REDUCE OR ABOLISH CORPORATE TAX ???

InvestPenang, the investment promotion arm of the Penang State Government recently urged the Federal Government to reduce or even abolish corporate tax to help industrial sector cope up with the effects from rising fuel prices and the impending hike in power tariffs.

I have this to say – in trying times like nowadays the Government is still in need to earn a living for its people. Nothing is free anymore in this wicked world. Most of these industries either have be been enjoying tax incentives such as Pioneer Status or Investment Tax Allowance which gave them quite ample deductions on real tax; and to a certain extent are also given various types of tax exemptions as provided under the Income Tax Act and/or the Promotion of Investment Act. These tax benefits and tax exemptions accorded are more than suffice. Just allow the Federal Government to collect as much of what’s left after these exemptions and deductions from such industries.

For existing industries, whether foreign-, joint-venture or locally-owned, I would urge them to institute programmes that would improve overall productivity. I would also urge those employed by this sector to also improve their productivity. Productivity entails to a certain extent saving of production and overhead costs and hence improve profitability.

The hiring of cheap foreign labor is indeed a blessing in disguise for industrial concerns. On the one hand, labor costs have been greatly reduced as compared to hiring locals. On the other, these foreign labor were given work permits for a certain limited years. Once their work permits expired, new batch of foreign workers come in with lower start-up pay. Not to mention cost savings to those hiring illegal foreign labor. The cycle never stops.

For new industries – I would say that development taken place in Malaysia during the last few decades, especially in the manufacturing sector, is tremendous indeed. We can now afford to select and choose types of industries that we want. We can now forego labor-intensive industries; even allow existing labor-intensive industries to move out to Vietnam, China or the like. The latest Industrial Master Plan has spoken on this matter.

State Governments’ investment promotion arms should realign their promotional targets to more sophisticated and technologically innovative industrial concerns that are able to better feed our more educated population rather than relying on “imported” manual labor.

MIDA has always done its best since its incorporation. Hat’s off to MIDA, ex-DGs Dato’ Sada, Dato’ Aishah, Datuk Karu and to the recently appointed DG Datuk Jalilah.