BUT DOES IT APPLY TO ALL RACES? Don't expect further HANDOUTS in 2014 Budget - PM's banker brother

DON'T expect further handouts in the 2014 Budget as the government's priority is likely to deal with the current budget deficit, said CIMB Group chief executive officer Datuk Seri Nazir Razak.

Nazir said the government is facing a tough time in fine-tuning the budget amid uncertain global conditions.

Three months ago, Fitch Ratings downgraded Malaysia's credit outlook to "negative" from "stable". Fitch doubted Malaysia's ability to repay money, in view of rising debt levels.

Malaysia, which has Fitch's long-term foreign currency-denominated rating of 'A-', has been operating on budget deficits every year since 1998. At 53.3 per cent, Fitch said Malaysia's debt-to-gross domestic product ratio is the highest among 12 emerging Asian economies after Sri Lanka.

Malaysia's household debt, too, is not doing too well. Last year, the level of indebtness stood at about 83 per cent of gross domestic product.

"We've gone through a good period of incentives. What's important now ... is the government's financial health. If the government gets that wrong, ratings will be negative, thus cost of borrowings will be impacted," Nazir said at the launch of "Plug n Pay by CIMB Bank", the bank's latest electronic payment system.

Plug n Pay is Malaysia's first-ever chip-based mobile point-of-sale solution that offers businesses of any size an affordable and yet secure way of managing electronic payments via smartphones and tablets.

This is in line with government efforts to promote the adoption of efficient electronic payments and reduce dependency on cash transactions.

Bank Negara Malaysia aims to boost the number of electronic transactions per capita from 44 to 200 and reduce the usage of cheques by more than half from 207 million to 100 million by 2020.

Nazir, citing a global research report, highlighted the world's point-of-sale solutions currently amounted to 30 million units and the figure is expected to more than double in the next three to five years, driven by new technologies worldwide.

In view of this development, he is optimistic of the take-up rate for CIMB's Plug n Pay system.

Already available in the market, the Plug n Pay device is priced at RM250 each.

BT