CIMB chief urges review of IPP windfall tax

KUALA LUMPUR: CIMB Group chief executive Datuk Seri Nazir Razak has urged the Government to review the 30% windfall tax that has been imposed on the independent power producers (IPPs) because of the wider impact the tax will have on the capital markets in the country.

He said the Government should review the imposition of the tax because of the implications it would have for fundraising, especially for infrastructure projects. The tax came into operation on July 1.

"This goes beyond just the IPPs, this will have an impact on the equity and financial markets because the IPPs account for 21% of all bonds issued," Nazir told reporters Friday following an EGM to get Bumiputra-Commerce Holdings Bhd's (BCHB) shareholders' approval for the merger of PT Bank Niaga TBK and PT Bank Lippo TBK. CIMB is a subsidiary of BCHB.

"There're no winners in this tax because bond yields have gone up, prices have come down and investor sentiments have been affected," Nazir said, adding that the implication far exceeded any money the Government could hope to raise from the tax," he added.

The IPPs had issued up to RM20bil in ringgit bonds and notes in 2006, according to the IPPs association - Penjanabebas - last Friday.

Penajana Bebabs said the windfall tax would result in a possible downgrade of their bonds following the tax.

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