A ‘rakyat’ favourable budget

KUCHING: After waiting with fingers crossed and bated breath as to the outcome of Budget 2012 that Prime Minister Datuk Seri Najib Tun Razak tabled in the Dewan Rakyat on Friday, the nation is now abuzz with reactions, mostly relief that it is indeed a ‘people-centric’ one that will provide a string of initiatives, measures and incentives to benefit the ‘rakyat’ as it faces global uncertainties in all quarters.

Industry sources, analysts, bankers and captains of indus­tries concurred that Budget 2012 was a clear indication that the government remained committed to its fiscal consolidation path. They also pointed out that under Budget 2012, the government was continuing to provide vigorous support and financial allocation for its Economic Transformation Programme (ETP) and the Start­egic Reform Initiatives.

According to Public Bank Bhd’s chairman Tan Sri Dr Teh Hong Piow, “Budget 2012 is well-crafted and has provided a string of ini­tiatives and incentives to benefit the people especially the lower to middle income segments.

“In striking a balance between meeting the needs of the people and providing impetus for businesses and the private sector to be an en­gine of growth, it has taken cogni­sance in recognising the economic sectors that are primarily driving ecomomic growth which include tourism, banking and finance, as well as agriculture.”

On the other hand, OCBC Bank Bhd’s economist Gundy Cahyadi contemplated that by essentially sticking to its fiscal consolidation theme, the government might have aimed to send a couple of strong signals, namely its confidence on the economy and its commitment to longer-term growth projects instead of a short-term fix.

“While the nominal amount of spending remains fairly support­ive to Malaysia’s growth potential, we also think that it may have underestimated the downside risks to growth stemming from the extended soft patch in the global economy.

“Given that, we think the five to six per cent gross domestic product (GDP) growth target looks fairly high, an upward revision to the 4.7-per cent fiscal deficit target for 2012 is not to be ruled out going forward,” he opined.

Public Bank’s Dr Teh main­tained that in view of the height­ened uncertainties in the global economy, a five to six per cent projection for 2012 was achiev­able.

“The growth was still a respect­able performance given that the Malaysian economy had strong fundamentals such as high sav­ings, strong external position and a healthy banking sector.”

He also commended the gov­ernment’s commitment to its fis­cal discipline and prudence with reducing the budget deficit to 4.7 per cent of GDP in 2012 from 5.4 per cent in 2011.

Meanwhile, CIMB Group Bhd’s chief executive Datuk Seri Nazir Tun Razak commented, “A creative and responsible budget, bringing down the deficit to 4.7 per cent in 2012; and yet delivering benefits to the most deserving segments of the Rakyat. I particularly like measures focusing on human capital development and those addressing concerns on rising consumer debt levels. In addition, I would like to compliment the government for the estimated 14.9 per cent increase in its revenues for 2011, which is a reflection of overall improvement in efficiency in the public sector.”

Telco giant Maxis Bhd’s chief executive officer Sandip Das fur­ther added, “We can see that the budget 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 admisnistrative efficiency as key pillars.

“In the telecommunications industry, we are keen to play a de­cisive role in the ETP by providing a technology plank to fast-track the process.”

As for Budget 2012’s implications on Sarawak, KPMG Tax Services Sdn Bhd – Kuching executive direc­tor Regina Lau said, “Sarawak will be a direct beneficiary of the Ru­ral Transformation Programme, which aims to attract private sector investments in the outskirts and create employment in the rural sector.

“As expected, a number of measures to address the rakyat’s concerns of higher living costs was also announced by the Prime Minister with his added assurance that current subsidies, incentives and assistance will be continued,” she added.

The abolishment of public school education fees would help to alleviate living costs of families with school-going children but considering that such fees were very low in the first instance, it did not help substantially when the other incidental costs of education such as school supplies, uniforms, transportation were rising, Lau noted.

“Nevertheless, the announce­ment of a direct, albeit one-off, cash distribution of RM500 to households with a monthly income not exceeding RM3,000; RM100 to all primary and secondary school children from low and medium income families; and a RM200-book voucher for higher learning is widely applauded,” she said.

With regards to the tax relief on medical expenses for parents to include expenses on caring for the parents at home, day care centres or home care centres, these could perhaps be enhanced with an increase in the amount of relief, she suggested.

Quite noticeably, most sources, analysts, bankers and industry observers concurred that the up­ward revision of the 10 per cent real property gains tax (RPGT) on disposal of properties held and disposed within two years was strongly complementing the earlier measure instituted by Bank Negara Malaysia in applying the lower loan-to-value ratio for third

property financing was a positive move. They opined that it was es­sential to ensure macroeconomic and financial stability as well as social justice by curbing specula­tive manoeuvres and preventing excessive rise in property prices.

President and chief executive officer of Maybank Bhd and chair­man of the Association of Banks in Malaysia, Datuk Seri Abdul Wahid Omar concluded, “Overall Budget 2012 is most comprehensive and reflects the government’s efforts to strike a balance between dealing with people, cyclical and structural issues.

“It is clearly a ‘listening and responding budget’ that hears the concerns of the rakyat over issues of higher living costs, given the plethora of measures benefiting especially the poor and lower income group, the middle class, civil servants, pensioners and ex-servicemen and their families,” he summarised.