Citing the example of Grab, Geoffrey Williams pointed out that the delivery service provider has created almost 280,000 jobs, which he termed as “earning opportunities”, and in the process brought a RM10 billion value-add to the economy despite it being viewed as “low-value” gig work.
On the other hand data centres, which are often considered “high-value”, will not offer so many jobs, he told FMT.
Williams, who is also a policy specialist, said this to underscore the importance of a clear definition of “high-value activities” under the New Investment Incentive Framework (NIIF) set to be implemented this year.
“This is crucial to ensure that Malaysia attracts the right type of investments, those that its economy and people need and will benefit from,” he said.
Williams pointed out that only 300,000 jobs will be created by 2030 under the New Industrial Master Plan, showing that “low-value” investments could potentially create more employment opportunities and, along the way, greater value-add to the economy.
Deputy investment, trade and industry minister Liew Chin Tong, when announcing that the NIIF will be implemented in the third quarter of this year, said the government will focus on high-value activities and economic spillover effects when assessing investment proposals.
Liew said this is an improvement over existing practices or mechanisms that offer incentives based on product type or activities.
He said the focus now will be on “Made by Malaysia” rather than “Made in Malaysia” products.
Williams also called for a public bidding system for companies to submit investment proposals to ensure transparency in the selection process and to curb patronage.
“A patronage cascade is when a policy is designed to have funding passed down through projects, programmes and packages from the top to pre-approved recipients.
“Patronage is a bad thing because money goes to well-connected people rather than to the best people based on competitive tendering and merit,” he said.
Fariq Sazuki, of think tank Bait al-Amanah, said the government should ensure that new investment incentive schemes benefit big and small firms proportionately.
He said previous incentive schemes had mostly benefited larger companies, given that small and medium-size enterprises (SMEs) often lacked the awareness or resources to comply with requirements to obtain such benefits.
“The government should avoid offering incentives that disproportionately favour large firms, as this can hinder the growth of SMEs and limit broader economic benefits,” Fariq said.
‘Made by Malaysia’ focus could cause patronage
Williams warned that the focus on the “Made by Malaysia” concept could lead to patronage in project funding in the endeavour to birth a “local champion”.
“The idea is ill-defined and the ‘local champion’ target comes with the risk of funds being channelled to vested interest through patronage,” he said.
On the other hand, Fariq said the NIIF has the potential to create high-paying jobs and grow wages if there is an allocation earmarked for talent development and capacity building in high-value industries.
He also suggested adding tax incentives for activities in research and development as well as education, but urged against continued massive tax cuts for foreign firms to set up operations in Malaysia.
“Malaysia should stop promoting itself as a tax holiday destination because this can be ineffective and abused, especially if loss-making assets are built in Malaysia,” he added.