KUALA LUMPUR: The national budget for next year is well thought-out and a good step towards bridging opportunity gaps in Malaysia, said Khazanah Nasional Bhd managing director Datuk Shahril Ridza Ridzuan.
Measures to improve the government's delivery mechanism and the rakyat's participation in digital economy will provide a strong foundation for long-term inclusive and sustainable growth, Shahril Ridza added.
“Khazanah and our investee companies look forward to playing our part in delivering the national development measures in Budget 2020, with particular emphasis on the digital stimulus, digital infrastructure, and tourism measures,” he said in a statement.
Deloitte Malaysia country tax leader Sim Kwang Gek said the budget was comprehensive focusing on initiatives to embrace inclusivity, steer the country towards digital transformation, and enhance Malaysia’s competitiveness as the preferred destination for foreign investments.
At the same time, it supports the well-being of the B40 group and maintains fiscal discipline.
She said the 15 strategies outlined in the budget sought to future proof the economy and bridge wealth and income disparities in line with the aspirations of Shared Prosperity Vision 2030.
“Despite budget constraints, the government stood its ground by not introducing any form of new taxes.
“Instead, the existing tax base is widened by taxing the rich where the personal income tax rate is proposed to be increased by two per cent to 30 per cent for those earning chargeable income of more than RM2 million per year.
“Non-resident individuals will be taxed at a flat rate of 30 per cent, an increase of two per cent from 28 per cent. It remains to be seen as to how much tax collection can be generated from this measure as it only impacts approximately 2,000 individuals,” she said.
The proposal to provide customised investment packages of RM1 billion a year for five years to attract Fortune 500 companies and global unicorns in hi-tech, manufacturing, creative and economic sectors was a good one as it is targeted towards high value investments and generate growth for SMEs.
Deloitte Malaysia deputy tax leader Tan Hooi Beng said as SMEs contribute significantly to the Malaysian economy, it was not surprising that the segment continues to be recognised by the government.
To further support SMEs’ growth, certain tax goodies had been proposed, Tan said. This included a review of corporate income tax treatment for them and a review of capital allowances for small value assets.
“It is unclear at this juncture on whether the annual sales ceiling of RM50 million applies only to the SME or also to any ‘related company’ or ‘company’ with more than 50 per cent ordinary shareholding relationship/capital contribution relationship with the SME,” he added.
Funding Societies Malaysia co-founder and chief executive officer Wong Kah Meng said as a peer-to-peer (P2P) financing platform with the largest SME market share, the company was encouraged by the government’s four core thrusts anchoring the budget, as well as its priority in driving economic growth in the new economy and digital era.
He said on the back of the RM430 million that was collectively raised by alternative financing platforms including P2P financing since its introduction in 2016, the newly-announced measures reflected the government’s trust in the P2P financing industry’s potential to help bridge the SME financing gap.
“We laud the government’s announcement of the RM50 million allocation towards the My Co-Investment Fund (MyCIF) and believe this will help drive greater awareness of P2P financing as a viable and attractive digital financing option for Malaysian SMEs, besides being able to directly support SMEs in a sustainable manner,” he said.
On real estate, Knight Frank said the budget was a bold move to address property overhang in the country.
To reduce the overhang of condominiums and serviced apartments amounting to RM8.3 billion, the government was lowering foreign buyer threshold for high rise property in urban areas from RM1 million to RM600,000.
The company said generally, Malaysia has higher distribution of unsold completed high-rise residential properties priced above RM600,000 at 53 per cent as compared to those priced below RM600,000 (47 per cent).
Knight Frank Malaysia managing director Sarkunan Subramaniam said it may be an immediate remedy for the overhang situation.
“However, there are no rules that foreigner must buy from developer, like in Australia. Such rules could be implemented to avoid creating stiff competition with foreigners buying in the same field of secondary market properties.
“However, the property overhang is attributed to various factors such as mismatch of products and location rather than pricing alone.
“Some units remain unsold due to less favourable location in terms of accessibilities, distance and lack of amenities as well as product type,” he said.