Since the Government is asking for feedback on the Budget 2022 proposal, I would like to offer my comment and I trust the Government will take appropriate action. 

On the first day after the Budget 2022 announcement, Bursa Malaysia took a beating. The FBM KLCI, which is a gauge of the 30 biggest companies on Bursa Malaysia, dipped by 2.2%. RM34bil of market capitalisation was wiped off from the stock market, 178 stocks went up, 996 stocks dropped with 327 unchanged.  

The biggest culprit is the prosperity tax increase from 24% to 33% for companies whose annual profit exceeding Rm 100 million. All investors especially institutional and foreign investors can foresee that practically all the larger capitalised companies will report reduced profit next year.

Among all the stock selection criteria such as NTA, cashflow, debt or healthy balance sheet, EPS etc the most powerful catalyst to push up stock price is profit growth prospect. Investors will not buy any stock if the company reports reduced profit.

As a result, many larger capitalised companies have move away from Malaysia as follows:

Hyundai had closed its Asia Pacific regional headquarters in Malaysia and relocated to Indonesia, after splashing US$1.55 billion (RM6.26 billion) in a new factory there. 

-IBM had closed down its Global Delivery Centre (GDC) in Cyberjaya and relocated to Singapore. 

-Shell moved its IT operations from Cyberjaya to India. 

-Citigroup exited retail banking in Malaysia, where Citi has been in for more than six decades and shifted to Singapore. 

-German IT company T-Systems sold its business in Malaysia and quit the country. 

-Toyota Motor Corp invested US$2 billion to develop EVs (electric vehicles) in Indonesia from 2019 until 2023 starting with hybrid vehicles. 

-Tesla and SpaceX boss Elon Musk has agreed to explore investment opportunities in the electric car battery – and even space launch station – in Indonesia following a talk with President Joko “Jokowi” Widodo. 

-Facebook, Lazada, Tencent, Byte Dance, Alibaba are some of the big names that have made Singapore as its regional hub, strategic location or data centre hub, leaving Malaysia behind.  

-Indonesia, the Southeast Asia’s largest digital market, has attracted investments from four American tech giants – Google, Microsoft, Facebook and PayPal. 

-Zoom Video Communications has chosen Singapore over Malaysia for their first R&D centre and new data centre in the region. 

-Google and Facebook had bypassed Malaysia for the Apricot 12,000-km internet subsea cable project due to the unresolved cabotage policy because of “unknown “

reasons.

Malaysia must wake up and make the necessary changes. I trust the Government will take appropriate action.