October 13, 2023
As a financial institution with 118 years of rooted heritage in Malaysia, Hong Leong Bank Berhad (“HLB”) will continue to contribute to the sustainable growth of the nation through our customer and community-centric products, services and initiatives.
We are very encouraged to see the follow-through announcement of additional details and actionable plans outlined in the Belanjawan 2024, covering not only the welfare of the Rakyat, but also enhancing the micro, small and medium enterprises ecosystem, strengthening the Islamic Banking positioning, combating financial scam and fraud incidences and providing welcoming policies to attract FDIs. This could serve as a solid foundation to propel Malaysia towards meeting the New Industrial Master Plan 3 and the mid-term review of the 12th Malaysia Plan, contributing significantly to the long-term sustainability of the Malaysian economy.
As a community bank, we are also pleased to see the government’s dedicated commitment to fortify the SME ecosystem through an array of ongoing tax and non-tax incentives, coupled with financing grants that are poised to significantly bolster the competitiveness of SMEs within the global value chain. This will pave the way towards doubling the share of export-oriented SMEs to 25% of vendor development by 2030, and lifting the share of domestic value added in manufacturing to 65% by the same timeframe. We believe this will strengthen the Malaysian economy in general as SMEs account for about 37% of Malaysia's GDP and offer about two-thirds of employment.
The government’s steadfast sustainability-related efforts, especially its commitment towards net zero by targeting to reduce CHG emission intensity to 45% by 2030 will set the tone for the nation as a whole. We are pleased to see the extension of RM2,500 personal income tax exemption for those who own electric vehicle charging facilities for up to four years, and the tax exemption for those who rent electric vehicles extended for two years. HLB will continue to support the sustainability journey of the nation through our robust green financing offerings.
Despite the challenging external environment, we are cautiously optimistic that the expansionary budget and steady projected growth trajectory of 4-5% for 2024 would provide the much-needed backdrop for businesses including SMEs to grow, more so with quick and effective implementation of budget measures and anticipated revival in investor confidence.
In this regard, the government’s target to narrow the fiscal deficit from 5.0% of GDP this year to 4.3% of GDP in 2024, its lowest in five years, is well regarded and is expected to augur well with investor confidence in the international arena.
This will be done via a combo of expanding revenue such as the introduction of a capital gain tax for unlisted shares by companies, proposed 2ppt increase in SST from 6% to 8%, and increases in both direct (income taxes) indirect taxes (SST, excise duty, export and import duties), as well as reducing development expenditure to RM90bn, and plans on gradual subsidy rationalization by eliminating price ceiling of poultry. Fuel subsidies and the RM40 electricity tariff rebate to a targeted group will however be maintained for now, which would no doubt provide a temporary relief to the broader rakyat fazed by the rising cost of living, hence bolstering continuous growth in private consumption.
In summary, we are positive the proposed budget initiatives will set the stage for longer-term sustainability of the Malaysian economy by addressing some long-standing economic and fiscal challenges.
Group Managing Director & Chief Executive Officer
Hong Leong Bank