21-02-2023

The Associated Chinese Chambers of Commerce and Industry Malaysia (ACCCIM) is looking forward to a responsible and pro-business budget on 24 February 2023.

Faced with the weakening economic prospects for both global and domestic economy, businesses have to manage increased cost pressures, including operating cost and cash flow problem as well as high prices of raw materials. Adding to the concerns are the shortage of workers as well as additional employment costs coming from the implementation of the Employment (Amendment) Act and higher electricity tariffs for industrial and commercial users.

ACCCIM hopes that the Budget will adopt strategies and initiatives in ensuring prudent and productive spending to sustain economic and business resilience, to revitalize private investment, especially DDI, and to implement measured reforms for the growth and industry sustainability.

We urge government to pay particular attention to tackling cost related bottlenecks in the business regulatory environment and completely move away too much bureaucratic and cumbersome rules as well as high compliance cost. This will reduce the cost of doing business and the cost of living.

ACCCIM’s wish list for the business community, especially SMEs are:
(a) Lower income tax rate at 15% and higher preferential threshold (RM1 million) to help SMEs ease their cost of doing business. ACCCIM is of the view that increasing the threshold higher to a more realistic level, says RM1 million would help them to be more competitive and have leeway to reinvest from the tax savings.

(b) Reinvestment Allowance (RA), which is due to expire in 15 years can consider to be extended further for a period of five years to 20 years. This is to encourage existing companies to plan ahead to modernise and upgrade their production capacity and processes as well as diversify their products.

(c) Higher capital expenditure threshold to encourage automation in all economic sectors. Standardise and increase the qualifying expenditure for Accelerated Capital Allowance (ACA) for both Category 1 (high labour-intensive industries) and Category 2 industries to RM10 million from RM4 million and RM2 million, respectively.

(d) Ease operating and employment cost of SMEs due to the implementation of the Employment (Amendment) Act 2022. We propose the Government to co-share the additional 38 days maternity benefits, which have increased to 98 days from 60 days. Singapore Government co-share the payment for the first and second child while for the third and subsequent child, it is fully reimbursed by the Government.

(e) Consider to review a surcharge at the rate of 20 sen/kWj for the period of January 1 to June 30, 2023 on the Medium voltage (MV) and high voltage (HV) users, which have impacted SMEs’ financial burden. The electricity charges jumped by around 40%; and could even go up to 60% during the off-peak period.

(f) Tax incentives and financial assistance for the tourism sector and also encourage the food production.

(g) SMEs also require the support of facilitation fund and advisory to transition into IR 4.0 as well as embrace ESG, including reduce carbon footprint.

(h) Cut in personal income tax rate for the middle-income wage earners and below to help mitigating the impact of inflation and cost of living pressures.