Budget 2016: Startup goodies, MaGIC boost, ho-hum broadband

  • Rebates to be credited into prepaid users accounts from Jan 1 to Dec 31
  • Various initiatives to boost average Internet speed from 5Mbps to 20Mbps
Budget 2016: Startup goodies, MaGIC boost, ho-hum broadband

ENTREPRENEURS, startups as well as small and medium enterprises (SMEs) can look forward to a slew of incentives and aid next year under Malaysia’s national Budget 2016, which was tabled by Finance Minister Najib Razak in Parliament today.
He proposed a total allocation of RM267.2 billion for Budget 2016, made up of RM215.2 billion in operating expenditure and RM52 billion in development expenditure.
While not much was announced on the technology ecosystem front per se, the Malaysian Global Innovation and Creativity Centre (MaGIC) was the big winner, getting an additional RM35 million to establish itself “as a Leading Regional Entrepreneurship and Innovation Hub,” he said.
This includes RM10 million as initial allocation for the Corporate Entrepreneurs Responsibility Fund, said Najib, who is also the Prime Minister.
This follows a host of allocations MaGIC has got in the last two national budgets. When Najib announced the Budget 2014, he had allocated RM50 million for the establishment of MaGIC. Later this was increased to RM70 million.
Under Budget 2015, he also announced a slew of allocations to boost entrepreneurship, with many of the programmes falling under MaGIC’s purview.
Other entrepreneurship-related allocations include:

  • The National Entrepreneur Group Economic Fund (Tekun) will allocate RM600 million for entrepreneurship development; with RM500 million being reserved for bumiputera entrepreneurs, while RM100 million will be set aside for 10,000 Malaysian Indian business owners [‘Bumiputera’ includes the majority Malay-Muslim population, as well as certain indigenous peoples];
  • RM1.5 billion to be used for a Science, Technology and Innovation Camp, in a bid to make the country a competitive technology hub for the region;
  • RM107 million to be allocated for the SME Blueprint to provide funds for entities at various stages of business development;
  • RM60 million for the Entrepreneurs Acceleration Scheme and SME Capacity and Capability Enhancement Scheme;
  • RM200 million to be allocated to establish the SME Technology Transformation Fund under SME Bank to provide soft loans at interest rates of 4%; and
  • RM70 million to be allocated to continue the Rural Business Challenge (RBC) and Sustainable Rural programmes to catalyse entrepreneurship in rural communities.

The MaGIC allocation was part of Najib’s proposal that 2016 be declared ‘Malaysia Commercialisation Year,’ as an effort to spur the commercialisation of R&D (research and development) products by local research institutions.
Other initiatives to be implemented include:

  • SMEs that incur expenditure on R&D projects up to RM50,000 for each year of assessment are eligible to claim double-tax deduction automatically. This facilitation is provided for the years of assessment 2016 to 2018;
  • RM100 million to be allocated to the Malaysian Innovation Agency or Agensi Inovasi Malaysia (AIM);
  • RM200 million to be provided to the Funding Scheme for Technology and Innovation Acceleration run by Malaysia Debt Ventures Bhd; and
  • RM30 million for several youth entrepreneurship programmes such as Global Entrepreneurship Community, 1MET, National Innovation Competition and a Pilot Coding Project in schools.

Najib also said that RM100 million would be provided by Communications & Multimedia Ministry for eRezeki and eUsahawan programmes which is expected to benefit some 100,000 underprivileged people.
GST rebates for prepaid
Meanwhile, recognising that the majority of Malaysian mobile phone users, especially youth, are on prepaid accounts, the Government will be providing rebates on the Goods and Services Tax (GST) for prepaid cards, Najib said.
The rebates will be credited to their accounts from Jan 1, 2016 to Dec 31, 2016, said Najib, who at press time had not given details.
The hotly-debated GST of 6% was rolled out on April 1, and created an outrage immediately when it was imposed on prepaid users. Previously, telcos had absorbed the Sales and Service Tax, which was also at the same rate of 6%.
Broadband measures fall short
Saying that infrastructure was a catalyst for social and economic development, Najib announced that the Malaysian Communications and Multimedia Commission (MCMC) will be allocated RM1.2 billion to improve the country’s telecommunications infrastructure.
These include “rural broadband projects which will see a four-fold increase in Internet speed from 5Mbps (megabits per second) to 20Mbps; a National Fibre Backbone Infrastructure; High-Speed Broadband; and undersea cable systems,” he said.
This follows measures Najib announced in May under the 11th Malaysia Plan 11MP, the latest in a series of five-year national development programmes, which included two new infrastructure initiatives as well as efforts to drive down the cost of access.
The two infrastructure initiatives are the High-Speed Broadband 2 (HSBB 2) and Sub-Urban Broadband (SUBB) programmes.
Under the 11MP, the Malaysian Government is targeting broadband infrastructure to reach 95% of populated areas, and to make broadband more affordable, targeting subscription prices at 1% of gross national income (GNI) per capita for fixed-lined broadband.
However, the Budget 2016 broadband measures still fall short of what many, including the National ICT Association of Malaysia (Pikom), were hoping for.
In a statement released earlier this week, Pikom said that the “cost of Internet connectivity in Malaysia is still simply too high.”
The association had recommended that the Government seriously look into regulating the broadband rates by telcos, “and foster competition to encourage greater uptake of broadband.”
Earlier, Pikom had also taken to task Communications and Multimedia Minister Dr Salleh Said Keruak’s assertion that Malaysians preferred slower broadband speeds because of the lower cost.
According to the latest State of the Internet study by US-based Akamai Technologies, while Malaysia has been making progress on the broadband front, the country now ranks behind Sri Lanka and Thailand in average Internet speeds.
Malaysia was also listed in 70th place worldwide, with its average Internet speed of 5.0 megabits per second (Mbps).
Malaysia does not fare much better when it comes to wireless broadband either. According to a Digital News Asia analysis in May, the country is seriously lagging behind its Asean neighbours in terms of cost-per-megabit.
For the full text of Najib’s Budget 2016 speech, click here.
Related Stories:
Pikom releases Budget 2016 wish-list for Malaysia
11th Malaysia Plan: Broadband gets some love
Pikom: Malaysians do NOT prefer slower broadband
Budget 2015: What's good, what's not-so-good
How affordable are Malaysia’s ‘affordable’ broadband packages?
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