HIGHLY skilled workers are sought after by various organisations globally.

Since no economy will be able to survive without a highly-skilled talent base, it is imperative for Malaysia to develop, attract and retain the best global talent.

As the nation embarks on the important mission towards becoming a progressive and high income nation as envisioned in Vision 2020, a key issue in the 2011 Budget would be developing the right affirmative-action policies to attract local and foreign talent, and reducing the outflow of local talent.

One of the steps to attract and retain talent would be to reduce the personal income tax rates.

Last year, the Government reduced the maximum rate by 1% to 26% for individuals with chargeable income exceeding RM100,000.

A further reduction in the top marginal rate to 25% would ensure consistency with the current corporate tax rate of 25%.

The chart illustrates the comparison of the top marginal rates of some of our neighbouring countries.

Although the top marginal rate in Malaysia is generally lower than most of the countries indicated, Malaysian taxpayers would hit the top marginal rate of 26% if their chargeable income exceeds RM100,000.

In comparison, taxpayers in Singapore would only hit the top marginal rate of 20% if their chargeable income exceeds S$320,000 (about RM764,320).

As part of Malaysia's effort to attract foreign talent, it should consider a review of the tax rates.

A reduction in the tax rates and the widening of the tax bracket will particularly appeal to higher income earners to continue working in Malaysia and will also attract foreign talent to work in Malaysia as these measures will enable them to retain a higher level of disposable income.

In the last Budget, the Government introduced an incentive to attract foreign and local talent into Malaysia via Iskandar Malaysia.

Iskandar Malaysia is set to attract world-class talent to pursue their career prospects there.

Knowledge workers residing and working in Iskandar Malaysia would be subject to a flat rate of 15% on their chargeable income.

The incentive is for those who apply and commence work in Iskandar Malaysia before the end of 2015 and they will enjoy it indefinitely.

As the tax rate in Iskandar Malaysia is even lower than some of the countries in the region, the incentive would make Iskandar Malaysia an attractive work destination in Malaysia.

One of the recently much-discussed measures introduced by the Government under the 10th Malaysia Plan to attract and retain talent is the establishment of the Talent Corporation (TC).

TC will commence operations in 2011 and has the objective of attracting, motivating and retaining the talent needed for a high-income economy.

Currently, it is estimated that more than 700,000 Malaysians, many of whom are highly skilled professionals, are working and living abroad.

Furthermore, the Government is looking at ways to address the shortage of skilled talent in our country in order to increase the ability to attract high-technology industries.

Based on the 10th Malaysia Plan, TC together with the Immigration Department will actively develop measures to attract skilled foreign talent into Malaysia.

In this respect, the Government is working to further improve and simplify the current processes of hiring foreign talent. This can be achieved by aligning and benchmarking our work permit requirements with the more liberal ones of other high- income countries.

Initiatives by the Government in allowing more flexibility and mobility for skilled foreign talent earning above RM8,000 per month and open visas to highly skilled foreign professionals would encourage the inflow of highly skilled foreign talent, and this in turn will help alleviate the shortage of local talent.

The 2011 Budget is essential to transforming Malaysia into a high- income nation. The right affirmative action policies in place will ultimately assist in developing and retaining the much-needed world-class talent in Malaysia, and in tackling the constraints in our human capital.

- The Star Online