KUALA LUMPUR (Feb 24): Banks in Malaysia believe the Madani Budget has a good balancing act on improving the welfare of the rakyat while supporting the growth of businesses to move Malaysia forward, especially in the post-pandemic era and amid inflationary pressures.

Mutual words leaders in the industry have used to described the revised Budget 2023 unveiled by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim in Dewan Rakyat on Friday (Feb 24) include “prudent”, “sustainable” and “inclusive”.

Here are the comments of top executives of banks on the re-tabled Budget 2023:

At the outset, the re-tabled Budget 2023 commits to fiscal consolidation with further reduction in budget deficit to gross domestic product ratio to 5% this year and to 3.2% by 2025. However, we believe the government will continue to remain steadfast in addressing issues like high cost of living, better-paying jobs and adequacy of retirement savings as well as implement measures for socio-economic uplift of the poor and low-income groups, tax cut for middle-income taxpayers, empower micro, small and medium enterprises (MSMEs), promote investment, boost tourism, enhance food security, improve basic public infrastructure and essential public services.

These are balanced with redistributive and progressive tax proposals such as increases in tax rate of higher income taxpayers, luxury goods tax, capital gains tax on disposal of unlisted shares and excise duties on vape products, coupled with strengthening governance and effectiveness of public spending.

We welcome the budget initiatives that are relevant to the financial sector, including tax incentives for ACE and LEAP Market listings and Bankruptcy Act reform which will catalyse entrepreneurship, the renewed focus on Islamic finance and the proposed consumer credit act and monitoring authority to create a level regulatory playing field.

Equally important to note, the budget is not just about medium-term fiscal sustainability but also broader aspects of longer-term sustainability, including protecting biodiversity, preserving the environment, greening the economy and addressing climate change.

The Madani policy framework encompassing the spirit of inclusiveness is evident in 35.2% or about RM136 billion allocated for the social sector and 19.1% or about RM74 billion towards reshaping the economic landscape of the country. This will continue to ensure the income gap between the rakyat and the development gap among the states are reduced further.

Government agencies’ continued provision of financing and guarantees amounting to RM40 billion for the benefit of MSMEs, Bank Negara Malaysia (BNM)’s RM10 billion financing facility for SMEs and guarantees of up to RM20 billion provided by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will provide much needed lifts to businesses.

The government’s allocation of RM8 billion towards Sumbangan Tunai Rahmah will help alleviate the difficulties of 8.7 million people in the B40 category burdened by rising living costs.

Personal income tax cuts amounting to RM900 million will benefit at least 2.4 million people in the M40 category. In a surprising but highly compassionate move, the government will deposit RM500 into the accounts of Employees Provident Fund contributors aged between 40 and 54 with savings of less than RM10,000 in their accounts. This is expected to benefit two million members, involving an allocation of RM1 billion.

Budget 2023 is broad-based and adequately addresses the current needs of all strata of society. Issues like food security and preparedness for natural disasters are also being addressed, in addition to infrastructure spending covering healthcare and education, and digital infrastructures to address development and digital gaps.

We welcome the expansionary nature of Budget 2023, which provides the much needed support in addressing the high cost of living, further strengthening the social safety net as well as enhancing the MSME ecosystem. The government remains steadfast in balancing the need to safeguard the well-being of the people and the nation while ensuring a sound and sustainable fiscal position.

Budget 2023 will increase the momentum for economic recovery with an emphasis on structural reforms to strengthen economic resilience, measures to support the growth of MSMEs and priority sectors coupled with assistance to targeted groups.

In driving economic recovery, we are encouraged to see financing support for start-ups as well as SMEs. These include, among others, RM2 billion in financing to support sustainable technology startups and to help SMEs adopt low carbon practices, as well as RM1 billion to help SMEs automate business processes and digitalise their operations.

The focus on sustainability as well as digitalisation will strengthen the growth and resilience of our SMEs, and ensure our economy is future-proofed.

We also welcome the focus on improving the vibrancy of Malaysia’s capital market. In particular, we welcome the proposed tax cut on listing expenses for the ACE and LEAP Markets through 2025 and the listing expenses of technology-based companies on the Main Market of Bursa Malaysia, in addition to the easing of the secondary listing process for private market instruments to improve liquidity as well as the efficiency of price discovery.

The introduction of dual class share listings is also an encouraging development in stimulating the listing of high-growth technology companies domestically.

In supporting the government’s Islamic finance agenda, CIMB welcomed the focus on driving more active market participation as well as equitable distribution of wealth among the rakyat through value-based intermediation. We also laud the increase in the Amanah Saham Bumiputera (ASB) and ASB 2 investment ceiling to RM300,000, which will increase Bumiputera equity ownership and participation and, in the long term, help to secure their financial resilience. In addressing the issue of financial scams, we welcome the government’s RM10 million allocation to the National Scam Response Centre.

At AmBank, SMEs are the bedrock of our customer base, and we are encouraged by the government’s efforts to support this crucial pillar of our economy, specifically as a result of the RM10 billion loan funds to be provided by BNM to ease the financial burden of SMEs as well as SJPP to provide a guarantee of up to RM20 billion, focusing on sectors such as high technology, agriculture, and manufacturing. This will certainly empower local SMEs.

We also laud the government’s call to strengthen Islamic financing which will most certainly bode well for Malaysia as an Islamic financing hub. On this note, AmIslamic looks forward to building on this momentum.

The forward thinking aspirations of the budget, particularly with regards to environmental, social, and corporate governance in the form of loan funds of up to RM2 billion to support sustainable technology for start-up companies and promoting SMEs towards embracing low carbon practices demonstrate the government’s tangible commitment to ESG and we hope for SMEs and government-linked companies to build on this positive trajectory.

Budget 2023 is well curated, recognising the delicate balance of fiscal discipline and maintaining growth momentum into 2023. As the largest allocation in Malaysia's history, the RM388.1 billion budget reinforces collective resilience to help the nation withstand external pressures and economic shocks in the long run. We laud the gradual reduction of operating expenditure to RM289.1 billion to further strengthen the nation’s fiscal position.

It is heartening to note that the budget also truly reflects on the government’s commitment to protect the livelihood and well-being of the people. We support the government’s commitment to ensure that ASB fund holders will receive more dividends, and assistance up to RM64 billion will be allocated to the people in the form of subsidies, cash aids and incentives to address the high cost of living and inflationary pressures.

As facilitators of cross-border trade, we strongly support the government’s mandate of Tun Razak Exchange as an international financial hub and the designation of a special financial zone within Iskandar Malaysia to attract quality investments and skilled workers. With our roots in trade banking in Malaysia dating back to over a century, initiatives such as the expansion of Penang International Airport and Subang Airport, development of a port in Sanglang, Perlis and construction of a main port in Carey Island will cement the country’s position as a key trading hub in Asean.

Budget 2023 mandates BPMB to provide financing of up to RM6 billion for strategic development projects that promote sustainability and automation, as well as equity and working capital support for high-performing companies that are still dealing with the Covid-19 pandemic's adverse effects.

As the country’s premier developmental financial institution, BPMB is committed to working closely with the government to ensure sustainable growth for Malaysia by delivering impact capital for national development.

Get our comprehensive coverage of the revised Budget 2023 here.