Budget 2017: Pikom asks for zero rate GST, EPF withdrawals to purchase ICT products
By Digital News Asia October 13, 2016
- Urges government to increase affordability of ICT goods, services for man-on-the-street
- Allow double tax deduction on cost incurred (with cap) for pursuing ICT-related certification programs
IN view of the upcoming Budget 2017, the National ICT Association of Malaysia (Pikom ) has made the following recommendations to the Malaysian government for inclusion in the budget.
Specifically, given the current economic challenges and rising living costs, Pikom has urged the government to improve the affordability and availability of ICT goods and services as a means to benefit the man-on-the-street. "Given the prevalent usage and consumption of ICT today on a daily basis, the measures recommended by Pikom will have a cascading effect not just on spurring the ICT industry but to also benefit almost every Malaysian," says Chin Chee Seong, Pikom Chairman.
In addition, given the government’s move to introduce coding in schools, it is all the more imperative to ensure that ICT goods and services are affordable for over Malaysia’s five million schoolchildren and their families.
Zero rate GST for ICT products and services
The impact of GST coupled with the weakening of the Ringgit has resulted in a slowdown for the local ICT retail sector. While it has impacted the retail sector, the most affected are the SME companies who contribute some 31% to National GDP employing about 56% of the local workforce.
Prior to the implementation of GST, prices of ICT products did not attract any sales tax. This has changed from 1st April 2015 and has resulted in consumer demand for ICT goods and services decreasing.
Pikom recommends that ICT products and services be zero-rated. As ICT is used by almost all Malaysians, this will have a direct impact on students, families, professionals, most notably on the lower and middle income groups.
Increase Demand for local ICT training
Malaysia’s ICT sector continues to face a brain drain challenge as revealed under the Pikom ICT Job Market Outlook in Malaysia 2016 report. PIKOM feels it is imperative that more talent be upskilled and trained accordingly to fill the gaps.
Pikom recommends allowing double tax deduction on cost incurred (up to a capped amount) for individuals pursuing ICT-related certification programs. Companies should also be allowed to claim double tax deduction if companies are bearing the cost of the training.
Provide greater incentives for ownership of ICT goods & services
Pikom recommends allowing income tax deductions of RM3000 once every two years for PCs and smartphones instead of the current three years.
The primary source of connecting to the internet has evolved from the PC to a mobile device with an increasing number of connected people, on the go. Smartphone penetration has reached the 140%-150% level and the usage of mobile phones to access the internet is around 63%.
Pikom recommends that policies be brought in sync with present trends and the incentive be extended to smartphones given the rise of mobile devices as the ICT device of choice. In addition, the income tax deduction be made exercisable once every two years in tandem with current device replacement cycles, which on average is every two years for PCs and smartphones.
EPF withdrawal scheme for ICT products, services and broadband
To increase household disposable income, Pikom recommends reintroducing the EPF withdrawal scheme to purchase computing products, peripherals and consumables (i.e. PCs, laptops, smart phones and tablets including broadband subscription) with a clear list of items/services to prevent abuse. Mechanisms can be put in place to ensure that only trusted parties are involved in the scheme.
Across-the-board reduction of broadband rates for individuals, households and businesses
Pikom feels more effort is needed to bring the cost of internet connectivity in Malaysia on par with other regional peers. Given the importance of high-speed broadband to the nation and its people, this area requires further and timely action.
Pikom recommends that the government take further action to foster greater industry competition and to regulate pricing of broadband rates in Malaysia. A regional benchmarking comparison should be in place to ensure that we remain a competitive ICT nation. This should cover speed, coverage and quality of service.
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