Experian Information Services (Malaysia) announced its Trade Bureau Industry Debts Turned Cash (i-DTC) study which measures credit repayment data between September 2020 to August 2022. In this analysis, Malaysian companies and small and medium-sized enterprises (SMEs) were examined across seven key industries including: Construction, and Hospitality/Food & Beverage.
Dawn Lai, Chief Executive Officer of Experian Information Services (Malaysia), says “Our i-DTC study examines the impact of the COVID-19 pandemic on Malaysian businesses, both large and small. This together with Experian’s extensive credit data provides valuable data and analysis for future events of a similar nature, giving business stakeholders more actionable insight into the broad measures, both at entity, economic and fiscal levels, to build a more resilient and sustainable economic ecosystem for Malaysia in the face of a more volatile global economy.”
Dawn Lai, Chief Executive Officer of Experian Information Services (Malaysia)
Overview: Malaysian companies and SMEs make broad cash flow recovery
Malaysia’s economy has gone through challenging times because of the pandemic and external factors like geopolitical tensions and the rise in global commodity prices leading to inflation. SME Bank’s inaugural SME Sentiment Index has shown a positive reading of 53.8, which indicates that SMEs are optimistic about the current economic recovery phase, however, many are still in need of financing aid to manage their working capital and struggle with rising operating costs due in part to supply chain disruptions, higher raw material prices and increased labour costs.
Figure 1: Experian i-DTC by months (September 2020 – August 2022)
The average Experian i-DTC on a rolling 12-month basis has reduced (74 days in July 2021 vs 68 days in June 2022). This indicates that there is a broad cash flow recovery for the last 12 months as compared to the same time last year. This is largely due to the opening of the economy in normalising trading activity and strengthening the economy towards recovery and growth.
Malaysia’s gross domestic product (GDP) growth in the second quarter of 2022 rose by 8.9%and this growth momentum is likely to continue in the second half of 2022. In addition, recent official estimates are still buoyant despite inflationary pressures, a weakening Ringgit and trading conditions influenced by geopolitical tensions around Asia and the conflict in Eastern Europe.
Corporations vs SMEs
Corporations have been able to weather liquidity pressures, and their ability to borrow remains stronger than their SME counterparts. Conversely, SMEs have seen a softening of cash flow stresses, but recovery is flat around 72-73 days from May to August 2022. Smaller enterprises remain cash vulnerable particularly with recent inflationary pressures, competition for labour, difficulty in securing loans and the rising cost of borrowing (interest rates).
Figure 2: Experian i-DTC Corporations vs SMEs (August 2021 – August 2022)
SMEs in the Hospitality / F&B sector recorded thebiggest recovery on a YOY (Year-On-Year) basis, with an i-DTC of 89 days over the same month last year (August 2021), improving by 28 days to 61 days in August 2022. The easing of travel restrictions in April 2022 has had a positive impact on both inbound and outbound tourism.
According to CBRE Asia Pacific’s latest report, Kuala Lumpur Hotel Market Outlook & Prospects 2022, more than 3,000 new hotel rooms and hotel suites are slated to open in Kuala Lumpur this year. Also, between 2023 and 2025, 1,260 new hotel rooms will be available. Restaurants, cafes, and those in the food business are also seeing increased foot traffic, improving their sales performance. Liquidity and access to capital remains key to SMEs in this sector as they seek near-term expansionary measures to scale their operations for growth.
On the other hand, corporations in this sector are demonstrating a reverse trend of slower payments in recent months since early 2022. With the country having entered an endemic phase of COVID-19, access to manpower continues to challenge hoteliers, travel agencies, restaurants and cafes in scaling their business to full capacity, despite growing domestic and international demands. Many in the sector have called for the government’s support to expedite foreign worker approvals to meet urgent manpower requirements to drive recovery.
Figure 3: Experian i-DTC Hospitality/F&B Corporations vs SMEs (August 2021 – August 2022)
In the Construction sector, corporations and SMEs benefited from recovery in the sector across the last 12 months. The government has implemented various initiatives to support the construction sector to bounce back from the impact of the global economic crisis. This includes the plan to establish the Public Private Partnership (PPP) 3.0 model, a specialised mechanism to fund infrastructure projects in the 12th Malaysia Plan (12MP) between 2021 and 2025, as well as several incentives to improve employment rates and support businesses.
Compared to a year ago, Construction SMEs have managed to see a 21-day improvement from August 2021 to August 2022. Conversely, the large corporation construction sector has also seen a 34-day improvement over the same period as construction projects and activity resume.
Figure 4: Experian i-DTC Construction Corporations vs SMEs (August 2021 – August 2022)
Dawn Lai, Chief Executive Officer of Experian Information Services (Malaysia), explains: “With global inflationary pressures expected to persist, it is commendable that the government continues to provide support through the many subsidies put forward for Budget 2023 to help Malaysia weather the headwinds. From our observation, monitoring of suppliers, clients and cash flow continues to be important for Malaysian companies to be able to ride through the tides of uneven economic recovery.
Cash preservation will continue to be the focus for smaller Malaysian enterprises where they have less ability to demand preferential credit terms from their clients.”
As outlined by the government in Malaysia’s Digital Economy Blueprint (MyDIGITAL), companies will also need to understand the importance of big data and being data-driven. “This will help SMEs have tangible results and be able to predict their customers’ actions. SMEs can succeed by making a concerted effort to enhance their knowledge, digital capabilities, and managerial practices,” adds Lai.
About Experian
Experian is the world’s leading global information services company. During life’s big moments – from buying a home or a car to sending a child to college, to growing a business by connecting with new customers – we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organisations to prevent identity fraud and crime.
We have 20,000 people operating across 44 countries and every day we’re investing in new technologies, talented people, and innovation to help all our clients maximise every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.
Learn more atexperianplc.com or visit our global content hub at our global news blog for the latest news and insights from the Group.
The book title Selling with Consciousness itself spurs a sense of curiosity as the word consciousness is not often associated with selling. One might think the word, “consciousness” is superfluous. After all, isn’t selling a conscious effort?
This is where Olivia Lee’s book stands out from the many other books written about selling. Olivia Lee is not your normal sales lady thriving on pushing her products in the marketplace, instead she uses the Selling With Consciousness method.
The approach she used in Selling with Consciousness has won her a string of awards both for her company as well as for herself amongst which includes the following.
Industry Icon Award 2021 by IR Academy Asia Awards
McMillan Woods Global Awards 2019
The Star Outstanding Business Award (SOBA) 2019
ASEAN Outstanding Business Award 2019-RFID Security Excellence Award
Innovative Excellence Award 2019
Business Dynamism Award 2017
Selangor International Business Summit 2017 – Business Excellence and Innovation Award
The Start Outstanding Business Award(SOBA) 2016
The Brandlaureate SMEs BestBrands Award – 2016-2017 Signature Award
SIRM Quality Award 2013
FMM (Federation Malaysia Manufacturers) Excellence Award 2012 – Manufacturer of the Year
In her book, she explained that her sharing of these numerous awards is not to impress the readers but to impress upon them the effective principles of conscious selling that have enabled her to become a top salesperson in her industry – the casino industry where she sells software and security seals.
She hopes that her sharing of her many years of valuable sales experience can inspire those sales professionals to reach the top in their sales career too. She pointed out that even though the selling field is indeed very challenging, however, there is a better and more effective way to excel.
This is why she wrote this book to share her secrets. In the years of working with all kinds of people from the ground up to the level of founders and top leaders, she had accumulated vast experience and insights regarding the effectiveness of selling in different situations.
She had faced sales rejections and failures. She had come from the depths of despair to achieve top sales in her industry. She explained that she had personally seen salespeople, including professionals who were highly educated and qualified, yet failed to make the grade as top salespeople.
While there are many reasons, here are some of the more poignant ones:
They are not conscious of their weaknesses or flaws
They are task-driven instead of customer-oriented
Their approach is too product-oriented, losing the awareness of the importance of relationship selling
They are complacent and are not up to date on industry trends and their competitors’ strategies and their strengths
They are too inward-looking, focusing on internal issues rather than the industry
They carry too many worries and negativity, thus blocking their effectiveness in selling
Selling with consciousness is the awareness of whatever is happening during the entire selling process from prospecting, researching, preparation, strategizing, presentation, handling objections, closing, and the sales follow-up. The effectiveness of selling comes from moments of total presence, free from the clutter of the mind.
As recommended in her book for sales to be effective, there should be an integration of three critical components that can help achieve a greater sense of selling with consciousness to enable one to be totally present throughout the entire sales process.
The book shares a useful framework for tapping into selling with consciousness as shown below:
Selling With Consciousness Framework
Selling with consciousness framework
The book highlighted that one’s preoccupation with worries about the present as well as the future can affect one’s effectiveness in sales and hence the outcome. Some examples of distractive thoughts often go like these:
What if I said the wrong thing and mess up my presentation?
What if I lose this sale and it would be difficult to get another client with such big potential?
What if the potential client asked me some critical questions and I could not answer them?
Thus to stay on top of one’s field, what is needed is to disengage our thoughts from the distractions of our current worries or concerns about the past and focus on what is at the present moment.
Of course, there is no substitute for the solid fundamentals of the business or work if one is to do well in one’s field. One would need to acquire whatever knowledge and skills that are needed to excel and succeed. Olivia cited the example of one of her earlier jobs where she started as a remisier she had to familiarize herself with all the rules and regulations on all kinds of securities and learned every nitty-gritty of the trade and be updated on developments in specific companies and industries.
She developed her knowledge and skills as a dealer’s representative to the level where at one point she was buying and selling shares for prominent business clients with a portfolio of over RM100 million.
The final component that helps one to focus on the present is embracing positivity which is defined in the book as the engagement of positive thinking, feeling, and actions aligned to a positive outcome. As shared by Olivia, a sense of confidence, calmness, enthusiasm, energy, and aliveness are critical to ensure the best outcome. Such an atmosphere cannot come from a place of negativity. A salesperson must indeed embrace this positivity if he or she wants to succeed.
In essence through the three components of disengaging from the distraction of thoughts, unleashing knowledge and skills, and embracing positivity, one can become totally present and conscious of the whole selling process. One becomes conscious of customer needs, company products, competitors, the company, suppliers, the industries, and of course oneself.
The book also touches on the techniques of meditation in embracing consciousness to achieve inner peace and calm that enables one to tap into one’s inner source of “knowingness” and excel in whatever one does including sales presentation and closing sales.
It is through this experience of total consciousness; a salesperson becomes very focused and effective and hence successful in selling. Read this book and you too can rise up to achieve top sales in your industry, as you begin to understand the power of selling with consciousness.
Dr Victor SL Tan is the Managing Director of KL Strategic Change Consulting Group and the author of 14 books. His passion is in consulting, training and writing. For more information contact him at 0123903168 or email him at victorsltan@klscc.com
The Securities Commission Malaysia (SC) and key agriculture agencies have discussed ways to address financing gaps faced by Micro, Small and Medium-sized enterprises (MSMEs) involved in the agriculture sector in a bid to boost the country’s food security.
Some 40 representatives from agencies and industry players this week attended a workshop called GROW® – a new collaborative programme under SC’s fintech flagship initiative, SCxSC.
GROW® is a collaborative effort by the SC and ecosystem partners to harness the potential of alternative fund-raising digital platforms to meet the needs of underserved players in strategic sectors, such as agriculture.
Equity crowdfunding (ECF) and peer-to-peer (P2P) financing were among the alternative financing mechanisms that were addressed during the workshop as potential ways to help fund the sector.
The SC Chairman Dato’ Seri Dr. Awang Adek Hussin stressed the importance of broadening access to the capital market for local businesses.
“We have seen how technology has democratised financing via digital platforms such as ECF and P2P financing,” he told the workshop. “We believe these alternative financing avenues have the potential to address some of the funding needs of the MSMEs in the agriculture sector as well.”
Senior officials from relevant ministries, agencies and key players in the agriculture ecosystem attended the one-day workshop. They include the Ministry of Agriculture and Food Industry, Federal Agricultural Marketing Authority (FAMA) and Agrobank.
At the workshop, participants called for greater ecosystem coordination to move the agriculture sector forward and strengthen the country’s food security.
They also emphasised the need for greater awareness on the role of alternative financing for the agriculture sector. They welcomed the development of more innovative financing instruments to cater to the diverse agro-business needs.
Following the workshop, the SC plans to have greater industry engagements with key stakeholders next year including organising a GROW® Fintech Conference. This will be followed by a nationwide GROW® roadshow to raise awareness on ECF and P2P financing as viable funding options for agro-based MSMEs to grow their businesses.
These programmes will complement ongoing efforts by the government to support alternative fundraising by agriculture businesses such as the Malaysia Co-investment Fund (MyCIF).
MyCIF, a public-private co-investment vehicle administered by the SC on behalf of the Ministry of Finance, has observed a greater uptake of ECF campaigns in the agriculture sector after implementing a special ratio of 1:2 in 2022 for this sector. MyCIF invests RM1 for every RM2 raised from private investors on the participating platforms by eligible issuers.
It has co-invested in a range of agriculture projects in upstream and downstream activities, including firms applying technology to improve agriculture yields and aquaculture production.
About the Securities Commission Malaysia
The Securities Commission Malaysia (SC), a statutory body reporting to the Minister of Finance, was established under the Securities Commission Malaysia Act 1993. It is the sole regulatory agency for the regulation and development of capital markets. The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Capital Markets and Services Act 2007. More information about the SC is available on its website at www.sc.com.my. Follow the SC on twitter at @SecComMy for more updates.
Malaysian Research Accelerator for Technology & Innovation (MRANTI) is the new entity as a result of the merger of two agencies under Ministry of Science, Technology and Innovation (MOSTI), Technology Park Malaysia Corporation (TPM) and Malaysian Global Innovation and Creativity Centre (MaGIC). Inspired by the yellow Meranti tree which is the world’s tallest tropical tree found only in Malaysia – MRANTI strives to become the strongest and tallest among the world’s best.
What Is MRANTI?
MRANTI is the one-stop research commercialisation agency with the resources to accelerate the commercialisation of innovative ideas that will drive impact. As a connector, collaborator and catalyst, MRANTI will connect problem statements (demand) with solutions (supply), bridging collaboration between public and private sectors (transition); increase private sector participation, either through market access, investment, advisory or consultation and facilities for testing and prototyping.
Smart Investor recently interviewed Dzuleira Abu Bakar, CEO MRANTI to find out more about them and their plans.
Dzuleira Abu Bakar, CEO MRANTI
Smart Investor: Why was MRANTI formed?
Dzuleira Abu Bakar: MOSTI with Akademi Sains Negara: examined the landscape:
○ To increase the number of commercialised entities in Malaysia ○ To accelerate technology & innovation
And some gaps were found:
1. R&Ds remain where they are with the Research Institutes (RI) and the universities 80% of in IHL, Corporates 15%, balance 5% government or NGOs.
2. Low GERD to GDP, which is at 1.04%. Other countries; Israel – 4.95%, South Korea – 4.81%, Japan – 3.26%
3. Commercialisation rate is low between 5% to 10% China’s commercialization rate target: 34.7% in 2020 Korea in 2010: 38.9% (they considered: unsatisfactory) Japan and the USA: as high as 60%
● To rise in the ranks as a high-economy, innovation driven nation, we need to ensure our security of R&D supply translates into successful commercialisation.
● As such, the Ministry then decided to streamline its resources – which led to the merger of the 2 agencies, and the formation of MRANTI about a year ago.
● There are 3 important approaches (3Ps) we are taking to position ourselves to support the progress of the ecosystem:
1) MRANTI PARK provides integrated facilities and infrastructure for innovators and entrepreneurs that are 4IR ready, even as we bring together 2) Targeted PROGRAMMES & interventions; and 3) A large portfolio of PARTNERS
SI: What does MRANTI want to achieve by 2030, and which stage are you at now? What are your priorities?
DAB: My goal is to put Malaysia on the Top 20 most innovative countries in the world. This will have amazing spillover effects i.e. higher income, more jobs, and overall better livelihood for Malaysians.
For the immediate, I will focus on rolling out our programmes and partnerships, as well as sprucing up the park. Today, various programmes and facilities are available at the Park.
To have 2,000 sqft MakersLab for designers wanting to prototype their ideas – from computer design or sketches into “things” or small scale models. Various materials and machines are available.
A Centre of Excellence for DroneTech, Living Labs for Autonomous Vehicles (AV) and Agritech
As an example, the Drone Industry Insights report, the world market value of drones is USD26.3 billion, and is targeted to reach USD41.3 billion by 2026. In the Drone Tech sector, Malaysia has the potential to be a world leader in this sector. We are proud that Aerodyne Group, a local company, is emerging as the best drone remote-sensing service provider in the world. There are many other drone companies based here, including Poladrone, Terradrone, VStream, Elsa Energy, DJI, NRA Technology and Allied Aeronautics.
Malaysia also has the potential to grow rapidly in the robotics and drone industries. We will establish the Academy of Talent Development In Robotics (Robotic Talent Development Academy), and are targeted to increase the ratio of robots to humans by 195 robots per human by 2030. Today, the ratio of robots to humans is 55 to 10,000 people.
Therefore, we established Area 57 in MRANTI Park as a centre of excellence for the development of the drone industry. The 5-acre area will provide drone runway services, a 300 square metre drone net area, drone testing mock-up sites, hangars, laboratories, manufacturing equipment, training facilities and prototype testing areas, operational offices as well as drone service and maintenance workshops for drone operators to use.
Revitalising Lab testing facilities for food and herbal products and other manufacturing services at MRANTI Nexus.
5G infrastructure-ready
Commercial entities and researchers face several challenges today which could be addressed with 5G Technology. These include communication efficiency (higher data rates, lower latency), connection density (reliability, availability and coverage) and position accuracy (higher user mobility). To deliver the full value of 5G, we are bringing together more partners to collaborate, innovate and incubate ideas to nurture a thriving ecosystem.
We have lined up 26 key programmes to seed, sustain and scale impact-driven innovations in a structured and systematic manner -linking both domestic and international markets for entrepreneurs, startups and the innovation ecosystem. i. IP & commercialisation initiatives ii. impact and thematic accelerators, bootcamps and iii. Digital Business Academy programmes iv. social impact initiatives this year to jump start the innovation engine.
Examples of these are as follows:
Academy + International Innovation Hub programmes
For anyone looking to upskill and reskill, we offer a host of digital courses, webinars, workshops, bootcamps, custom content/programmes, custom and industry-focused coaching and mentoring, post-grants management and advisory, business acceleration, access to corporate and industry partners, alumni, investors and academia.
Impact Innovation
For innovators to access funding and test their products in the market with corporate partners and large organisations, in order to achieve Sustainable Development Goals (SDGs) and linked to Environmental, Social and Governance (ESG) outcomes.
Global Innovation Exchange (GIX)
For innovators looking to scale and / or global startups looking to set up innovation hubs in ASEAN, with Malaysia as a launchpad. Programmes include:
● National Technology & Innovation Sandbox (NTIS) ● Global Market Fit Programme (GMP) ● MyStartUp Hub (MSH) ● Global Accelerator Programme (GAP)
Rapid IP Commercialisation is another focus. Through a structured review process, we are evaluating how some IPs – in MOSTI’s stable, for example, can be brought to market.
Volume alone is not sufficient. MRANTI will play a key role in enhancing the quality, variety and value of innovations.
This is a big task and MRANTI and I cannot achieve this alone. We are here to collaborate, collaborate, collaborate.
It isn’t a single entity’s show. We aren’t in a sprint. It is a long game, and realistically, one year is just the start to drive deep transformation. Altogether, these will place Malaysia and our people on the right trajectory to becoming a high-tech producer nation.
SI: How many talents are currently working under MRANTI?
DAB: We are 345 strong. More than 55% are under 40 years old – a large number of whom have solid technical background in areas of biotech, engineering, legal, commercialisation, Intellectual Property servicing and a range of industry experts.
MRANTI Park, however, has a community of about 20,000 people – ranging from university students, knowledge workers, academicians, researchers, scientists, entrepreneurs, management staff and more.
SI: How many startups/ enterprises have MRANTI engaged with? Will you be able to name a few and share about their journey with MRANTI?
DAB: Since its inception in 2014, the Malaysian Global Innovation and Creativity Centre (MaGIC) has nurtured, encouraged and developed the Malaysian spirit for discovery, and in the years that followed, we’ve grown from strength to strength.During this time, we have also won the regard of many regional and international industry players – cultivating and producing some of the world’s best startups and social enterprises.
Since we started, we have reached out to 4,503 startups, 145,477 individuals, 48 accredited social enterprises and created RM3.9 billion in economic value. In 2021, in spite of challenges presented by the pandemic, we conducted more than 100 programmes and impacted approximately 11,200 entrepreneurs from more than 700 start-ups and social enterprises who went on to garner close to RM150 mil in investment and generated more than RM400 million in revenue.
Five new sandboxes were launched through the National Technology and Innovation Sandbox (NTIS) in 2021 with more underway to strengthen the security of innovation supply. Since its launch, the NTIS has received 546 complete applications, 148 of which have received funding, regulatory, commercial and technical support, with RM53 million funding approved for these projects.
The returns are notable – at about 10X, as we recorded value creation (investment and revenue, as well as job creation from our programmes and by our alumni) of more than RM570 million.
Testament to the value of initiatives we are rolling out, almost 12 companies have signed on as tenants at MRANTI Park since January 2022 – bringing it to a total of 157 tenants. These include companies in ICT, Biotechnology, Engineering, Green Technology, Consulting, Support Services and more.
We are expecting 15 more local and multinational companies to take up tenancy here by the end of the year, bringing the total occupancy rate at MRANTI Park to nearly 80% or an equivablent of 645,000sqft.
Case study: Through the NTIS, MRANTI facilitated Biogenes Technologies’ discussions on regulatory procedures with the Malaysian Medical Device Authority (MDA), and coordinated approval with the Ministry of Health for a live test site to collect samples, which then allowed them to validate the market readiness. As a result, their test-kits have now undergone preclinical and clinical trials at Pusat Perubatan Universiti Malaya. What would have ordinarily taken at least a year, was accomplished in several months. Biogenes also received funding through the NTIS within six months to enable their operations to expand.
Additionally, through the NTIS, there are sandboxes testing the use of drones to deliver medical supplies to hard-to-reach areas, and to deliver essential goods and services particularly to remote and rural areas. However, we still aren’t moving quickly enough in some areas. Attracting more international players is one area that could do with improvement. The IMD World Competitive Ranking 2020 still ranks Malaysia 52nd in ease of starting business, with an increase in “startup days” from 13.5 days in 2019 to 17.5 days 2020 to set up business in Malaysia.
Today, many startups still find it difficult to know which agencies to approach, as some have overlapping functions. Having multiple sources of information and numerous agencies impedes Malaysia’s potential as a preferred destination for startups.
To ensure that we do not get left behind, moving with speed is absolutely essential. To do this, we need to streamline our processes, get rid of any overlap or ‘legacy’ inefficiencies and utilise technology to digitalise or automate for efficiency.
And in this regard, MRANTI aims to be the one-stop centre for technology and innovation acceleration, regardless of which stage the innovation or solution is at – as we take ideas to impact.
SI: What has MRANTI clocked in since you helmed MRANTI a year ago, though the agency was only formalised in January this year? What have been some of the challenges?
DAB: Merging TPM, a 26-year-old entity, and then seven-year-old MaGIC, comes with its own set of operational and external challenges.
Core challenge: culture integration, added with pressures of managing the bottomline. Thankfully, the merger was completed in record time – under a year.
Much of my time in the last 12 months: spent on onboarding stakeholders and key players to see this transformation of TPM to MRANTI Park.
My immediate goal: capital investments, policy, incentives to raise MRANTI Park’s relevance and profile.
I’m pleased to say, we are now on the cusp of profitability. With a formidable team, we have put in place a strategy to transform TPM’s Profit & Loss and achieve its technology development mandate for the country. My team and I are focused on improving the infrastructure for the 686 acres MRANTI Park (10x larger than KL Sentral) located in Bukit Jalil, to attract global players. The park is now the only fully 5G-enabled innovation park facility in Malaysia, giving it the edge in ultra-fast and stable connectivity.
Speed is the name of the game, and MRANTI Park will be the fast track for innovators.
SI: What are your targets?
DAB: My aim is to make MRANTI Park a global name. My team and I have been relentless in developing the prioritised tech clusters as announced under Budget 2022 at MRANTI Park to make it the foremost innovation hub in Malaysia.
Our integrated facilities are being enhanced for higher capacity and higher value services. RM30 million funding allocated for MRANTI in the Budget 2022, we are kicking into high gear.
2022 Targets : MRANTI, as a 4IR Innovation Hub aspires to
○ Impact 5,000 aspiring entrepreneurs exposed to 4IR technology ie Dronetech, ○ Assist 50 companies to successfully build proofs of concept (POC), prototypes and products, ○ Enable 1,250 business owner to benefit through various facilities and programmes, and ○ Foster RM500 million in Value creation.
Our longer term targets:
The 12th Malaysia Plan (2021-2025) has set several R&D related targets by 2025;
2.5% of GERD to GDP (from 1.04% in 2018)
70% of R&D expenditure by the private sector (BERD) to GERD (we are about 43.9% in 2018)
500 products and solutions commercialised through the National Technology and Innovation Sandbox (NTIS) and Malaysia Commercial Year (MCY) by 2025
Top 20 ranking in the Global Innovation Index in the same period (from 36th in 2021)
SI: What is MRANTI’s Masterplan?
DAB: In shaping MRANTI, benchmarked against:
○ Thai Digital Park, Singapore’s A*Star, and Innovate UK, are all a result of strong policy, investment, talent pool and market environment.
To attain a Top 20 position in the Global Innovation Index (GII) by 2030, from where we have been in the last 5 years – in the 30-somethingth position, we have much to do. This includes upgrading our Engineering, IT, Biotech and other building infrastructure in order to meet the changing demands of industries and the start-up ecosystem. Under the 4IR Hub Initiative, we aim to support prototyping and tech immersion programmes through our maker space and innovation centres.
Ultimately, MRANTI Park will be redesigned to make high potential research and development and early technology products economically viable through holistic and comprehensive commercialisation support.
Our MasterPlan involves the development of 4IR solutions in areas of
○ Computer vision, speech recognition, natural language and human/robot, folding in the development of technology and talent, data management, R&D and a commercial ecosystem across 5 clusters – greentech, biotech, smart manufacturing, agritech and smart city.
Today, 5G coverage is now available within our campus. The recent collaboration involving DNB and Ericsson entails the deployment of 5G coverage and capabilities at MRANTI Park, the creation of MRANTI’s on-campus “5G Experience Centre” with support from DNB, as well as comprehensive knowledge sharing and education efforts for enterprises and the community in MRANTI’s innovation clusters.
Among other components and functions of the centre include:
⇢ Research and insight library – MRANTI Park will be a place for researcher and innovators to conduct case studies on 5G technology ⇢ Testing and development function – for developers to conduct 5G application assessment and improvement ⇢ Showcase, awareness, training and advisory function – It will be a venue to develop prospective digital transformation actors and become a centre for technological innovation, development, and application of ICT in the future 5G era.
● MRANTI Park Phase 2 & 3: includes a Masterplan for land, leasing and property development that will cultivate Malaysia’s capabilities in 4IR – from IoT systems, end-to-end IP services and laboratory to contract manufacturing facilities with advanced technologies.
○ 5-acre Area 57 Centre of Excellence for UAV is the first and only park of its kind in Kuala Lumpur intended to help Malaysia achieve its goal to become one of the leading players in the drone technology industry in the global drone market which is forecasted to achieve US$41.3 billion in 2026. ○ Commercial zones: will infuse the elements of lifestyle, learning and business.
A Hyperscale Data Centre (HDC) will also be a core service that will support a host of technologies that will take flight in the coming years. HDCs would be one of the many tech sectors MRANTI will look to grow and cultivate within the AI Park. It is not just about housing HDCs but looking at the entire incubation of research and development players from academia and industry.
In essence, this is what MRANTI is about – bringing IDEAS TO IMPACT. Our goal is to create impact – so these can be recognised, appreciated and celebrated the world over.
SI: What partnerships are you looking to build, specifically what kinds of investments and investors are you looking to attract?
DAB: Past 12 months, partnerships with Huawei, Ericsson, Digital Nasional Bhd, SUKE TV and Telekom Malaysia – for 5G services, eServices, content and more in the pipeline.
Also inked MOUs with Malaysia’s premier public universities for research including Universiti Malaya, Universiti Teknologi Petronas, Universiti Sains Malaysia, Universiti Teknologi MARA and Multimedia University.
More updates are in the pipeline as we knock on more Technology Transition Office (TTO) doors to bring more research out of the lab into real life.
Through the NTIS, and within just a year, we have amassed a strong network of 35 Innovation Acceleration companies – leading technology multinationals, legal firms, financing partners, and various experts on board in 12 Sandboxes. And this list is fast growing! Synergy will be key for us to progress.
SI: What sets MRANTI apart from other government agencies?
DAB: MRANTI is the “glue” that brings together solution providers, such as researchers, startups and solutions seekers such as corporates. MRANTI enables a conducive environment for impactful discourse, exchange of ideas and a matching platform.
A key differentiator for MRANTI: the speed at which we connect Government with Industry, Academia and Civil Society – the ‘quadruple helix’ for an innovation ecosystem to thrive.
SI: What are some of Malaysia’s innovations – commercialisation chasms that MRANTI is looking to address?
DAB: SUPPLY. We need to build a strong pipeline, as we have the talent and good inventions that have yet to find a clear pathway to market and eventual profitability.
TRANSITION: getting past the “valley of death” ie TRL4 to TRL6 – where a lot of drop-outs happen
OUTPUT: It is important to support commercialisation, including providing the correct infrastructure and development programmes in Malaysia’s journey towards becoming a tech producer.
SI: Are there specific industry sectors that you will focus on? Why these?
DAB: We are guided by MOSTI’s Dasar Sains & Teknologi Negara (DSTIN) or MySTIE 10×10 (10 high technology areas for x10 socio economic clusters). These are deemed high-impact areas with multiplier effects e.g strengthening local innovators; creating a high-skilled talent pool and quality employment opportunities; leveraging advanced technologies; and addressing pressing national and global issues.
MRANTI will also prioritise 4IR technologies involving blockchain, robotics, sensor tech, advanced materials and drones, among others. For example, in terms of Medtech, we will be developing a MRANTI Healthcare Cluster that will accelerate the exploration and development of work in healthcare and medical technology, offering capacity building programmes, laboratories and incubator facilities to conduct stress tests on ideas, prototypes, applications and various related innovations.
MRANTI Park will also feature a Sustainable Food and Agritech cluster which will feature:
i. a bioscience R&D lab with state of the art equipment and facilities ii. an incubation garage to host commercialisation efforts of high potential food/agritech innovators iii. a vertical farm infrastructure including IoT fertigation for urban farming systems
SI: What are living labs, maker labs, 4IR, etc which will be featured at MRANTI Park – and how does this fit into the end to end “R&D&C&I” scheme of things?
DAB: Early Stage: Ideation & Applied Research. Aimed for innovators at all ages, it is ideal for sandboxing smaller scale ideas, as well as tinkering of hardware and software in a dedicated space. It fosters a culture of learning by-doing, innovation, hands-on exploration.
Example: MakersLab – a 4IR-themed playground featuring a spectrum of IR4.0 focused tools, technologies and technology immersion programmes.
Mid Stage: Prototyping & Viability Testing. Getting past the labs into controlled environments for testing, validation, reiteration, etc. Example: Living Labs and Centers of Excellence: ie Drone, UAV.
Market-Ready Stage: Scaling Up & Commercialisation. This would encourage communities to gather for experiments and collaboration in order to increase local inventions . There’s also NTIS, GAP, GMP Programmes.
ESG is rapidly transforming the business climate today and is constantly evolving. This is fuelled by growing concerns among investors and stakeholders who seek not only economic profits but social good. They want better environmental, social and governance (ESG) disclosures to help them understand how the company operates, makes decisions and creates value.
Smart Investor talks to Dr Sumitra Nair, Head & Senior Vice President Strategy & Policy, Malaysia Digital Economy Corporation (MDEC). She currently leads MDEC’s corporate strategy, planning, policy and ESG agenda. She is also one of the speakers at the prestigious ESG Evolve 2022 conference that Kexxel Group is organizing in KL on 6-8 December. We will talk more about the conference at the end. For now, let’s find out more about how MDEC is pioneering ESG in Malaysia.
Dr Sumitra Nair, Head & Senior Vice President Strategy & Policy, MDEC
Smart Investor: What does ESG mean to you? Why is it important to your business, and how does it impact your industry?
Dr Sumitra Nair: ESG is about carrying out business in a way that is respectful to people and planet, and about generating profits ethically. This is important to ensure that businesses can carry out their operations in a sustainable manner. For example, operations of a business could be impacted by climate-related risks, or governance related risks, hence impacting business continuity. A sustainable business model also improves productivity by uplifting employee motivation and loyalty; and boosting talent attraction and retention. There is also increasingly strong evidence of a connection between good corporate practices and financial performance – an ethics premium. According to Ethisphere’s Ethics Index, the world’s most ethical companies outperformed a comparable index of companies by 24.6% from January 2017 to January 2022.
The Global e-Sustainability Initiative (GeSI)’s Digital with a Purpose: Delivering a SMARTer 2030 report estimates that digital tech can directly influence 103 out of 169 UN Sustainable Development Goals (UN SDG) targets. The same report has identified key technologies that have the highest potential influence on the world, and more specifically on the UN SDGs. These include high speed internet, Cloud, Internet-of-Things, Machine learning, AI, Digital Reality and Blockchain. Such technologies can help to reduce environmental impacts, as well as narrow socio-economic disparities, which strengthening transparency and governance.
For example, from an environmental perspective, the effective use of digital technologies is projected to reduce global Green House Gas emissions by 15% by 2030, which translates to 1/3 of the global 50% target reduction. This is mainly through the use of digital tech solutions in the energy, manufacturing, agriculture and land use, buildings, services, transportation and traffic management.
Therefore, the digital tech ecosystem plays a very significant role in the agenda of ESG in Malaysia. It is also very much aligned to the recently-launched national strategic initiative, Malaysia Digital (MD), which seeks to increase the overall ecosystem value, sustainably.
SI: What are the key factors for successful deployment of ESG in Malaysia?
DSN: At a firm level, following are key factors for successful deployment of ESG in Malaysia:
Leadership commitment is key. ESG must be driven from the top, ideally from the Board, top management and across the organisation.
ESG culture and mindset – ESG should be seen as a way of doing business, rather than a separate function or set of responsibilities.
Taking a longer-term perspective of business performance – over-emphasis on short term gains may impact a company’s ability to manage its ESG risks which may manifest in the longer term. For example, the focus on cutting costs in the short term, may result in non-eco-friendly or non-ethical purchasing decisions.
Measuring and managing ESG impact – as the saying goes, “what gets measured, gets done”. Similarly, defining and tracking ESG performance metrics is key to managing ESG impacts.
SI: What are the challenges that you faced?
DSN: This year, MDEC’s ESG focus kicked off with a focus on Climate change, which has been globally acknowledged as one of the most critical issues of our time. To this end, we recently launched the Malaysia Digital Climate Action Pledge (MDCAP), which aims to galvanise digital tech companies to commit specific actions to address Climate Change, and to support the decarbonisation of SMEs. At the same time, MDEC with our partners such as the UN Global Compact Malaysia and Brunei (UNGCMYB) will provide guidance and know-how to the digital economy ecosystem via a Digital Economy Climate Playbook, and training programmes.
These initial efforts are tailored to address some of the key success factors we have identified in our journey to encourage digital companies in Malaysia to adopt ESG practices. These include:
Raising the level of awareness and understanding about ESG amongst digital businesses
Access to resources to address ESG risks and compliance – e.g. funding, talents, etc.
Encouraging digital tech companies to create shared value through opportunities arising from ESG trends, for example, via digital innovations/solutions that help governments, businesses, or society to achieve ESG-related targets.
SI: What are the key trends you see gaining traction for ESG in Malaysia? What are the areas of growth amongst the pillars to look at in 2023?
DSN: Climate change is the most important topic that has been gaining traction in the past ten years. It is evident from World Economic Forum’s Global Risk Report that climate action failure and extreme weather conditions dictate global risk factors.
Hence why MDEC took a proactive approach to launch the MDCAP initiative to advocate climate action amongst the digital economy ecosystem.
Besides, social factors such as forced labour and livelihood crises of the B40 group have also gained a strong pull for ESG in Malaysia.
In 2023, we can expect other areas of the environmental pillar to grow, such as the carbon market, carbon tax and carbon offsetting, which involves carbon capture, storage and sequestration activities.
Regarding the social pillar, topic of diversity and inclusion in the workplace is growing in prominence, be it gender, age, ethnicity, or other forms of diversity.
“A green and safe planet, a happy and healthy community and equitable opportunities are the best wealth we can create for the future generation.”
– Dr Sumitra Nair
ESG EVOLVE 2022: Driving Catalytic Change For Business Sustainability
Dr Sumitra Nair will share more insights on MDEC ESG at the ESG Evolve 2022 Driving Catalytic Change for Business Sustainability organized by Kexxel Group which will be held on 6-8 December in EQ Kuala Lumpur.
One survey from the University of Michigan indicated that 73% of adults between the ages of 22 and 35 overthink, and 52% of 45 to 55-year-olds do too. While it is important to engage in thinking in our work, overthinking on the other hand affects our effectiveness in getting things done.
What is overthinking and what are some of the ways to manage overthinking? Overthinking is a process where people engage in excessive thinking to the extent that it impedes their actions and productive results. It becomes a justification for procrastination and inaction.
On the surface, it would seem legit for one to gather more information for analysis prior to making a decision and taking action. However prolonged thinking and rethinking can be a wasteful habit and can stop people in their tracks.
The way forward is to strike a healthy balance between thinking and action. To do that we need to come up with effective strategies to avoid overthinking and engage in the right thinking and take the right actions to achieve the desired results.
Over the last 25 years in leading various projects in my consulting work for organizations, I have developed a framework to ensure that our team avoids overthinking but engages in productive thinking to enable practical execution to achieve the desired results.
Let’s check out some of the ways to manage overthinking.
6 Ways To Manage Overthinking
1. Set A Time Frame
To ensure that we do not get into paralysis by analysis mode, we need to set a clear time framework for various tasks such as gathering information, analysis and diagnosis, decision-making, recommendations, and a clear action plan with specific measurable goals and deadlines.
Having a clear time frame is important and requires one to be more practical and balanced without getting carried away with a long engagement in one task that one loves to do more than others. It is not uncommon that some leaders love to debate over the smallest of stuff which is often more intellectual than practical.
There are many root-causes of why some leaders engage in overthinking. Some are perfectionists who are never contented until they explore everything to the fullest. Others lack courage in making decisions, so they avoid them by prolonging thinking and analyzing.
By setting a deadline for each task in each of the phases of work, one becomes compelled to move forward without being stuck in the thinking phase. This is certainly one of the ways to manage overthinking that you can try.
2. Ascertain The Necessary Information
There is no end to getting more information. It will be useful to choose the criteria needed to make a good decision and then go about collecting information about them.
The more data and information we collect, the more analysis and thinking will be involved. We do not live in a perfect world where we can have all the information needed to draw a perfect conclusion.
One of the ways to manage overthinking is by making sure we need adequate information that enable us to make a reasonable decision to move forward. Often more information creates overload and crowds one’s thinking. What is needed is relevant information to help make a sound conclusion that is directive enough to spell out the correct actions to be taken.
3. Analyze To Come To A Decision
One needs to be aware that we need not reinvent the wheel. We only need analyze the information to achieve better understanding in the areas that lack clarity. In those areas in which we are already clear, there is no need for more analysis.
The purpose of our thinking and analysis is to help make a decision. It should not be analysis for analysis’ sake. A better way is to set specific areas where clear decisions need to be made. Then go ahead with the thinking and analysis to arrive at those decisions.
4. Moving From Negativity To Positivity
A lot of overthinking may arise from negative mindsets with constant worrying about the past as well as concerns about the future. Often worrying about what could go wrong will get one to stall under the pretext of waiting for more information or analysis.
Too much negativity will certainly dampen one’s courage to take action. Many would justify that in view of the risks of what could go wrong, they need more thinking and rethinking on various issues. While a little caution with an exploration of contingencies is a good measure, taking an over-cautious stance with great doses of pessimism will wreak havoc on good decision-making.
Worrying forward leads to overthinking which is just creating problems that do not even exist. One of the ways to manage overthinking is by moving from what could go wrong to what could go right with the right strategies is a good way to move out of overthinking.
5. Execute To Achieve Productive Results
Thinking and more thinking would not create results. The missing link in most organizations is concrete actions. There are many leaders who love to have meetings after meetings to discuss over many things. The ills of overthinking are that they create a comfortable habit of inaction.
Inaction provides temporary refuge and comfort but over time it dents the credibility of leaders as they are eventually judged by the results they achieve. Without execution, there will be no results and without results, a leader is deemed to have failed.
In one of the ways to manage overthinking, is to execute what was planned.
6. Recognise And Reward Results
To discourage people from engaging in overthinking, organizations should realign their recognition and rewards towards result based. Assessing one’s work based on concrete and measurable results directly or indirectly is a good way to get people to move from overthinking to taking the right actions to get the desired results.
So there you have it, some of the ways to manage overthinking.
You need to stop overthinking, be a realist and not a perfectionist. Focus on getting things you want to be done right instead of things that could be done wrong.
About the Author
Dr. Victor SL Tan is the CEO of KL Strategic Change Consulting Group. He undertakes change management consulting and training. He is also the author of 14 management books. His bestseller books include Leading Positive & Productive Change and The Secret of Change. For more information email him at victorsltan@klscc.com or contact him at 012-3903168.
The much-publicised ‘Great Resignation’ appears to be more muted in Southeast Asia, based on the latest survey from global recruitment firm Robert Walters.
Professionals in the region are valuing job security during uncertain times, with more than half (59%) indicating that they are uncomfortable to quit without a new job offer, and 81% of those who have thought of resigning are willing to change their minds, if conditions are right.
In addition to job security, professionals in Malaysia highly value salary package, good leadership and healthy workplace culture. These are contributing factors that will retain talent.
Hiring new talent remains challenging in Southeast Asia, especially in Malaysia which saw 83% of companies finding it more difficult to do so in the past year. High expectation on salary and benefits was cited as one of the biggest challenges for sourcing talent, at 66%.
These are among the key findings of the Robert Walters Great Resignation Reality Check that canvassed the insights of over 2,600 professionals and more than 1,100 companies, to better understand the attitudes held towards resignations, staff turnover situations, and unlock retention motivators. It was conducted in June 2022 and spanned six Southeast Asian countries (Singapore, Malaysia, the Philippines, Thailand, Indonesia and Vietnam).
Job-switching instead of resignations While 79% of professionals surveyed across Southeast Asia had the intention to resign in 2021, close to half (42%) have yet to do so.
Malaysia saw the most professionals (82%) who have thought of quitting their job in the past year, followed by Singapore (80%) and Thailand (80%). However, 62% of professionals in Malaysia will not quit without a better opportunity lined up, just slightly behind Singapore (64%).
“Rather than a ‘Great Resignation’, businesses can expect an accelerated hiring market across Southeast Asia in the coming year. Professionals are not quitting on a whim, but rather, they are looking to move between jobs. In the face of a possible recession, we expect more cautious professionals, who would only move when they have another job offer on hand,” said Gerrit Bouckaert, Managing Director, SEA, Robert Walters.
Malaysia: Positive work culture including good leadership, and flexible work arrangements are highly favoured by employees
Of the 82% professionals in Malaysia who considered resigning in the past year, 39% eventually stayed on because they have not found a new job yet (58%), are uncertain over new workplace’s culture and suitability (26%), and are concerned about job security at a new company (25%).
About 4 in 5 professionals (81%) would reconsider their intention of resigning if conditions are right. While salary increment continues to be the main determinant, changed job responsibilities (26%) and a change of leadership (24%) are the other crucial factors that will make them change their minds.
In view of this, employers have stepped up efforts in taking necessary measures to retain staff, such as matching or increasing salaries (58%), offering training and upskilling opportunities (56%) and providing a clear pathway for career development (44%). However, almost half of the professionals (45%) mentioned that they were not aware of changes made by their employers, indicating a gap in the retention initiatives by employers.
A staggering 86% professionals also revealed that they have re-evaluated their other life aspects when it comes to career, now prioritising their mental and physical wellbeing (76%). Other notable areas include time spent with their loved ones (70%), and the meaning/fulfillment of their jobs (68%).
This corresponds to this year’s findings by Malaysian Employers Federation, noting that many employers are now adopting Flexible Work Arrangements (FWAs) to cater to employees’ evolving needs such as having work-life balance, physical and emotional health.
Apart from work flexibility, colleagues and culture that inspire employees to do their best are what professionals value most in an employer (43%). This ranked slightly above compensation and perks (41%).
Other findings include:
In addition to high salary and benefit expectations (66%), high competition for candidates (55%) and lacking industry experience (44%) are the biggest challenges employers face when hiring talent.
87% of companies think employee turnover/resignations in their organisations have increased in the past year.
Ai Rene Tan, Country Manager of Robert Walters Malaysia
Ai Rene Tan, Country Manager of Robert Walters Malaysia comments:
“Positive employee experiences have never been more important in today’s work environment. Recognising and rewarding strong talent, job security and meeting employees’ desire for better well-being are important to attract and retain talent. Good leadership and positive workplace culture will also make a critical difference in the hiring of new talent.”
Robert Walters is one of the world’s leading specialist professional recruitment consultancies and focuses on placing high-calibre professionals into permanent, contract and temporary positions at all levels of seniority. The Malaysia office specialises in placing candidates on a permanent basis in the following disciplines and industries: accountancy & finance, banking & financial services, executive search & senior management, engineering & manufacturing, human resources, tech & transformation, legal & corporate secretarial, sales & marketing, healthcare & life sciences and supply chain, procurement & logistics. Established in 1985, the Group has built a global presence spanning 31 countries and regions.
We always hear about the rich helping out the poor and it is normally done out of compassion and as a way to express gratitude for all the blessings that one receives throughout his life.
Rather than getting rich and enjoying the wealth on your own, sharing it with others will put a smile on others and alleviate whatever ills and hardship that they are currently facing.
Are you still confused with the terms Zakat, Sadaqah and Waqf?
What Is Zakat, Sadaqah And Waqf?
Zakat
As one of the pillars of Islam, Zakat is a form of obligatory charity that has the potential to ease the suffering of others. With the literal meaning of the word being ‘to cleanse,’ Muslims believe that paying Zakat purifies, increases and blesses the remainder of their wealth.
It is a wealth tax and a means of wealth distribution, harmonizing the relationship between the individual and public interest. Each year, Muslims are required to donate 2.5% of one year’s total cumulative wealth to the poor in the form of Zakat.
There are eight categories of zakat recepients as stated in the Al-Quran.
Those living without means of livelihood
Those who cannot meet their basic needs
To zakat collectors
To persuade those sympathetic to or expected to convert to Islam, recent converts to Islam, and potential allies in the cause of Islam
To free from slavery or servitude, slaves of Muslims who have or intend to free from their master
Those who have incurred overwhelming debts while attempting to satisfy their basic needs, debtors who in pursuit of a worthy goal incurred a debt
Those fighting for a religious cause or a cause of God, or for Jihad in the way of Allah by means of pen, word, or sword, or for Islamic warriors who fight against the unbelievers but are not salaried soldiers.
Wayfarers, stranded travellers, travellers who are traveling with a worthy goal but cannot reach their destination without financial assistance
Waqf
It involves donating a fixed asset which can produce a financial return or provide a benefit. Is is an endowment to a religious, educational or charitable cause, most frequently used to build schools, hospitals or religious institutions. Given its communitarian nature, Waqf is often used to fund social projects and services.
It literally means to stop, contain, or to preserve. This philanthropic activity has become one of the catalysts for Muslims’ economic activities over the centuries including Malaysia.
Sadaqah
Sadaqah means voluntary offering, whose amount is at the will of the “benefactor”. It is voluntary charity given on an ad-hoc basis; a concept similar to putting coins into a charity donation box.
Giving Sadaqah does not mean being rich and able to give money to the poor and needy. There are many types of Sadaqah.
Spreading knowledge is Sadaqah
Sharing food is Sadaqah
Giving your time and energy to a good cause is Sadaqah
Saying a kind word, even smiling is also considered as Sadaqah
Still Confused With Zakat, Sadaqah And Waqf?
Zakat is the obligatory form of charity, whereas Sadaqah is voluntary.
For example you make a profit of RM50,000 from your investment for the year 2021, therefore you need to pay zakat of 2.5% of the total profit, which is equals to RM2,500.
But it is up to you how much you want to give for Sadaqah. You can also choose not to give Sadaqah.
Whereas Waqf is losing the ownership and management of the property/wealth from the giver to be used for a good purpose or the profit from it, to be used for a good purpose.
For example you have a empty house. You give permission for an administrator to manage the house to rent it out for free to students. Or if you allow the administrator to rent out the house, then the monthly rent is being used for a good cause.
Hope you now have a better understanding of what Zakat, Sadaqah and Waqf is all about, as well as its differences.
Over the years, Malaysian corporations have grown and expanded their business footprint, not only to neighbouring countries, but also to other continents in many parts of the world. It is not uncommon to see many Malaysian companies receiving income from their business and investment ventures in foreign countries, hence we need to understand about the issue of tax on foreign income.
These income sources include sales from exports of goods and services, dividends and interest income from foreign investments, royalty fees from licensing of intangible assets, rental from properties located overseas, and commission from acting as agents.
Generally, income received from out of Malaysia has been exempted from tax. However, in the Budget 2022, the Government announced removal of the tax exemptions on such income.
The rationale quoted for the removal, other than a measure by the Government to raise revenue collection, is that it is a step taken by the country to comply with the global tax standards on harmful tax practices.
Tax On Foreign Income
Malaysia adopts a territorial principle of taxation in that only income accruing in or derived from or received in Malaysia from outside Malaysia, is subject to income tax in Malaysia pursuant to Section 3 of the Income Tax Act, 1967 (ITA). Nevertheless, Malaysian tax residents enjoy tax exemption on the “income received in Malaysia, from outside Malaysia”, also called foreign sourced income (FSI), under Paragraph 28, Schedule 6 of the ITA (Para 8).
In short, while the FSI received by Malaysian tax residents are taxable under the Section 3 of ITA, the amount are exempted under Para 28. (Note: the exemption excludes those engaged in banking, insurance or sea or air transport businesses)
However, not all FSI income received are exempted as it has to be truly “sourced from outside Malaysia”.
Generally, whether the income is sourced within or outside Malaysia would depend on the location where the related income-generating activities had taken place. For example, export sales of goods by a trader are not exempted because the personnel who carried out the various business functions are located in Malaysia.
In contrast, it is argued that interest income from investment funds placed and managed outside the country is foreign sourced and thus, exempt under Para 28.
Tax Treatment On FSI From 1 January 2022
Effective 1 January 2022, the tax exemption for FSI received by Malaysian residents provided for under Para 28 was removed, following the Budget 2022 made on 29 October 2021. The implementation of the legislation is staggered into two remittance timeline of FSI into Malaysia:
January to June 2022 @ 3%:
Taxpayers are given this 6-months transitional period to remit their foreign sourced income in order to enjoy the lower tax on foreign income rate of 3% calculated on the gross income remitted (Part XX, Schedule 1 of the ITA)
Subsequent to 30 June 2022:
Remittance will be subjected to the normal tax rates.
In summary, the tax treatments for the income of a person residing in Malaysia are depicted as follows:
Special Remittance Programme Terminated
In November 2021, the Inland Revenue Board of Malaysia (IRBM) introduced the Special Income Remittance Programme (Program Khas Peremitan Pendapatan or PKPP) to help taxpayers in the transition to the new FSI regime.
The FSI remitted during the PKPP period (between 1 January 2022 and 30 June 2022) would be accepted in good faith by the IRB without any audit nor investigation be conducted on the taxpayer. In addition, there will be no penalties imposed for the remittance during the PKPP period.
However, this programme is shortlived and was revoked on 11 March 2022, as it is deemed not relevant, after the Ministry of Finance (MOF) announced in December 2021 on a concession to exempt certain categories of FSI for a period of five years from 2022 to 2026.
Concession: 1 January 2022 – 31 December 2026
The removal of exemption under Para 28 has been highly debated and criticised with regard to, among others, its timeliness of implementation, vagueness on the scope of FSI, and lack of clarity on claiming of double tax relief if the income had suffered foreign tax.
It is also seen as a stumbling block to attract foreign direct investment (FDI) in Malaysia, thus affecting Malaysia’s competitive position in the global trade map.
On 30 December 2021, MOF made an announcement to defer the full implementation of the new Para 28 to 1 January 2027. The official rules were issued by the Government by way of exemption orders dated 19 July 2022, in the Income Tax (Exemption) (No.5) Order 2022 and Income Tax (Exemption) (No.6) Order 2022 (“Exemption Orders”), applicable to individuals, partners in conventional partnerships, limited liability partnerships (LLP) and companies.
The exemption period granted is from 1 January 2022 to 31 December 2026.
Individuals are exempted on all categories of income including income from employment, dividend, rental and interest. Meanwhile companies and LLPs are exempted on foreign dividend income only.
However, there are the preconditions set in the Exemption Orders to qualify for the exemption during the fi ve years concession period, whereby:
FSIs received by individuals, LLPs and companies “shall have been subjected to tax of a similar character to income tax under the law of the territory which the income arises”.
For foreign dividends received by individuals from conventional partnerships, LLPs and companies, the added condition is that “the highest rate of tax of a similar character to income tax charged under the law of the territory which the income arises at that time is not less than 15%”.
IRBM is to issue the relevant guidelines on the applicable tax treatments, which are yet available at the time of writing. Clearly, taxpayers will need to meet certain conditions to enjoy the tax exemption during the five years concession period as it may not be as straight forward to qualify.
The limelight is now on the IRBM to expedite the issuance of the relevant guidelines, which are expected to provide the much-needed administrative details surrounding the reporting of FSI, including documents required to provide evidence for exemption of FSI, tax calculations of non-exempt FSI, the claiming of double taxation relief on FSI, especially foreign dividends, etc.
Tax Exemption Of FSI From 1 January 2022 To 31 December 2026
Taxable FSI Received By Corporate Investors
For now, FSI other than dividend income received by Malaysian corporate tax residents will be subject to tax in Malaysia. Notably, where the foreign dividends are received by a legal corporate structure other than a company incorporated under the Companies Act 2016, there is no exemption provided during the 5 years period on the income.
A list of the more common situations of tax on foreign income is set out below:
Common Situation Of Taxable FSI
Double Tax Relief On Foreign Tax Suffered
The tax on foreign income received in Malaysia may be reduced by the foreign tax credit paid. Where a Malaysia tax resident has suffered foreign tax on the FSI, the taxpayer is given bilateral or unilateral tax credit relief against the Malaysian tax payable on the same FSI.
Bilateral relief is given under Section 132 of the ITA when the foreign country has a double tax agreement with Malaysia eg Singapore, Indonesia, Japan, China, Australia, South Africa, United Kingdom, France, etc. Under a double tax agreement, a full relief may be possible based on the calculation of a prescribed formula, but the relief amount is only up to the Malaysian tax suffered.
On the other hand, unilateral relief is given under Section 133 of the ITA when there is no or limited double tax agreement by Malaysia with the foreign country eg British Virgin Islands, Taiwan, United States of America, etc. For such relief, the foreign tax recognised is automatically halved.
One is required to substantiate the amount of tax paid overseas with the relevant supporting documents from the tax authorities in the foreign countries, in order to claim the aforementioned tax relief in their tax return.
Capital Receipts Are Non-Taxable
The tax on foreign income will only affect gains that are “income” in nature. Receipts that are “capital” in nature (also known as capital gains) will not be subject to Malaysian tax. Capital gains include proceeds from the disposal of foreign stocks, foreign properties, foreign assets, foreign currencies, and foreign investment papers. However, these assets have been held as long-term investments.
Whether the gains are “income” or “capital” in nature, the onus of proof lies with the taxpayers. If the remittances are found to be income in nature instead of capital as claimed by the taxpayers, the same shall be subject to income tax.
Action Plan
The year 2022 marks an impact on investors with foreign asset holdings, in navigating a new tax landscape going forward with the removal of tax exemption under Para 28. The imminent measures include evaluation of the financial returns on their existing overseas investments, net of all tax costs. In sourcing new investment opportunities overseas, such investors shall need to factor in the additional tax costs in Malaysia.
Here are a few suggestions on the action that affected investors should look into:
1) Review the Malaysian tax impacts on all taxable FSI from investments outside Malaysia- tax simulations may be useful for the investment selection process.
2) Maintain proper records of the foreign assets, including tracking of the funds retained in foreign bank accounts vis-à-vis those repatriated to Malaysia. On the amount remitted into Malaysia, ascertain the nature as to whether they belong to “income” or “capital”, which will have different tax implications.
3) Where the funds are mixed, distinguish between foreign source income and domestic source income for proper reporting of taxable income for Malaysian tax purposes.
4) Conduct a comprehensive review of the current investment structure and strategise the most optimal approach to undertake future investments. This review may involve international tax planning to mitigate tax exposure involving multiple countries.
5) Examine the existing intercompany loans and undertake possible steps, including debt restructuring exercises, or rescheduling repayments to reduce the tax impact on remittance of interest income into Malaysia. On this note, any proposed changes will need to include transfer pricing considerations to avoid tax pitfalls in the future.
If guidance is required on the issue of tax on foreign income, consider seeking professional advice from a tax consultant. This would help you avoid stepping into potential tax landmines that could be uncovered in the future, when the company is audited by the IRBM.
As more consumers embrace digital banking and faster, simpler ways to send money, it has created opportunities for fraudsters and increased the risk of digital fraud in Malaysia, particularly fuelled by the adoption of real-time payments.
Smart Investor recently got in touch with CK Leo, FICO’s lead for fraud, security and financial crime in Asia Pacific to find out his views.
CK Leo, FICO’s lead for fraud, security and financial crime in Asia Pacific
Smart Investor: What are some of the growing fraud threats that consumers need to be more aware of?
CK Leo: According to Malaysia’s Commercial Crime Investigation Department, the top fraud threats reported this year include impersonation scams, e-commerce crime, and phishing, which could lead to account takeovers and unauthorized transactions. At the same time, consumers should be mindful of Authorized Push Payment (APP) fraud, where fraudsters manipulate consumers or individuals at a business to transfer money to a bank account controlled by the fraudster.
APP fraud is rising globally, fueled by the adoption of real-time payments, such as DuitNow in Malaysia, which enables fraudsters to flee with the money at speed.
Threats such as APP fraud are particularly difficult to detect and prevent, and show how traditional safeguards such as authentication checks, a common security measure used by banks in Malaysia, are insufficient in protecting customers.
One tool that can be used to help protect real-time payments is to use analytics that look for changes in customer behavior, such as using accounts or devices outside of their usual habits, as well as standard anomalies, such as time-of-day or frequency of a transfer. FICO has found that the use of targeted profiling of customer behavior to spot scams has yielded some impressive results, with 50 percent more scam transactions detected.
SI: Why do we still fall for investment scams, when there are a lot of legitimate investments out there?
CKL: The answer is that people want to believe that there are easy ways to make money. We are influenced by social proof in the media and online with stories of overnight crypto millionaires, stock wizards and real estate moguls. The pandemic helped to super charge the problem, as people spent a lot more time online, unable to go anywhere or spend money.
While in this state many were enticed by greed and schemes peddled by scammers that promised easy money. It is, however, worth remembering that with a clever amount of social engineering used against us, anyone can become a victim of fraud. Some schemes out there are very sophisticated at mimicry of real investment companies, setting up spoof websites and advertising on Google to attract potential victims.
Although banks and authorities are in a constant race to update and upgrade their security measures, this is simply not enough to prevent all investment fraud. There is a paramount need to educate consumers on new and emerging threats and what checks to make before investing.
SI: What are the driving factors for the rise in fraud in recent years?
CKL: Today’s technology has enabled fraudsters to undertake globally pervasive scams with shocking ease, constantly shifting in approach to find new vulnerabilities. Malaysia’s digitally savvy population and banking penetration of 92%, is expected to grow significantly in the coming years and along with it the opportunities for scammers. Criminals are attracted to both the increase in money flows and the growth in the number of inexperienced users.
Fraudsters have also been making use of technology to scale up both the complexities and the scope of their operations. Automation and bots, for example, have been exploited by criminals to gain data and create fake consumer identities for application and card fraud. In Malaysia, scammers have even created their own applications to trick consumers into giving up valuable personal information.
So, the driving factors in fraud growth are that technology has enabled the reach, scope, volume and low cost of creating scams. While a growth in digital services has increased the attack surface and the number of less educated users as well. Plus, the honeypot, or the sheer amount of money that can be made from online crime means there is an arms race going on.
For banks, this means staying on top of their banking security game and evolving to prevent new fraud types like the growth in real-time payment fraud.
SI: How must banks’ fraud detection and prevention strategies change to minimize fraud risks?
However, this verification method can be easily compromised, through scams like SIM swap fraud. Banks will need to consider more robust or multiple factors of authentication for a layered approach to security. This includes tools available to them, such as biometric authentication, a method FICO found a preference for among Malaysians.
The reduction of information silos is equally key. Banks with different solutions for transaction monitoring and fraud must remove these separate silos and work collaboratively to create an integrated solution able to read data holistically, leading to timely detection and the prevention of fraud.
Thirdly, consumer education must remain a top priority for banks. Banks must maintain regular communications with their customers to assist them in preventing fraudulent transactions. They can do this by encouraging customers to keep their contact information updated to receive timely fraud alerts.
These three approaches can be realized through advanced analytics which enable real-time decision-making to prevent fraudulent attacks from taking place.
In contrast to siloed, single-focus solutions, an integrated, enterprise-wide fraud platform enables banks to have a more comprehensive approach to minimizing fraud risks. Banks will be able to dynamically adapt to emerging fraud types, while using machine learning models based on targeted profiling of customer behavior to separate between fraud, scam and normal behavior.
This shift away from siloed solutions also enables banks to choose the best channel when communicating with customers to ensure that they are safe and aware of possible fraudulent activities.
SI: What are some steps consumers can take to protect themselves from fraud and scams as they increase use of real-time digital payments?
CKL: Consumers need to be aware of the risks of APP fraud. They should always stop and think if something unusual happens, like someone messaging to say their bank account has changed. It is always worth contacting the person directly to check things like this to minimize the risk of fraud. Consumers should also be wary of downloading new applications, and scanning QR codes, which scammers are increasingly exploiting for fraud.
Above all, consumers should always be diligent about performing background checks before revealing their personal information and credentials, and always keep track and check their transactions.
SI: What’s your view on the adoption of digital currency (crypto) in the next few years?
CKL: While the technology behind digital currency has seen interesting developments over the past few years, the region has understandably been apprehensive about its adoption, especially considering the recent cryptocurrency crash and bad actors that use it to try and support criminal activity.
No matter where digital currency is headed in the next few years, stronger security and trust will need to precede its wider adoption.
SI: What makes FICO unique from others?
CKL: When it comes to fraud protection, we believe in an integrated approach that combines industry-proven advanced machine learning and artificial intelligence with real-time cross-channel fraud prevention. Our decades of investment in fraud research and innovation have yielded over 100 patents for fraud-specific machine learning innovation.
Our analytics expertise is trusted to protect 3 billion global payment cards and 65 percent of the world’s credit cards.
About FICO
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. FICO’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. The company provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations.
