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KUALA LUMPUR: Malaysia’s latest tax reforms, outlined in Budget 2024 to stimulate domestic startups, drive clean energy investment and modernise tax administration, are set to benefit innovative startup businesses, green technology sectors and service-oriented companies. BMI, a Fitch solutions company, said the budget’s sweeping tax reforms aimed to stimulate local industries and channel investment into key sectors, including advanced manufacturing. Among the initiatives are reinvestment allowance (RA), electric vehicles (EVs) tax incentives and global services hub tax incentives. According to BMI, the RA effectively lowers the tax burden on companies that undertake capital investments to modernise machinery, upgrade technology or diversify into higher-value products. Meanwhile, the extended tax incentives until the assessment year 2027 for EVs will reduce operational costs for businesses in the rental sector, which could potentially accelerate fleet upgrades and increase the adoption of green vehicles. “Companies that set up global service centres in Malaysia will benefit from a reduced tax rate under the Global Services Hub Tax Incentive,” it said in a statement. BMI noted that Malaysia’s corporate income tax rate of 24% positions it towards the higher end of the spectrum in the broader Asia region. In contrast, ASEAN neighbours such as Singapore and Thailand offer more competitive rates of 17% and 20% respectively, positioning them as a more favourable investment destination on a tax basis. However, BMI said that introducing targeted incentives can offset the high tax rates. “While Malaysia’s corporate income tax rate is high by regional standards, the introduction of targeted investment incentives is poised to enhance investment appeal in key innovative and sustainable sectors. “This strategy will enhance Malaysia’s attractiveness as an investment hub before the Global Minimum Tax (GMT) comes into effect. Once the GMT is adopted broadly across Asia, the competition edge will shift as low tax rates will no longer be a draw for foreign direct investment, given that the tax floor will be uniform in adopting markets,” it said. Consequently, it said that economies like Malaysia will need to offer additional incentives to enhance their attractiveness to businesses. “Such proactive measures are expected to strengthen Malaysia’s overall value proposition for companies operating within its borders,” it added. Malaysia’s implementation of the GMT as part of the Organisation for Economic Co-operation and Development’s (OECD) Base Erosion Profit Sharing (BEPS) 2.0 project, has been deferred to 2025. This tax will affect multinational enterprises (MNEs) with consolidated revenues exceeding 750 million euros, by instituting a floor of 15% on their tax rates. — BERNAMA

KUALA LUMPUR: The International Air Transport Association (IATA) has upgraded its 2024 profitability projections for airlines to US$30.5 billion (RM143.16 billion) in net profit compared to the US$25.7 billion (RM120.63 billion) forecast made in December 2023. It said the improved profitability is also estimated to be higher than 2023’s US$27.4 billion (RM128.61 billion). IATA said North America continues to be the most significant contributor to industry profits, supported by a high passenger load factor, robust yields and strong consumer spending despite cost-of-living pressure. Meanwhile, Asia Pacific is expected to be responsible for half of the world’s revenue passenger kilometres (RPK) growth in 2024, driven largely by recovering domestic markets in China, Japan and Australia. “International travel in the region remains subdued, especially China where it is still below pre-Covid levels. “This indicates that there is still a lot of pent-up demand for cross-border travel in the region, which will likely boost future growth prospects,” IATA said, forecasting revenue in 2024 to hit a new high of US$996 billion (RM4.67 trillion). “Passenger revenues are expected to reach US$744 billion (RM3.49 trillion) in 2024, up 15% from US$646 billion (RM3.03 trillion) in 2023 with RPK growth expected to be 11.6% year-on-year,” it said. In contrast, cargo revenues are expected to fall to US$120 billion (RM563.2 billion) in 2024 from US$138 billion (RM647.7 billion) in 2023. “Despite the strength of demand, cargo yields are expected to fall 17.5% in 2024 while remaining slightly above 2019 levels. “This is normalisation after extraordinary pandemic highs. A key factor in this is the significant belly capacity that entered the market in 2023 in tandem with the recovery of passenger travel,” it stated. Overall, IATA projected total travellers to reach a new record of 4.96 billion this year, while total air cargo volumes are expected to reach 62 million tonnes in 2024. Meanwhile, the operating profits of airlines are expected to reach US$59.9 billion (RM281.1 billion) in 2024, up from an estimated US$52.2 billion (245.02 billion) in 2023. IATA said an aggregate return above the cost of capital, however, continues to elude the global airline industry. It said the return on invested capital in 2024 is expected to be 5.7%, which is about 3.4 percentage points below the average cost of capital. “The airline industry is on the path to sustainable profits, but there is a big gap still to cover. A 5.7% return on invested capital is well below the cost of capital, which is over 9%. “Earning just US$6.14 (RM28.82) per passenger is an indication of just how thin our profits are. It is barely enough for a coffee in many parts of the world,” said IATA Director-General Willie Walsh. On top of that, jet fuel is expected to average US$113.8 (RM534.18) per barrel in 2024, translating into a total fuel bill of US$291 billion (RM1.36 trillion), accounting for 31% of all operating costs. IATA added that high crude oil prices are expected to continue to be further exaggerated for airlines as the crack spread (premium paid to refine crude oil into jet fuel) is expected to average 30% in 2024. — BERNAMA

KUALA LUMPUR: The International Air Transport Association (IATA) announced that its projection for sustainable aviation fuels (SAF) to triple, reaching 1.9 billion litres (1.5 million tonnes) in 2024 is on track. This would account for 0.53% of aviation’s fuel needs this year. Meanwhile, IATA also emphasised the need for several policy measures to accelerate SAF use. “Governments have set clear expectations for aviation to achieve a 5% carbon dioxide emissions reduction through SAF by 2030 and to be net zero carbon emissions by 2050. “They now need to implement policies to ensure that airlines can actually purchase SAF in the required quantities,” said IATA Director-General Willie Walsh. The association said incentives to build more renewable energy facilities, strengthen the feedback supply chain and allocate a greater portion of renewable fuel output to aviation would help to decarbonise aviation. “Governments can also facilitate technical solutions with accelerated approvals for diverse feedstocks and production methodologies as well as co-processing renewable feedstocks in crude oil plants,” said Walsh. IATA said incentives aimed at SAF could help facilitate the renewable diesel-SAF switch, which requires minimal modifications at existing stand-alone renewable fuel facilities. It said that production of all renewable fuels will need to scale up rapidly and among them, the need for a growing share of SAF production will necessitate strong policy support. “One such articulated policy is the US Grand Challenge and the US$3 billion (RM14.1 billion) of investments it supports. “Stable, long-term tax credits would further maximise SAF production capability in both existing and new facilities,” it noted. In a separate statement, IATA announced that it would establish the SAF Registry to accelerate the uptake of SAF by authoritatively accounting for and reporting emissions reductions from SAF. 17 airlines, 1 airline group, 6 national authorities, 3 original equipment manufacturers (OEMs) and 1 fuel producer are already supporting the effort to develop the registry. The registry is expected to launch in the first quarter of 2025. — BERNAMA

KUALA LUMPUR: Talent Corporation Malaysia Bhd (TalentCorp), an agency under the Ministry of Human Resources (KESUMA), continues its commitment through the Malaysia at Heart (MyHeart) initiative, providing a platform for Malaysians worldwide to contribute to the nation’s development, regardless of their location. During a recent TalentCorp MyHeart ‘Salam Dari Malaysia’ outreach event in Tokyo, which drew over 180 Malaysians residing in Japan, KESUMA Minister Steven Sim Chee Keong, announced that TalentCorp will come on board as a strategic partner for the upcoming Malaysia-Japan Visionaries Conference 2024 (MJVC2024). In this first MyHeart collaboration for Japan, TalentCorp will provide a RM30,000 grant (equivalent to ¥1,000,000) to ensure the conference’s success. Additionally, TalentCorp will allocate a RM50,000 bursary to assist up to 20 Malaysian researchers to participate in the conference in Tokyo. “In today’s global market, the best talents, especially our Malaysians, will excel wherever they are. Through MyHeart, KESUMA is committed to developing Malaysian talents abroad, so they can contribute to the nation’s growth and benefit fellow Malaysians. “Our country’s human capital is a valuable asset, no matter where they reside, and KESUMA is dedicated to nurturing these assets for the greater good,” the minister said. The MJVC2024 is organised by a team of 45 Malaysian and Japanese researchers, led by Amy Poh Ai Ling. A Malaysian hailing from Bukit Mertajam, Penang, with dual PhD credentials, Amy Poh currently resides in Tokyo with her family and is committed to advancing excellence in interdisciplinary research between Malaysia and Japan. “To me, this is what a diaspora programme like MyHeart is about. Each MyHeart session offers more than just a chance to connect with fellow Malaysians abroad, but it is an opportunity to pitch and engage in collaborations to breathe life into your projects. These can create tangible outcomes that directly benefits both Malaysians and Malaysia, transforming into genuine brain gain stories,” Steven Sim emphasised. At the event, TalentCorp Group CEO, Thomas Mathew signed Memoranda of Understanding (MoU) with the Japan Graduates Association of Malaysia (JAGAM) and the Malaysian Students’ Association Japan (MSAJ), which aims to bolster TalentCorp’s initiatives, including MyHeart and Ilham KESUMA Antarabangsa, through increased collaboration with these active Malaysian associations in Japan. Mathew highlighted that previous TalentCorp’s efforts in the diaspora space were mainly on facilitating the return of Malaysians abroad and that the role has since evolved to encompass all Malaysians living abroad, recognising that they can contribute significantly to the circulation of knowledge and expertise. “By coming on board as a strategic partner for meaningful initiatives such as the MJVC2024, we are stating emphatically that we support our Malaysians abroad who drive and are committed to projects that provide opportunities to fellow Malaysians. That is the essence of what MyHeart is,” he commented.