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Malaysia's handling of mobile broadband service tax favourable: report

AvantiiKumar | July 25, 2010
GSMA report on mobile broadband growth in Malaysia

KUALA LUMPUR, 25 JULY 2010 -- According to the global GSM Association, the Malaysian government's handling of mobile broadband service tax is having a positive impact on mobile broadband penetration in the country.

Speaking during a visit to Malaysia, GSMA senior director, Asia Pacific, Jaikishan Rajaraman said findings from a Telecom Advisory Services (TAS) report on mobile broadband taxation showed that the Malaysian government has put in place some of the most flexible levels of taxation on mobile broadband service provision in the world.

"This tax regime is having a positive impact on mobile broadband penetration, but there is a major need for additional spectrum planning and allocation in order to ensure sustained growth and investment," said Rajaraman.

He said Malaysian operators benefit from tax levels of just 6.1 per cent of the total cost of mobile services (applied as VAT, or value added tax) on mobile broadband services. "By comparison, in Brazil, the additional taxes can be as high as 38 per cent of the total cost of mobile services (33 per cent VAT and 5.1 per cent from other taxes)."

"The Malaysian government is targetting delivery of broadband connectivity to 50 per cent of all households across Malaysia by the end of 2010," he said. "With just 1.5 million fixed line broadband connections currently available, compared to a growing ecosystem of some 31.5 million mobile users, HSPA [high speed packet access] and LTE [long term evolution] mobile broadband will be instrumental in helping the Malaysian government achieve its goals."

The GSMA represents the interests of the worldwide mobile communications industry. Spanning 219 countries, the GSMA unites nearly 800 of the world's mobile operators, as well as more than 200 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers, Internet companies, and media and entertainment organisations.

 

 More needs to be done

Rajaraman said other key findings include:

• For every dollar that taxes are reduced in Malaysia over the five-year period ending in 2014, 1.7 to 25.6 dollars will be created in additional gross domestic product (GDP)

• Lowering taxes in Malaysia on total cost of mobile ownership from the current level of 6.1 per cent to 5.1 per cent will increase mobile penetration by between 0.9 per cent to 1.8 per cent, deliver between 260,000 and 530,000 extra subscribers, and create additional wealth of between US$105 million and US$1.44 billion (0.01 per cent 0.24 per cent worth of additional GDP by 2014)

While Malaysia has demonstrated keen adoption of mobile broadband with year-on- year growth of 118 per cent by the end of quarter one 2010 - more needs to be done to drive widespread availability across the country, he said.

He added that the GSMA believed the Malaysian government needs to consider developing a clear and consistent plan for spectrum allocation, including the licensing of the 2.6GHz spectrum as soon as possible for future LTE deployments; not delaying the re-farming of the existing 900MHz spectrum; and aligning digital dividend spectrum plans across Asia.

"[So far] Malaysia has implemented a taxation approach which maximises the penetration potential of mobile broadband by minimising the tax burden on the purchase of devices and services," said Rajaraman. With further support and commitment from the government facilitating these key spectrum levers, GSM mobile operators across Malaysia have the opportunity to become the key innovators driving broadband uptake across Malaysia.

 

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