPMG in Malaysia highlights the various digitalisation and financing initiatives for SMEs and micro businesses such as training and support under the e-commerce campaign, grants and loans for the adoption of digitalisation services as well as the PENJANA SME Financing and Microfinancing programmes as beneficial to help them recover faster and quickly adapt to the new normal.
“The 3-months wage subsidy extension will also provide direct and immediate cashflow support critical to sustain these businesses,” he says.
Tai was also encouraged to see that the government has put in place bold measures to boost investments into Malaysia. “This is indeed timely as Covid-19 has affected businesses globally and MNCs are increasingly cautious on their foreign investments,” he notes.
Specifically, the introduction of the 10–15 years tax exemption for new foreign direct investments in the manufacturing sector with capital investment of RM300 million or more and the 100% Investment Tax Allowance for 5 years for existing companies which relocate their overseas facilities into Malaysia would allow the country to differentiate itself and encourage investors to choose Malaysia as the preferred investment destination in the region, Tai states
“However, these incentives are targeted only at the manufacturing sector and it is hoped that consideration is also similarly given to the services sector that can play an equivalent role in boosting the domestic economy,” he points out.
KPMG in Malaysia urges that the necessary guidelines and conditions accompanying such incentives be released quickly as much time will be required for MNCs to make such significant investment decisions and hence, the sooner, clear and unambiguous guidelines and conditions are formalized, the more likely favourable decisions can be arrived at.
PENJANA also contained several stamp duty and RPGT exemptions which are aimed at spurring the property sector, which is also severely affected by Covid-19. “These announcements are indeed welcomed as the sector was not provided with any stimulus in the previous Prihatin packages. The sector benefits are mainly concentrated on residential properties and there was no blanket RPGT and stamp duty exemption period for the property sector at large, like many had hoped to see to boost the dampened property market,” Tai concluded.