KUALA LUMPUR, Nov 17 (Bernama) -- The Malaysian Budget 2021 has done the right things on several fronts, but there are various missed opportunities that could have increased the core competencies of the country post-pandemic. 
 
Chris Wang, CEO of Asia Pacific Investment Bank (APIB), says Budget 2021, the largest Budget in the Malaysian’s history, has substantially increased its development expenditure to spur the country’s economy, which is a great thing.
 
“But the Budget could be better if it focuses more on critical areas that are key to the country’s economic recovery when the pandemic ends,” he says.   
 
For instance, there is a lack of new infrastructure spending that will accelerate the adoption of cutting-edge technologies such as 5G, artificial intelligence (AI), big data and other internet technologies, contrasting with the global trend in recent years.
 
“It is great that the Budget provides RM1 billion ringgit as a special incentive package for high value-added technology. A High Technology Fund worth RM500 million will also be provided by the central bank to support high-tech, innovative companies.”
 
“However, almost zero allocation is being made to build infrastructures that will further enable the implementation of new technologies,” says Wang.  
 
“These new infrastructures are beneficial for expanding the country’s effective demand, economic growth and job creation over the short term. Over the medium to long term, they are essential to promote innovation that could further unleash the country’s economic potential,” he adds.
 
Wang lauded the Budget's various tax incentive to attract foreign investments, including the RM1 billion investment incentives for Fortune 500 companies and global unicorns. Yet, there is a lack of incentives to cultivate local talents and attract foreign talents, especially those in the sectors expected to play a crucial role in the country's economic recovery post-pandemic.  
 
“It will be great if the Budget introduces incentives that encourage more and deeper collaborations between local and foreign talents. Both parties could form apprenticeships and learn from each other, which, in turn, could lead to a virtuous cycle,” he says.

Wang says the Ministry of Education is one of the ministries that received the highest allocation in the Budget. But funds allocated to help parents and students to be better equipped for e-learning is insufficient.
 
Wang also says new tax incentives for the establishment of the Global Trading Centre are good, but they are not strong enough to support local companies to expand their businesses globally. This is especially in light of the signing of the Regional Comprehensive Economic Partnership (RCEP) between 15 ASEAN countries and Australia, China, India, Japan, Korea and New Zealand.
 
“Malaysian will soon usher in a more open and competitive market. Government support for trading companies, especially small and medium enterprises (SMEs) is urgent,” says Wang.

In addition to what have been announced, the Budget could have also considered further reducing institutional transaction costs including banks providing a further extension of credit and interest subsidies to businesses to ease their cash flow pressure.
 
“It could also have increased export incentives and production subsidy, and made an allocation to develop an online trade system for the Royal Malaysian Customs Department to accelerate trade recovery post-pandemic,” says Wang.

SOURCE: Asia Pacific Investment Bank (APIB)

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