KUALA LUMPUR: The proposed incentives for automation announced in the 2020 Budget will help boost business confidence in automation investments, as it demonstrates a stronger commitment from the government in developing the fourth industrial revolution (Industry 4.0) technologies within the local ecosystem.
Malaysia Automotive Robotic and IoT Institute (MARii) chief executive officer Datuk Madani Sahari said this, in turn, will make the adoption process of automation easier as financial barriers could be lowered.
“The government has taken a step in the right direction in spurring smart manufacturing, particularly in incentivising the adoption of automation technology to boost productivity and quality,” he told Bernama.
He said since the launch of the National Policy on Industry 4.0 (Industry4WRD) in 2018, the Ministry of International Trade and Investment, through MARii, has conducted numerous programmes to ease manufacturers going into smart automation, guiding Malaysian companies to embrace automation through the development of technology strategies within their business plans.
Therefore, he said the announcement on the extension for the Accelerated Capital Allowances (ACA), as well as matching grants for 2,000 manufacturing and services companies, is a welcome move, particularly as investment decisions in automation are a key consideration for businesses, especially for small and medium enterprises (SMEs) within the automotive and mobility sectors.
Furthermore, he said the increased allocation for technical and vocational education and training added a new dimension to the automation adoption process as the human capital development aspect is essential for a sustainable technological ecosystem.
He said human capital development also goes hand in hand with financial considerations towards the adoption of smart automation within the industry.
He added that emphasis on human capital development would also help reduce the country’s dependence on foreign labour.
While tabling the 2020 Budget in Parliament, Finance Minister Lim Guan Eng said the government has extended the year of assessment for the Accelerated Capital Allowance and automation equipment capital allowance for the manufacturing sector on the first RM2 million and RM4 million incurred on qualifying capital expenditure to the year of assessment 2023.
The incentive is also to be expanded to include the services sector on the first RM2 million incurred on qualifying capital expenditure from the year of assessment 2020 to the year of assessment 2023.
The government has also allocated RM550 million to provide smart automation matching grants of up to RM2 million per company to 1,000 manufacturing and 1,000 services companies to automate their business processes.
The government is also enhancing the Working Capital Guarantee Scheme (SJPP) whereby its guarantee to Bumiputera small and medium enterprises (SMEs), export-oriented SMEs and SMEs investing in automation and digitalisation will be increased to 80% from 70%, while the guarantee fee will be reduced to only 0.75%. — Bernama