Is digitalisation support on the cards for local mid-tier companies?

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Despite being 1% of all Malaysian firms, mid-tier companies collectively contribute no less than 30% of the country’s GDP.

However, there is another category of companies i.e. the mid-tier companies, that is sometimes overlooked, and this extends beyond the manufacturers and service-based mid-tier companies.

Despite being 1% of all Malaysian firms, mid-tier companies collectively contribute no less than 30% of the country’s gross domestic product . In their eagerness to grow, many mid-tier companies in emerging markets like Malaysia focus primarily on top-line growth or country-specific comparative advantages , and often neglect to build the foundations for future success.

More importantly, these multinationals have the use of technologies that they have developed over time. While there are various ways in which Malaysian mid-tier companies can grow, undeniably, most of these paths involve technology as a key enabler to assist with that growth. This is where the tax incentives can come in to lighten the burden of all Malaysian mid-tier companies. In return, Malaysian mid-tier companies should generate value add using the tax incentives proposed in Budget 2021. Here are some suggestions to be considered:Grant tax incentives to all Malaysian mid-tier companies that install and use collaborative technology such as project management systems or enterprise resource planning software.

Where mid-tier companies have embarked on strategy development programmes with credible external consultants, additional tax deductions should be given for that expenditure, to encourage all local mid-tier companies to take that initiative.

 

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