Budget 2022: Industry Players Look Forward To Tax Incentives, Policies Geared Towards Commercialisation Activities and Priorities On Digitalisation

As Budget 2022 is set to be tabled on Oct 29, Head’s Up has reached out to industry players from the ecosystem to share their thoughts on the last Budget and what they hope to see in the coming Budget’22.

We will be bringing you more thoughts on a weekly basis from industry players on Budget 2022. So be sure to subscribe to stay updated and share Head’s Up to as many people you’d like.

In addition to this Budget issue, we also published another issue on Sentuh tackling the digital wave and pivoting to only become a stronger entity. So if you missed that, head on here to read further.

Till next Monday, stay safe and stay healthy!

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Bikesh Lakhmichand, CEO & Founding Partner of 1337 Ventures 

Malaysian companies embarking on digitisation initiatives can benefit from "Reinvestment Allowance" type of incentives especially if the purchase is from a Malaysian company. Generally there also were no major incentives in our industry for VC in Budget 2021.

1337 Ventures is a Venture Capital (VC) firm focused on pre-seed and seed-stage startups in Malaysia as well as South East Asia. We invest in early-stage startups, assisting startups in the pre-seed & seed stage through every growth phase. Our primary investments are technology solutions (social enterprises, commerce and other out-of-the-box solutions are also welcome!)

Su Ching, Chief Financial Officer of Leet Capital

Investors invest in companies using instruments with some form of return. Currently, most instruments are treated as a liability (per accounting standards definition) and the returns accrued to the investors (either in the form of dividends or interests) are added back to the tax computation of the Company.  

As a result, it makes this form of "financing" highly inefficient and ineffective from a financial standpoint as the Company has to "pay" taxes on the returns to the instruments. This makes venture cap funding extremely expensive from the issuer's (the Company) perspective.

We would really like to see returns accrued or paid by the Company to investors be allowed as a tax deduction. At the very least it will make venture cap funding less onerous for a company just starting out

2021 on the other hand was focused on getting companies financing to get back on their feet. Unfortunately, the mechanisms (especially the banks) that dispensed the funds were extremely slow defeating the whole reason for the financial aid. The budget did not directly aid our business but we saw how the snail pace modus operandi of the financial system hurt the businesses of our clients and associates. 

Leet Capital is an innovative & premier equity crowdfunding platform. Since being awarded our license by the Securities Commission in May 2019, we’ve been enabling investors to invest in highly vetted high growth businesses, whilst providing an avenue for high growth businesses to raise capital.

Wan Dazriq Wan Zulkiflee, CEO of ETHIS Ventures

For budget 2022, I think there should be more incentives and policies that gears towards commercialisation activities & investment opportunities for micro/small medium enterprises - this may include policies and weavers on taxation and even zero or low interests on new loans for a certain period of time. Given the backdrop of Covid- 19 challenges for the last two years, in doing so businesses can be eased with regards to financial burden as they look to get back on their feet and restart as economic sectors are looking to be in full motion again. Other tactical initiatives and policies could be on current enhancement and extension where it involves human capital and employability as well as monetary investments through the PENJANA initiatives as well as PENJANA Capital for high growth and scalable Malaysian enterprises

There was a lot of emphasis with Budget 2021 around digitalisation across sectors in government. While it is highly tactical and relatively small in comparison to other aids, it actually does help enterprises and businesses like us to be onboarded a bit more aggressively with the digital agenda. From ways of doing business or even to adoption of tech infra , I believe these have actually forge businesses to adopt digitalization drastically which found to be fruitful for businesses to steadfast in years to come where the dynamics of doing business primarily via online and digital platforms is becoming more eminent.

A pioneer of Fintech for Islamic finance, ETHIS Ventures is one of few firms licensed to operate investment platforms in multiple countries, most notably for P2P financing by the Financial Services Authority Indonesia and Equity Crowdfunding by Securities Commission Malaysia.

Ahmad Azuar Zainuddin, CEO of SATU CREATIVE

The slowdown of economic activities caused by the COVID-19 pandemic is causing Malaysian enterprises to hold back from hiring and even trim their headcounts. This situation not only impacts their growth trajectory but may even set their development back by a few years. Although the government has introduced a wage subsidy programme, to be meaningful, we believe the intervention needs to last at least 12 months per employee, if not longer.

We also hope that the government will continue to prioritise digitalisation in the upcoming Budget. Indeed, enterprises with digital capabilities have proven to be more resilient during this challenging period. In addition to digitalisation grants and capacity building programmes, we wish to see incentives to encourage businesses to hire tech-related talents.

An entrepreneur development consultant, we are at the frontline in supporting Malaysian enterprises during this challenging period. Through our engagement with the SMEs, we have observed first-hand the impact of the government’s efforts. Reviving economic activities amidst a backdrop of a global pandemic is indeed an unenviable task. 

While it has received plenty of criticisms, some fair or otherwise,  Budget 2021 has afforded some relief for our SMEs. Many enterprises benefit from measures introduced in the Budget, such as the loan moratorium, wage subsidy programme, and direct cash aid, to mention a few.

Satu Creative empowers Malaysian entrepreneurs and leaders to create positive impact by unlocking the power of creativity. Satu Creative consultants are subject matter experts who have led projects across industries and around the globe.

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Have any thoughts on the previously tabled Budget 2021 and looking to expect anything from Budget 2022. Share your thoughts with us via headsupnewsletter@gmail.com