Go big in solar panel exports, Jomo urges Malaysian firms

Economist KS Jomo says Malaysia should take advantage of the world demand for solar panels. (Bloomberg pic)

KUALA LUMPUR: Economist KS Jomo today urged Putrajaya to go all-out to export solar panels, as more countries look to renewable energy.

He said this would stimulate the private sector with more entrepreneurs manufacturing and assembling the panels.

“We need to stimulate the private sector. We have a huge opportunity in exporting solar panels,” he told reporters when asked about a point he made during a speech on the upcoming budget.

Jomo, who was part of the high-level Council of Eminent Persons tasked with advising the government on economic and financial matters, had expressed concerns about debate on the budget resembling “people on the Titanic”.

“(It is) like rearranging deck chairs as the ship is heading towards the iceberg, which proves to be disastrous,” he had said at a forum on “Budget 2020 – Making Shared Prosperity a Reality” organised by the Institute of Democracy and Economic Affairs (IDEAS).

At present, Malaysia is the largest exporter of solar panels to the United States, but there are not many companies in the field.

Jomo, now an adviser with Khazanah Research Institute, said the United Nations will be meeting later this month to discuss climate change, and Malaysia needs to take advantage of the world demand.

He said Europe uses 100% bio solar panels and “here we are debating whether we can go further”.

He said political will is needed for Malaysia to excel in renewable energy.

IDEAS’ four proposals for Shared Prosperity

At the forum, IDEAS gave its views on the Shared Prosperity vision announced by Prime Minister Dr Mahathir Mohamad to ensure that no Malaysian is left behind.

They focused on low wages and high cost of living.

IDEAS research director Laurence Todd said businesses are struggling with increasing uncertainty as costs rise, coming at a time when the government’s fiscal room for manoeuvre is limited.

“We know that the minimum wage is insufficient to maintain an acceptable standard of living, but also that businesses have concerns over further increase in minimum wage,” he told participants.

Because of that, he said IDEAS is proposing a new Living Wage Tax Credit, under which employers are incentivised to increase wages up to the new living wage proposed.

IDEAS is suggesting a 50% tax reduction for employers in the SME sector who pay workers up to RM1,100. Those who increase wages to RM1,500 and RM2,500 should also get a tax deduction of 50% and 25%, respectively.

Todd, who had previously served in a number of roles in the British government including at the defence ministry and the Treasury, said many Malaysians are unable to save enough for retirement or unexpected events.

The think tank is, therefore, proposing Employee Equity Schemes, where shares are allocated to employees to hold rather than to sell them for easy cash.

With the abolition of the goods and services tax (GST), and the replacement sales and service tax (SST) insufficient to cover a shortfall of about RM20 billion, Todd said the government should also introduce Capital Gains Tax on equities starting with an initial rate of 5% and tax-free allowance of RM50,000.

Lastly, he said there should be a Government Divestment Strategy, where it would hold only 10% of total market capital by 2030 with no majority shareholding.

Currently, he said the government’s shareholding among publicly-listed companies remains over 40% of the total capital market with majority stakes in over 70 companies.

“This creates concerns over competition and the lack of liquidity in Malaysia’s capital market,” he said.

The proceeds of this divestment, Todd said, should be reinvested in new markets to generate returns for the people.