The Penang chief minister said giving Malaysians overseas incentives to lure them back may actually backfire and encourage more professionals here to leave.
“Isn’t it better to work overseas since the Malaysian government would treat you better than when you are working in Malaysia? One can then return back to enjoy the 15 per cent income tax benefit,” he said in a statement today.
Prime Minister Datuk Seri Najib Razak announced the 15 per cent transitional income tax incentive yesterday under the Returning Experts Programme (REP).
The flat income tax initiative is part of a slew of recent measures aimed at attracting highly-skilled Malaysian Diaspora back to participate in Najib’s ambitious transformation plans.
Malaysia is considered badly affected by brain drain, with departing Malaysian rising from 9,576 Malaysians in 1960 to 1,489,168 Malaysians in 2005, according to the World Bank.
The World Bank also warned that a lack of human capital is a “critical constraint” in Malaysia’s ambition to transform itself into a high-income nation by 2020.
Najib said Talent Corp will be taking the lead in the REP and has revised the programme’s parameters and qualifying criteria, which will be announced in full at a later date.
But Lim cautioned that, while tax was an important factor, capping it will not be enough to get Malaysians who emigrated to return if other key issues were not addressed.
He cited pay, quality of life, promotion prospects, racial quotas and discrimination as other important considerations that weighed heavily on the minds of some 2 million Malaysians who have left the country since independence.
“No professional would want to bring up his children is this type of environment which does not offer them equal opportunities and reward performance,” he said.
Lim pointed out that a previous attempt in 1995 to lure 5,000 professionals back “failed miserably” when the scheme only pulled in 24 scientists in pharmacology, medicine, semiconductor technology and engineering between 1995 and 2000, with only one remaining in 2004.
He added that since 2001, the government has only managed to attract some 300 Malaysian scientists and specialists home despite the fact that Malaysia needs several hundred thousand more such experts to keep up with developed countries.
