The Federation of Malaysian Manufacturers (FMM) would like to applaud the government for tabling a comprehensive and pragmatic mid-term review plan of the 11th Malaysia Plan (RMK11) to balance fiscal consolidation with support for inclusive growth by adjusting macro strategies and setting new priorities.

It is most reassuring to note that despite the impact of fiscal and governance reforms on short-term economic growth, the government is steadfast in pursuing its target of 4.5 percent to 5.5 percent GDP growth for the remainder of RMK11 period; and most importantly, in keeping budget deficit at three percent per annum with continued government spending to support economic growth.

The industry would work closely with the government in helping to meet these economic targets.

FMM strongly believes that the Malaysian manufacturing sector can contribute significantly towards helping to achieve the macro strategies of productivity, investments, moving up the value-chain and strengthening exports.

The manufacturing sector has always been the main catalyst of growth with extensive upstream and downstream linkages throughout the value chain.

The government should therefore support the manufacturing sector by ensuring a business-friendly operating and investment environment through the reduction of unnecessary regulatory burden and costs; and a more level playing field to facilitate fair and open competition and access to market opportunities.

FMM hopes that proposals to increase government revenue as part of fiscal consolidation would not lead to additional and unnecessary regulatory burden to the manufacturing sector.

The priority should be to support and promote expansion of the economic pie to enable the reaping of higher returns to enhance business sustainability, and more importantly, medium and long-term growth.

Existing tax incentives such as the Reinvestment Allowance, Accelerated Capital Allowance, double deduction incentives for R&D as well as export growth should be enhanced to facilitate and spur the manufacturing sector to quickly undertake upgrading, expansion and diversification activities, including investing in Industry 4.0 technologies and innovation to achieve higher productivity and value-add.

Being a strong advocate of market–based mechanisms to drive business decision making, FMM looks forward to close consultation with the government on its progressive and comprehensive multi-tiered levy system mechanisms to empower human capital development.

We hope to see critical market-based levers namely, simple and transparent criteria; planned and pre-announced changes, especially in levy rates; removal of discretionary approvals, bureaucracy inconsistencies in policy implementation as well as rent seeking activities; and incentives to reward businesses which have reduced their dependence on foreign workers and unskilled labour.

Levy collected should also be ploughed back to help finance industry’s investments in automation and productivity enhancements.

Overall, FMM looks forward to close and regular engagement with the government on the relevant programmes and initiatives under the 19 priority areas and 66 strategies of the six policy pillars.

We are optimistic that these economic targets and aspirations would be executed and achievable through close collaboration and consultation between the government and the business sector, in particular the manufacturing sector for better fit of policies in meeting the challenging demands of competition and technological advancements.

The writer is the president of FMM.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.