Wednesday, October 16, 2024

The Federal Government Warns Bond Buyers of 1-Year Wait to Get Their Money

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The federal government is not exactly renowned for its efficiency. But the government’s slowpoke ways might have reached a new low for those who buy bonds through the TreasuryDirect website. If you want to move your Treasury bonds from the website to a brokerage account, you might have to wait up to one year, according to a recent report in The Wall Street Journal. The combination of a surge…



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8 Free Resources for Navigating Medicare Enrollment Periods

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It’s that special time of the year again. No, not Christmas. It’s Medicare’s open enrollment period, from Oct. 15 to Dec. 7, when people enrolled in the Medicare program can join, drop or switch health coverage or a drug plan. Here are some of the best free resources from nonprofits and the government. Use them for enrollment help or at any time for answers to your questions and guidance in…



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How Much Would Health Care Cost If You Retired Today?

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Health care costs in retirement are on the march, according to a new survey. A single 65-year-old retiring in 2024 can expect to spend an average of $165,000 on such care, a figure that’s up 5% year over year, according to Fidelity’s 23rd annual Retiree Health Care Cost Estimate. The rising cost of care probably comes as a disappointment to some, especially after costs held steady last year.



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Tuesday, October 15, 2024

Building on gains from Budget 2024 for a progressive Malaysia

AS we approach the announcement of Budget 2025, there is widespread anticipation. It is a time to reflect on the progress made since Budget 2024, recalibrate our goals, and outline the next steps to propel Malaysia forward, particularly regarding sustainability, economic resilience and social well-being.

Budget 2024: Key Successes and Shortcomings

Budget 2024 introduced several impactful measures aimed at economic recovery and future growth. Among the key achievements were:

Support for SMEs: Small and medium enterprises), contributing nearly 38% of Malaysia’s gross domestic product, received a major boost in Budget 2024. The RM10 billion SME Digitalisation and Automation Matching Grant played a critical role in helping businesses adopt advanced technologies, enhancing productivity and competitiveness.

However, a more streamlined tax system could further support SMEs by reducing administrative burdens, encouraging compliance, and simplifying the tax landscape.

Sustainability Initiatives: Budget 2024 made strides in promoting the sustainability agenda, with incentives for green investments, renewable energy projects, and the development of low-carbon cities. The Low Carbon Cities Framework successfully encouraged more municipalities to adopt green practices. Building on this, future budgets could enhance support for businesses to integrate sustainability into their operations through clearer incentives, such as tax breaks for investments in clean energy and green technology. A carbon pricing mechanism, for instance, could incentivise businesses to adopt more environmentally conscious practices.

Youth Empowerment: Recognising Malaysia’s youthful population, Budget 2024 allocated RM500 million for upskilling and reskilling programmes, enhancing job opportunities and career pathways for young Malaysians. As industries increasingly embrace digitalisation and automation, these initiatives are critical in aligning education with market needs. Stronger collaboration between the private sector and educational institutions could ensure that training programmes address the evolving demands of the job market, preparing youth for emerging roles in a digital and sustainable economy.

Despite these positive developments, some challenges remain. Affordable housing, particularly in urban areas, continues to be an issue, with the housing supply still failing to meet demand for the B40 group. Additionally, while tax reforms were introduced, the tax base could be expanded further to capitalise on the growing digital economy.

Expectations for Budget 2025: Key Areas of Focus

To build on the gains of Budget 2024, Budget 2025 should address several critical areas, laying the foundation for a sustainable and inclusive future:

Simplifying and Expanding the Tax System

A simplified tax system is crucial for improving compliance and supporting business growth. SMEs, in particular, would benefit from clearer, more straightforward tax policies.

Expanding the tax base to include the digital economy is also necessary to ensure that growing sectors, such as multinational tech companies, contribute fairly to national revenues.

Advancing the Green Economy

Malaysia’s commitment to climate goals requires continued focus on green initiatives. Introducing carbon pricing mechanisms, such as a carbon tax, would encourage companies to adopt cleaner practices. Expanding tax breaks for investments in renewable energy and energy-efficient technologies will spur more businesses to adopt green

solutions and drive the transition to a low-carbon economy.

Bridging the Skills Gap

While upskilling and reskilling initiatives have seen some success, more must be done to align education with industry needs. Establishing stronger public-private partnerships could help bridge this gap, providing young Malaysians with the practical skills needed for today’s job market. Prioritising digital and sustainability skills will help position Malaysia as a leader in the region’s shift towards a green and digital economy.

Addressing Housing Affordability

Malaysia’s ongoing housing crisis requires more aggressive measures. Rent-to-own schemes, targeted particularly at young professionals in urban areas, should be expanded. Moreover, public-private partnerships could help streamline the development of affordable housing, addressing supply shortages. With young professionals struggling to enter the property market, this must be a priority in Budget 2025.

Fostering Digital Transformation

As Malaysia moves towards becoming a high-income nation, digital transformation must remain a priority. Investments in digital infrastructure, especially in rural areas, are necessary to bridge the digital divide. Supporting tech startups and expanding ecommerce platforms will also help drive innovation and job creation.

Incorporating Professional Insights

As Budget 2025 approaches, it is crucial to consider the recommendations from key industry stakeholders such as ACCA, which consistently advocates for policies that support sustainable finance, tax transparency, and future-ready talent. ACCA’s global insights, particularly from reports such as Green Finance: A Global Perspective and Tax As a Force for Good, highlight the importance of simplifying tax systems, incentivising green initiatives, and fostering skills development to prepare the workforce for future challenges. These insights offer valuable guidance as Malaysia seeks to build a resilient, forward-looking economy.

Balancing Ambition with Fiscal Prudence

While bold initiatives are necessary to drive the nation’s growth, it is important to maintain fiscal prudence. Striking the right balance between ambitious policies and managing the national deficit will ensure long-term financial stability. This is especially important as Malaysia navigates both the opportunities and challenges of the global economic landscape.

As we await the unveiling of Budget 2025, there is an opportunity to build on the successes of Budget 2024 while addressing its gaps. With the right policies in place – focused on taxation reform, sustainability, youth development, housing, and digital transformation – Malaysia can chart a course towards a more resilient and inclusive economy.

This article is contributed by ACCA portfolio head of Maritime Southeast Asia, Andrew Lim.



Source: The Sun Daily

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The Ultimate Guide on How Much to Tip in Every Situation

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Tipping people who provide services — hairstylists, nail techs, movers, bartenders — is a common practice. It’s also something that elicits a lot of strong opinions. Customers expected to leave the money often balk because they don’t like the idea that the extra payment is seemingly required. They argue that the expectation makes it almost meaningless as a token for a job well done.



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Monday, October 14, 2024

Tax Matters – Understanding group restructuring and IPO capital gains tax exemptions

MALAYSIA’S finance minister announced the introduction of capital gains tax (CGT) on the disposal of unlisted shares by companies, trusts, limited liability partnerships and cooperatives in his Budget 2024 speech on Oct 13, 2023. In the speech, he stated that the government will consider the exemption of CGT on the disposal of shares related to certain activities such as approved initial public offering, internal restructuring and venture capital companies.

On Oct 3, 2024, two exemption orders relating to disposal of shares involved in group restructuring and IPO were issued. A summary of the gazette orders:

Group restructuring

In order to benefit from this exemption, the restructuring of companies should be within the group, and should be part of a scheme to increase the efficiency of the operations of either the disposer company or the acquirer company, or both.

The acquirer company must pay the disposer a consideration consisting not less than 75% of its shares, and the balance of the consideration must be in cash. The disposal should take place between March 1, 2024 and Dec 31, 2028.

To benefit from the exemption, the disposer needs to apply to the Director General of Inland Revenue three years after the disposal of the shares and comply with the conditions imposed in the guidelines to be issued by the Ministry of Finance. During this period, the disposer is required to the file normal tax returns and the CGT returns (Form CGT).

Any capital losses generated from the disposal will not be allowed to be set off against other capital gains or to be carried forward.

Issues that need clarification

Since the guidelines are not out, taxpayers cannot get certainty on their position because the conditions to be imposed by the minister are currently unknown. When we refer to the term “scheme”, the question in the minds of taxpayers would be – whether the scheme has to be approved by any third parties, or any scheme approved by the board of directors to improve the efficiency of the group is permissible?

The application to the Director General of Inland Revenue can only be made three years after the disposal of the shares. Does this mean that the tax must be paid upon the disposal upfront, and the exemption is only granted three years later? This could lead to a refund situation where the taxpayer has to make another application to obtain the refund.

Initial public offering (IPO)

The exemption period will only cover the disposal of shares between March 1, 2024 and Dec 31, 2028, and the shares should be in relation to the restructuring of any company for an IPO. The disposer must within one year from the date of disposal of the shares apply for the IPO either to Securities Commission Malaysia for listing on the Main Market, or to Bursa Malaysia for listing on the ACE Market or the LEAP Market. The approvals for the IPO must be obtained before Dec 31, 2028.

Upon obtaining the approval from either the Securities Commission or Bursa Malaysia, you should apply in writing to the Director General of Inland Revenue within one year for approval. Similar to the group restructuring exemption, any losses from the disposal of shares shall be disregarded.

Issues that need clarification

Again, the issue here will be the taxes may need to be paid upfront and a refund obtained later.

The exemption orders are welcome and provide much-needed clarity.

This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).



Source: The Sun Daily

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Mitsubishi Power eyes hydrogen projects to support Malaysia’s transition to green energy

KUALA LUMPUR: Japan’s Mitsubishi Power Ltd, part of Mitsubishi Heavy Industries Group, is eyeing hydrogen power projects in Malaysia to support the country’s transition to green energy.

Mitsubishi Power Asia-Pacific managing director and CEO Akihiro Ondo said Malaysia’s potential for energy transition lies in replacing older power stations with more efficient technologies, such as gas turbine combined cycle (GTCC) systems.

“To combine such renewable energy with a reliable baseload gas turbine combined cycle is important for energy security and sustainability in Malaysia. Therefore, we would like to be involved in this strategy for Malaysia by providing our technologies and solutions,” he told Sun Biz in an interview.

Furthermore, Ondo mentioned strong governmental support in Malaysia for energy transition initiatives.

“The Malaysian government has shown a strong commitment to energy transition. We have engaged in productive discussions with government-owned entities and agencies based on feasibility studies and other energy transition activities,” he said.

However, Ondo noted that deploying commercial-scale energy transition and decarbonisation programmes might be difficult for a single country. “We believe that intergovernmental arrangements involving Japan and other countries will be quite important. We would like to continue our dialogue with both the Malaysian government and the Japanese government.”

Ondo said their gas turbines and hydrogen production facilities can integrate with renewables to manage fluctuations in energy supply. “Malaysia has abundant resources for renewables, including hydropower in Sarawak, which can serve as a reliable baseload. We are in close communication with renewable energy providers and developers.”
Regarding competition in the hydrogen market, Ondo stressed collaboration over competition. “We are willing to work with potential partners in Sarawak to produce hydrogen based on renewable resources, which can be utilised for power generation or exported to Japan,” he said.

On the outlook for hydrogen fuels in Malaysia, Ondo expressed Mitsubishi Power’s commitment to validating and deploying technology for hydrogen and ammonia.

The company operates Takasago Hydrogen Park in western Japan, which features a gas turbine factory, a research and development centre, and a verification facility with a capacity of 550 megawatts – equivalent to the Miri-GTCC project in Malaysia.

By 2026, Mitsubishi Power plans to install four types of hydrogen production facilities at Takasago, enabling the production and storage of hydrogen on-site for use in gas turbine combined cycle systems.

The facility aims to validate technology for hydrogen combustion, with plans to increase hydrogen firing from 30% to 50% this year and eventually test 100% hydrogen firing in smaller-scale gas turbines.

“Our gas turbine, validated at Takasago, can currently fire 30% hydrogen. The commercial plant can initially operate with natural gas or LNG. Once the hydrogen supply chain is established, the plant can gradually increase hydrogen usage to achieve a complete transition,” Ondo said.

Since the 1960s, Mitsubishi Power has delivered several important power stations in Malaysia, including those in Pasir Gudang, Port Klang and Lumut, and has been involved in the construction of Tenaga Nasional Bhd’s (TNB) Tuanku Jaafar Power Station in Port Dickson.

“Recently, we secured the new GTCC project in Miri, Sarawak (in August). We will install high-efficiency and reliable technology capable of co-firing cleaner fuels like hydrogen, which is expected to be in commercial operation in 2027,” Ondo said.

He also mentioned that the company is pursuing a memorandum of understanding with TNB regarding energy transition to explore the application of cleaner fuels, carbon capture and other energy conservation measures.



Source: The Sun Daily

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Businesses that cannot pay living wage are not sustainable: ACCA expert

KUALA LUMPUR: Businesses that cannot afford to pay a living wage do not effectively have a sustainable model and will need to prepare to deal with future shocks from economic, climate, or natural crises.

ACCA Asia-Pacific senior policy consultant Sharath Martin said businesses have to recognise that paying wages that workers need in order to have a decent standard of living is a matter of human rights.

“Paying minimum wages just isn’t good enough, especially when such wage levels are very low. We often assume that cost increases from paying additional wages may adversely hit small and medium enterprises.

“However, today, such businesses may have to deal with high staff attrition, rehiring and retraining costs, and loss of productivity, which affect their bottom line.

“To overcome these barriers, companies can focus on the benefits of paying a living wage, such as increased employee motivation and productivity, reduced turnover and enhanced brand reputation.

“Businesses and governments need to appreciate that living wages act as a socio-economic multiplier and will further boost the government’s building of the Ekonomi Madani,” he told SunBiz.

Sharath was echoing a recent survey conducted by ACCA which showed that while 88% of accountants globally acknowledge the importance of living wages, only 56% see it as their responsibility.

The data in Malaysia paints a similar picture.

Despite recognising the need for a living wage to achieve sustainability goals, only 33% of respondents believe it is their responsibility to ensure that even their Tier 1 suppliers adhere to this standard.

Sharath said companies should adopt a phased approach to implementing living wages, balancing the short-term costs with the long-term socioeconomic and financial benefits.

He said companies should implement a transition plan to pay living wages to all employees, including contract staff, address Tier 1 suppliers and expand gradually across the supply chain.

“They should also consider that the costs of turnover, retraining, and low productivity may outweigh the initial investment in paying higher wages. Communicating the long-term benefits – such as improved reputation, enhanced talent attraction, and alignment with government policies – can also make the case to stakeholders.”

When asked about the government’s role in implementing living wages, Sharath said policymakers and governments should understand that low wages put workers at greater risk of being forced to work, even if they are unwell, or having to work in conditions that compromise their health and safety.

“Low wages may also lead to children being forced to work to supplement the household income. It passes the burden to the government by having subsidy programmes, which then place additional stress on government finances and national debt levels.

“Consistent with the government’s Ekonomi Madani philosophy and framework, living wages, on the other hand, have the potential to serve as a significant socioeconomic multiplier that benefits workers, employers, the economy and the government. These benefits include reducing inequality and improving social stability, reducing government subsidies to low-income households, increasing consumption and gross domestic product and reducing the incentives towards bribery and corruption,” Sharath said.



Source: The Sun Daily

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Sunday, October 13, 2024

SC: 3,380 complaints, enquiries on scams, unlicensed activities as of Q3’24

KUALA LUMPUR: As of the third quarter of 2024, Securities Commission Malaysia (SC) has received 3,380 complaints and enquiries on scams and unlicensed activities, an increase of 28% compared to last year.

SC executive director and general counsel Yew Yee Tee stated that in 2023, the regulator received 3,262 public complaints and enquiries on various scams and unlicensed activities, a 321% increase from that in 2019.

She said these numbers involve new and sophisticated fraudulent schemes using deepfake technology and ever changing modus operandi.

“Scams and unlicensed activities continue to be a growing concern,” Yew said at last Friday’s launch of the SC’s annual flagship investor education fair, InvestSmart® Fest 2024, in conjunction with World Investor Week 2024.

Yew said the positive side to this is that it also sees greater awareness and scepticism among the public where many of the complainants and enquirers have not fallen victim to the scams, compared to previous years.

She said most scams share a common element – the use of mule bank accounts.

“Mule accounts involve instances where victims are persuaded to rent out their bank accounts which are used by scammers to illegally receive and move ill-gotten funds. Therefore, I advise you to never allow your bank accounts to be used as mule accounts. The monetary reward offered is not worth the while.”

Since 2022, Yew said, the SC has acted against 19 mule account holders for receiving proceeds of unlawful activities, where enforcement actions were taken including imposition of fines in hundreds of thousands of ringgit.

Yew pointed out that this year, the Penal Code (Amd) Bill 2024 was passed in the Dewan Rakyat to combat online crimes using mule account for online fraud where, among others, mules are now being liable to fines of a minimum RM10,000 and jail terms of at least one year if found guilty.

“Beyond such enforcement actions, these individuals would also face other consequences such as not being allowed by banks to maintain or open bank accounts resulting in these individuals facing challenges in finding work or operating a business, both of which requires a bank account,” she added.

In combating scams and unlicensed activities, Yew said, the SC adopts a multiprong approach consisting of investor awareness and education, monitoring, surveillance and enforcement.

“Despite these regulatory interventions by the SC, the key challenge has always been how to get the right warnings to the right people and before they become victims as most times those who need warnings most aren’t seeing these warnings,” Yew said.



Source: The Sun Daily

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