Experts: Budget 2015's focus on R&D, creative industry a step in the right direction

  • TECH
  • Monday, 13 Oct 2014

Encouraging R&D: Budget 2015 seeks to attract more market interest into R&D activities through incentives such as Research Incentive Scheme for Enterprises (RISE).

Budget 2015's emphasis on stimulating research and development (R&D) in the Information and Communications Technology sector and growing the creative industry is being welcomed by local experts. 

“The one thing that impressed me the most was the special incentives given to investment projects that involve technology, innovation or are knowledge based,” said Amarjeet Singh, tax partner, Ernst & Young. 

"It's a measure that is all encompassing. Once you attract the right investments for innovation and technology, the whole supply chain develops and this will spur growth in the whole technology sector,” he said. 

He added that this would be a good approach to help Malaysia “move towards becoming a knowledge based and high income economy". 

 Amarjeet praised the allocation of the RM1.3bil fund for the Ministry of Science, Technology and Innovation which would go towards research and development activities. 

With regards to the Budget announcements that were aimed at encouraging the growth of local startups, Amarjeet said that this was a good move to ensure economic growth. 

“This will help increase the number of entrepreneurs in Malaysia. Once you have more businesses, this will directly lead to the creation of additional jobs,” he said. 

However, he felt that the Work Pass that would be offered to eligible expatriate entrepreneurs had too brief a validity period. 

“The period of one year is a bit short. It does take time to develop a new business. Perhaps a work pass with a longer duration of three to five years would be more realistic,” he said. 

Besides that, he viewed the RM100mil that the Government has set aside for the Digital Content Industry Fund as “a step in the right direction”.

Chee Pei Pei, executive director, Deloitte Tax Services Sdn Bhd was also in favour of the Government’s efforts to promote the greater development of digital content. 

“This is very much in line with the Government’s current efforts to boost the ICT sector,” she said, citing the recent developments such as the establishment of independent integrated studio facility, Pinewood Iskandar Malaysia Studios in Johor as an example. 

“What the Government wants is a nation that has knowledgeable workers and incentivises people to achieve high income growth status for the nation by 2020,” she said. 

Looking forward, Chee hoped to see more incentives provided by the Government to promote the development of Malaysia as a data centre.

She also felt that funds ought be directed towards reducing the cost of ICT services such as broadband within the nation. 

“There doesn’t seem to be much for this purpose apart from developing the infrastructure in rural areas within Sabah and Sarawak,” she said. 

Ho Sui-Jon, market analyst for IDC financial insights Asia Pacific at IDC Malaysia was less impressed with Budget 2015 and felt the ICT industry as a whole was not receiving as much budget allocations as it had in the past. 

“A lot of the agenda in the Budget this time was less ICT centric than it was in 2014,” he pointed out.

As for the creation of the Research Incentive Scheme for Enterprises (RISE), he said, “The injection of RM10mil into the R&D sector will attract more players into the market.” 

He added that most multinational companies such as Intel and AMD had already long associated the Malaysian market as being one which offered them a competitive advantage in R&D. 

“We already have R&D centres in Penang, Johor and around the Klang Valley so to have RISE as part of the fiscal policy only serves to validate this view and to attract newer players into the market. It’s good news for Malaysia and sends out a great message to potential global investors.” 

In addition, Ho said RISE would also play a crucial role in pushing Malaysia upwards in the high technology goods value chain. 

“It’s been high on policymakers’ agenda because Bank Negara Malaysia had also foresaw we needed to replace Malaysia’s current dependence on non-value added technology goods in order to become a high income nation,” he added. 

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