Tax perks for businessmen ‘will help economy grow’

IT’S good news for business citizens. The corporate tax rate will be reduced from the current 28% by two percentage points over the next two years.

For 2007, it will come down to 27%, and further cut to 26% the following year.

This is to promote greater private sector investment.

Although this measure will result in a significant reduction in revenue, the Government is confident that it will have a positive overall effect on the economy.

Welcoming the proposal, industry players said it would be a boost for the economic growth of the country.

Tax consultant V. Shanmuganathan said the cut was good for businessmen because it would improve their cash flow and reduce the cost of doing business in Malaysia.

“The reduction will indirectly encourage foreign businessmen to invest in Malaysia,” he said when commenting on the tax cut.

“I believe the reduction will lead to the creation of more jobs for Malaysians and higher income levels generally. Therefore it will improve the purchasing power of the people.”

Malaysian Institute of Taxation (MIT) council member Datuk Raymond Liew said the move would attract additional Foreign Direct Investment (FDI) into the country.

Another MIT council member Dr Jeyapalan Kasipillai said the tax relief on the purchase of books was a good decision as it would help create a more cultured society.

“It will also promote lifelong learning,” he added.

Tax consultant Stanley Selvakumar said the reduction would help create a better overall living standard among Malaysians, as their incomes would be higher.

He added that several other perks would also help the business climate in the country.

“By giving 10 years’ tax exemption for biotech ventures and Islamic banking, the Government will encourage more people to participate in these two emerging industries. Malaysia can thus be more competitive in the global market,” he noted.

In this way, Selvakumar said, the Government showed that it was more committed to providing a conducive environment to spur greater dynamism in the private sector.

“This will also enhance competitiveness in the private sector,” he added.

Be cool, Gerakan deputy president advises members

Be cool headed and do not retaliate to criticisms in a hot headed man¬ ner – that is the advice of Gerakan deputy president Tan Sri Dr Koh Tsu Koon to members in view of the “hot” political climate.

Dr Koh, who is also Penang's Chief Minister said: “You can be hot-blooded but not hot-headed. Don’t even be big headed. Have a cool head to be analytical and rational. You must be able to plan, implement and sacrifice for the country,” he said on Friday when opening the Gerakan Youth and Wanita delegates conference.

Dr Koh said members should criticise positively and constructively by focusing on the issue and not on personal matters.

“When it is personal, we become emotional and are distracted from the real issue,” he said, adding that they should use internal channels within the Barisan Nasional.

“For example, if Education Minister Datuk Seri Hishammuddin Tun Hussein messed up in his work, we do not bantai (whack) him and ask him to resign. That is not the way.”

He said the wishes of the people should be raised but one should not criticise other par ties to get publicity.

Dr Koh admitted it was easier if he was attacked by the opposition.

“If the criticisms are coming from Barisan, which is our friend, we will hit back at that person and not the party. This is because the views of Barisan are different from the person’s opinions,” he added.

He noted that Barisan component members would quarrel and raise their voices when they discussed matters within the coalition.

But, they must make sure that the issues did not become racial, he said.

Any issue confronting the different communities should be seen as a national concern, he added.

PM tables Budget 2007

Prime Minister Datuk Seri Abdullah Ahmad Badawi on Friday tabled the 2007 Budget in Parliament.

It is Abdullah's third budget since he became Prime Minister and Finance Minister.
The Economic Report 2006/2007 was also released simultaneously.

The Government proposed that the corporate tax rate be reduced by two percentage points in two stages - the tax will be reduced to 27% in 2007 and 26% in 2008. This is aimed at promoting greater private sector investment, said Abdullah Ahmad Badawi in presenting the Budget.

Abdullah shaking hands with Housing and Local Government Minister Datuk Seri Ong Ka Ting inside Parliament before tabling the Budget. In the middle is Deputy Prime Minister Datuk Seri Najib Tun Razak.
He announced a wide array of tax and financial incentives for the private sector to help it to continue as the catalyst that will spearhead the nation's economic growth.

Tax incentives are offered to the biotechnology sector. Bionexus companies, for instance, will be given tax exemption for 10 years.

Abdullah noted that computer ownership is low. Hence, the eligibility period for the incentive to buy a computer, currently given once in every five years, is shortened to once in every three years, and the RM500 tax rebate is replaced with a tax relief of RM3,000.

Among the highlights of the budget are:

# RM112.9bil is allocated for operating expenditure, an increase of 11.6%.

# RM46.5bil is allocated for development expenditure, an increase of 31%.

# The budget deficit will be reduced to 3.4% of GDP in 2007.

# A Customs tribunal will be established for appeals on decisions made by the Customs Director-General.

# Tax rebate of RM500 for computer purchases will be replaced with tax relief of RM3,000, once every three years.

# Students with 10A1s in SPM from families earning RM1,500 and below to be given scholarships for tertiary education.

Ministers listening to the budget speech in parliament. - Starpic by Kamarul Ariffin
# Tax relief on purchase of books increased from RM700 to RM1,000.

# Lower taxes for dividends received from real estate investment trusts (REITs). Dividends received by local and foreign individual investors and local unit trusts from listed REITs will be taxed at 15%, and for foreign institutional investors, 20%.

# To promote tourism, especially for Visit Malaysia Year 2007, income tax exemption for eligible tour operators is extended for five years.

# To foster a culture of maintenance, expenses incurred by property developers within the defects liability period will be allowed as deduction from the same project.

# Sime Darby will lead several new projects in agriculture, high tech industries and tourism in the Northern Corridor

# Perlis will be declared a promoted area in which designated projects will be eligible for a higher level of tax exemption.

# RM3.6bil allocated to the agriculture sector.

# Exam fees for all public examinations abolished in all Government schools, beginning with 2007 school session.

# Excise duty on cigarettes up by one sen per stick. Duty on liquor with alcohol content of more than 40% up by RM5 per litre.

# Tax deduction for Zakat paid by cooperatives and trust bodies up to 2.5% of their aggregate income.

# Minimum compound of five times of the total tax payable be imposed for under declaration and smuggling of high duty goods.

# RM20bil worth of projects had been identified to be implemented under the private financing initiatives (PFI) on a build, lease and transfer basis.

# The RM20bil PFI projects will be financed and owned by the Employees' Provident Fund (EPF) and the Pension Trust Fund (KWAP) and leased back to the government.

# The government's support of PFI projects include sponsoring students to private institutions of higher learning as well as providing land and basic infrastructure.

# The Fund for Food to be increased to RM1.9bil from RM300mil.

# Non-Food Agriculture Scheme to be set up with an initial allocation of RM20mil.

# RM111mil to be allocated to implement livestock projects.

# RM40mil to be allocated for the implementation of the beef valley in Gemas, Negeri Sembilan.

# RM92mil to be allocated for the development of the aquaculture industry.

# Khazanah Nasional to establish an agriculture fund of RM200mil, to be funded jointly by the government, Khazanah Nasional and the private sector.

# Bank Negara Malaysia to establish another agriculture fund of RM200mil to invest in integrated agriculture and livestock projects.

# RM210mil to be allocated for the development of the biotechnology sector.

# RM59mil to be allocated under the R&D for genomics and molecular biology, production of pharmaceutical and nutraceutical products as well as promotion of agrobiotechnology activities.

# Halal Industry Development Corporation to be established under the Prime Minister's Department, with a launching grant of RM25mil.

# RM50mil is allocated to set up halal parks in Pasir Mas, Gambang, Chendering and Padang Besar.

# RM20mil to be allocated for SME Bank to finance halal park entrepreneurs.

# Multimedia Development Corporation (MDeC) to receive RM154mil allocation.

# The Content Industry Development Fund to be established with an initial funding of RM25mil.

# MIMOS to be allocated RM162mil.

# Universal Service Provision fund will be expanded to include broadband infrastructure in rural areas.

# The MSC Grant Scheme to be allocated RM20mil.

# RM193mil is allocated to agriculture research agencies.

# Several PFI projects valued at RM4 billion will be implemented in 2007.

# RM1bil to be provided for the maintenance of buildings and public facilities, to be awarded to small contractors.

# RM33.4bil to be allocated for operational and development expenditure to further strengthen the education and training system.

# RM1bil allocated for 22 new primary and secondary schools to be operational next year plus 198 schools to be built, including fully residential schools.

# RM90mil is allocated for the construction of two new Mara Junior Science College (MRSM) and for the purchase of equipment for existing MRSM facilities.

# RM782mil to be allocated for teacher training.

# RM101mil to be allocated to implement 67 housing projects for teachers especially in rural areas.

# RM288mil to be allocated under the Bestari school programme to enhance computer usage in schools.

# From 2007, Chinese language will be taught as a full subject in 150 national schools while Tamil will be taught in 70 national schools.

# RM195mil to be allocated for the upgrading and improvement of facilities in existing universities.

# RM450mil to be allocated for the construction and upgrading of polytechnics and community colleges.

# RM148mil will be allocated for construction two Industrial Training Institutes and four Advanced Technology Training Centres under the Ministry of Human Resources.

# RM214 million to be provided for several training programmes under Mara, Advanced Skills Training Institutes, Giat Mara programme, and UniKL.

# RM30mil grant for NGOs to undertake women, family and community programmes.

# RM50 subsidy for every mammogram done in private clinics and hospitals.

# RM721mil to be provided to implement various youth and sports programmes.

# RM91mil to be provided for sports and training programmes.

New LRT line to help ease traffic woes

A new LRT line between Kota Damansara and Cheras, cutting across Kuala Lumpur will be ready in four years while the present two light rail transit network, Putra and Star will be extended.

The new and extended rail lines are part of the efficient and cost effective public transportation system, approved by the Government, involving an expenditure of RM10 billion to be spent in the Klang Valley.

The new Kota Damansara line will cover some 30km, while the Putra LRT from Kelana Jaya line will be extended to cover Subang Jaya and USJ.

The Star LRT from Bukit Jalil will now cover Seri Petaling and Puchong.

Deputy Prime Minister Datuk Seri Najib Tun Razak who announced this Tuesday, said the Syarikat Prasarana Negara Berhad (SPNB) had proposed its public transportation plan in Klang Valley up to 2010.

“Apart from the rail lines, SPNB will buy train coaches, new buses, building new infrastructure, developing new ticketing programme and developing integrated transport terminal in Gombak and Bandar Tasik Selatan.

“Rapid KL which is under SPNB is getting 1,130 buses and repairing the existing 600 buses. So by the first quarter of next year, Rapid KL will have 1,700 buses plying bus routes within Klang Valley,” he said after chairing the first meeting of the Cabinet committee on public transportation.

Also present was Transport Minister Datuk Seri Chan Kong Choy.

Najib hoped with the improved bus service, the public transportation in Klang Valley would be integrated involving monorail, LRT, commuter train and Express Rail Link (ERL).

Malaysia may go for nuclear energy

Malaysia may explore the use of nuclear technology for power if the oil price shoots up to US$100 (RM370) a barrel.

Science, Technology and Innovation Minister Datuk Seri Dr Jamaluddin Jarjis said the country need not venture into nuclear technology at present to generate power.

“However, the world is changing. Who would have thought oil could hit US$70 (RM259) a barrel?,” he told reporters at the 4th Informal Asean Ministerial Meeting on Science and Technology here yesterday.

“There is even the possibility the price could shoot up to US$100 a barrel. When that happens, Tenaga Nasional Bhd will have no choice but to increase its tariff or go bankrupt.”

It would be a matter of national interest and economic survival for the country’s power utility company at that time, he said when asked about Japan being invited to share its experiences in managing nuclear energy.

He said Malaysia wanted to know how Japan, where two major cities – Hiroshima and Nagasaki – were destroyed by atomic bombs during World War II, could convince its people to go along with the use of nuclear technology to generate power and how they build the plants.

Dr Jamaluddin said it would be an issue of economic survival if oil price continued to rise.

“Investors may run away because their products will become too expensive to be made in Malaysia if the cost to generate electricity increases,” he said, adding that the Government wanted to be prepared for the situation in the future.

“We will not be able to draw new investors as well.”

He said some European countries were already moving towards using nuclear technology with the latest being Britain.

Closer to home, Vietnam also has plans to switch to nuclear technology to generate power, he noted.

“We have more than 60 nuclear scientists and we want Japan to share with us their experience,” he added.