PIKOM BUDGET 2015 ‘Wish List’ For ICT Sector

Oct 19, 2015 - K.L

In view of the upcoming Budget 2016, which is to be tabled on the 23rd October 2015 - as the ‘Voice of the ICT Industry’, the National ICT Association of Malaysia (PIKOM) proposes the following recommendations to the Malaysian government for inclusion in the budgetary plans for the coming year.

The wish list are:
  1. GST Zero-Rated for ICT Products and Services
  2. Across-the-Board Reduction Of Broadband Rates for Individuals, Households and Businesses
  3. Standardisation of Cost & Transparency of Process for Participation in GLC Tenders
  4. Spurring Local ICT Market

1.) GST Zero-Rated for ICT Products and Services

With the Goods and Services Tax (GST) Act 2014 coming into effect 1st April this year, the average prices of computers and related items increased, resulting in an estimated up to 30% drop in demand. The impact is compounded by the weakening of the ringgit which has seen its value plunge by around 30% against the US Dollar and other major currencies. GST implementation has also affected ICT adoption among the a) SME sector, and b) 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 it personal or business users.

2.) Across-the-Board Reduction Of 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 advancement of the local economy.

PIKOM recommends that the government needs to seriously regulate pricing of broadband rates by telcos and fostering competition among the players, 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 of Process for Participation in GLC Tenders 

PIKOM recommends enhancing the tender process in GLCs 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 rebate / deductions on cost incurred (up to a capped amount) for individuals pursuing ICT-related certification programs. Also to allow companies to claim HRDF on the same.
  • Encourage adoption and usage of ICT Products, Services and Broadband: PIKOM recommends increasing the income tax deductible amount for purchase of PCs and laptops for personal use to RM4000 (from current RM3000). In addition, it also recommends re-introducing EPF withdrawal 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.