Little cheer for ICT in new Budget

Petaling Jaya – PIKOM, the National ICT Association of Malaysia, views Budget 2009 as people-friendly but offers limited incentives for the development and growth of the information and communications technology (ICT) industry.

PIKOM Chairman David Wong Nan Fay says. “While we are excited about the key offerings in Budget 2009 that the ICT industry can look forward to, certain critical areas are not addressed.”

“We welcome the Accelerated Depreciation Allowance (ADA) on expenses incurred on ICT equipment to one year (from two years). This will spur demand for ICT solutions especially among the small and medium enterprises.”

The double tax deduction for employers sponsoring employees to pursue post-graduate studies in fields including ICT will encourage companies to invest in the development of their human capital to enhance competitiveness.

The proposal to allow venture capital companies that invest at least 30% of their funds in start-up, early stage financing or seed capital be eligible for a 5-year tax exemption will also encourage more private venture companies to be more active in this area, which is currently predominantly supported by Government-owned funds.

The broadening of the scope for tax incentive for Corporate Social Responsibility to include conservation and preservation of the environment augurs well as PIKOM is embarking on an e-Waste recycling programme.

However, PIKOM is of the opinion that Budget 2009 falls short of addressing the needs of the ICT industry in moving forward.

While the Budget places key thrust on developing quality human capital, no specific incentive addresses the ICT industry. This is a serious concern as skills shortages remain acute in the industry. Unless it is addressed aggressively and decisively, it will lead to erosion of our competitive edge.

Similarly, there is nothing specific to give a boost to Business Process Outsourcing, despite it being recognized as an opportunity area for growth.

PIKOM’s proposals for incentives for the Malaysian Outsourcing industry as well as tax rebate on PC purchase were also not addressed.

PIKOM urges for these incentives to be forthcoming across the year.