KUALA LUMPUR: The government needs to introduce more options under tax incentives other than tax exemptions and tax shelters in order to better help unicorn startups and entrepreneurship get through their initial challenges.
Deloitte Asia Pacific tax partner Mark Chan said the initial challenges are not very profitable, so profit shelters and allowances are not going to do much in the short term to help these businesses grow and develop, and the critical issue is still how to get funding in order to achieve their desired level.
"I think it's also important that the government has appreciation of what the needs of these entrepreneurs are and how to meet these needs rather than having preset conditions for entrepreneurs to fit in specific categories.
"This approach needs to be more widely available to cater to the growing diversity in the market, and this is how we provide customised support to help these entrepreneurs with new ideas to get their business to where they want to get it," he said in a virtual roundtable discussion on 2022 Budget at "Invest Malaysia Series 3: Sustainable Growth" forum organised by Bursa Malaysia today.
Chan believes it would help the startups if they get into a partnership with the government in return for equity stakes and share of profits to remunerate the government for the risk it's taking.
He added that there are several countries who have similar programmes so this wouldn't be radical or new, but the government would simply need to tweak it to make it more localised.
"We already have many incentives but sometimes they're very specific and limited to groups who can't really benefit from it.
"Maybe we should start looking at wide ranging incentives and programmes to encourage more Malaysian companies to be in line with this, so rather than supporting costs, we support the revenue side," he said.
Meanwhile, Chan also said it's time to take a holistic approach to support sustainability goals and environmental efforts, as a piecemeal approach is not enough to encourage sustainability in companies.
Institute for Democracy and Economic Affairs chief executive officer Tricia Yeoh shared Chan's view on the importance of sustainability.
But she said the government missed the opportunity to make clear advancements into the country's commitment to moving away from its dependence on oil and gas for the time being and eventually moving towards renewables.
"Last few budgets have been good in that they've emphasised some sort of sustainability within the speech as well as within the budget documents themselves, but I do think that there was also a missed opportunity there where we could have done a lot more.
"The government is also planning to emerge with a national energy policy and there are debates into what will go into this energy policy and what are the price points that both individuals and companies are willing to pay as we move away from this dependence (on oil and gas)," she said.
However, she said sustainability is only part of this global challenge, and Environmental, Social and Governance (ESG) also plays a big role in moving towards sustainability.
She put forward as an example that Malaysia has been banned by US Customs and Border Protections primarily over labour issues, so while debates surrounding sustainability are being held, it's equally important to get economic fundamentals right.
Yeoh also highlighted that political stability has emerged as a factor to attract investors coming into the country, because that's linked to the governing framework and institutional robustness of any country.
"Essentially, institutional independence and stability of the institutions contributes to a rules-based environment.
"We talk about carbon tax and the environment, but all this needs to be premised on a transparent and accountable rules-based environment that would allow the G in the ESG to function, so there's no point in committing to these very high overarching goals when we don't get some of these basics right," Yeoh added.