IPOH, Oct 12 — The government should have reduced corporate tax to stay competitive against its Southeast Asian neighbours, Federation of Malaysian Manufacturers (FMM) Perak chairman Datuk Gan Tack Kong said after yesterday’s Budget 2020 announcement.
He said Malaysia’s corporate tax is still at 25 per cent when other countries in the region had either reduced it, or were planning to do so.
“A bit disappointing is the fact that corporate tax has not been reduced in the Budget. Singapore and Thailand are already offering 20 per cent, while Vietnam and Indonesia are planning to reduced it to 17 per cent in the next five years on a gradual basis,” he told Malay Mail when contacted last night.
“We understand that as much as 45 per cent of revenue is generated from corporate tax. But in order for Malaysia to stay competitive, I think we should lower our corporate tax,” he added.
Gan also feels the government should reintroduce the goods and service tax (GST) instead of keeping the sales and service tax (SST).
“Initially, the government had looked into the possibility of changing to GST again after getting feedback from the private sectors, especially from the industries.
“I think the GST would be the way to go right now. It is more transparent and cleaner and at the end of the day it would benefit all,” he said.
In tabling next year’s Budget at Parliament, Finance Minister Lim Guan Eng said the government has no plan to reintroduce the GST despite trade tensions weighing on the economy.
Separately, the Perak chairman of the Malaysian International Chamber of Commerce and Industry, Datuk Lim Si Boon, is sceptical that the federal announcement to lower the threshold of urban high-rise properties would bring foreign buyers to Perak.
Si Boon said this is because stratified properties in the state are priced below RM600,000.
“Perak is supposed to have a large overhang of apartments and condos under PR1MA housing scheme, which are less than RM400,000 per unit. We hope the rent-to-own plan helps in this matter.
“However, in the case of private condos, Perak still doesn’t have many over RM600,000. Those states which will be benefit from the reduction are like Kuala Lumpur, Penang and Johor,” he said.
Guan Eng also announced that the government will lower the threshold on high-rise property prices in urban areas for foreign ownership from RM1 million to RM600,000 in 2020.
He said that the move will work towards reducing the supply overhang of condominiums and apartments, which amounted to RM8.3 billion as at the second quarter of 2019.