MEF: Profit incentive will cut layoffs

shamsulKUALA LUMPUR: Malaysian employers have hopes that the new scheme for company income tax will address retrenchment issues in the country.

Malaysian Employers’ Federation executive director Shamsuddin Bardan said it was hoped that the scheme would increase companies’ productivity and performance while protecting workers’ welfare.

“One interesting thing to note in the budget this time is that tax reduction would be in relation to the company’s performance and this will help the company to be more profitable.

“By being more profitable, the companies will be encouraged to manage their human resources to run more efficiently to increase productivity further which will be able to help address the issue of layoffs,” he said when contacted by Bernama.

Shamsuddin said that based on the Human Resource Ministry records as at September a total of 31,000 workers in various sectors have been retrenched.

Under the new scheme, companies with between five and 10 per cent increase in taxable income will enjoy income tax reduction of one percentage point.

“With the tax reduction, companies will be motivated to think of ways to upgrade skills and technologies in order to improve productivity and thus retain and protect their employees’s welfare,” said Shamsuddin.

On the tax relief of up to RM1,000 for individuals who send their children aged below six years to registered nurseries and pre-schools, Shamsuddin said it was a proactive move to reduce the burden on families and encourage more women to join the work force.

“Currently, it is estimated that only 50 per cent of women are in the work force. We hope to increase the number to over 60 per cent, to be at par with developed nations,” he said.

On the RM4.6 billion allocation to Technical and Vocational Education Training (TVET) insitutions, Shamsuddin said the move was very much welcomed by industries in need of skilled workers in the country.

“It is important to invest in human capital because human happiness and well-being will lead to various socio-economic benefits,” he said.