NOVEMBER 5 — AIMS Data Centre hopes that the Government will look into providing more incentives and exemptions for IT players, both local and foreign, in order to grow the industry in Malaysia.
In recent years, international players have favoured Singapore over Malaysia as the destination to set up their regional hub. Facebook’s announcement of its plan to build its data centre in Singapore follows closely on the heels of Google. A concerted effort is needed in order to put Malaysia back on the map.
In line with the Government’s vision to be a developed digital nation, tax leniency should be granted to the online and digital sectors if there are no additional incentives. Instead of granting tax privilege to local players, the local market should be made more competitive to create a more conducive business environment.
Local tech players could seek customised incentives or support from the Government if they can table constructive solutions to not only bring in investment, but also knowledge transfer and national infrastructure upgrades.
Another factor that will severely impact both foreign and local players is the time limit placed on carrying forward tax relief to a maximum of seven years. While established foreign players may be able to recover capital-intensive investment within two years while a local player might need three to four years minimum. This move could potentially become a hindrance to companies looking to set up a base in Malaysia and is something the Tax Reform Committee should further fine-tune to make it friendlier to business owners.
As data centres are crucial to the growth of a digital nation, we also hope the Government will introduce lower power tariffs, citing high energy costs as a major hurdle for companies looking to enter Malaysia. Lower power tariffs will renew interest from larger companies to enter Malaysia.
While the lower tariffs and tax exemptions are a step in the right direction, we believe that much more can be done to promote the growth of a digital economy, including prioritising more customised incentives for important pillars of the digitalisation movement.
We’re seeing a gradual increase worldwide in digital practices such as cashless payments and hardware virtualisation. To keep up with the pace of advancement, we need special tax incentives and exemptions to reduce the burden of digital industry players to encourage them to invest in, explore and adopt these technologies.
*Chiew Kok Hin is head of AIMS Data Centre, which is Southeast Asia’s leading carrier-neutral data centre and managed services provider.
**This is the personal opinion of the writer and does not necessarily represent the views of Malay Mail.
