Pikom chairman calls for overarching tech ministry in Budget 2020
By Kiran Kaur Sidhu August 29, 2019
- Low take-up of incentives as they are not tailored for the private sector
- Budget a result of closer industry consultation, sees roll out of funding announcement
AS MALAYSIAN prime minister Dr Mahathir Mohammad looks into the restructuring of agencies for a leaner government, Ganesh Kumar Bangah (pic), Pikom chairman, is in favour of having “one ICT or tech ministry”.
In conversation with Digital News Asia about his recommendations for Budget 2020, he highlighted a point he has reiterated over the years. Currently, Pikom works with the Ministry of Entrepreneur Development (MED) which MaGIC is under the purview of, the Malaysia Digital Economy Corporation (MDEC), Malaysia External Trade Development Corporation (Matrade) under the Ministry of Trade and Industry (MITI) for e-commerce matters and also the Ministry of Energy, Science, Technology, Environment and Climate Change (Mestecc).
Candidly, Ganesh said: “It gets very tiring having to deal with four ministries. The issue is a lot of overlap between these ministries.” One area of overlap he raised is the implementation of the 6% digital tax involving the customs department and the existing 10% withholding tax under the Inland Revenue Board (IRB), therefore resulting in implementation a year after the announcement to iron out matters.
Looking to Budget 2020, Ganesh calls for stronger public private partnerships and more “application-focused” incentives. “There is a mismatch between the innovations on the ground and the incentives [given out].”
To illustrate his point, he referred to the Budget 2019 RM3 billion allocation for the Industry Digitalisation Transformation Fund under Bank Pembangunan Malaysia Bhd. “The per ticket size estimated to be given out is RM50 million per company. Basically, very large companies can take these loans, not SMEs. But those that are innovating are the SMEs and startups – that is the mismatch,” he added.
One of the biggest issues facing the IT industry today, he says, is a lot of the incentives provided by the government are not taken up. “The issue is not really that the private sector doesn’t want to take up the incentives. The issue is those incentives are not tailored for the private sector.”
Commenting on the government’s RM2 billion allocation of matching funds for private equity and venture capital that is yet to be rolled out, Ganesh believes it could be due to lack of funding and the non-existent structure to give out the funds.
However, he credits the government for consulting with industry regularly especially for Budget 2020. For the upcoming year, Ganesh is hopeful of the government’s improved cash flow and expects the implementation of the incentives and funding announced in Budget 2019.
During the interview, he also had recommendations to drive Malaysia’s growth as a foreign investment destination. “We were that when Multimedia Super Corridor (MSC) was introduced and when Digital Free Trade Zone (DFTZ) was implemented for e-commerce. But today, the fact is we may not be as [attractive] as before.”
While MSC 2.0 has been announced, Ganesh says there is little understanding as to what it entails. There is also a lack of clarity about the MSC incentives. “It is now only for service companies. What about companies with intellectual property (IP)? There has been a lack of focus in getting more MSC status companies.”
Additionally, accelerating exports is important as more investment comes in. “E-commerce plays a very big role when it comes to exports. We need to focus on our e-commerce strategy and DFTZ.”
One vital aspect that will boost Malaysia’s positioning, he says, is “transparency from the programmes”. Clear key performance indicators (KPIs), the number of MSC status companies and revenues earned are some factors to be made public.