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FMM hails Budget 2024 as 'well-balanced, prudent and forward-thinking', but disappointed it did not address sluggish trade growth

FMM In The News: THE EDGE MALAYSIA, KUALA LUMPUR, October 13, 2023 - The Federation of Malaysian Manufacturers (FMM) is of the view that Budget 2024, which it noted was drafted against a still uncertain macro backdrop, is overall a "well-balanced, prudent and forward-thinking" plan that rightly focused on more concrete fiscal reforms, with a notable effort and step in the right trajectory to restore public finances and strengthen the nation's collective resilience.

It also lauded the government's recognition of the importance that the manufacturing sector plays in the overall economic growth of the country and views positively the allocation of RM200 million in 2024 as the initial fund to drive the New Industrial Masterplan 2030 (NIMP2030) to elevate the sector as the country’s engine of new growth. 

"We also welcome the focus and priority given to high-growth high-value (HGHV) sectors and incentives, such as the tiered reinvestment tax incentives introduced to support the contribution of these sectors to the overall GDP of the country. 

"The introduction of the Investment and Trade Coordination Action Committee is also a step in the right direction to further attract more HGHV related investments both foreign and domestic. The focus on technology and innovation to drive new economic growth which is supported by research, development, commercialisation and innovation (R&D&C&I) which will enable Malaysia’s target to be in the Top 30 countries in the Global Innovation Index by 2026 is much welcomed. In particular the RM510 million allocation for R&D funds under the Ministry of Science, Technology and Innovation (Mosti) and the Ministry of Higher Education (MOHE) and the push for greater collaboration between public universities and industry will further drive initiatives in R&D&C&I," the federation's president Tan Sri Soh Thian Lai said in a statement.

The federation also commended the various initiatives that the government outlined to support the transition to a low-carbon economy, and its continued emphasis on automation and digitalisation, as well as the development of human capital.

"FMM strongly supports the government’s efforts to continue to emphasise on automation and digitalisation by providing RM900 million funds for SMEs under BNM to increase business productivity through automation and digitalisation. The digital transformation of SMEs is vital in order to grow our economy as it would help SMEs boost productivity and competitiveness. The interest rate should be low enough, for example 2% rate or lower, to assist SMEs to ease their current cost burden in the environment of slow economic growth," Soh said.

Nevertheless, Soh said the federation was disappointed that the national budget failed to address the issue of sluggish trade growth and provide specific assistance to support trade for industries to expand their market access. It is also disappointed that its call for the establishment of a National Automation Fund with an initial funding of RM500 million that would be topped up with the challenging of foreign worker levy collection, was not considered.

On that note, Soh suggested that the government consider a new tax incentive for the establishment of manufacturing AI and robotic systems at the production floor, by providing an accelerated capital allowance up to a qualifying expenditure of RM5 million for SMEs that implement manufacturing AI and robotic systems starting January 1, 2024.

"FMM would also like to highlight that incentives for Industry 4.0 adoption is needed and more government resources should be allocated to promote and encourage Industry 4.0 and digitalisation in Malaysia especially for SMEs," Soh added.

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