Wednesday, September 3, 2008

2009 National Budget

Just last month, Prime Minister Datuk Seri Abdullah Ahmad Badawi unveiled the 2009 National Budget with the theme “A Caring Government” focusing on three specific strategies namely:-

1) Ensuring the Well Being of Malaysian
2) Developing Quality Human Capital; and
3) Strengthening the Nation’s Resilience.

National Budget is often one of the best indicators of the directions taken by the government to transform our country to be a developed nation. But unfortunately, the recent budget failed to carry the aspirations of our National Biotechnology Policy. Reading through the budget speech, I noticed that the biotechnology sector was hardly given any attention. Biotechnology plays a major role in all three strategies named above.

Looking at the first strategy, Biotechnology is one of the key technologies that can improve the quality of human life by leaps and bounds. Food security has been addressed quite well in the budget but unfortunately all the incentives are in the form of subsidy and tax reduction to reduce the burden of the farmers. Subsidies and tax incentives are definitely needed but may not be the best option in the long run. The government should be looking into transforming the agriculture industry into a high-tech industry by assisting the farmers to obtain the best technology for better yield and lesser use of manpower. Reduction on import duty on fertilizers and pesticides can temporarily reduce the burden of the farmers but it does not reduce their dependability on their continuous high usage of fertilizers and pesticides for better yield.

The second strategy is important to the biotechnology sector similar to the need of human capitals in other high-end industries such as electronics and ICT. As discussed in my previous post, retaining local biotech experts will be an easier task compared to luring back Malaysians in foreign countries. Reducing income tax rate by 1% may not be significant enough to retain local talents. Greater incentives in the form of higher pay and other benefits should be given to scientist similar to the incentives given to those professionals in the healthcare sector.

Looking at the third strategy, we have been consistently losing out foreign investors to neighboring countries. Investors from the west are flocking into Asia to tap into the biggest market (India & China) but unfortunately we see lesser FDI into our country compared to our neighbor’s esp. Thailand, Singapore and even Vietnam. Established foreign multinationals are definitely not looking for tax exemptions as their main criteria. The bait to bring them has to be in the form of strong human capital availability, transparent and business friendly policies and abundance of support services to enable them to sustain their businesses here. We are indeed lacking in all these areas in which the government has to play a major role in enabling a conducive environment for foreign companies to invest here.

We certainly need a biotech friendly budget to achieve the dream of our National Biotechnology Policy and 9th Malaysian Plan in transforming Malaysia into a developed nation. In year 2011, the implementation of the National Biotechnology Policy will enter the second phase which is transforming science to business. During this phase, we envisage sprouting of spin-off companies, blooming investment, knowledge-intensive job creation, technology acquisition and technology licensing, and developing of expertise in drug discovery and development. In other words, Malaysia should transform into a China or India in the next two years. Budget 2010 might be too late to address this. With the decline in growth rate in the manufacturing sector, the government should be more committed to develop the biotech industry in order to increase FDIs and GDP.
-by Joel William

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