E-invoicing Rollout for SMEs Deferred to 2026

The implementation of e-Invoicing for small and medium enterprises (SMEs) with annual sales between RM150,000 and RM500,000 will be postponed to Jan 1, 2026, with a six-month transition period. Finance Minister II said this would benefit over 240,000 SMEs, allowing them more time to adapt to the system. 

Meanwhile, businesses with annual sales below RM150,000—such as small food vendors—are exempted from e-Invoicing requirements, benefiting over 700,000 small traders. The government remains committed to supporting businesses in transitioning to e-Invoicing, providing free access to the MyInvois portal and mobile app for tax submission. Additionally, free nationwide training is being conducted by the Inland Revenue Board (LHDN).

Since e-Invoicing was introduced in August 2024 for companies with annual revenue above RM100 million, over 25,000 companies have adopted the system, generating 181.3 million e-Invoices. 

On another matter, employers will be required to contribute 2% to the Employees Provident Fund for foreign workers, with a matching 2% contribution from employees. Prime Minister Datuk Seri Anwar Ibrahim announced that this policy will remain in place until further review.

The government justified the move as necessary to ensure equal employment conditions between local and foreign workers, as lower employment costs for foreign workers had previously put locals at a disadvantage. Employers will be eligible for tax deductions on these contributions under Section 34(4) of the Income Tax Act 1967, up to 19% of total employee wages.

SMEs can also claim capital allowances for ICT equipment and software purchases, with the deduction period reduced from four years to three years from 2024 onwards. Additionally, SMEs can claim up to RM50,000 in tax deductions per year on consultancy fees related to e-Invoicing from 2024 to 2027. 

Personally, SMEs with turnover of up to RM3 million should implement e-invoicing in 2026 (and not in July this year). That gives a little more time for adjusting procedures and working arrangements. But, alas, that may not be feasible for a government looking for more tax sources? 

Reference:

e-Invoicing rollout for SMEs deferred to 2026, Shahrizal, BusinessToday, 20 February 2025

Remember Names!

 Remembering is a skill. Sure, there are those who have been blessed with a good memory. But they are exceptions. For most of us, remembering is a skill, like speaking in public, singing, reading, thinking, or swimming. We improve at a skill by hard work—direct effort applied with a good deal of concentration, mixed with proper know-how. 

One of the most glaring weaknesses we often confess is in the realm of remembering names. We excuse it by saying: "I'm not good at remembering names!" or "Your face is familiar, but what was that name?" That's better than: "Your breath is familiar, but not your name."

 

Source: https://www.wikihow.com/Remember-Names

There is a story told by a comedian about his neighbour, an elderly gentleman and wife who returned from their summer holiday. As a good neighbour he offered to help with the luggage. Asked where did he go? The neighbour with dementia couldn’t answer and he needed to ask his wife. Not remembering her name too, he asked the good neighbour what is the plant that grows on the side of a wall? The good neighbour replied “Lily”! “Ah yes” he said and went on to ask “Lily, where did we go for our holidays, dear?” 

The secret lies in that very brief period we stand face to face with another person—in fact, the most important person in your life at that moment. So is the name! How you fit the name with the face—and cement both together in your memory bank—is of crucial importance.

Perhaps remind yourself at each introduction and handshake:

This person is important (because he or she is!).

God has arranged our meeting (because He has!). 

It would be safe to say that people with remarkable memories developed them because of a driving need or desire. One of the keys that unlocks a person's soul is the realization that you are interested enough to call him or her by name. Let that be your driving force as you make the concerted effort to remember someone's name. 

Don’t worry if you don’t, I am poor at this! 

Reference:

Remembering Names, Part One, by Pastor Chuck Swindoll

(Excerpt taken from Come before Winter and Share My Hope by Charles R. Swindoll. Copyright © 1985, 1988, 1994 by Charles R. Swindoll, Inc. )

List Petronas?

Why not list the national oil corporation Petroleum Nasional Bhd or Petronas? That was the question posed by P. Gunasegaram in Malaysiakini on 21 February 2025. 

Saudi Arabia listed its wholly owned oil company, the world’s largest oil producer Saudi Aramco, in 2019, on its Tadawul exchange, by selling just 1.5 percent to investors and raising US$25.6 billion (RM113 billion at current exchange rates). 

Source: https://en.wikipedia.org

Its current market value is about US$1.8 trillion or RM8 trillion, among the most valuable companies in the world and its most profitable by far. Petronas could be valued at over RM1 trillion (US$226 billion) and will account for a third of Malaysia’s expanded market capitalisation if it is listed. It could raise funds of around RM50 billion for floating just five percent. Because it is a huge company, it will provide considerable depth and width to the local stock market and boost market liquidity. This is the seed capital for a sovereign wealth fund, beyond Khazanah 

Its listed status will ensure public scrutiny and timely disclosure of all relevant information to an investing public. But that is the key issue. Currently, only the PM know its true workings. Not the Cabinet, Parliament or PAC. 

Petronas is the only Fortune 500 Malaysian company, ranked 167 in terms of revenue. In 2023, it made a net profit of RM80.7 billion, a fifth down from 2022’s RM101.6 billion. Lower energy prices, higher costs and tax expenses as well as foreign exchange impact saw the national oil company posting a 32% or RM25.6bil drop in net profit to RM55.1bil for the financial year ended Dec 31, 2024 (FY24) compared with RM80.7bil in FY23. 

Revenue for the period fell by 7% on-year or RM23.6bil to RM320bil primarily due to discontinued operations impact of RM23bil, while softer energy prices were offset by higher sales volumes, the company noted in a statement yesterday. 

Will they do it? No. Why? It is the private “war chest” of the PM in power. There is always a good reason to keep it from public scrutiny, so it can rescue various parties when required!

 

References:

Comment | Why not list trillion ringgit Petronas?P. Gunasegaram, Malaysiakini, 21 February 2025

Petronas FY24 net profit at RM55bil, Bhupinder Singh, The Star, 26 February 2025

Semiconductor Industry: Prospects and Challenges

The semiconductor industry is key to the global technology sector, and its prospects are closely tied to advancements in various fields such as artificial intelligence, 5G, the Internet of Things (IoT), and electric vehicles (EVs). As for Malaysia, its role in this industry is significant, and its future may seem promising due to several factors:

1. Strategic Location

Malaysia is geographically well-positioned in Southeast Asia, providing easy access to major markets like China, India, and other ASEAN countries.

2. Established Ecosystem

The country has a well-established semiconductor manufacturing ecosystem, with a strong presence of multinational corporations and local players involved in various stages of the semiconductor supply chain, from wafer fabrication to assembly and testing. 

Source: https://commons.wikimedia.org

3. Skilled Workforce

Malaysia has been investing in education and training to develop a skilled workforce capable of supporting high-tech industries. This includes specialized programs in engineering and technology fields relevant to semiconductor manufacturing.

4. Government Support

The Malaysian government has been supportive of the semiconductor industry through various initiatives, including tax incentives, grants, and the development of specialized industrial parks like the Kulim Hi-Tech Park.

5. Diversification

Malaysia is looking to diversify its semiconductor industry by moving up the value chain. This includes efforts to attract investments in higher-value activities such as integrated circuit design and the manufacture of more sophisticated components.

6. Global Demand

The global demand for semiconductors is expected to continue growing, driven by the proliferation of smart devices, the expansion of IoT, and the transition to greener technologies. This bodes well for Malaysia's semiconductor industry.

7. Trade Agreements

Malaysia is part of various trade agreements that can benefit its semiconductor industry, such as the Regional Comprehensive Economic Partnership (RCEP), which can enhance trade flows and reduce tariffs among member countries.

8. Challenges

Despite the positive outlook, Malaysia faces challenges such as competition from other countries, the need for continuous technological innovation, and the impact of global economic fluctuations on the semiconductor market. 

Malaysia has been one of the largest exporters of semiconductor devices and integrated circuits. The semiconductor industry is one of the largest employers in Malaysia's electrical and electronics (E&E) sector. The global semiconductor industry has seen a CAGR of around 4-6% over the past decade, and Malaysia's growth has been somewhat aligned with global trends.

Looking ahead to 2030, several factors could influence the value, workforce size, and CAGR of Malaysia's semiconductor industry:

1. Industry Value

The value of the semiconductor industry is expected to grow as demand for semiconductors continues to rise with the expansion of 5G, AI, IoT, and EVs. Malaysia's industry value could potentially increase proportionally with global growth, which some estimates suggest could see the global semiconductor market reach over $1 trillion by 2030.

2. Number of Workers

The number of workers may not grow at the same rate as the industry's value due to automation and the adoption of more advanced manufacturing technologies. However, there will still be a need for skilled workers, particularly in high-value areas such as semiconductor design and R&D. 

3. CAGR

The CAGR for Malaysia's semiconductor industry could remain steady or increase if the country successfully moves up the value chain and captures more of the global market share in higher-value semiconductor activities. The CAGR will depend on Malaysia's ability to innovate, attract investment, and navigate global competition.

A lot of work needs to be done between MITI, the Association and various large market players. We have Vietnam, Taiwan, India and Singapore as our competitors, and they don’t have other peripheral issues to contend with!

Malaysia’s Education Investment Gone South?

Quality human capital investment equips individuals with relevant skills and knowledge, enabling them to drive industrial transformation, technological advancements, and business efficiency. At the macro level, human capital investment is commonly measured by the percentage of education expenditure to gross domestic product (GDP). This indicator reflects the commitment of public, private and international entities to investing in human capital development and is monitored as part of the sustainable development goals (SDGs).

Data from the Unesco Institute for Statistics shows that from 2011 to 2022, Malaysia allocated an average of 4.6% of its GDP to education, notably higher than Singapore and Japan, which allocated 2.8% and 3.3% respectively during the same period. On the other hand, the productivity levels per employee in 2022 were almost three times higher in Japan and almost five times higher in Singapore compared with Malaysia. That year, the productivity level in Malaysia was equivalent to US$22,947. In Japan it was US$67,677 and in Singapore it was a whopping US$114,597. Despite a marginal decline in 2023 to US$113,179, Singapore’s productivity rate was still 4.8 times that of Malaysia’s US$23,298. 

So, how can this higher education expenditure translate into improved productivity in Malaysia? 

A closer analysis of labour productivity trends in relation to education spending reveals an alarming situation that cannot be ignored. This is evident in the graphs below, which depict scatter plots illustrating the relationship between education expenditure and productivity growth in Malaysia, Singapore, and Japan from 2001 to 2022.

 In the case of Malaysia, the trend line suggests a negative correlation between education expenditure and productivity growth. Higher education expenditure does not appear to translate into productivity gains; in fact, there are instances of productivity decline despite increased spending.

In contrast, a clear positive correlation is observed for Singapore and Japan, suggesting that increased education spending tends to be associated with productivity growth. The spread of data points suggests that the relationship is not perfectly linear but generally indicates that investment in education contributes to productivity improvements. Singapore’s model seems to show that effective allocation of education funds leads to economic benefits. 

When education fails to contribute positively to productivity growth, it raises serious concerns about the efficiency and effectiveness of a country’s investment in human capital. Education is widely regarded as a key driver of economic progress, equipping individuals with the skills and knowledge necessary to enhance labour productivity and drive innovation. 

However, when increased education expenditure does not translate into measurable productivity gains, it suggests underlying inefficiencies in the education system, labour market mismatches, or structural economic challenges that hinder the effective utilisation of human capital. The negative correlation between education expenditure and productivity growth underscores the urgent need to reassess education policies. 

Rather than focus solely on increasing funding, policymakers must prioritise the quality of education and its alignment with market demands. A well-functioning education system should equip the workforce with relevant skills that drive innovation and economic efficiency. Without targeted reforms, continued investment in education without measurable productivity gains risks becoming a financial burden rather than a driver of sustainable economic growth. 

With half of the Budget, many can translate a better outcome! We are in denial; the Minister is in denial; PMX is in denial. 

First, please admit you have a problem. Second, sack the Minister of Education (I had hoped Elon Musk will come over and sack the whole MOE lot). Third, engage with all stakeholders. Fourth, devise a simple plan:

 

(i)                  Adopt a two-language policy in all national schools – Bahasa Malaysia and English (options with incentives for Mandarin and Tamil).

(ii)                    Emphasise maths and science not religious knowledge.

(iii)                  Engage competent headmasters.

(iv)                  Re-train and recruit teachers of all races.

(v)                    Re-visit curriculum and adapt from Singapore and Finland.

(vi)                  Collaborate with parents and “win-over” the students.

(vii)                Re-introduce exams at UPSR and PMR (or at least have UPSR).

(viii)               No more regrading/downgrading/special grading for weak students.

(ix)                  More vocational schools with industrial practice on-site; and

(x)                    “Audit” all facilities, headmasters, teachers and support staff annually. How? Use the District Education Officers.

That’s the plan. But key is implementation. And nothing will happen with this lot in power! Good luck Malaysia, you will suffer in 20-30 years from now if you don’t do anything! 

Reference:

Malaysia’s education investment is not paying off. What’s going wrong? Yusof Saari, FMT/Letter to the Editor, 21 Feb 2025