Malaysian government promises clearer communication over tax changes
The Malaysian government is looking to enhance communication among stakeholders before introducing new tax measures, Finance Minister Amir Hamzah bin Azizan has said.
The service tax rate increase from 6% to 8% implemented from 1 March, was based on discussions with various stakeholders, he said. “The service tax rate increase from 6% to 8% was introduced and announced in Budget 2024… there was a lot of consultation done with various groups to ensure that we figured out the key things,” he told reporters after the launch of the Government’s SJPP guarantee scheme and first-time home buyer initiative SJKP.
Amir Hamzah said the key element of the service tax rate increase is to generate higher revenue for the government. However, he added, while the government recognises the need to increase its revenue, it is important to “limit the damage” to stakeholders and those who are involved.
Amir said the government will strive to enhance communication among its stakeholders affected by the service tax hike.
“At the same time, as anything that goes out, sometimes communication could be a little bit better and we recognise that we should do a little bit more on that side,” he said.
The minister said the higher revenue collected from the revision of the service tax will be redistributed to help those in the lower end of society.
He cited examples such as the various programmes conducted last year to enhance infrastructure – upgrading of school toilets and improving the living conditions or quarters of government servants, including those in the police and armed forces.
“This redistribution based on an increase in revenue is actually very, very good, because it is actually about helping society at large,” he added.
During the launch, Amir Hamzah announced that both the SJPP and SJKP initiatives have started accepting applications from financial institutions which offer special government guarantee schemes tabled in Budget 2024 to assist micro, small and medium enterprises (MSME) as well as first-time home buyers who do not earn fixed income.
The SJPP guarantee is part of Budget 2024’s aim to provide financing worth RM44 billion to MSME this year.
Amir Hamzah said SJPP has been given approval to provide financing guarantees for up to RM20 billion (£3.3 billion) and is expected to guarantee up to 90% of the financing for MSME, particularly those involved in the green economy, advanced technology, healthcare and halal businesses.
“So far, SJPP has guaranteed more than 100,000 MSME with a total disbursement exceeding RM75 billion,“ he said.
Greenwashing a cause for global concern
Greenwashing is becoming a point of concern globally as the investment into environmental, social and governance (ESG) funds has swelled into the trillions, according to Malaysia’s Securities Commission chairman Awang Adek Hussin.
He said that IOSCO, the grouping of securities regulators of which the Securities Commission is a part, highlighted that greenwashing remains a fundamental market conduct concern that poses risks to both investor protection and market integrity.
“Taken more broadly, greenwashing can undermine the fundamental trust in sustainable finance.
“If investors lose trust, the financing required for a just transition can be dissipated,” he said in his opening address at the IIC-SIDC Corporate Governance Conference 2024.
Awang Adek said at the end of 2023 there were 68 sustainable and responsible investment (SRI) funds in Malaysia, with a total investment of RM7.7 billion.
He said investors should evaluate the ‘governance’ aspect in ESG first, before considering what it says it does for the ‘environment’ and ‘sustainability’.
He explained: “If the ‘G’ is problematic, they should discount what the company says about ‘E’ and ‘S’ because it is likely greenwashing.”
He added that investors are in the best position to holds boards and management accountable for their plans, commitments and progress, or lack thereof.
