Friday, October 7, 2011

Budget 2012: Reactions from corporations

Reaction from corporations, fund management

MMC Corp managing director Datuk Hasni Harun:

Measures put in place to stimulate the domestic economy would boost domestic consumption and productivity of the economy in the long run.

The higher allocation of RM29.8 billion for the economic sector to support the needs of infrastructure would raise the level of CONSTRUCTION [] activities and in turn provide more business opportunities.

The construction sector would also receive a boost from the implementation of the ETP and the Second Rolling Plan beginning in 2012 which focus on high-impact development projects such as the Gemas-Johor Bahru double tracking project.

The economic impact of the Ipoh-Padang Besar portion of the double tracking project, of which we are involved as the contractor, has been far reaching, with RM10 billion worth of contracts awarded to more than 600 contractors.

The MMC Corp group remains committed to the ETP implementation, via nation-building initiatives such as the Klang Valley MRT (KVMRT) project, expected to be rolled-out next year.

As the Project Delivery Partner for the KVMRT project, we are excited with the project's prospects as it will provide an efficient, integrated and sustainable transport system for the Klang Valley and will serve as an economic multiplier, estimated to create 130,000 employment opportunities and generate RM3-4 billion annually in terms of gross national income (GNI).

MMC Corp's track record in building complex tunnels, such as the SMART tunnel, bodes well for its bid to undertake the KVMRT tunneling works.


JT INTERNATIONAL BHD [] managing director Shigeyuki Nakano:

JT International is encouraged that the government has not increased the excise duty in light of the significant issue of illegal cigarettes in Malaysia.

Excessive taxation is one of the critical factors which fuel the trade of illegal cigarettes.

As such it is very heartening that the government has shown pragmatism in its cigarette taxation approach.

Coupled with the government agencies' strong and persistent enforcement efforts which we hope will culminate into the imposition of enhanced sanctions and penalties, JTI Malaysia believes the government's two-pronged approach of a prudent excise policy and enhanced enforcement is a constructive and effective strategy to fight the huge illegal cigarette trade in Malaysia today.


BOUSTEAD HOLDINGS BHD [] deputy chairman/group managing director Tan Sri Lodin Wok Kamaruddin:

This year's National Budget has indeed become a very attractive one particularly for the masses. As for the Boustead Group, the Budget will have a particular impact from two broad areas namely property development and hospitality.

Given the fact that property prices locally have been experiencing high appreciations due to speculations, we believe the measures introduced by the Prime Minister in the 2012 Budget will temper the speculations and provide stability to property prices.

Hence with the staggered taxation schedule introduced in today's budget, as one of the premier property developers in the Klang Valley and Johor, we hope that as much as property prices reflect demand, it will not be prone to excessive speculation.

Our view is that measures such as these will provide Malaysians with an opportunity to benefit from stable property prices that will appreciate organically.

We laud the Government's initiative to promote the hospitality sector particularly with the announcement of the 70% tax exemption for five years for the building of new four-star hotels. The Boustead Group, being a key participant in this sector via our highly established and successful franchise of Royale Bintang & Royale Chulan Group of Hotels, will certainly benefit from this budget especially since we have 700 new rooms in three new four-star hotels coming up in Kuantan, Selangor and Pulau Pinang.

As the Chief Executive of Lembaga Tabung Angkatan Tentera, we are also very delighted with the Government for allocating half a billion ringgit under the Army Care programme which LTAT will be very much involved in to upgrade and maintain army camps and quarters nationwide. This will certainly help raise the morale of armed forces personnel. This will also most certainly spur strong economic interest especially for small and medium enterprises in the construction and building materials segment, throughout the nation.


Maxis Bhd chief executive officer Sandip Das:

We can see that the budget for 2012 is a continuation of the efforts being undertaken to secure a strong future for the nation.

The Budget addresses fundamental areas of raising investment, developing human capital, uplifting rural areas, spreading economic development and raising administrative efficiency as key pillars.

In the telecommunications industry, we are keen to play a decisive role in the economic transformation programme by providing a technological plank to fast-track the process.


Gan Eng Peng, Head of Equities of HwangDBS Investment Management Bhd:

A People-Centric Budget

The 2012 Budget is focused on people-centric with initiatives that will accelerate the nation's push to be a developed and high-income economy by 2020. Moreover, with the issue of rising cost of living on the minds of most people, the Budget 2012 has tabled incentives to ease cost pressures now being felt by the low and middle-income groups.

Malaysia is seen to be able to achieve gross domestic product (GDP) of 5 to 6 per cent in 2012. This expected GDP growth appears to be optimistic given to the current global markets that remain plagued by uncertainty and extreme volatility.

As a fund management company, we feel that the impact of the global slowdown is only starting to filter through into the real economy from late 2011.

Thus, it is unrealistic for the government to expect a pick up in growth momentum now. Malaysia remains largely an open economy.

Hence, the more realistic GDP growth figure would be approximately 2 to 3 per cent for 2012 on the back of a recessionary Europe, a very slow US economy and a tight monetary policy in China.

Construction Sector

One of the key planks of the growth engine in Malaysia is slated to be the construction sector. However, we have our doubts about key projects like the Mass Rapid Transit (MRT) and the building of a new financial district.

The tender of the MRT is already delayed, the size has been scaled back, financing has not been sorted and disputes about land acquisition are heating up. Besides that, rushed tender deadlines, slow decision-making and an abrupt change of project owners is blighting the MRT projects.

Thus, we would not be surprised if further delays occur since MRT Co, under the Ministry of Finance Incorporated is the new owner of the MRT projects, taking away from another government unit, Syarikat Prasarana Negara Bhd.

On the building of a new financial district and the 100 storey building, it would not be such a great idea when one considers that we are already heading into an oversupply situation in the commercial property space.

The oversupply situation should be considered before taking into account these projects.'' On the demand side, Kuala Lumpur does not have enough critical mass nor growth to support a new financial district.

Essentially, the overall growth forecast is a bit unrealistic to as how we are going to achieve it. We do not think that the stock market will be impressed by it since many people can see through the flaws of the mega projects. As markets do not have much expectations built into it, it will also not cause any untoward sell down.'' Furthermore, given that a few of the policies announced in the previous budget has been totally reversed, the credibility of more policy announcement here has worn thin.'' Hence, we think this budget is a non-event for the market.

Fixed Income Market

For the fixed income market, it is positive if one takes the government economic growth forecast at face value.'' Inflation is being controlled and growth is strong.'' Moreover, deficit is being reduced. Thus, this means lower issuance of papers, resulting in stronger bids and better pricing.

Real property gains tax (RPGT)

The fact that there is no drastic change to the ruling on RPGT encourages long-term ownership of property which also helps the owner with capital appreciation and wealth creation as they will hold on to the property for longer. However, the 10 per cent increase in the first two years is not an effective measure to try and curb speculation activities. Thus, if we want to curb speculation, it should be higher than 10 per cent.


Ismet Suki, President of UMW Toyota Motor:

UMW Toyota Motor welcomes the announcement by the Prime Minister Datuk Seri Najib Tun Abdul Razak to extend the exemption of the Import Duty and Excise Duty for Hybrid Vehicles below 2000cc until 31st December 2013.

We are delighted with the announcement by the Prime Minister. This shows that the government is committed to make Hybrid vehicles affordable for more Malaysians. It would be exciting to see more Hybrid vehicles on our roads and more people would be aware about the effectiveness of Hybrid TECHNOLOGY [] as a proven alternative to lowering fuel consumption and environment friendly.

The government is moving towards the right direction in promoting a 'greener living' by reducing the CO2 emission with more hybrid vehicles on our roads. UMW Toyota Motor strongly supports this government initiative and will continue to promote hybrid vehicles.

We at UMW Toyota Motor would like to congratulate the Prime Minister on the successful budget announcement that is favorable to private companies and will definitely ease the burden of more Malaysians.

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