2022 Budget to Catalyse More Inclusive and Sustainable Nation Building in the COVID-19 New Normal

The Malaysian Institute of Accountants (MIA) welcomes the inclusivity and sustainability themes of the 2022 Budget which are aligned with the global momentum of ESG (environment, social and governance) and the 17 UN UN Sustainable Development Goals (SDGs).

“As the regulator and developer of the accountancy profession, the MIA has been emphasising strongly on the adoption of ESG and sustainability among accountancy professionals and our members in order to help drive good governance and support sustainable business and economic development,” stated MIA President Dr. Veerinderjeet Singh in an initial response to the Budget.

Given the size of the Budget which is the largest in the nation’s history, good governance and monitoring will be vital to ensure that desired outcomes are achieved, and leakages plugged. “MIA continually advocates for budgetary governance to ensure that the spending is prudent, without wastage and achieves the desired outcomes,” stressed Dr. Veerinderjeet.

“As finance professionals, accountants especially those in the public sector can play a key role in monitoring the implementation of projects and ensuring the accountability and transparency of public spending,” continued Dr. Veerinderjeet, who welcomed the Budget’s announcement of the public expenditure review in collaboration with the World Bank.

The MIA also praised the Government’s efforts to engage inclusively and obtain feedback on the Budget proposals from different quarters. “We are delighted that some of our key proposals were incorporated into the Budget, especially those related to upskilling and ESG advocacy,” said Dr. Veerinderjeet. Specifically, MIA’s recommendation for increasing the tax relief for professional development and upskilling courses has been incorporated, along with a recommendation for a tax relief on course fees for programmes (including accountancy, finance and ESG) offered by approved professional bodies.

MIA CEO Dr. Nurmazilah Dato’ Mahzan also lauded the Budget’s focus on sustainability and inclusivity. “The measures outlined in the Budget are clearly meant to stimulate the economy, enhance the wellbeing and growth of diverse stakeholders, and drive long-term sustainable development reforms. In line with our nation building purpose, MIA is ready to deploy its expertise to support the implementation of the Budget proposals. We look forward to contributing especially in the emerging areas of climate change and sustainability, which is aligned with the global accountancy profession’s direction as MIA strives to enhance the future relevance of the accountancy profession.”

In its preliminary analysis of the Budget, MIA believes that the Institute and the profession will be able to add value in the following areas:

Tax-Related Concessions

To reduce the burden of taxpayers, the Budget has proposed the following:

• Special Voluntary Disclosure Programme by the Royal Malaysian Customs Department (RMCD) to be introduced, with remission of penalty of 100% for phase 1 and 50% for phase 2.
• No real property gains tax on disposal of chargeable assets by individuals, permanent residents and non-corporates from the sixth year of holding the property.

SDG-related: Making Malaysia a Carbon-Neutral Country by 2050

MIA has focussed on positioning the profession as a leader for ESG and climate governance in line with the stance of the International Federation of Accountants. MIA supports the Government’s aspiration of making Malaysia a carbon-neutral country by 2050 through the introduction of the following:

• Launch of Voluntary Carbon Market under Bursa Malaysia as a voluntary platform for carbon credit trading between green asset owners and other entities, influencing transition towards low carbon practices.
• The allocation of RM1 billion from Bank Negara Malaysia to match funds from participating financial institutions, facilitating micro, small and medium enterprises (MSMEs) in adopting sustainable and low-carbon practices such as usage of sustainable raw materials and renewable energy.
• Issuance of Sustainable Sukuk in Ringgit Malaysia valued up to RM10 billion to be channelled to eligible social or environmental-friendly projects.

Inclusivity for Improved Corporate Performance and Stakeholder Representation

MIA is committed to championing inclusivity through the increased participation of women leaders in C-Suites and corporate boards. MIA supports the gender equality goal whereby the Government through the Securities Commission Malaysia will make it compulsory for public-listed companies (PLCs) to appoint at least one female director to the PLC boards by 1 September 2022.

Education and Upskilling for Higher Value Jobs

The Institute applauds the various initiatives aimed at strengthening the sustainability and future relevance of the nation’s talent pool, which will support sustainable economic and social development, namely:

• The allocation of RM6.6 billion for education facilities under MARA, UiTM and Yayasan Peneraju, which among others focuses on upgrading quality of education programmes from Diploma to Degree level as well as producing more Bumiputera professionals.

• Tax relief for expenses to upskill has been increased from RM1,000 to RM2,000 until 2023 and those who attend courses related to professional qualifications will be entitled to tax relief of up to RM7,000. The inclusion of approved professional qualifications that include accounting and ESG bode well for the adoption of sustainability within the accountancy profession as well as positioning accountants as climate change and sustainability leaders.

• The allocation of RM52.6 billion for the Ministry of Education, which is the largest allocation from the Budget for this year, and the allocation of RM14.5 billion for the Ministry of Higher Education to strengthen education quality. This is critical for future proofing accounting graduates as well as accountancy academicians via Train the Trainer initiatives. In addition, the Institute hopes that the allocations will help to enhance the incorporation of emerging technologies in the programmes offered by higher learning institutions (including the accounting programmes) to ensure that future graduates are equipped with technology knowledge and awareness.

• The allocation of RM6.6 billion to further enhance the Technical and Vocational Education and Training (TVET) initiatives will produce more quality graduates who can support the roles and functions of accountants, thereby further improving the ecosystem of the accountancy profession.

• The allocation of RM450 million to supply B40 students from Institutions of Higher Learning with a tablet will facilitate them in attending online courses and undergoing online assessments. The digitalisation initiative, which is expected to benefit 600,000 undergraduates from B40 families, is in line with the emphasis on technology adoption and acceleration in the wake of the COVID-19 pandemic and the Industrial Revolution 4.0 (IR4.0).

Capacity Building and Social Responsibility

MIA fully supports the incentives in the Budget that promote capacity building and social responsibility among corporates, including the extension of the scope to all study fields for double deductions to corporates that provide scholarships to students of higher educational institutions. This is in line with the proposal submitted by MIA that corporate contributions to fund professional studies be made eligible for double deduction and/or other tax incentives, to incentivise corporate social responsibility.

Personal Reliefs, Support for Household Wellbeing

In line with the 2022 Budget theme of “A Prosperous Malaysian Family,” the Institute welcomes the generous reliefs and incentives that will alleviate the burden of individuals and households, including:

• Personal relief for employees and tax deduction for employers on the cost of COVID-19 booster shots.
• Tax relief of RM2,500 for the purchase of smartphones, computers and tablets to be extended to 31 December 2022.
• Personal relief for contributions to the Social Security Organisation (SOCSO) to be increased to RM350.   

Digital Transformation

Digital transformation especially for smaller-sized organisations will be critical to ensuring their business continuity in an environment of digital disruption. As a firm advocate of digitalisation for the profession and businesses, MIA welcomes the following measures to support digital transformation:

• RM300 million allocated under “Skim Geran Pendigitalan SME dan Geran Automasi” to support automation and modernisation activities.
• RM700 million allocated to enhance digital connectivity which will facilitate digitalisation of SMPs and SMEs.

Incentives and Reliefs Benefiting the SMEs and SMPs

As small and medium practices (SMPs) and small and medium enterprises (SMEs) are a crucial category of the profession and business, MIA welcomes the Budget initiatives that support their financial wellbeing and business continuity, including:

• SMEs allowed to postpone income tax instalments for six months until 30 June 2022.
• Zero interest scheme for informal and micro-SMEs under TEKUN, with a provision for funding of up to RM10,000 with a moratorium of up to 12 months.
• BSN and Agrobank to offer micro financing of up to RM75,000 at zero interest for the first 6 months with a moratorium of up to 6 months.

Conclusion

MIA is committed to supporting the initiatives proposed in the Budget which will strengthen the inclusivity and sustainability of Keluarga Malaysia and the nation for the digital and IR4.0 economy.