KUALA LUMPUR: The local Islamic banking industry is hoping that the government under the upcoming Budget 2015 will provide incentives to facilitate the development of the investment account (IA), for example, capital allowance for investment in IT infrastructure.
Bank Islam Bhd managing director Datuk Seri Zukri Samat said the industry would benefit from such incentives, as in the case of Islamic banks, it has a lot to do with the Islamic Financial Services Act (IFSA) 2013, and especially with the impending implementation of a deposits transition plan by June 30, 2015.
Under the plan, investment and deposits accounts must be clearly differentiated. The IA is an account under which money is paid and accepted for the sole purpose of investment and therefore, is not capital guaranteed as opposed to a deposit account.
Zukri also suggested that the government educate the people on Islamic finance as well as prosper the IFSA 2013, which is aimed at providing greater regulatory clarity, promoting financial stability and a more robust Shariah framework.
“We need to ensure that the people fully understand the concept of Islamic finance, with the move towards an equity-based financial system, where risk-sharing takes place.
“In my opinion, our education system must introduce Islamic finance to students as early as the primary level to encourage an understanding and appreciation of the subject matter,” he said.
The Budget 2015, themed, “Accelerating Growth, Ensuring Fiscal Sustainability and Prospering the People”, will be announced by Prime Minister Datuk Seri Najib Tun Razak in Parliament on Oct 10. It is the last budget under the 10th Malaysia Plan.
Meanwhile, Maybank Islamic Bhd and the Association of Islamic Banking Institutions Malaysia (AIBIM) are hoping the government will continue supporting the Islamic finance industry through fund allocation in the Budget 2015.
AIBIM president Datuk Mohd Reza Shah Abdul Wahid said the industry would remain supported through the implementation of incentives by the government to enable the industry to grow in line with the Financial Sector Master Plan and Capital Market Master Plan.
Maybank Islamic chief executive officer Muzaffar Hisham opined that the government should probably review downward the rate of income tax and corporate tax following the implementation of the goods and services tax (GST) in April next year.
“I think the GST is a right move to capture wider revenue. But coming with a review of both taxes, it would help to create a nice balance to spur the country’s growth, without affecting public sector funding, revenue and so forth,” he added.
Meantime, Zukri hoped there could be GST tax neutralisation given to Islamic banks to facilitate Shariah contracts or transactions that attract GST.
This means, Islamic banks should not be in a worse off position and for example, the sales based contract such as for Commodity Murabahah transactions, should be GST exempted. — Bernama