PETALING JAYA: Agencies are calling for the government to incorporate measures under the upcoming Budget 2022 that will raise the bar of the advertising and marketing industry.
Among the measures are a temporary sales and service tax (SST) exemption for advertising spend, measures to strengthen purchasing power, to boost the usage of e-wallet, allowing agencies to draw down on their Human Resources Development Fund (HRDF) and allocating more grants to content houses that produce local content.
They added that such measures would provide a multiplier effect on the economy and put the industry on a higher pedestal.
The Association of Accredited Advertising Agents Malaysia (4As) president Andrew Lee said the advertising and marketing industry needed government aid to encourage brands to increase their ad spend as this would revive the country’s economy.
Lee, who is also Havas Group Malaysia group managing director, said many advertisers had expressed the desire to increase advertising spend, but to do so, some temporary reliefs were required from the government.
“For Budget 2022, we appeal to the government for two key tax reliefs. The first is a temporary SST exemption for advertising spends, and secondly, a double deduction relief of advertising expenditure spent with Malaysian-owned companies to be exempt from claims submission and the extension of the qualifying criteria for a tax deduction.
He told StarBiz that these reliefs would create the desired multiplier effect to the entire value chain of the industry. It would enable brands to increase their advertising activities to encourage consumer spending and, in the process, boost business for advertising agencies, media agencies and media owners as part of the economic recovery.
Mediabrands Malaysia CEO Bala Pomaleh said the Malaysian advertising spend is projected to be at RM5.1bil in 2021, up 15.4% from 2020 based on statistics from Magna.
Though this figure is a mere fraction of the nation’s gross domestic product (GDP), it plays a significant role in fuelling and growing the economy. Magna is the centralised IPG Mediabrands resource for intelligence, investment and innovation strategies.
To spur more growth and consumer spending, there needs to be additional measures to strengthen purchasing power of the middle-income group, he noted.
“This could come in the form of a reduction of individual income tax rates and other tax exemptions for the coming year across education, lifestyle and tourism as lockdown measures are eased,” he said.
Bala said the usage of e-wallets should be stepped up. There are segments that still have not fully adopted its usage, based on the MasterCard Impact Study 2020, which indicates a 40% e-wallet use in Malaysia.
He said the move to boost the usage of the e-wallet, besides the other measures mentioned, would have a multiplier effect on consumer sales, which would have a positive correlation on advertising spends.
He said given the boost in streaming services, online learning and gaming, more grants could be provided to content houses that produce local content, animation and games, as this could allow local businesses to compete for these opportunities internationally.
“There are numerous internationally accredited programmes that would greatly benefit agency talents, yet these programmes are often at a cost beyond our local budgets.
“Allowing agencies to draw down on their HRDF learning fund and making the process less unwieldy will be a good start in helping agencies keep up with learning demands.
“Organisations like the Media Specialists Association or MSA, 4As, the Malaysian Digital Association or MDA, and the Malaysian Advertisers Association or MAA would be best placed to collaborate with the government to identify relevant training and certifications that could qualify under the scheme,” Bala said.
Oxygen Advertising managing director and 4As senior adviser Datuk Johnny Mun said tax reductions and payment deferments for taxes would certainly go a long way to help businesses manage their already tight cash flow to tide them over and into the next year.
“Only with this and further relaxations to encourage business reopenings can we hope for light at the end of the tunnel for many businesses, particularly small medium enterprises (SMEs) which may not have deep reserves to sustain them much longer should the situation persist.
“The government needs to implement tax breaks for the creative industry, as business has been impeded since the outbreak of Covid-19. The various ministries will need to quickly devise plans for more relaxations that are positive in nature and not put up more roadblocks to further retard the already sluggish market. Of course, with the proper SOPs in place,” Mun said.
Entropia founder and senior partner Prashant Kumar (pic below) said the industry is one of the important pillars of the knowledge that needs to develop in order to graduate from mid to high-income status.
He said a relook at the tax structures for the industry could allow for that extra bandwidth for players across the board to stay committed to their people and for them to continue investing in honing competitiveness.
“I believe virtual work norms have opened a whole new opportunity for Kuala Lumpur to become a cost competitive hub for the regional and global industry.
“A special incentive for such a hub could spur aggressive growth and job creation in this sector. There is no reason why at least 50% of advertising work from Australia, Japan, Hong Kong and Singapore can’t be done from KL, for example. It just needs a strong ecosystem push. A catalyst from the government can surely help in this direction,” Prashant noted.
As for outdoor advertising, Spectrum Outdoor Sdn Bhd managing director Henry Low (pic below) said the billboard medium has been hit with low-traffic count during movement control order and enhanced movement control order as advertisers “pause” their ads on digital billboards.
On the whole, the billboard industry has recorded a contraction in 2019 and 2020. He said media owners have been seeking a licence fee reduction from the respective councils to help cushion the high cost of operations.
“Numerous appeals have been made to councils and state governments, and some government quarters came to our aid. We hope the government will continue to help the sector in staying afloat as the ad industry is pivotal to the growth of many brands, especially the local home grown products and services,” Low added.