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Budget 2012: Malaysian ICT industry's careful welcome

AvantiKumar | Oct. 10, 2011
Malaysian PM continues transformation theme in Budget 2012 proposals, which will cost US$74 billion.

Hitachi Data Systems Malaysia managing director Johnson Khoo said that the prime minister had made moves in the right direction and that further initiatives would be welcome in the future,  "Innovation is the critical factor that will enable us to compete and stay ahead of our competitors in the region. Countries such as Singapore are investing in R&D and innovation (US$16.1 billion for 2011-2015), while South Korea's ratio of research and development (R&D) spending to gross domestic product (GDP) was the third-highest in the world in 2010."

"Additionally, the focus on instilling and developing innovation in schools and public institutions of higher learning is crucial to create a creative and knowledgeable workforce," said Khoo, who welcomed the fund allocation to the education sector.  "We believe that innovation needs to be inculcated right from the onset in our education system. This will provide a solid foundation to build quality human capital that is capable of achieving the nation’s aspirations of a high value and high income economy by 2020."

"[In addition] the various initiatives including the government’s proposal to award Pioneer Status to industrial design services and giving them income tax exemption of 70 per cent for five years will definitely promote creativity and innovation through modern technology for local designers," said MDeC's Badlisham.

The importance of SMEs

Najib said: "Small and medium enterprises (SMEs) contribute about 31 percent to GDP, 56 percent to the workforce and account for 19 percent of total export. To further strengthen SMEs' contribution to economic growth, a shariah-compliant SME Financing Fund totalling RM2 billion (US$638 million) to be managed by selected Islamic banks will be established in 2012."

To enable SMEs to commercialise research products, the government will establish a shariah-compliant Commercialisation Innovation Fund totalling RM500 million (US$158 million), he said. "Effective 2012, this fund will be available at selected Islamic banks with the government financing two per cent of the profit rate. Bank Simpanan Nasional (BSN) will provide RM100 million (US$31.69 million) for soft loans with four percent interest including stamp duty exemption to encourage professionals such as lawyers, doctors and accountants to set up firms in small towns as part of the government's Rural Transformation Programme."

"An important factor in promoting innovation is to bring the product or research idea to market, which the government has aptly addressed through the Commercialisation Innovation Fund which enables SMEs to commercialise research products," said Symantec's Ong. "The collaboration between the public-private sectors will be important in assisting local research and innovation in going to market. The government could leverage the large force of private sector experiences and best practices in product commercialisation. "

"In addition, Symantec welcomes the RM100 million (US$31.69 million) SME Revitalisation Fund offering soft loans up to RM1 million (US$316, 857) for entrepreneurs," he said.

"We have seen SMEs investing in technology in the last two to three years to drive greater efficiency and productivity, and ultimately enhance their competitiveness and potential for growth," said Dell's Pang. "The SME Revitalisation Fund would provide the platform for SMEs to be able to continue investing in technologies needed to compete in a challenging local and global economic environment."

"Intel believes that this funding (SME Revitalisation Fund) will help SMEs become more competitive in the local sector as they will be able to invest in relevant technologies that can help them innovate, transform their business processes and accelerate their productivity," said Intel's Mallya. "Given that SMEs represent 99 percent of business establishments in Malaysia, it is incumbent upon SMEs to contribute more towards the country's GDP since they are clearly the catalyst for domestic economic growth. As of 2010, SMEs only contribute 31 percent of Malaysia's GDP."


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