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Saturday October 26, 2013 MYT 11:07:00 AM
Saturday October 26, 2013 MYT 11:49:55 AM
Real property gains tax
The Government will increase the real property gains tax from next year in a bid to curb speculation in the housing sector. The move together with the developer interest bearing scheme are designed to cool the rise in property prices and should not penalise first time home buyers from purchasing their home.
Large infrastructure projects
Public investments will be RM106bil and the big ticket items that will be implemented have a theme whereby they will add to economic activity. Highways, railways and oil and gas projects are prioritised. The projects will also be spread throughout the various economic corridors to bring about a balance in development in the country. SMES
The government has allocated RM120 million in financing to increase innovation and productivity of SMEs.
They account for 98.5% of businesses in the country and contribute 32.4% to GDP, as well as major source of employment.
To encourage compliance with the minimum wage policy and reduce its financial impact on SME employers, co-operatives, societies and associations, the government has proposes that the difference in the wages paid by employers in 2014 be given further tax deduction.
Sugar subsidies were removed with immediate effect and the Government said it spent RM47bil in subsidies in 2013. The Government said it will gradually remove subsidies and give it to those who deserve it. It will help with the fiscal deficit and the savings will go towards funding development projects. It’s time Malaysians get use to the fact that subsidies are coming to an end.
High speed broadband
The Government and the private sector will be spending RM3.4bil to roll out HSBB to more urban sectors and surburban areas to widen the reach of high speed broad band in the country. In addition to that, Internet access in rural areas will be expanded at a cost of RM1.5bil and RM850mil will be spent to improve Internet access to Sabah and Sarawak.
Goods and services tax
GST will be implemented effective April 1, 2015 at a rate of 6%. The GST rate was above what the market was expecting and it will save the Government political capital as it will be able to keep the rate fixed for at least some time after it is introduced.
At that rate, expect the impact to be positive for Government revenue although a lot of items are zero-rated and GST-exempt, the introduction of GST will see corporate and personal income taxes cut the same year GST is introduced.
The National Entrepreneur Development Office under the National Strategy Unit at Ministry of Finance will be set up to plan and coordinate all activities related to entrepreneurship. The government is targeting to train 5,00 young entreprenuers every year.
To do this, RM50 was allocated to Malaysian Global Innovation and Creativity Centre (MaGIC) and another RM50 million for Graduate Entrepreneurship Fund managed by SME Bank.
A National Aviation Policy will be formulated to strengthen the ecosystem and services network in the aviation industry.
The government will spend RM700mil to build a new high capacity air traffic management centre at KLIA to replace the existing one in Subang.
Airports in Kota Kinabalu and Sandakan in Sabah, as well as the ones in Miri, Sibu and Mukah in Sarawak will be upgraded.
Passenger terminals at the Langkawi International Airport and in Kuantan will also be upgraded.
The industry will have a huge multiplier effect on the economy.
SME Bank will set up a RM300 million Bumiputera Equity Fund (Equibumi) to provide loans to credible Bumiputera companies to take over listed companies or companies with potential to be listed on Bursa Malaysia.
Another RM200 million loan facility by SME Bank for development programmes at Malay Reserve lands in Kuala Lumpur.
Tan Sri A.K. Nathan, Eversendai Corp Bhd executive chairman
While there will be short-term pain when the GST is implemented, the revenue generated from this tax can be channelled into infrastructure projects to promote growth as well as address public needs. We also hope that new projects will be awarded to competent and capable companies.
Datuk Badlisham Ghazali, Multimedia Development Corp Bhd CEO
The high speed broadband second phase will not only drive Internet usage and higher productivity, it is also a big boost for Digital Malaysia and will serve as a very important catalyst to drive us towards a Digital Economy.
Datuk Tajuddin Atan, Bursa Malaysia Bhd CEO
A stock exchange focus on the Environmental, Social and Governance Index will provide the marketplace a distinct advantage in attracting socially responsible investments from around the world estimated at about US$34 trillion
Datuk Abdul Farid Alias, Malayan Banking Bhd president
The continuation of high-impact major infrastructure and investment projects is positive for the banking industry and the capital market in terms of continuing to supporting fund raising and market activities.
Datuk Seri Nazir Razak, CIMB Group Holdings Bhd group chief executive
The government has correctly prioritised fiscal consolidation; restraining expenditure while being prudent with income expectations for 2014. The financial markets will welcome the reaffirmation of the targeted 2013 and 2014 budget deficits of 4% and 3.5% of GDP respectively.
Tan Sri Teh Hong Piow, Public Bank Bhd chairman
We welcome the Government’s firm commitment to continue addressing the country’s fiscal challenge by further reducing the budget deficit from 4.0% of GDP in 2013 to 3.5% in 2014, through a combination of efforts in increasing revenue and controlling of expenditure of the Government. We believe that the GST will be implemented in a coordinated and efficient manner.
Tan Sri Azman Mokhtar, Khazanah Nasional Bhd MD
This budget is, above all, for economic rebalancing. This states clearly that Malaysia’s future growth should not be driven by the expansion of debt, but rather by moving up the global value chain in an inclusive manner which leaves no citizen behind.
Aireen Omar, AirAsia Bhd CEO
The allocated funds for air traffic management will encourage greater efficiency and growth of traffic into Malaysia. It is also encouraging to hear that the Government will formulate a new aviation policy and framework as this will ensure we can compete effectively in maintaining the country as Asia’s hub for low cost carriers.
Johan Mahmood Merican, Talent Corp Malaysia Bhd CEO
The Government has shown in this budget that besides committing to managing the finances and reducing the fiscal deficit, it has shown a commitment to investing in human capital development. We’re also encouraged by the introduction of several initiatives for the private and public sectors to work together in human capital development.
Tan Sri Leong Hoy Kum, Mah Sing Group Bhd group MD
We look forward to exploring opportunities for suitable locations for the MyHome private affordable ownership housing scheme. The RM30,000 subsidy per unit is a positive for the property industry as well as the increase in maximum prices for low-cost homes to RM45,000 per unit and RM170,000 for medium-cost units.
Tan Sri Liew Kee Sin, SP Setia Bhd president
Although residential properties will be exempted from the GST, it does not mean that the cost of supplying them will be free from GST as developers will still have to pay this tax on nearly all the inputs required to construct the home. This may increase construction costs quite substantially.
Ahmad Jauhari Yahya, MAS group CEO
I laud the PM’s Budget announcement on the aviation sector – these are the right steps towards making Malaysia as the aviation hub in the fastest growing economic region in the world. Positive steps include investment in new ATC infastructure, airport upgrades and aviation policy to guide the industry. These are important steps to support the Visit Malaysia campaign.
TAN SRI AZMAN HASHIM
Malaysian Investment Banking Association
We applaud the initiatives to strengthen the financial market, including the Islamic capital market, moving Malaysia in the direction of greater market sophistication and vibrancy. Budget 2014’s efforts at structural reforms are essential to generate higher growth. It relates to boosting competitiveness, improving productivity, embracing innovation culture, while focusing on boosting quality growth.
Malaysian head fixed income and sukuk
Franklin Templeton Investments
The measures to strengthen national fiscal position by cutting subsidies is a step in the right direction in addressing the weakness in the country’s balance sheet. This will protect the “A” sovereign rating as any downgrade will not bode well for our bond market.
GAN ENG PENG
Hwang Investment Management
From a market perspective, the budget is a step in the right direction while a return of global growth and the delay in quantitative easing tapering will provide impetus to drive the market higher by the year-end. By historical standards, valuations are not excessive and foreign positioning in the market is relatively low.
WITH less than 18 months to go before the goods and services tax (GST) goes live, corporates need to assess the impact on their existing business models and strategies, and start preparations to ensure they are ready not only in terms of their systems and processes, but also in terms of a broader organisational readiness.
The proposed corporate and personal tax rate reductions are timely, but a larger reduction may be necessary to ensure that we remain competitive regionally. At a 24% tax rate in 2016, we would still be higher than many of our neighbours, and higher than the new norm of 20% in the region.
YEO ENG PING
Ernst & Young Malaysia
The details of implementing the proposed option for employees to do away with the annual income tax filing in April, including the monthly tax deductions, should be carefully reviewed so that individuals can effectively enjoy this facility.
It is likely that this facility would be available only to those with employment income. This, however, remains to be confirmed. There would also be questions on how tax audits would be conducted to ensure that the system is not unfairly taken advantage of.
DR VEERINDERJIT SINGH
The budget was bold in the way in which the GST package was crafted, with drops in tax rates in the same year or the year after, and even before the robustness of the GST system has been tested. Other than that, there is nothing exciting to talk about!
DATUK SERI STANLEY THAI
Supermax Corp Bhd
The corporate tax reduction is good news for the manufacturing sector, including glove manufacturers. However, we hope that the Government would continue to reduce corporate tax rates in line with the region’s leading economies.
DATUK DR R. PALAN
SMR Technologies Bhd
I like the strategic thrust on Inculcating Excellence in Human Capital in this budget. I think the budget has focused on a key priority area, human capital, to improve the long-term well-being of the nation and our competitiveness. There are no short-cuts to success.
DATUK EWE SWEE KHENG
Tough times call for tough measures. It takes political will and courage to invoke the necessary medicine such as the goods and services tax implementation and sugar subsidy rationalisation. These tough measures, coupled with fair, inclusive, far-reaching ones such as book vouchers and cash for all our students, culminate in a balanced and fiscally responsible budget.
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Budget 2014, reaction and impact
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