Employers, unions want lower living and business costs in Budget 2018

Sharon Tan

While calling for civil servants to get salary increases twice a year, Cuepacs also wants the government to control rising prices. – The Malaysian Insight file pic, October 26, 2017.

LOWERING the cost of living and business are two items at the top of industry groups and unions’ Budget 2018 wish list.

Industry groups want more incentives and aid to take advantage of technologies in the “fourth industrial revolution” (Industry 4.0) so as to boost productivity and competitiveness.

Two of the largest business groups in the country, the Malaysian Employers Federation (MEF) and the Federation of Malaysian Manufacturers (FMM) are on the same page as public sector union Cuepacs when it comes to putting more money in the hands of consumers.

“The government should address the high cost of doing business. The increasing cost of living should also be addressed quickly,” MEF told The Malaysian Insight.

FMM said corporate and personal tax rates should be reduced for the country to be competitive. Malaysia’s current corporate tax rate stands at 24%, as compared to Thailand’s 20% and Singapore’s 18%.

“We hope the government will restructure personal income tax bands so as not to hit higher tax rates too quickly,” FMM said in a statement.

Cuepacs, meanwhile, wants civil servants to get two salary increments a year to cope with the rising cost of living.

Cuepacs deputy secretary general Adnan Mat said the pay hikes should be carried out in January and July.

“The government should also control the prices of things because the cost of living is on the rise. Our salary has only gone up by 3% to 5%, while prices of foodstuff and other things have gone up between 8% and 12%,” said Adnan.

Cost of living allowances (Cola) should also be standardised at RM300 for all civil servants, while the housing allowance should be increased to RM450 from RM300 for those at the lower end of the salary scale.

Rising cost of business

The rising cost of doing business is the main concern of private sector employers.

“The issues include the high cost of recruiting foreign workers, the Employment Insurance Scheme (EIS) proposal, productivity improvements, and policies on human resource development and management,” MEF said.

The group wants the government to abort the Labour Consistency Plan (LCP) that was part of the now defunct Trans-Pacific Partnership Agreement (TPPA).

The LCP was to reform and improve local labour laws so that they complied with TPPA standards.

The MEF also hoped that Budget 2018 will include measures to ease the legal and financial burden of companies that want to upgrade their operations and invest more in training their staff.

These upgrades, MEF said, would reduce the dependence on foreign workers.

For instance, there should be better tax incentives for companies that want to automate their operations.

Transforming manufacturing

High on FMM’s wish list is a RM1 billion transformation fund under the National Roadmap for Industry 4.0 to enhance productivity and innovation.

FMM also hopes there would be more Industry 4.0 centres and support for local companies that are involved in robotics.

“The government should support research  and development by extending automatic double deduction to all companies indefinitely. It can introduce an R&D voucher scheme to encourage and support small and medium enterprise’s innovation,” said FMM.

The FMM also submitted a list of other concerns that it hoped would be addressed:

* A review of the current practice of scanning all import-bound containers at Penang Port as it is causing congestion. 

The Customs Department, however, has claimed the ruling has foiled more than 6,000 smuggling and tax evasion attempts, resulting in seizure of contraband worth some RM425 million.

* A return to the original fee structure for the MIDA e-Tariff System. The fees were raised by 189% from RM110 in April 2016 to RM318 in last March. 

* Strict enforcement on illegal trade.

* Increase the paid-up capital of SMEs to RM10 million.

* Synchronise the definition of SMEs with other Asia-Pacific countries.

* Better engagement with industry associations when crafting policy.

* Reduce investments by government-linked companies, which are crowding out private players. – October 26, 2017.

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