15% tax or sincerity?

when I read this election angpow from Najib administration, a busload of thoughts passed through my mind.

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http://www.themalaysianinsider.com/malaysia/article/najib-proposes-flat-15pc-income-tax-to-lure-back-talent/

Najib proposes flat 15pc income tax to lure back talent

UPDATED @ 11:56:32 AM 12-04-2011
By Lee Wei Lian April 12, 2011

KUALA LUMPUR, April 12 — The Najib administration is hoping to lure Malaysian professionals working abroad with a flat income tax rate of 15 per cent for 5years under the Returning Experts Programme (REP).

The prime minister said today that the new 15 per cent transitional income tax incentive will be introduced alongside other incentives for returning Malaysian experts.

“I certainly hope these various changes will encourage more Malaysians working abroad with their varied experience and expertise to return and play an active part in our country’s economic transformation,” Najib announced this morning to gasps of surprise from delegates at the Invest Malaysia conference here today.

Other changes in store include limiting the tax free incentive for two cars under the REP to locally assembled vehicles.

Malaysia is considered one of the most badly affected nations by brain drain and the number of Malaysian migrants rose by more than 100-fold in a 45-year period, from 9,576 Malaysians in 1960 to 1,489,168 Malaysians in 2005, according to the World Bank which warned that a lack of human capital is a “critical constraint in Malaysia’s ambition to become a high-income economy.

In an effort to plug the talent leak, the Najib administration launched the Talent Corp last year which is tasked to lure back the Malaysian diaspora and scout for foreign skilled professionals.

Najib said that the Talent Corp will be taking the lead in the REP and has revised the programme parameters and qualifying criteria which will be announced in full at a later date.

“I would like to announce today that the incentive package has also been revised with immediate effect and I know that the Talent Corp will be providing details later,” he said.

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I think 1Malaysia administration has failed to address the real reasons for the great brain drain, or "trouble drain" in Najib's dad's case according to Lee Kuan Yew.

I won't go into those areas where too much has been about, and will continue to be written about :lack of equal opportunities, deficiency of outdated and obsolete social re-engineering approach, deficiency of non-meritocracy, deteriorating quality of life due to safety issues, lack of maintenance culture, haphazard town planning, poor public delivery system, racism, lack of "fun factors" etc.


My other contention is:

1) why such an abrupt announcement, i.e. a few days before Sarawak election, to the extend that Talent Corp will have to "iron out the details later"? I don't think the returnees are entitled to vote, nor Sarawakians who are probably too engrossed with NCR or land premium issues.

2) it is mind boggling to have 2 or 3 tax rates in the spirit of 1Malaysia. (1 for you and me, another for Iskandarians down south and now the NEP rejects.

3) Malaysians who stay behind will feel being classified as second class. The returnees are not doubt high calibre individuals with high income. Take a look at our income tax scale rates for individuals. The higher the income, the higher the tax bracket. That is social justice.

Unless Malaysian administration stop and recovery leakages, curb inefficiency and corruption; and able to lower tax rates for all, I do not think it is fair to continue to impose relatively high taxes on the people, when Malaysia have 38% petroleum tax while countries with no such nature's gift like Hong Kong and Singapore are charging considerably lower tax rates.

4) Wrong cure applied. The returnees no doubt needed to be encouraged but the main reason they went overseas are probably due to open competition hence freedom to compete and excel. So long as the outdated non-meritocracy culture and systems remain, the young, dynamic and ambitious will have second thoughts for themselves and their family.

Unless Malaysian environment is proven to be as open and fluid as talent magnets i.e. Singapore, Hong Kong or the United States, perhaps not many would like to give up what they are having now.

5) The 15% tax rate and tax free incentive remind me of the strategy of offering pittance goodies before a by-election to the less knowledgeable and grey matter. What works for hillbillies may not work as well for top notch high flying professionals who know a thing or 2 about operating conditions in Malaysia.

The 5 year window period do not offer consistency. Does this signal some drastic changes after 5 years? Would the high calibre returnees tolerate significant and unascertained changes in 5 years' time? The short term mentality in this abrupt change in policy might result in these returnees taking a 5 years tax break in Malaysia and move away after that. They are highly capable and mobile individuals with ambition and ability to adapt.


Just what sort of market research/strategic thinking did 1Malaysian administration did to come up with this until now unclear programme I do not know.

6 comments:

  1. They will fail in their efforts to lure back talent back to Malaysia. Anyway who would want to come back in the first place wanting to leave the uneven playingfield n orpportunities available to them. Its just an adhoc election ploy.

    ReplyDelete
  2. if the talent corp, brain gain programme and what not would address the humiliating racial affirmative action policies and introduce anti racial discrimination safeguards, do something about Ketuanan plague, I bet many of these professionals would return, tax exempted or not. Oh yes, you need to remove nuisance like Ibrahim Ali and Bung Mokhtar, you can't expect high flying professionals to regard them as their leaders! otherwise, I guess we have to just settle for professional "GLC lifers" hehehe

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  3. http://malaysia-today.net/mtcolumns/from-around-the-blogs/39688-15-tax-or-sincerity

    written by taxpayer, April 14, 2011 12:07:03

    Our professionals in UK are paying higher income tax than the British but something better than ' 2 cars and 15% tax ' bait , keeps them from avoiding our beautiful Nation. IF Najib and his 'million dollar ' APCO are unable to 'work 'it out , we are disgusted at the waste of our tax money spent on APCO ! ! NO SANE PERSON , WHO IS DOING 'WELL ' PROFESSIONALLY , WILL WANT TO RETURN TO A NATION , WHERE THE JUDICIARY SYSTEM , STINKS, THE EDUCATION SYSTEM IS MAKING A MOCKERY OF ' TRUE FACTS ' IN EDUCATION, RACIAL DISCRIMINATION AT WORKING PLACES, [ PRIVATE OR GOVT. ] , HEALTHCARE WITH 'QUANTITY BUT NO QUALITY ' AND OF COURSE TO 'UNHEALTHY , POLLUTED ENVIRONMENT AND WATER NOT FORGETTING OUR MOST CORRUPTED , FILTHY GOVT. ,WHICH IS WELL KNOWN FOR 'STEPPING OVER ' OBJECTIONS OF THE RAKYAT IN PUBLIC MATTERS EG. NUCLEAR PLANTS , MRT DEVELOPMENT NEAR HOUSING AREAS SO ON ! !
    +2 ...
    written by sioponthan, April 14, 2011 11:07:21

    just ask them(Malaysian experts) about what they want..
    +0 ...
    written by Andykhai, April 14, 2011 10:18:58

    hope that the Malaysian professionals abroad will return to serve this country.

    -3 ...
    written by Andykhai, April 14, 2011 10:14:00

    efforts to make our professionals to return to Malaysia should always be done.
    -2 ...
    written by tanakwagu09, April 14, 2011 10:04:10

    we will see soon.
    +1 ...
    written by LimD, April 14, 2011 09:32:33

    Don't think this will lure the talent back.
    +4 ...
    written by bulletpain, April 14, 2011 09:11:34

    better we serve to our country.
    -1 ...
    written by andray, April 14, 2011 08:37:45

    Just come back & try la...no use of making noises outside the country...if you want to fight for your right, come here & fight...no one wants to listen you there....
    +0 ...
    written by popuri, April 14, 2011 08:24:11

    I doubt people will take the bait.
    +8 ...
    written by popuri, April 14, 2011 08:23:15

    Those talents have a good reason for leaving in the first place, and its not as simple as how Najib puts it in.
    +9 ...
    written by z3_demarco, April 14, 2011 06:30:44

    I've got a long list here before you can get us to go back fool!

    1) A change in government.
    2) Demolish NEP
    3) Demolish ISA
    4) Increase the salaries
    5) Jail all the a55holes who's corrupted
    6) Make Lim Guan Eng PM
    7) Never ever to pay tax again.
    Drop all charges on RPK

    +17 ...
    written by smalluncle, April 13, 2011 23:28:25

    I think PM purposely get the fact wrong.

    Its not the tax that the "Talents" are concern about. Its the equality in job progression, fair treatment, promotion based on merits etc that counts.

    Who would want a pier who had only primary school brain to later become your boss jas becos he had thick cable????

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  4. @ andray, I am right here in Malaysia. I have worked in overseas but well over 90% of my study and work life is in Malaysia...I am not one of those foreign base brain drain...when bark, please bark right.

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  5. DS NAJIB has got the wrong advise. How can these yuppie around Najib who are inexperience think of a better and wholesome solutions to the country's malice. Dont just look at the those has gone out, stop those are planning to go which is much better option. Attracting those gone is difficults. Find ways how to tackle them here. Why need to go out.

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  6. Anom....nice thoughts but those foreign base professionals have been successful in more competitive and advance environment hence their presence can bring in new know how and experience but at the moment, Malaysia do not offer an attractive environment for them

    ReplyDelete