The Prime Minister's recent visit to China yielded record investment deals of RM170bil, proving to be a fruitful albeit short trip. According to Datuk Seri Anwar Ibrahim at the press conference, the RM100bil investment deals were signed after a roundtable meeting between our Cabinet ministers and senior officials and Chinese industry leaders. We hope that the RM170bil investment can be put into action quickly to stimulate the economy. We are glad that the Prime Minister has made this a top priority after returning to Malaysia to chair the Cabinet meeting and announcing the formation of a special committee to oversee the issues at hand.
Aside from the investment commitments, this visit to China marks the 10th anniversary of Malaysia and China's comprehensive strategic partnership, as well as the opening of the Malaysia-China Kuantan Industrial Park, which strengthens bilateral cooperation. China has stated that in Malaysia-China joint venture projects, it will hire local skilled and professional labour and will only bring in Chinese professionals in shortage fields. In addition to exploring new fields such as new age automotive manufacturing and halal industries, the two countries agreed to strengthen cooperation in vaccine development, high-tech research and development, digital economy, exporting Malaysian agricultural products to China, increasing flight frequencies and inbound tourists between the countries and vocational education.
The Prime Minister has also invited Chinese President Xi Jinping and Premier Li Qiang to Malaysia for the 50th anniversary of Malaysia-China diplomatic relations next year. If this happens, more high-end Chinese-funded enterprises will invest in Malaysia, creating more jobs while also encouraging technology exchanges and industry development. China is one of our foreign investors and as an open economy that welcomes foreign investments, we must establish Malaysia as a key foreign investment destination, especially as the gateway to Southeast Asia.
The Budget 2023 announced in February included tax subsidies and reliefs to attract high-value foreign investments, consolidate local investments and increase local employment and earnings. We have witnessed the importance of digitalisation and its inevitable trend in the global economy over the last three years of the pandemic, so the Budget also prioritises digital projects as well.
The Budget promotes green technology, electric vehicles and food security with tax incentives. However, in comparison to the previous government's Budget presented in October last year, the revised Budget 2023 appears to ignore several important tax incentives, including the Green Investment Tax Allowance (GITA) and the Green Technology Income Tax Exemption (GITE), which have only been said to be reviewed so far. The most unexpected part is that the Budget did not extend a number of investment tax incentives that were initially announced to have an extended application time. This included the establishment of a regional centre, a global trade centre and pharmaceutical production in Malaysia - all of which ended in 2022. Although these three tax breaks were put in place to attract foreign investments during the pandemic, we will still need them, especially since our economy has not yet fully recovered from the pandemic's aftermath. Furthermore, encouraging investors to set up regional centres, global trade centres, and pharmaceutical production can boost our economy and raise the country's and people's incomes in the longer run. During the recent China visit, the government actually encouraged Chinese-funded enterprises to establish regional centres in Malaysia. I hope the government will reinstate this preferential treatment because it is consistent with its goals.
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) set up a private meeting between the Prime Minister and prominent Malaysian Chinese business leaders during his time in Beijing. During the meeting, I urged the Prime Minister and the government to improve the friendliness of the investment environment and the efficiency of the one-stop service centre in order to attract foreign investments. Otherwise, no matter how generous the tax benefits are, foreign investments will be deterred by bureaucracies at the relevant government agencies or unnecessary restrictions upon entry to Malaysia, diverting them away from Malaysia and to our neighbours.
After taking office, the Prime Minister paid close attention to civil servants' efficiency and repeatedly demanded that they carry out their duties professionally, honestly, trustworthily, and efficiently. Our enormous civil service system is undeniably a drain on our finances, accounting for 32% of the RM386.1bil budget allocation for salary and pension payments. To avoid investor confusion, we hope the government will make greater efforts to increase civil servant efficiency and ensure the smooth implementation of federal government policies in state and local governments. After all, the efficiency of the civil service is a major consideration for foreign and domestic investors.
The year 2023 is where the mid-term review of the 12th Malaysia Plan (2021-2025) and the first five years of "Shared Prosperity Vision 2030" plan is. We must evaluate our progress and devise strategies for a more sustainable and equitable society. After all, no one expected the Covid-19 pandemic or the Russia-Ukraine conflict to cause unprecedented damage to the global economy and irreversible changes to business models, lifestyles, and even global political and economic trends when the "Shared Prosperity Vision 2030" was launched in 2019.
Malaysia's political unrest during the pandemic has impacted the confidence of both domestic and foreign investors. Regaining the confidence of financial backers is crucial. Good policies must be implemented and promoted from the top down in order to succeed. We can no longer afford to sit back and wait; instead, the government, the corporate sector and the people must work together to move forward, or Malaysia will fall behind its neighbours.
If it is too late to address some of the issues raised earlier, we hope that all of the suggestions made in response to the China visit that are business and investment friendly will be included in next year's fiscal plan, Budget 2024, which will be tabled in October this year. For the benefit of our economy and people, and as Malaysia and China celebrate their 50th anniversary of diplomatic relations next year, more business-friendly policies will entice more high-end Chinese firms to come to Malaysia with more high-value investments.
- END -
~ this article is published on Star Biz "Insights" on 10th Apr 2023