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Budget 2012 to boost capital, Islamic financial markets

by Ronnie Teo, ronnieteo@theborneopost.com. Posted on October 11, 2011, Tuesday

VARIOUS ANNOUNCEMENTS: Photo shows the Parliament where Prime Minister Datuk Seri Najib Tun Razak tabled the Budget 2012 last Friday. Announcements include the listing of Felda Global Venture Holdings and the formation of Kuala Lumpur as a global Islamic financial hub.

KUCHING: With Budget 2012 announced in a more people-centric manner last Friday, the business community is also seeing perks in terms of capital market boosts and efforts to transform Kuala Lumpur into a global Islamic financial hub.

Bursa Malaysia Bhd’s (Bursa Malaysia) chief executive officer, Datuk Tajuddin Atan welcomed the listing of Felda Global Venture Holdings (FGVH) during the Budget announcement which was expected to be listed on Bursa Malaysia by the middle of next year.

“This listing will create yet another blue chip in the plantation sector and add to our niche offerings, attracting larger international portfolio funds to the Malaysian market,” he opined in a media release.

“This move also shows the government’s focus to bring blue chip stature companies to the public domain so that institutional investors as well as the rakyat can participate in the growth of such well run entities.”

Tajuddin added that Teraju’s aim to guide over 1,000 performing Bumiputera companies to potentially list on Bursa Malaysia was also an added drive to bring more breadth and depth to Malaysia’s capital market offerings.

In a separate statement, the Minister in the Prime Minister’s Department, Datuk Idris Jala, showed his support towards the incentives rolled out to accelerate the formation the Kuala Lumpur Islamic Finance District (KLIFD).

Idris, who is also the chief executive officer of the Performance Management and Delivery Unit (Pemandu) supported this idea under the Financial Services National Key Economic Area (NKEA).

“Our efforts to make Kuala Lumpur a global Islamic financial hub also received a huge boost with tax deduction on expenses incurred for sukuk wakala for a three-year period from 2012 as well as the extension of income tax allowance for non-ringgit sukuk issuance and transaction for further three years up to 2014,” he noted.

Bursa Malaysia’s Tajuddin felt the same way on this issue, noting that Malaysia’s efforts were bearing results with the Bernamaattestation of Malaysia as the world’s largest sukuk issuance centre.

“The announcement to extend exemption of income tax on non-ringgit sukuk issuance and transaction, as well as the tax deduction on expenses for sukuk wakala issuance is a further boost towards increasing participation in our thriving sukuk market,” he noted.

Among incentives announced under this initiative included an income tax exemption of 100 per cent for a period of 10 years and stamp duty exemption on loan and service agreements for KLIFD status companies as well as income tax exemption of 70 per cent for five years for property developers in KLIFD.

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