GST affected ICT adoption by SMEs, and rural and underprivileged communities
Recommends regulated broadband pricing, tax incentives for ICT purchases
ON Oct 23, Malaysia’s Finance Minister Najib Razak, also the Prime Minister, will table his Budget 2016 proposal in Parliament.
In a statement, the National ICT Association of Malaysia (Pikom) said it is making the following recommendations to the Malaysian Government for inclusion in the budgetary plans for the coming year.
1) GST zero-rating for ICT products and services
With the Goods and Services Tax (GST) Act 2014 coming into effect on April 1, the average price of computers and related items increased, resulting in an estimated 30% drop in demand.
The impact has been compounded by the weakening of the ringgit, which has seen its value plunge by around 30% against the US dollar and other major currencies.
The implementation of the GST has also affected ICT adoption among the SME (small and medium enterprise) sector, and rural and underprivileged communities.
Pikom recommends that ICT products and services be Zero-Rated. This will help to ensure that prices remain more affordable for all Malaysians, be they personal or business users.
2) Reducing broadband rates for individuals, households and businesses
While Pikom lauds the Government’s continual efforts to make broadband more affordable, it is insufficient because the cost of Internet connectivity in Malaysia is still simply too high (see comparison chart below).
Broadband is key in today’s always-connected and real-time environment. Broadband connectivity is akin to the lifeblood of the ICT industry and society as a whole. Pikom believes that the more affordable movement of Content, Data and Transactions will boost the overall economy.
Pikom recommends that the Government needs to seriously regulate pricing of broadband rates by telcos, and foster competition to encourage greater uptake of broadband towards bridging the digital divide and boosting penetration, especially in rural and underserved areas.
3) Standardisation of cost, transparency in GLC tenders
Pikom recommends enhancing the tender process in GLCs (government-linked companies) in creating greater uniformity, consistency, transparency and integrity within the procurement exercise.
This includes a uniform and standardised cost for tender documents. While Pikom accepts there is need to ensure only serious bidders should be allowed to participate, it hopes the current cost of up to RM10,000 for tender documents will be reviewed as this may discourage or exclude many genuine bidders, especially from smaller companies.
4) Spurring local ICT market
To spur the local ICT Market, Pikom recommends the following to cushion the impact of GST on ICT products and services.
Encourage talent development and training: Allow personal tax rebates/ deductions on the cost incurred (up to a capped amount) for individuals pursuing ICT-related certification programmes. Also, allow companies to claim HRDF (Human Resource Development Fund) on the same.
Encourage adoption and usage of ICT products, services and broadband: Pikom recommends increasing the income tax deductible amount for the purchase of PCs and laptops for personal use to RM4,000 (from current RM3,000). In addition, it also recommends re-introducing EPF (Employee Provident Fund) withdrawal to purchase computing products, peripherals and consumables (i.e. PCs, laptops, smartphones and tablets) including broadband subscription with a clear list of items/ services to prevent abuse.
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