A ‘shrewd’ Budget, says Nazir


BUDGET 2008 is a “shrewd” Budget, according to CIMB Group chief executive Datuk Nazir Razak. 

“There is no let up in stimulating economic growth while reducing the budget deficit to 3.1% of gross domestic product, well ahead of analysts' expectations of 3.5%. 

“This leaves the Government room to increase expenditure if there is significant deterioration in the external sector while positioning the country for a credit rating upgrade.” 

He said it was also shrewd in its details by being incisive in choice and structuring of initiatives and incentives. 

Datuk Nazir Razak

“The consensus was expecting a reduction in personal income tax due to the administrative challenges from differing personal and corporate tax rates.  

“The Budget cleverly dealt with this by introducing a single-tier tax structure, and thereby avoiding the financial impact of cutting personal taxes,” Nazir said. 

There were calls for measures to boost the property sector as a whole. “Budget 2008 concentrated instead on boosting the low and medium-cost housing segment and avoids inflating the already accelerating high-end property sector,” he said. 

According to Nazir, the key initiative that will boost the property sector is enabling Employees Provident Fund (EPF) contributors to make monthly withdrawals from Account 2 to meet monthly mortgage repayments. 

However, implementation is key and an automated framework linking EPF withdrawals to monthly mortgage repayments should be developed, he said. 

“If the withdrawal process is a protracted manual process, this measure will not have its full anticipated impact – or worst, a lot of man-hours lost in account filling forms every month,” he opined. 

Nazir noted that the Budget also recognised how far behind Malaysia was in terms of knowledge workers and skilled workforce.  

Education and training received 25.3% of total budget allocation, demonstrating the Government’s commitment to produce a pool of talented and innovative human capital.  

“I particularly like the measures to ease employment of skilled foreign talent to deal with the current acute shortage of skilled workers.  

“Personally, I feel there is room for us to be even more aggressive in attracting foreign talent, for example by allowing tailor-made incentives to attract key talents to work for our companies,” he said. 

In line with positioning Malaysia as an International Islamic Financial Centre, the Budget also mentions the channelling of RM7bil by EPF to Islamic fund management companies. Nazir said this might prove insufficient.  

“If we assume that EPF pays 35 basis points of assets to fund managers, assets under management (AUM) of RM7bil lead to only RM24.5mil in annual fee income.  

“Perhaps, to strengthen this proposition, other agencies and corporates increase the AUM available to the fund managers we hope to attract.” 

He said the stock market should receive this Budget well because the reduction of corporate tax rates to 25% in 2009 would directly result in average corporate earnings per share enhancement of about 1.4%.  

The public companies accounting oversight board to be set up under the auspices of the Securities Commission and lower brokerage rates for e-broking and stamp duty exemption on merger and acquisition exercises would also be well received, he said. 

Nazir welcomed the emphasis placed on corporate social responsibility (CSR), which he felt Malaysian companies still didn’t do enough of.  

“However, I am a bit concerned with the requirement to disclose employee data by race and gender. While well intentioned, it could have unintended side effects,” he said. 

Nazir said the Budget reflected the Finance Ministry’s emphasis on value. 

“Rather than just use traditional blunt instruments, initiatives and incentives are cleverly designed to deal with specific challenges and minimises ‘free-riding’ and wastages,” he said. 

Related Stories:How companies benefit Budget promoting conducive investment climate Towards a more competitive Malaysia  

Related Stories:How companies benefit Budget promoting conducive investment climate Towards a more competitive Malaysia  

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Next In Business News

Human error and shaky grid spark new global-chip supply concerns
Grab’s SPAC vehicle Altimeter near record low
Singapore stocks tumble as strict virus curbs return
Foxconn sees 2Q surge on WFH boom
Ant leapfrogs banks to top China fund sale rankings
Wider vaccination and herd immunity are vital to the recovery
Oil extends loss on India Covid-19 cases, U.S. pipeline restart
Stocks rebound as Fed officials calm inflation fears, for now
Japan Q2 economic growth forecasts cut sharply on coronavirus restrictions
Subang Airport car park upgrading to complete by 3Q, 200 extra parking bays

Stories You'll Enjoy


Vouchers