Budget 2011 in line with OCBC’s expectations

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KUALA LUMPUR: OCBC Bank (Malaysia) Bhd (OCBC Malaysia) held a positive view on the 2011 Budget presented by Prime Minister Datuk Seri Najib Razak as noted by OCBC director and chief executive officer Jeffrey Chew.

“While the focus of the budget is very much on infrastructure spending, the government has managed to lower its budget deficit to 5.4 per cent of GDP (gross domestic product) in 2011, from the estimated 5.6 per cent of GDP in 2010 through the introduction and revision of service taxes,” he revealed.

“If the development projects are carried out according to plan, we are confident the GDP growth target of five to six per cent is realistic and thus achievable.”

Chew welcomed the continuing government liberalisation programme through three new brokerage licences that would be issued. To add to this positive note, he noted that Bursa Malaysia would also launch Islamic sukuk and conventional bonds, providing a greater range of products to the investing public.

“Looking at the Islamic capital market, we expect the tax deduction on all expenses for the issuance of Islamic securities under Murabahah and Tawarruq to further encourage Islamic capital market growth and hence revitalise Syariah-compliant commodity trading platforms.

“However, we are of the view that the government should extend this benefit to financing via banks as well, which would include syndications and so forth as banks could also use Bursa Suq Al-sila to transact Murabahah and Tawarruq.”

Amidst the strong emphasis on infrastructure development, the OCBC director noted that the budget also provided the necessary framework to see to the needs of the lower and middle income groups through various initiatives such as the retaining of toll rates and introduction of minimum wage initiatives.

“The government has done well to find an opportunistic angle to assist the lower and middle income segments in their quest to own homes through the introduction of stamp duty exemptions. This is a positive development for the residential property market.

“Overall, the 2011 Budget is a comprehensive plan aimed to kickoff the ETP (Economic Transformation Programme) in grand fashion. In effect, the Prime Minister is formally welcoming us to the in-earnest launch of the ETP,” he concluded.