Banks hail sustainable, fiscally responsible budget

BUDGET 2024 | Banks have hailed Budget 2024 as sustainable, fiscally responsible, and friendly towards small and medium enterprises (SMEs) following its tabling by Prime Minister Anwar Ibrahim earlier today.

Hong Leong Bank and CIMB Bank expressed that they were pleased with the new budget which they say will strengthen the country’s business ecosystem.

“The budget forms a strong foundation towards achieving Malaysia’s long-term goals of safeguarding the rakyat’s wellbeing and strengthening the country’s business ecosystem within an increasingly volatile global macro-economic environment,” said CIMB Group CEO Abdul Rahman Ahmad in a statement today.

The budget has suitably balanced fiscal responsibility with supporting growth while meeting the rakyat’s needs, he added.

Specifically, he supported the measures to boost SMEs and start-ups including the RM2.2 billion in total funding for SMEs.

He pointed out that the focus on environmental sustainability and food security with specific allocations for SMEs that operate within these areas is also good.

“This will help support their growth and resilience and subsequently future-proof the socioeconomic wellbeing of all Malaysians,” Rahman said.

He also welcomed the government’s commitment to combat financial scams by doubling the allocation to the National Scam Response Centre and the establishment of the National Fraud Portal.

Promising ‘actionable plans’

In a separate statement, CEO Kevin Lam said it is encouraging to see follow-through on previous announcements with additional details and “actionable plans” in the budget.

These include policies on the welfare of the rakyat, enhancing SME ecosystem, strengthening the Islamic banking positioning, combating financial scam, and providing welcoming policies to attract foreign direct investments (FDIs).

“This could serve as a solid foundation to propel Malaysia towards meeting the New Industrial Master Plan 3 and the mid-term review of the 12th Malaysia Plan, contributing significantly to the long-term sustainability of the Malaysian economy,” Lam said.

The government’s commitment to fortifying the SME ecosystem will pave the way to doubling the share of export-oriented SMEs to 25 percent of vendor development by 2030 and lifting the share of domestic value added in manufacturing to 65 percent by the same timeframe, he elaborated.

This will strengthen the country’s economy in general, he said, as SMEs account for 37 percent of the GDP and offer about two-thirds of employment.

Lam also lauded the government’s commitment to sustainability and the incentives offered to those using electric vehicles.

He expressed cautious optimism that the projected growth trajectory of four to five percent for 2024 would provide a suitable environment for businesses to grow.

“In this regard, the government’s target to narrow the fiscal deficit from five percent of GDP this year to 4.3 percent of GDP in 2024, its lowest in five years, is well regarded and is expected to augur well with investor confidence in the international arena,” Lam said.

Expansionary budget

Meanwhile, Bursa Malaysia chairperson Abdul Wahid Omar also described the budget as expansionary but with fiscal responsibility by reducing fiscal deficit from five percent of GDP in 2023 to 4.3 percent in 2024 and further to three percent in the medium term in line with the Fiscal Responsibility Act (FRA).

Bursa Malaysia chairperson Abdul Wahid Omar

“This will be achieved, among others, by enhancing tax collection effectiveness, gradual subsidy rationalisation and plugging leakages as well as broadening the revenue base,” Wahid said in a statement.

He pointed to the increase in the sales and service tax to eight percent, the reintroduction of tax on luxury goods and the imposition of 10 percent capital gains tax on shares in unlisted companies.

Specifically, the capital gains tax policy will encourage more unlisted companies to list their shares on Bursa Malaysia, which he said will spur further growth in the capital market.

The government’s support for the development of a voluntary carbon market is also encouraging, he added.

“Overall, (it is) a comprehensive yet pragmatic and relatively sustainable Budget 2024,” he said. - Mkini