Budget 2009 is considered generic from the information and communications technology perspective. Compared to previous Budgets, it lacks specific incentives that industry players had hoped for to address current challenges. Here are comments from some key players.

David Wong Nan Fay, chairman, Association of the Computer and Multimedia Industry Malaysia (Pikom)
Budget 2009 is people-friendly, but offers limited incentives for the development and growth of the ICT industry. While we are excited about the key offerings in the Budget that the industry can look forward to, certain critical areas have not been addressed.
While the Budget places a key thrust on developing quality human capital, no specific incentive addresses the ICT industry. This is a serious concern, as skill shortages remain acute in the industry. Unless it is addressed aggressively and decisively, it will lead to the erosion of our competitive edge.
Similarly, there is nothing specific to give a boost to business process outsourcing, despite it being recognised as an area of growth. Pikom’s proposals for incentives for the Malaysian outsourcing industry as well as tax rebates on PC purchases also have not been addressed.

Woon Tai Hai, executive director and head of business performance services, KPMG
The ICT industry had hoped for more specific incentives and initiatives in Budget 2009 that would cater to current industry woes. For instance, much still needs to be done to keep Malaysia at the forefront of the shared services and outsourcing sector and to cater to the ICT brain drain issue.
Directly, the 100 per cent capital allowance should spur investments in the ICT field, especially among SMEs (small and medium-sized enterprises). The double deduction on expenses incurred by employers when they send employees for postgraduate courses in ICT is also positive, in line with the industry’s hope that more skilled ICT professionals are developed in the country to compete with the likes of India and the Philippines.
Indirectly, the Budget should spur the industry through reduction in personal income tax rates. This should increase the disposable income of households for discretionary personal spending, which is likely to result in sustained demand for ICT gadgets and equipment.

Jaygan Fu Ponnudurai, associate analyst, personal system research, IDC Malaysia
Budget 2009 leans towards human capital development. This will indirectly encourage ICT adoption in Malaysia in light of the Government proposing to extend double deduction to employers sponsoring employees to pursue postgraduate studies in areas such as ICT, electronics and life sciences.
The Accelerated Capital Allowance on ICT for SMEs will lead to increased IT hardware, software and services adoption. And this will lead to competitive offerings from SMEs to ensure sustainable business development in years to come.
The Government also encouraged a culture of CSR (corporate social responsibility) by granting tax deductions to private organisations that are involved in projects that preserve the environment.

Kam Soon Siew, ICT consulting director, Frost & Sullivan
Budget 2009 should spur SME spending on ICT capital investments. But the impact would have been better if spending on software and systems had been included under the Accelerated Capital Allowance definition.
Tax exemption for mobile phones, telephones and Internet expenditure also should promote ICT adoption among the Malaysian workforce.
But there is a need to clearly articulate the implementation mechanisms, as some companies may not be as proactive in promoting such plans as aggressively as compared to, say, the individual tax incentive scheme.
One area not addressed in Budget 2009 is efforts, incentives or allocation for the digital content industry, which was identified as a potential growth area in last year’s Budget. Some continuity in promoting this sector would help sustain the overall digital content industry and promote growth in this sector.

Johnson Khoo, managing director, Hitachi Data Systems Malaysia
We are disappointed that Budget 2009 did not place more emphasis on ICT as a driver for the country’s economic growth. There is a critical need for the Government to double its efforts and incentives to attract more ICT investments, especially in relocation of shared services and outsourcing operations and data centre farms to Malaysia. Such large-capital, long-term projects are essential to maintain Malaysia’s ICT growth.
Having said that, we laud the Government’s continued emphasis on quality human capital development with an allocation of RM47.7 billion for education and training. We also appreciate the proposal to extend double deduction to employers sponsoring employees to pursue postgraduate studies in ICT, as this is a step in the right direction in encouraging workers to further augment their skills.

Ryaz Patel, country manager, sales and marketing, Intel Malaysia
Intel had hoped for more emphasis on ICT in Budget 2009. We had wanted more incentives to reduce infrastructure costs, including the removal of import duty and sales tax exemptions on broadband equipment and consumer access devices. Such a move would accelerate broadband deployment across the nation. The deployment of broadband beyond urban areas would help drive greater PC penetration and narrow the digital divide.

Vijay Bala, chief financial officer, Microsoft Malaysia
Microsoft Malaysia is heartened about the continued emphasis placed on the well-being of the rakyat, in particular, strengthening human capital initiatives to empower the rakyat to master knowledge and skills which are essential in today’s globalised economy. The sums allocated for the enhancement of training and skills programme (RM2.4 billion), improving the quality of education (RM31 billion) and the expansion of the Pintar programme will go a long way towards nurturing Malaysia’s next generation of leaders.
The Accelerated Capital Allowance for local companies to claim for ICT equipment in one year (instead of every two years) serves to encourage more companies to invest in new technology such as unified communications and mobility. This is a positive step forward for local businesses, as technology is all about empowerment – tools to bring out the best ideas and innovations and further encourage automation for a broad set of industries such as manufacturing.

Ou Shian Waei, managing director, IBM Malaysia
The Government continues to place importance on ensuring the development and supply of necessary human capital to cater for economic growth. Our regional shared services centre alone has created over 2,000 job opportunities in Malaysia.
IBM Malaysia welcomes the tax exemption on excellent service, as this will assist us in continuing to drive innovation and productivity. We also applaud the Government’s appreciation of how ICT can enable SMEs to achieve overall business goals. An array of new capabilities has come of age to drive innovation, and SMEs should leverage on ICT to create innovative business products, services and operations.

C.P. Loo, managing director, Sun Malaysia
We welcome the Government’s decision to shorten the claimable period from two years to one year under the Accelerated Capital Allowance on expenses incurred on upgrading or replacing ICT equipment. This enables businesses to remain competitive and helps to increase productivity.
We are also heartened by the Government’s support for SMEs so far. Apart from the RM1.2 billion financing facilities allotted for SMEs to upgrade their processes or ICT equipment, SMEs should find the Accelerated Capital Allowance and the ability to claim full capital allowance on all small-value assets within a year as positive news. These benefits not only will facilitate the cash flow issue faced by SMEs, but also stimulate the domestic economy and encourage cross-border economic activities.
Moving forward, Sun would like to see subsidies allocated for software developers as an encouragement to commercialise their ideas in the global market. We also hope to see additional rebates for companies which seek ways to reduce power and consumption costs and adopt “green” technology within their organisation.

Kumaran Singaram, managing director, Cisco Malaysia
We are encouraged by the Government’s move to further enhance the role of SMEs in the economy. The funding and aid available to SMEs through Bank Negara Malaysia to assist in the modernisation of their operations will spur SMEs to compete on the global stage.
Moving forward, we hope to see greater adoption and implementation of world-class technology and infrastructure for a more sustainable future. Cisco is committed to help the Government achieve this vision by using the network as a platform, and to help people work, live and learn in an environmentally friendly way.