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Slew of measures in Malaysian Budget 2018 directed towards fourth industrial revolution and digital economy

In the Malaysian National Budget for the year 2018, the Government has announced a series of measures to prepare the country for the fourth Industrial Revolution (IR 4.0) and driving the growth of the digital economy.

To support IR 4.0 businesses and investment activities, the Government will provide a matching grant of RM245 million (USD 58 million) under the Domestic Investment Strategic Fund to upgrade Smart Manufacturing Facilities.

The Futurise Centre in Cyberjaya will be strengthened as a one-stop centre for corporations and universities to develop product prototypes as well as to boost innovation.

Tax incentives will also be provided. The incentive period for Accelerated Capital Allowance of 200% on automation equipment is being extended from year of assessment 2018 to year of assessment 2020. In addition, capital allowance for ICT equipment, which includes spending on computer software development, is claimable for the period of four years, beginning year of assessment 2018 to 2020, including for small and medium enterprises (SMEs).

Encouraging venture capital investments

To encourage venture capital activities, a sum of RM1 billion (USD236 million) will be provided by major institutional investors for investments in main selected sectors, co-ordinated by the Securities Commission (SC).

The minimum investment limit in venture companies will be reduced from 70% to 50%, effective year of assessment 2018 to 2022. Companies or individuals investing in venture capital companies will receive a tax deduction equivalent to the amount of their investments, limited to a maximum of RM20 million per year. Moreover, income tax exemptions equivalent to the amount of investments by angel investors in venture companies are being extended until 31 December 2020.

Digital Free Trade Zone

Malaysia will become the first country in the world outside China to establish a Digital Free Trade Zone (DFTZ). The DFTZ comprises an e-Fulfillment Hub (to help SMEs and businesses in exporting their goods easily), a Satelite Services Hub (which will be the region’s digital hub for global and local internet-based companies facilitating end-to-end support) and an e-Services platform (for managing cargo clearance and other processes needed for cross-border trade).

The first phase is expected to generate RM700 million worth of investment and create 2,500 job opportunities. The Government provided RM83.5 million to construct then required infrastructure for the first phase in Aeropolis, KLIA (Kuala Lumpur International Airport).

In a commentary on the budget, MDEC CEO, Datuk Yasmin Mehmood wrote that DFTZ will “Go Live” on 3 November and 1,900 export-ready SMEs will begin their export journey with the launch, compared to a previous target of 1,500 SMEs.

Education

For the education of the TN50 (Transformasi Nasional 2050) generation, the Government is allocating RM250 million. 

Out of the this, 190 million will be directed to upgrade 2,000 classes into 21st century Smart Classrooms, in order to enhance creative-based learning and innovative thinking. Skills such as coding, app development, robotics, embedded programming and creative technology would be imparted.

Computer science modules in primary and secondary schools, including coding programmes, will be enhanced.

The sum also includes funding for setting up a Science, Technology, Engineering and Mathematics (STEM) Centre to develop the latest learning methods for training STEM specialist teachers, utilising existing facilities at teachers training institute in collaboration with Academy of Science, Malaysia.

Job creation and income generation

The Government has allocated RM 100 million to expand the eRezeki, eUshawan and a new flagship initiative called eLadang, under the Malaysian Digital Economy Corporation (MDEC).

eUsahawan is a digital entrepreneurship program aiming to help the public enhance business growth via online sales. The eRezeki initiative, based on the concept of crowd-sourcing aims to connect low-income households to digital income opportunities. Participants are trained, qualified and matched against suitable available tasks and/or work, helping them earn additional income and acquire new skills, equipping them to cope with an increasingly digital world.

Datuk Yasmin Mahmood wrote in her commentary that around 150,000 people would be trained in 2018 under these two programmes, resulting in 341,745 people participating in both programmes with an estimated total income and revenue of RM544 million.

eLadang aims to encourage farmers to leverage the latest smart farming technologies such as IoT (Internet-of-Things) and BDA (Big Data Analytics) to improve yield and income.

Featured image: Jorge Láscar/ CC BY 2.0

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