Answer for Oral Question PL246

QUESTION

Yang Berhormat Awang Haji Mohamad Danial @ Tekpin bin Ya'akub

YANG BERHORMAT AWANG HAJI MOHAMAD DANIAL @ TEKPIN BIN YA'AKUB asked the MENTERI HAL EHWAL DALAM NEGERI to state whether the Government plans to introduce the Ganjaran Berdasarkan Nisbah Tenaga Kerja Tempatan policy, namely preferential government procurement or tax incentives for companies that retain at least 70% local workers, and what the implementation mechanisms or main obstacles would be.

ANSWER

Yang Berhormat Menteri Hal Ehwal Dalam Negeri

The Local-Foreign Ratio (NTA) method is indeed already being planned. However, the determination of the ratio needs to be carefully examined, taking into account the capabilities of various types of companies in different sectors. Consideration must also be given to the availability of local workers with skills and experience corresponding to the companies’ requirements.

In terms of incentives, several tax facilities are available under the Income Tax Act (Chapter 35) to encourage companies to hire, develop and retain local employees, including the TAP Contribution Additional Contribution Tax Credit, which was implemented on 1 January 2011; the Local Workforce Recruitment Tax Credit; and the Training Tax Credit, both of which were implemented on 1 January 2012.

The TAP Contribution Additional Contribution Tax Credit is granted at 10 per cent of the additional contribution over the previous year’s total contribution to the Employees Trust Fund. Under the Local Workforce Recruitment Tax Credit, companies that hire new local workers may claim a tax credit amounting to 50 per cent of the total salary paid to those local workers for a maximum period of three (3) years. Meanwhile, under the training tax credit, companies that incur expenditure on employee training are permitted to claim a tax credit amounting to 100 per cent of the gross salary paid throughout the training period.