Malaysian Budget 2018 Commentaries

Budget 2017 Commentaries.

The government of Malaysia has just announced the Budget 2018 coined as an election budget.

Here are some commentaries gathered across the ICT industry.

1.) Matteo Sutto, Senior Vice President of Growth, iPrice Group

As the Malaysian government has recently revealed that e-commerce is among its six key initiative in the Transfomasi Nasional 50 (TN50) plans, we are excited to see how digital economy will develop in the coming years. To support the government’s initiatives, we’ve crafted a Budget 2018 Commentary to voice our thoughts on the recent announcement.

Matteo Sutto, SVP, iPrice
Among the key topics we’re commenting on is pertaining:
  • Investments to develop Malaysia’s Digital Free Trade Zone (DFTZ) as supported by Jack Ma & Alibaba
  • Initiatives to increase the influx of funds for startups by reducing taxes imposed on venture capital companies
  • Improvements in communications infrastructure which we believe will increase the number of online shoppers in East Malaysia

2.) Chin Chee Seong, PIKOM Chairman

PIKOM is pleased that Prime Minister Datuk Seri Mohd Najib Tun Razak, announced that Malaysia is the host of the World Congress on IT (WCIT) in 2020 which has also been declared as Visit Malaysia Year.

Chin Chee Seong, PIKOM Chairman
PIKOM is delighted to have received the rights to host WCIT2020 from the World IT and Services Alliance (WITSA) and we look forward to welcoming our international visitors to this event dubbed as the Olympics of the ICT industry.
  • With a strong economy expected to grow by 5.2% in 2017, here are some of the perks that businesses can look forward to;
  • RM200 million allocation to Malaysian Investment Development Authority (MIDA) for high impact projects;
  • RM2 billion fund for Industrial Revolution (IR) 4.0 with 70% govt guarantee;
  • RM200 million for training for SME Corp;
  • RM150 million for export including the Market Development Grant (MDG);
  • Startup funds for VCs including RM1 billion fund.

PIKOM is also pleased to note that the government has placed more emphasis on human capital development in 2018 especially on coding in schools; STEM education, with RM250 million for teachers’ training and RM190 mil to upgrade 2,000 classes into a 21st century smart classrooms in order to enhance creative-based learning and innovative thinking.

They also welcome Capital Allowances for ICT equipment, which will include spending on software development, claimable for a period of four years as this will boost the companies’ productivity and reduce the cost of operation.

The other incentives that will benefit the ICT Industry;
  • RM1 bil for Sabah and Sarawak for broadband infrastructure;
  • ICT projects in PDRM of RM 170 mil and RM 100 mil for communications systems;
  • RM 100 mil allocation for e-rezeki, e-usahawan and e-ladang;
  • Industry 4.0 and Digital Economy – RM 245 mil for smart manufacturing;
  • Cyberjaya Futurise Centre to be strengthened;
  • DFTZ focus on 1500 SMEs and RM 83.5 mil funding and de minimis increased to RM800;
  • Boost startups with setting up of regulatory sandboxes.

However PIKOM had hoped that there would be measures to drop the cost of broadband services as well as GST exemptions on ICT products and services which were not announced in Budget 2018.

3.) Troy Martin, Vice President, APAC for Canvas, Instructure.

“The 2018 National Budget sets the stage for Malaysia to continue its aspirations of a knowledge-based, high-income nation by 2020, to one of the world’s top 20 performing nations by 2050. We laud the government’s practical allocation especially in the areas of advancing education standards through Science, Technology, Engineering, and Mathematics (STEM), spurred by its TN50 aspirations. We look forward to a vibrant and dynamic education ecosystem, with technology as its catalyst,” said Troy Martin, Vice President, APAC for Canvas, Instructure.

Troy Martin, VP, Canvas APAC
  • 2018’s Budget saw an increase of over RM19 billion from last year, bringing this year’s allocation to RM280.25. Accordingly, this year’s allocation for education increased from
  • RM52.4 billion to RM61.6 billion, twice as high as the Asean average. A further RM250 million was allocated for TN50 education purposes, which include:-
  • Establishment of Science, Technology, Engineering, and Mathematics (STEM) centre
  • Enhancing computer science module including Coding programme
  • Introduction of 21st Century Smart classrooms to enhance creative-based learning and innovative thinking
“Instructure is encouraged that the Malaysian Government has placed high importance in the area of education within its T50 aspirations. With STEM as the catalyst, we believe Malaysia is setting a strong foundation for its T50 aspirations by empowering the next generation with digital skills such as coding and enhancing creative-based learning and innovative thinking. Possessing these digitals skills will prove an advantage as the Fourth Industrial Revolution evolves industry demands, and with it, the need for a highly-skilled workforce. All this begins with a novel vision of transforming the traditional classroom through technology, and we support the Malaysian government’s focus and emphasis in technology-led education,” concluded Martin.

4.) Chuljin Yoon, COO of 11street

The development of the Digital Free Trade Zone (DFTZ) hub in KLIA continues to help Malaysia edge closer to its digital economy vision, while improve the livelihood of Malaysians through growing job and entrepreneurship opportunities, and reduction of income tax for the M40 category.

Along with tax reliefs, incentive measures and the vision to make Malaysia a regional e-commerce hub, SMEs and e-commerce will continue to play a vital role achieving the digital economy vision of contributing 20% to the Gross Domestic Product (GDP) in 2020.

Chuljin Yoon, COO, 11street

11street is confident that these measures will continue to cement a dynamic and strong digital economy for the country, allowing SMEs, online marketplaces and monobrands a holistic e-commerce trading experience. One key observation is the investment into DFTZ that will drive the participation of 1,500 SMEs into digital economy, and attract investments of up to RM700 million, therefore creating an additional 2,500 jobs.

Futhermore, other initiatives are in place to help drive the adoption of e-commerce among SMEs, such as the recent DesaMall project by the Ministry of Rural and Regional Development (Malaysia) in partnership with 11street, providing entrepreneurs a comprehensive e-commerce training development programme to upskill themselves. This programme includes skillset, packaging and promotion trainings, along with platform site support and services – a move we believe will drive greater revenue to local and rural entrepreneurs within the domestic market and international exports.

It then becomes evident that the e-commerce ecosystem in Malaysia is geared for accelerated growth, as the country progresses to offer a holistic online trading experience. While SMEs continue to proliferate, global brands are increasingly seeking opportunities to explore and expand their offerings within the local online space – signaling a healthy growing consumer spending power and market demand. To date, the B40 group has recorded the fastest growth income and contribute to 16.5% of the nation’s GDP, as the country progress to achieve its target of becoming a high-income nation by 2020.

The support allocated for SMEs will continue to empower this sector to grow, not just locally but globally as well to drive greater cross-border trading opportunities – a key component we see will propel the local e-commerce market, as cross-border trading continues to grow in Malaysia. Income tax reduction for the M40 category, anticipated to provide RM300 – RM1,000 of disposable income, will encourage consumers to hop aboard online marketplaces to purchase daily necessities attributed to friendlier prices, thus broadening the platform for the e-commerce sector to grow.