I spoke at a panel discussion organised by the Penang Institute last Saturday. Others on the panel were TalentCorp CEO Johan Merican, CEO of Agensi Inovasi Malaysia Mark Rozario, and CEO of Penang Institute Dr Lim Kim Hwa.
The topic was brain drain. Dr Lim and his colleagues recently produced a paper analysing the costs and benefits of the emigration of Malaysian professionals to greener pastures over the years. The panel speakers were invited to comment on their findings and recommendations.
Dr Lim’s team studied the economic impacts of brain drain. Among others, the study found that, on average, emigrants gain an additional annual net income of USD24,600 (RM78,000) by migrating. And if the impact of immigration is factored into the picture, the source country suffers from significant remittance outflow and high net fiscal cost.
Currently, TalentCorp offers several incentives to lure back Malaysian professionals under the Returning Expert Programme (REP). These are flat income tax rate of 15 percent for five years, tax exemption on personal items brought back to Malaysia, tax exemption on one car, and permanent residence status for foreign spouse and children.
The researchers looked at the income tax incentive on offer and found that returnees do benefit financially. Over a period of 13 years, returnees under the REP stand to gain up to USD125,885 in total. That is about RM400,000. A significant financial gain.
TalentCorp has done a good job. On their website, they recorded that 2500 applications have been approved under the REP since 2011. This is a relatively good number. And they have many more programmes to attract, retain and nurture talents for the country. They have a very important task at hand and they must be commended for it.
But I symphatise with friends at TalentCorp because they seem to be working within a system that is bent on countering the good work they do.
TalentCorp goes everywhere, representing the government to persuade people that Malaysia is a welcoming home. But we have within the same government individuals who urged some of us to migrate out of the country or want the citizenship of some loyal citizens to be revoked.
And we have politicians who refuse to condemn groups and individuals who are spreading hatred amongst us by exploiting racial sentiments and promoting religious bigotry.
When it was my turn to speak at the forum on Saturday, I chose to use my own experience as an example. I lived in the United Kingdom from 1993 to 2009. When we returned, the REP did not exist yet in its current form. But my wife qualified for another programme offering similar benefits. And I benefitted from the scheme through her.
Despite the various benefits on the list, the only thing that was useful to us was the ability to bring back two cars duty free. It was actually an afterthought. We have already decided to move back because I wanted to set up IDEAS, and we would have returned even if there was no benefits on offer. I wonder how many of the 2500 returnees were like us. Does the benefits offered by the REP really matter? Or was it just a nice gift that played a minor role to influence the decision?
When we were returning, we simply applied for the AP to get the duty free cars without giving it much thought. Now, with the benefit of hindsight, I must admit that I think all the benefits offered to the returnees are discriminatory to Malaysians who did not leave.
Take just the duty free cars for example. One of the cars I bought when I got back was a 2007 Mercedes C200. The car cost me RM35,000 and shipping was about RM5000. Even today, with RM40,000 you will never get a 2007 Mercedes. But you can get a manual Proton Saga FLX 1.3 Executive.
The incentives are saying to the millions of Malaysians who have not migrated that, since you have not migrated, you will be charged onerous tax and duties so that you can only afford to buy a Proton. Since you have remained in the country, you do not deserve a Mercedes. The price will be artificially inflated so that if you can only afford RM40,000, you can only buy a Proton.
The same about income tax. Since you have not migrated, rather than rewarding you, you will be slapped with higher income tax rates from the Inland Revenue Board. It is your fault for not migrating.
In short, with the benefit of hindsight, I can say that I have benefitted from a policy that discriminates against the millions of Malaysians who remained in the country. Maybe that is something I should have thought about before moving back, and not only when Penang Institute invited me to speak on the topic.
In any case, moving forward, I think it is time we start thinking of a more holistic, and non-discriminatory, way to make Malaysians want to return.
Since these are people who have seen greener pastures, we need to create a pasture that is just equally green in Malaysia. The greener pastures are usually countries that are more liberal, more committed to protecting universal rights and more serious in defending minority rights.
They are countries in which the economic cake can be shared equally among citizens, where no one is prevented from having a share just because they were born into the wrong group. They are also countries where bigots are unanimously chastised by national leaders, and no racist will be given special privileges by any political party.
If we emulate the characteristics of those liberal countries, perhaps we would no longer need piecemeal offerings like special tax status and duty free cars to make talented people return home. After all, I am pretty sure that this was what the great Almarhum Tunku Abdul Rahman envisioned when he said back in 1957 that our country shall forever be a country based on the principles of “liberty and justice”. Bring back the Malaysia that the Tunku wanted to create, and we will see emigrant Malaysians coming back.
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Wan Saiful is the Chief Executive of IDEAS
Image credit: DL Magazine