Impact POSITIVE

Measures

• RM800m allocated to provide RM100 e-wallet credit for 8m people in the M40 group with annual income below RM100,000.

• RM400m allocated to continue the e-Pemula scheme, which will benefit 2m youths aged 18 to 20, and full time students aged 21 and above.

• RM100m allocated to support development of local technology companies.

• Khazanah will invest RM1b under Dana Impak in 2023, of which RM23m is for investments in locally owned high-tech companies.

• Government will expand tax deductions for companies to include the listing cost of tech-based companies on the main market of Bursa Malaysia.

• RM6.7b allocated for technical and vocational education training (TVET) training and education via the National TVET Council.

• Additional tax deductions for employers who hire former residents of juvenile institutions.

• RM73m to improve Malaysia's cybersecurity by strengthening monitoring, detection and reporting of threats, as well as building cyber forensic system capabilities

Comments

• We are positive on the allocation of e-money incentives for the M40 group and youths worth RM800m and RM400m, respectively, which will further accelerate the adoption of cashless transactions.

• The government’s focus on grooming local tech start-ups via its RM100m allocation as well as RM1b via Dana Impak (Khazanah’s venture capital (VC) arm) is timely as global VCs (e.g. 500 Global, Prosus Ventures) are recently placing more focus in the South East Asia region.

• TVET training will be very helpful in addressing the lack of local skilled workers in the tech industry. In addition, the tax deduction for hiring juvenile institutions will be beneficial for the labour-intensive EMS space.

• As the world evolves into a data-centric society, the emphasis on beefing up cybersecurity will be very important for Malaysia to be recognised by MNCs as a safe place for taking on high-tech, intellectual property (IP) sensitive manufacturing as well as a preferred choice to set up data centres.

Source: Kenanga Research - 11 Oct 2022