Malaysia extends tax relief on tech purchases, accelerating digitalization

25, Jan. 2021

Video meeting with colleagues while working from home has become a norm in Malaysia and other countries because of the pandemic. Global sales of laptops, workstations and other devices have seen robust growth in 2020. (Photo by Chris Montgomery)
Video meeting with colleagues while working from home has become a norm in Malaysia and other countries because of the pandemic. Global sales of laptops, workstations and other devices have seen robust growth in 2020. (Photo by Chris Montgomery)

By Charlotte Chong

KUALA LUMPUR, NNA - Malaysia has rolled out its fifth stimulus package worth $3.7 billion (15 billion ringgit) to help save jobs, businesses and lives as COVID-19 cases soared, forcing the country to impose a state of emergency till Aug. 1 and a second lockdown after three weeks into 2021.

Struggling to contain the third wave of the pandemic since October with four-digit jumps in daily infections, the government launched a slew of 22 initiatives to combat the deadly virus, protect people's welfare and support business continuity.

Among the measures is an extension of a special tax relief of up to 2,500 ringgit on the purchase of mobile phones, computers and tablets by one year until the end of 2021 to encourage companies especially small businesses to introduce work from home arrangements.

In announcing the latest round of relief package on Jan. 18, Prime Minister Tan Sri Muhyiddin Yassin noted that many Malaysians have already been relying heavily on technology in the 'new normal' and that various government incentives and tax relief measures have successfully stimulated the economy in several sectors.

The announcement has been welcomed by businesses and Malaysians, who also shared with NNA their suggestions on how people could be helped to adopt digitalization faster.

Electronic retail chain Senheng Electric (KL) Sdn. Bhd. told NNA that laptop and tablet sales jumped 90 percent and 112 percent respectively last year. Peripheral devices saw sales increasing by more than 50 percent.

Its founder and managing director, Lim Kim Heng, said the tax relief is indeed the right move to support those who have to work from home. However, the government should provide assistance to students from poor households to buy a laptop for learning.

“The government should prioritise children from the bottom 40 percent. I believe there are still a lot of students not equipped with a laptop for studies at home,” Lim told NNA.

He suggested that the government allocate discount vouchers to low-income households and help import laptop models with affordable price tags of around 1,500 ringgit specifically for these students.

The average family buying laptops for their children would usually go for entry-level ones which cost up to 2,500 ringgit or a tablet PC as an alternative device.

Adults working from home would usually opt for laptops with faster speed and other enhanced capabilities, Lim said, adding that the sharp demand last year also led to a supply shortage for laptops, tablets and printers.

According to technology market research firm International Data Corp. (IDC), worldwide shipments of desktops, laptops and high-efficiency workstations rose by 13.1 percent to 303 million units last year after a decade of dismal performance.

Welcoming the tax relief extension, Gaurav Bhasin, CEO of e-commerce platform Mudah.my Sdn. Bhd., said the measure could encourage Malaysians to upgrade their tech devices by selling their older models. It will not only generate some funds for sellers but also help others to gain access to these devices at a lower cost, he told NNA.

Koong Lin Loong, SMEs committee chairman of Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), said the special tax relief introduced in July last year has enabled many people to work remotely and contributed to the digital transformation in the country.

However, he feels that the scheme should also cover essential peripherals such as the video camera and mouse. In addition, assistance should also be given to non-taxpayers working in the gig economy such as delivery men who would need better smartphones to work efficiently, said Koong.

He believes that the demand for tech devices will continue to soar as "most companies will be fully or partially digitalized and the amount of Facebook live events and webinars will continue to increase.”

Concurring, Areca Capital Sdn Bhd CEO Danny Wong Teck Meng said the tax relief has its limitations as it will not result in big enough savings or benefit non-taxpayers, he said.

However, he believes the trend of digitalization will continue to surge ahead over the next five years, especially in banking and insurance.

“COVID-19 has escalated the process of digitalization. For those companies which are already digitalized, they will move faster. But for those which have not, they will have to push this agenda forward,” said Wong.

Cherish Pang, an assistant sales manager in the retail and enterprise division of CIMB Bank, told NNA that work has become easier after her team switched to using tablets provided by the company in May last year after the government implemented the first lockdown under a movement control order (MCO) in March.

“Our customers had to sign stacks of application forms before the MCO, but now the documents are automatically uploaded to the system after they sign on tablets. It is definitely faster and less of a hassle,” she added.

Taking advantage of the tax relief, Ina, an accountant and mother of four children aged between 10 and 17, spent 2,500 ringgit on a new laptop for them to take online lessons.

The challenge is for them to take turns to use the laptop and mobile phones for their online classes, she told NNA.

“I think the tax incentive is useful. At least it helps with my expenses,” Ina added.

Meanwhile, the current lockdown under a second MCO has allowed more economic activities to operate. Also, there is no curfew under the emergency.

So, the Malaysian prime minister does not expect a severe impact similar to the second quarter of 2020 after the first lockdown was enforced.

Said Tan Sri Muhyiddin Yassin, "I would like to emphasise once again that this declaration of emergency is merely aimed at curbing the spread of the COVID-19 pandemic which is now the biggest threat to the socio-economic development of the country."

The latest round of stimulus measures will cover the country's COVID-19 vaccination programme and strengthen the healthcare system apart from various assistance schemes across the board for the less fortunate, students, borrowers, transport drivers, employers and businesses.

Meanwhile, analysts are projecting a positive 'U-shaped' or 'V-shaped' recovery for Malaysia this year.