This article first appeared in The Edge Malaysia Weekly on November 9, 2020 - November 15, 2020

Chairman, Khazanah Research Institute

The Covid-19 pandemic has sped up the country’s nascent digital transformation and makes the issue of digital policy more pressing than ever. The Budget 2021 allocation of RM150 million to encourage local entrepreneurs to adopt digital services through the SME and Micro SME e-Commerce Campaign should stimulate the country’s digital economy.

Recognising the need for digital upskilling in the workforce to enable more meaningful participation in the digital economy, Budget 2021 has also included a RM100 million allocation through Malaysia Digital Economy Corporation to provide information and communications technology training to the current workforce. In terms of digital inclusivity, RM180 telecommunications allowance for B40 households and RM500 million allocation for internet connectivity in 430 schools is encouraging.

The provision of childcare centres in public and private buildings will ease working women’s burdens, especially frontline workers, and promote women’s participation in the workforce. Also laudable is the social support provision of RM21 million for women facing domestic violence and divorce.

Chairman, Bursa Malaysia Bhd

Chairman, Universiti Kebangsaan Malaysia

Notwithstanding the record spending, the budgeted fiscal deficit of 5.4% of GDP is lower than the forecast deficit of 6% for 2020 and lower than the highest deficit of 6.4% recorded in 2009 (restated) during the global financial crisis.

Apart from increasing the ceiling for the Covid-19 Fund and various measures to protect public health, many benefits are extended to the rakyat such as the introduction of Bantuan Prihatin Rakyat of up to RM1,800 for households earning less than RM2,500 a month, 1% income tax reduction for taxpayers in the RM50,001 to RM70,000 taxable income band and reduction in EPF contribution from 11% to 9%.

The alignment of Budget 2021 with the 17 Sustainable Development Goals 2030 is timely. This includes the commitment to create the Sustainable Finance Hub and to position Malaysia as a hub for sustainable living. The issuance of sustainable bonds to finance environmentally friendly and social projects in 2021 is much anticipated.

Group CEO, CIMB Group Holdings Bhd

The government spending today is necessary, given the unprecedented environment. We welcome that Budget 2021 continues to comprehensively build on Malaysia’s focus on reducing income inequality, healthcare spending, and targeted assistance to businesses.

Proactive measures by the government include deepening engagements for job creation, training and reskilling, investing further in broadband connectivity and accelerating development in e-commerce. These long-term investments will reduce the digital divide at both levels of human capital and technological infrastructure.

The government’s focus on the rakyat is commendable and timely, where increased healthcare spending is needed to address the Covid-19 challenge through multilateral partnerships. This is especially relevant, given the recent resurgence in Covid-19 cases.

Group president and CEO of Malayan Banking Bhd,

Chairman of the Association of Banks in Malaysia

It is in times like these that we must find ways to assist struggling communities and businesses, the unemployed and those whose income has been significantly reduced because of underemployment, pay cuts or loss of business.

We also believe environmental, social and governance-related investments can stimulate economic growth, generate business opportunities and create jobs. So, we are pleased the budget has measures to achieve the Sustainable Development Goals, promote green investing and protect the environment and natural resources.

Group managing director, RHB Banking Group

We welcome the government’s targeted action plans to continue supporting and ensuring the sustenance of the worst-hit segments, especially small and medium enterprises (SMEs). It has been reassuring that the government continually ensures that business owners have been able to withstand the economic impact of the Covid-19 pandemic.

With an expansionary budget in 2021, downside risks to Malaysia’s economic growth next year are likely to be more limited than in 2020. At the current juncture, the three risks that we are closely monitoring are the timing of a commercial adaptation of an effective Covid-19 vaccine, the path of global economic growth and volatility in the global financial markets.

Group CEO, AmBank Group

The call for financial institutions, specifically banks, to provide focused attention and assistance to B40 borrowers and micro-enterprises by way of the extended repayment assistance is necessary and apt. The flexibility to withdraw RM500 monthly for a year from the Employees Provident Fund (EPF) Account 1 will allow those who are facing difficult times to have access to funds.

The government’s RM1 billion allocation as an incentive for technology and high value-added investments as well as the RM500 million High Technology Fund from Bank Negara Malaysia is important, as it allows our local businesses to become more competitive in the global arena while contributing to the overall value chain.

President and CEO, Eco World Development Group Bhd

We are very pleased to hear that RM100 million has been proposed for the maintenance of the infrastructure of industrial parks. Also, the government’s proposal to fully exempt stamp duty on instruments of transfer and loan agreements for first-time home buyers for purchasing properties priced up to RM500,000 until Dec 31, 2025, is very welcomed. It will certainly benefit many young purchasers.

Head of tax, KPMG Malaysia

Another innovative proposal involves the granting of a limited tax deduction to individuals for amounts invested in equity crowdfunding (ECF) ventures. ECF has been around for a while and it is interesting to see an incentive being introduced to give this sector a boost. That said, it is to be noted that the Securities Commission Malaysia will be involved in monitoring these ECF ventures to give some degree of comfort and assurance to investors who may wish to participate.

Tax leader, PwC Malaysia

For personal tax, there is a 1% reduction in the tax rate for the RM50,001 to RM70,000 tax bracket. This will benefit the middle 40% (M40) and top 20% (T20) income groups, which will see their tax bill reduced by up to RM200 next year.

To promote investments, Budget 2021 takes a scalpel-like approach in targeting specific areas such as an extension of the Principal Hub tax incentive until Dec 31, 2022, with relaxation of conditions. There is also the carving-out of a Global Trading Centre as a separate tax incentive with a concessionary tax rate of 10% for five years, with the ability to renew for another five years. Meanwhile, tax incentives could be extended to encourage manufacturing businesses to relocate to Malaysia for another year until Dec 31, 2022.

EY Asean and Malaysia tax leader, Ernst & Young Tax Consultants Sdn Bhd

It is a fit-for-purpose budget that meets the immediate needs of the country to encourage recovery, growth and investment. It is now key to monitor and measure the implementation of the budget closely against the desired objectives and also consider how our neighbours in the region are reacting, especially in terms of incentive offerings.

As we saw at the beginning of this year, the Covid-19 pandemic has created significant uncertainties and economic conditions may change very rapidly, depending on the continued impact of the virus and the length of time it will take to develop a vaccine. As such, the government needs to be agile and be prepared to revisit and supplement the budget measures as and when necessary.

CEO, Malaysian Association of Hotels

The tourism and hotel industry is deeply concerned about the lack of immediate assistance to stakeholders buckling under heavy cash flow burdens as a result of domestic and international travel restrictions. Little was mentioned in the budget about sustaining tourism businesses, other than the extension of wage subsidy at the same amount of RM600 per employee per month, which the industry has long voiced as insufficient, having lost almost 80% of business.

The industry is grateful, however, that the government is extending direct assistance to displaced airline employees, but it also needs to look at the situation in entirety. Airlines, an essential stakeholder of the tourism industry, must also be protected.

President, Malaysian Association of Tour and Travel Agents (MATTA)

The budget has failed to meet the needs of tourism enterprises, particularly SMEs, and does not address the key issue of protecting jobs. It does not include any incentive to boost domestic tourism and is seen as inadequate to empower the tourism industry during these challenging times.

The outlook for the next 12 months is bleak. Without the right support, we will inevitably see the industry contracting quickly and drastically.

We cannot help but compare the state of tourism in our country with that of other countries such as Singapore, which has not only implemented practical and effective stimuli but is already making headway in the controlled reopening of borders and, therefore, the revival of its tourism industry.

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