ACCCIM Media Conference on
Survey Report on Economic Situation of Malaysia for the 1st Half of Year 2012

Speech by Dato’ Lim Kok Cheong, President of ACCCIM
29-8-2012

First of all, I would like to express my appreciation to all the media representatives for your presence this afternoon.

The ACCCIM Survey on Economic Situation of Malaysia for the First Half of year 2012 is conducted as a means to gauge the economic situation of the Malaysian Chinese business community in the First Half of 2012. The survey also covered some current issues in relation to the Government policies and measures, namely implementation of minimum wages and Competition Act 2010, concerns and impact of the European Financial Crisis, views in relation to the state of the Malaysian economy to-date in relation to the coming 13^th General Elections, as well as the prices of properties in Malaysia. This survey outcome would serve as important reference for the business community as well as for consideration by the Government.

Chairman of the ACCCIM Commerce Committee Dr. Leong Kai Hin will brief on the survey findings in a short while.

Business competition has become increasingly stern, and the SMEs are facing tough challenges, both domestically and abroad. Many businesses become less optimistic, on the back of shrinking new orders and production as they feel the pinch from weakening global demand, while the efforts by the government at the macro level may not yet have filtered down to them and they are being squeezed by rising costs of doing business.

The increase in operating costs and prices of raw materials has become the greatest concern among businesses. Increase of 1% point in EPF contribution for workers earning RM5,000 and below, the imposition of 1% feed in tariff, the impending implementation of the minimum wage are perceived to aggravate operating costs and affect the business performance of SMEs. At the same time, employers would be hit by another new ruling, i.e. the extension of retirement age in the private sector to 60 year of age. Wage costs are now expected to further increase for businesses through the extended retirement age of the older aged staff.

Malaysia’s corporate tax is relatively high compared with to neighbouring countries. There is a need to reduce corporate tax to help ease the burden of businesses, encourage domestic re-investments as well as to make Malaysia more attractive as an investment destination for FDIs.

Therefore, lowering corporate tax rate is among the items on ACCCIM’s wish list for Budget 2013. We are seeking a gradual reduction of corporate tax rate from 25% to 22%, and to 17% in the long run.

In addition to above, we are also of the view that the standard rate for GST should start from as low as possible and should not burden the rakyat. On this, ACCCIM recommends starting with a GST rate of 4%. At the same time, the government is urged to formulate and announce the timetable of implementing the GST, and to allow at least 18 months, enabling businesses to make preparations and necessary training so as to ensure that the resultant cost of doing business would not increase.

It has been reported that Malaysia registered significant improvements in the Business Efficiency category and in the Government Efficiency category. These notable improvements in Malaysia’s rankings have indirectly helped to create a favorable business and investment climate. ACCCIM commends the government for several recent efforts to improve the delivery system in public sector. Clear and transparent processes and procedures as well as shortened the processing time for licenseswill certainly reduce cost of doing business.

Finally, I commend ACCCIM Commerce Committee’s efforts with UTAR cooperation in making this survey a success. I also take this opportunity to thank the media for your support and cooperation in giving continued coverage to this survey exercise.

Thank you.