Local ICT Sector Seeks 4 ‘Wishlist’ Items for Budget 2018

The National ICT Association of Malaysia (PIKOM) as the ‘Voice of the ICT Industry’ proposes the following recommendations to the Malaysian government for inclusion in the budgetary plans for the coming year. These recommendations will provide a needed boost for the digital economy which comprise of a wide range of sub-sectors including ICT hardware, software, services, communications and e-commerce.

1)        Propagating a Digital Ready Workforce

In developing the next generation of talent to support Malaysia’s digital economy, a greater number of Science, Technology, Engineering and Mathematics (“STEM”) oriented students are needed. Government should explicitly promote secondary school and tertiary students to embark on STEM stream or courses that are relevant to Industry 4.0.

PIKOM Recommends:

• Students who pursue STEM courses to be provided with a stipend or monetary incentives to pursue additional online courses, purchase technology and procure additional resources.

• Enhanced corporate tax incentives for:

o         Companies providing scholarships for Computer Science, Software Engineering and STEM related courses.

o          Companies training employees to obtain professional certification in critical core areas such as data science, artificial intelligence, cyber-security and others.

2)        Withholding Tax on Software

The Finance Act 2017 which treats software as royalty (and therefore subject to withholding tax) has had a detrimental impact on the local software industry. Compounding the issue is uncertainly on the application of withholding tax on software prior to 2017.

PIKOM Recommends:

• Software should not be subjected to royalty for mere use or right to use.
• Tax should not be imposed retrospectively.

3)        Greater Utilisation of ICT in Government

The government needs to be at the forefront of technology adoption. This will position Malaysia as a leader in the digital age.

PIKOM Recommends:

• Government should accelerate the use of disruptive ICT technologies such as hyper-scale public cloud, advanced analytics, mobile, social, artificial intelligence, IoT, Blockchain and others that will not only improve public service delivery and reduce operational cost, but also serve as a catalyst and confidence booster for the private sector to adopt these technologies.

4)        Making ICT More Affordable for Every Malaysian

Affordable, accessible ICT hardware and software is vital towards creating an educated, informed nation, whose population is not left behind in the new digital era.

PIKOM Recommends:

• GST zero-rated for ICT products and services, especially for bigger ticket items i.e. laptops, smartphones, etc.
• Tax relief of RM3000 for to be exercisable annually and to cover PCs, tablets and smartphones
• Reintroduce the EPF PC Scheme
• Reduce broadband prices (speeds have increased but prices have not gone down) to be on par with other countries.