Comments on the Budget 2010/2011 by the banks, Bursa Malaysia
Tan Sri Megat Zaharuddin Megat Mohd Nor, Maybank Chairman:
It is a Budget set to springboard the initiatives of change by the Government and puts Malaysia well on the path towards a stronger nation and a high income economy.
The Government's bold moves to assure investments in new growth areas and creating many jobs are exciting for us all. Malaysians usually rise to such challenges with strong leadership.
What is commendable is that it has been crafted with the people's feedback and ideas. I would call it a participative Budget as it shows a common vision by all for Malaysia's economic success.
We at Maybank take this in stride in our next steps of our own transformation to secure greater regional leadership. We will continue to play our role in nation building, as we have done over the last half century
Dato' Sri Abdul Wahid Omar, President & CEO of Maybank and Chairman, Association of Banks in Malaysia:
Budget 2011 is a prudent and practical budget in that it continues with the gradual fiscal consolidation while at the same time ensures that the growth momentum from this year's robust recovery can be sustained into 2011.
Malaysia does not have to aggressively slash its deficit and engage in painful austerity measures like the European countries considering that the Federal Government debt is manageable at just over 50% of GDP currently and our sovereign credit rating is stable.'' Moreover, the global economic outlook remains cautious, hence the need to support domestic demand.
In this regard, Budget 2011 is obviously earmarked for the implementation and execution of the Government and the economic transformation programmes (GTP, ETP) to deliver the National Key Result Areas (NKRAs) and boost investments in the National Key Economic Areas (NKEAs) that will lift GDP through public sector efficiency gains and stimulate private sector spending.
I must say that I like the clarity provided on some of the key infrastructure projects to be implemented from 2011 onwards.
Although there is no specific incentive for the banking sector, we at Maybank ' as the leading financial services group in Malaysia ' welcome Budget 2011's initiatives to further develop financial services as a key driver of services sector and overall economic growth.'' These initiatives include the measures to improve the stock market's liquidity, product and service offerings as well as participation, the tax incentives for the Islamic capital markets and the setting up of the Private Pension Fund.
Moreover, the banking industry will participate in ' and stand to benefit from ' the Budget 2011's allocations and measures to sustain domestic demand and economic growth, particularly in terms of financing consumer spending, business working capital and investments, as well as funding for the various infrastructure and development projects.
One interesting aspect of the Budget 2011 is the increase in Service Tax from 5% to 6%.'' Perhaps this will later create a stronger case for the implementation of GST that will be beneficial in broadening the Government's revenue base and plug tax leakages in the future.
Overall, the Budget 2011's strategic thrusts of Reinvigorating Private Investment, Intensifying Human Capital Development, Strengthening Public Service Delivery and Enhancing Quality of Life of the Rakyat lay the foundations for the economy to RISE to the challenges of becoming a high-income, developed economy over the next 10 years.
Tan Sri Dato' Sri Dr. Teh Hong Piow, Chairman of Public Bank:
First of all, we would like to congratulate the Honorable Prime Minister and Minister of Finance for the growth-friendly budget, in particular for the significant efforts to increase private investment in Malaysia.
The budget is pragmatic in that it strikes a delicate balance between the need to boost the domestic economy and ensure economic prosperity in this challenging external environment and the need to reduce the Government's fiscal deficit.
Based on the expected public sector's deficit of 5.4% of GDP for 2011 compared to 5.6% for 2010, the Government is committed to gradually consolidate and improve its financial position.
Although the global economy will remain challenging in which advanced economies will experience anemic growth with high unemployment and high sovereign debt, the Malaysian economy is expected to remain healthy.
The 6% growth target for 2011 - as also envisaged in the Tenth Malaysia Plan - is achievable. Malaysia has strong economic fundamentals - such as high savings, modest inflation, healthy labour market, strong external position and strong banking sector -'' which can be further leveraged to support economic activity.
Coupled with strong household and corporate balance sheets, we expect low interest rates and steady credit flows will continue to support our domestic growth. At the same time, Malaysia has a strong competitive advantage which can be leveraged, particularly to increase intra-regional trade. The banking sector in Malaysia will continue to remain strong and supportive of our economic growth, given its strong capitalisation and strong asset quality.
The series of measures in Budget 2011 will continue to support the domestic economy by attracting more private investment.
The proposed measures to intensify public-private partnership will further enhance private sector involvement in economic activity'' and help the Government hasten the process of economic transformation towards a high-income economy by 2020.
Also, the proposed infrastructure projects such as new highways, power plants,'' and medical institutions will boost aggregate domestic demand and productive capacity of the economy in future.
The high-impact strategic development projects such as the Development of Kuala Lumpur International Financial District and the implementation of the Mass Rapid Transit in Greater KL will raise the level of economic activity in Malaysia.
The proposed measures to further enhance high-value added activities in the electrical and electronics industry; propel oil, gas and energy industry; invigorate the agricultural sector; energise the tourism industry; revitalise palm oil and related industries and enhance the information and communication TECHNOLOGY [] will not only benefit small- and medium-sized businesses (SMEs) in Malaysia but will also increase high-valued activities in the country.
These efforts will support growth of SMEs in Malaysia, in line with the Government's objective of transforming SMEs to be more innovative and vibrant in the future. In the Tenth Malaysia Plan and also in the New Economic Model, SME segments form an important component to drive future growth of the Malaysian economy.
The budget is also caring in that it is aiming at increasing home ownership, particularly among'' young adults such as graduates who have just joined the workforce with income less than RM3,000.
The Skim Rumah Pertamaku will allow house buyers to obtain a 100% loan without having to pay the 10% down payment to purchase houses below certain price. The stamp duty exemption of 50% on instruments of transfer on a house price not exceeding RM350,000 will help first-time house buyers.
Dato' Yusli Mohamed Yusoff, Chief Executive Officer of Bursa Malaysia Berhad:
The 2011 National Budget announcement made by the Prime Minister today demonstrates the Government's commitment towards elevating the country to a high income, high value nation.
With regards to the capital market, the measures and initiatives announced are predominantly targeted towards enhancing liquidity, velocity and vibrancy.
The Government Linked Investment Companies' (GLIC's) impending further selldown of its stakes and the establishment of a private pension fund alongside the Employees Provident Fund will see diverse positions being taken on the capital market, and we see this as a positive move which will promote vibrancy in the market.
Increasing the number of day traders in our market will help to balance out the long term holdings in our market.'' The day traders will manage this imbalance, thereby creating liquidity.
With the issuance of the three new licenses to eligible local and foreign brokers, we hope to see an increase in retail investor participation in our market.
On the establishment of an International Board under Bursa Malaysia, we welcome this announcement as it is a move to further internationalise our market and provide diversity of products to our investors, as well as build liquidity.
In encouraging further retail participation in the market, making sukuk and conventional bonds accessible to the retail market will increase the diversity of products and investment options.'' We are also pleased to note efforts to ease issuance of Exchange Traded Funds (ETFs) and we hope to see more issuers come onboard to list ETFs.
Increasing the public shareholding for the much awaited listings of Petronas Chemicals and Malaysian Marine & Heavy Engineering will see greater participation from the retail market, and allow the rakyat to participate in the growth of one of the nation's most successful enterprises.
We are pleased that the Government will give tax deductions for the issuance of Islamic securities based on Murabahah and Tawarruq contracts using commodities traded on our Bursa Suq Al-Sila' trading platform as it will further increase participation by issuers and financiers.
This commodity trading platform is already receiving international acclaim from users, local and foreign Islamic banks, and incentives such as this will help us to drive the MIFC agenda to position Malaysia as a key destination for Islamic finance and investments.
Datuk Mohd. Najib Abdullah, Group Managing Director of MIDF:
Malaysian Industrial Development Finance Berhad ('MIDF') said today that it is optimistic that Budget 2011 will help reinforce the sustainability of the economic growth.
The economies of western advanced countries are encountering headwinds that may stunt their recovery thus the elevated risk of a 'double dip' recession. The Government appears to not taking any chances but without abandoning its commitment towards fiscal rationalization.
As it is also the maiden budget under the Tenth Malaysia Plan, proposals contained in the budget are seen to be directed towards realizing the five strategic thrusts of the nation's latest five-year plan.
The Federal Government deficit, as a percentage of GDP, is projected to decline further to 5.4% from 5.6%. The decline may not be as steep as one may want it to be, but at times when the risk of a global 'double dip' recession has heightened, the Government appears to not taking any chances.
After all, Malaysia does not really stick out like a sore thumb in deficit spending when countries all around the world are still pump priming their economies.
Forecast GDP growth for 2011 of between 5-6% is 'normalised' growth as far as Malaysia is concerned.
It is to be private sector driven, with the Government assuming a facilitative role while keeping the financial option to lift the economy should the need arises. The MIDF Group is confident that the private sector will increase its investment and consumption by 10.2% and 6.3% respectively, as projected in the Budget.
In addition, total government's subsidies budgeted next year is down by a marginal 4.9% to RM23.7 billion, from the RM24.9 billion spent in 2010 and RM20.3 billion in 2009.
The apparent message is that while the Government is for a lesser dependence on subsidies, the phased withdrawals will be done in judicious manner so as not to exert too much burden on the Rakyat.
As we had expected, the incentives for green technology were forthcoming, reaffirming the Government's commitments towards cleaner environment. These incentives are necessary to enable the country to leapfrog other nations in this high potential sector.
The MIDF Group is a strong proponent of sustainable development, which is a critical growth strategy in the 21st century.
The Budget mentioned several big-scale projects with high multiplier and spillover effects. These are expected to rejuvenate the private sector and catalyze activities in the CONSTRUCTION [] and building material sectors.
These strategic high impact projects will assist in meeting the targeted GDP growth of our economy. As a wholly-owned entity under'' PNB, the MIDF Group is particularly excited with the proposed 100-storey tower to be developed as a new landmark icon for Kuala Lumpur.
The Budget also contains good news for the Rakyat. Assistance for education from pre-school to university level, improving the teaching of English in schools with teachers from United Kingdom & Australia, skills training under the 1Malaysia Training Programme are just a few examples of how the Government is working towards strengthening the quality of education.
Education will be key to prepare the Rakyat in facing the many new challenges as we move towards a high income economy which requires innovation and productivity improvements.
In conclusion, the 2011 Budget has painted a broadly realistic but cautious macro picture for next year, with GDP growth projected to return to normalised levels.
It reflects consensus expectation with regard to the economic performance in the U.S. and major European countries. Nevertheless should there be a further easing in the western economies, MIDF expects Malaysia as well as countries in the region to ready able to withstand the knock-on-effect, shaken but still moving ahead.
Tan Sri Megat Zaharuddin Megat Mohd Nor, Maybank Chairman:
It is a Budget set to springboard the initiatives of change by the Government and puts Malaysia well on the path towards a stronger nation and a high income economy.
The Government's bold moves to assure investments in new growth areas and creating many jobs are exciting for us all. Malaysians usually rise to such challenges with strong leadership.
What is commendable is that it has been crafted with the people's feedback and ideas. I would call it a participative Budget as it shows a common vision by all for Malaysia's economic success.
We at Maybank take this in stride in our next steps of our own transformation to secure greater regional leadership. We will continue to play our role in nation building, as we have done over the last half century
Dato' Sri Abdul Wahid Omar, President & CEO of Maybank and Chairman, Association of Banks in Malaysia:
Budget 2011 is a prudent and practical budget in that it continues with the gradual fiscal consolidation while at the same time ensures that the growth momentum from this year's robust recovery can be sustained into 2011.
Malaysia does not have to aggressively slash its deficit and engage in painful austerity measures like the European countries considering that the Federal Government debt is manageable at just over 50% of GDP currently and our sovereign credit rating is stable.'' Moreover, the global economic outlook remains cautious, hence the need to support domestic demand.
In this regard, Budget 2011 is obviously earmarked for the implementation and execution of the Government and the economic transformation programmes (GTP, ETP) to deliver the National Key Result Areas (NKRAs) and boost investments in the National Key Economic Areas (NKEAs) that will lift GDP through public sector efficiency gains and stimulate private sector spending.
I must say that I like the clarity provided on some of the key infrastructure projects to be implemented from 2011 onwards.
Although there is no specific incentive for the banking sector, we at Maybank ' as the leading financial services group in Malaysia ' welcome Budget 2011's initiatives to further develop financial services as a key driver of services sector and overall economic growth.'' These initiatives include the measures to improve the stock market's liquidity, product and service offerings as well as participation, the tax incentives for the Islamic capital markets and the setting up of the Private Pension Fund.
Moreover, the banking industry will participate in ' and stand to benefit from ' the Budget 2011's allocations and measures to sustain domestic demand and economic growth, particularly in terms of financing consumer spending, business working capital and investments, as well as funding for the various infrastructure and development projects.
One interesting aspect of the Budget 2011 is the increase in Service Tax from 5% to 6%.'' Perhaps this will later create a stronger case for the implementation of GST that will be beneficial in broadening the Government's revenue base and plug tax leakages in the future.
Overall, the Budget 2011's strategic thrusts of Reinvigorating Private Investment, Intensifying Human Capital Development, Strengthening Public Service Delivery and Enhancing Quality of Life of the Rakyat lay the foundations for the economy to RISE to the challenges of becoming a high-income, developed economy over the next 10 years.
Tan Sri Dato' Sri Dr. Teh Hong Piow, Chairman of Public Bank:
First of all, we would like to congratulate the Honorable Prime Minister and Minister of Finance for the growth-friendly budget, in particular for the significant efforts to increase private investment in Malaysia.
The budget is pragmatic in that it strikes a delicate balance between the need to boost the domestic economy and ensure economic prosperity in this challenging external environment and the need to reduce the Government's fiscal deficit.
Based on the expected public sector's deficit of 5.4% of GDP for 2011 compared to 5.6% for 2010, the Government is committed to gradually consolidate and improve its financial position.
Although the global economy will remain challenging in which advanced economies will experience anemic growth with high unemployment and high sovereign debt, the Malaysian economy is expected to remain healthy.
The 6% growth target for 2011 - as also envisaged in the Tenth Malaysia Plan - is achievable. Malaysia has strong economic fundamentals - such as high savings, modest inflation, healthy labour market, strong external position and strong banking sector -'' which can be further leveraged to support economic activity.
Coupled with strong household and corporate balance sheets, we expect low interest rates and steady credit flows will continue to support our domestic growth. At the same time, Malaysia has a strong competitive advantage which can be leveraged, particularly to increase intra-regional trade. The banking sector in Malaysia will continue to remain strong and supportive of our economic growth, given its strong capitalisation and strong asset quality.
The series of measures in Budget 2011 will continue to support the domestic economy by attracting more private investment.
The proposed measures to intensify public-private partnership will further enhance private sector involvement in economic activity'' and help the Government hasten the process of economic transformation towards a high-income economy by 2020.
Also, the proposed infrastructure projects such as new highways, power plants,'' and medical institutions will boost aggregate domestic demand and productive capacity of the economy in future.
The high-impact strategic development projects such as the Development of Kuala Lumpur International Financial District and the implementation of the Mass Rapid Transit in Greater KL will raise the level of economic activity in Malaysia.
The proposed measures to further enhance high-value added activities in the electrical and electronics industry; propel oil, gas and energy industry; invigorate the agricultural sector; energise the tourism industry; revitalise palm oil and related industries and enhance the information and communication TECHNOLOGY [] will not only benefit small- and medium-sized businesses (SMEs) in Malaysia but will also increase high-valued activities in the country.
These efforts will support growth of SMEs in Malaysia, in line with the Government's objective of transforming SMEs to be more innovative and vibrant in the future. In the Tenth Malaysia Plan and also in the New Economic Model, SME segments form an important component to drive future growth of the Malaysian economy.
The budget is also caring in that it is aiming at increasing home ownership, particularly among'' young adults such as graduates who have just joined the workforce with income less than RM3,000.
The Skim Rumah Pertamaku will allow house buyers to obtain a 100% loan without having to pay the 10% down payment to purchase houses below certain price. The stamp duty exemption of 50% on instruments of transfer on a house price not exceeding RM350,000 will help first-time house buyers.
Dato' Yusli Mohamed Yusoff, Chief Executive Officer of Bursa Malaysia Berhad:
The 2011 National Budget announcement made by the Prime Minister today demonstrates the Government's commitment towards elevating the country to a high income, high value nation.
With regards to the capital market, the measures and initiatives announced are predominantly targeted towards enhancing liquidity, velocity and vibrancy.
The Government Linked Investment Companies' (GLIC's) impending further selldown of its stakes and the establishment of a private pension fund alongside the Employees Provident Fund will see diverse positions being taken on the capital market, and we see this as a positive move which will promote vibrancy in the market.
Increasing the number of day traders in our market will help to balance out the long term holdings in our market.'' The day traders will manage this imbalance, thereby creating liquidity.
With the issuance of the three new licenses to eligible local and foreign brokers, we hope to see an increase in retail investor participation in our market.
On the establishment of an International Board under Bursa Malaysia, we welcome this announcement as it is a move to further internationalise our market and provide diversity of products to our investors, as well as build liquidity.
In encouraging further retail participation in the market, making sukuk and conventional bonds accessible to the retail market will increase the diversity of products and investment options.'' We are also pleased to note efforts to ease issuance of Exchange Traded Funds (ETFs) and we hope to see more issuers come onboard to list ETFs.
Increasing the public shareholding for the much awaited listings of Petronas Chemicals and Malaysian Marine & Heavy Engineering will see greater participation from the retail market, and allow the rakyat to participate in the growth of one of the nation's most successful enterprises.
We are pleased that the Government will give tax deductions for the issuance of Islamic securities based on Murabahah and Tawarruq contracts using commodities traded on our Bursa Suq Al-Sila' trading platform as it will further increase participation by issuers and financiers.
This commodity trading platform is already receiving international acclaim from users, local and foreign Islamic banks, and incentives such as this will help us to drive the MIFC agenda to position Malaysia as a key destination for Islamic finance and investments.
Datuk Mohd. Najib Abdullah, Group Managing Director of MIDF:
Malaysian Industrial Development Finance Berhad ('MIDF') said today that it is optimistic that Budget 2011 will help reinforce the sustainability of the economic growth.
The economies of western advanced countries are encountering headwinds that may stunt their recovery thus the elevated risk of a 'double dip' recession. The Government appears to not taking any chances but without abandoning its commitment towards fiscal rationalization.
As it is also the maiden budget under the Tenth Malaysia Plan, proposals contained in the budget are seen to be directed towards realizing the five strategic thrusts of the nation's latest five-year plan.
The Federal Government deficit, as a percentage of GDP, is projected to decline further to 5.4% from 5.6%. The decline may not be as steep as one may want it to be, but at times when the risk of a global 'double dip' recession has heightened, the Government appears to not taking any chances.
After all, Malaysia does not really stick out like a sore thumb in deficit spending when countries all around the world are still pump priming their economies.
Forecast GDP growth for 2011 of between 5-6% is 'normalised' growth as far as Malaysia is concerned.
It is to be private sector driven, with the Government assuming a facilitative role while keeping the financial option to lift the economy should the need arises. The MIDF Group is confident that the private sector will increase its investment and consumption by 10.2% and 6.3% respectively, as projected in the Budget.
In addition, total government's subsidies budgeted next year is down by a marginal 4.9% to RM23.7 billion, from the RM24.9 billion spent in 2010 and RM20.3 billion in 2009.
The apparent message is that while the Government is for a lesser dependence on subsidies, the phased withdrawals will be done in judicious manner so as not to exert too much burden on the Rakyat.
As we had expected, the incentives for green technology were forthcoming, reaffirming the Government's commitments towards cleaner environment. These incentives are necessary to enable the country to leapfrog other nations in this high potential sector.
The MIDF Group is a strong proponent of sustainable development, which is a critical growth strategy in the 21st century.
The Budget mentioned several big-scale projects with high multiplier and spillover effects. These are expected to rejuvenate the private sector and catalyze activities in the CONSTRUCTION [] and building material sectors.
These strategic high impact projects will assist in meeting the targeted GDP growth of our economy. As a wholly-owned entity under'' PNB, the MIDF Group is particularly excited with the proposed 100-storey tower to be developed as a new landmark icon for Kuala Lumpur.
The Budget also contains good news for the Rakyat. Assistance for education from pre-school to university level, improving the teaching of English in schools with teachers from United Kingdom & Australia, skills training under the 1Malaysia Training Programme are just a few examples of how the Government is working towards strengthening the quality of education.
Education will be key to prepare the Rakyat in facing the many new challenges as we move towards a high income economy which requires innovation and productivity improvements.
In conclusion, the 2011 Budget has painted a broadly realistic but cautious macro picture for next year, with GDP growth projected to return to normalised levels.
It reflects consensus expectation with regard to the economic performance in the U.S. and major European countries. Nevertheless should there be a further easing in the western economies, MIDF expects Malaysia as well as countries in the region to ready able to withstand the knock-on-effect, shaken but still moving ahead.
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