THE government should effectively enforce the Buy Malaysian First policy in its procurement to help strengthen the domestic market, according to Federation of Malaysian Manufacturers (FMM) president Datuk Mustafa Mansur.
Most local companies have their brands nurtured and strengthened in their home market base before they could expand into the export market as the domestic market is an important foundation or anchor. The government, being the largest procurement agent in the country, must pay more attention to building up the local industries. They can be strengthened if the government buy more locally manufactured goods, he told StarBiz.
For example, some local software manufacturers do not have the confidence to compete overseas although they have the expertise, because they are not getting the support they need in the home base, he said.
According to Mustafa, many local companies have the edge to compete overseas but they need to have the extra push and support from the government.
By procuring locally, the government will save money because local materials are cheaper and we will not face the problem of an outflow of the ringgit. Local manufacturers need to have a slice of that yearly procurement expenditure which will mean a lot to strengthen the domestic base, he said.
In its memorandum submitted to the Finance Ministry on the forthcoming budget, the FMM has called for more effort to increase domestic investments by Malaysians and foreign investors in the country in view of the intense competition for capital.
To reduce the cost of doing business and enhance incentives, FMM proposes that the corporate tax be reduced from 28% to 22% over a five-year period, beginning with an initial cut of 2% and followed by 1% in the subsequent years.
To encourage export promotion, FMM proposes that expenses related to export expansion and brand name promotion be given triple deduction from the current double deduction. It also calls for an increase in the market development grant from RM60,000 to RM120,000 to encourage greater participation of the small and medium-sized enterprises in trade missions and exhibitions.
As for efforts to attract knowledge workers, the FMM also proposes to the government to restructure personal income tax range so that tax payers would not hit the maximum rate too quickly.
The restructuring would attract the return of k-workers as well as help increase disposable income, it said. FMM proposes that the maximum chargeable rate be reduced from 28% to 22% over a period of five years.
The FMM also calls for more efforts to be made to attract foreign direct investments in view of competition from regional economies that offer bigger domestic market and low cost of doing business.
FMM wants the government to showcase and market in a more focussed manner the advantages of Malaysia in having a stable and pro-business government, good infrastructure and delivery systems and an educated workforce.
The report said that many potential investors did not know about Malaysia and there were no direct flights to some major cities in the world like Brussels which is the administrative capital of Europe.
According to a Bank Negara report, the manufacturing sector was the main growth driver in the second quarter of this year. It was mainly supported by stronger growth in the export-oriented industries.
It said the domestic-oriented industries expanded by 4.2% while the overall capacity utilisation rate of the manufacturing sector was higher at 83% compared with 80% in the first quarter of this year. The export-oriented industries, resource-based industries such as off-estate processing, and chemicals and chemical products industry benefited from favourable external demand.
Domestic-oriented industries grew at a moderate pace due to the moderation in the construction-related materials industries and the decline in the transport equipment industries, the report said.
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