KUALA LUMPUR (Oct 27):  Malayan Banking Bhd (Maybank) said measures anounced in Budget 2018 are positive for the consumption, infrastructure, tourism and finance sectors.

"We are happy to see the government continuing with its prudent approach in fiscal management as can be seen by the gradual improvement in our fiscal deficit. We acknowledge that this is extremely challenging to execute when external markets continue to be volatile, while at the same time trying to minimise the negative impact on the domestic market and the general population," said its group president and chief executive officer (CEO) Datuk Abdul Farid Alias in a statement today.

Abdul Farid, who is also chairman of the Association of Banks in Malaysia, said the national Budget continues to address the government's present objective of boosting disposable incomes for the B40 to ease cost of living pressures and support consumer spending.
 
"These include developing more infrastructure in logistics, preparing for and promoting the digital economy, boosting productivity and automation, as well as focusing on human capital development and investment by further enhancing science, technology, engineering and maths and coding in the education system, and Technical and Vocational Education Training," he said.
 
"We are also encouraged by the government's continuing support for small and medium enterprises (SMEs) through funding and credit provisions, and also providing tax exemptions for capital markets covering a broad range of activities, products and investors such as exchange-traded funds, structured warrants, social and responsible investing, venture capitalist and angel investors for the capital markets," he added.

AMMB Holdings Bhd group CEO Datuk Sulaiman Mohd Tahir said the government’s target to reduce fiscal deficit to 2.8% of gross domestic product (GDP) in 2018 from 6.7% in 2009 shows that Budget 2018 has taken a redistributive approach.

This, together with the move to maintain the federal government debt to GDP from 55% to 50%, will see a narrower income gap in the nation, he added.

Sulaiman also noted that the reduction of income tax for mid-range income households (M40) as announced in Budget 2018 will increase disposable income of an estimated RM1.5 billion, which should provide a positive impetus on consumer spending.
 
"And given that SMEs are major contributors to our nation’s economy, the incentives allocated to the SME sector will better enable entrepreneurs to gain global market access, adapt quickly to a fast-changing business environment, participate in the global supply chain actively and adopt Industrial Revolution 4.0," he added.

OCBC Bank economist Barnabas Gan said it is cautious about Malaysia’s ability to achieve a lower budget deficit of 2.8% of GDP in 2018.

"Our concern stems from the lack of details over Malaysia’s revenue collection plans into the next year. Good and Services Tax has been one of the key revenue drivers in recent years, on top of individual tax receipts. However, both revenue streams have seen tax cuts and/or tax reliefs in one form or the other, which in turn could potentially reduce tax receipts into 2018," he said in a statement.

"The only hope for higher revenue receipts must stem from economic-led ones, including that of corporate tax receipts, petroleum tax receipts, stamp duties, as well as export and import duties. These receipts will invariably increase given the uptick in growth prospect into the next year," he added.

While the mainstay outlook is for Malaysia’s growth to expand further into 2018, Gan said any unforeseen wild cards that could derail growth, including a sudden fall in oil prices and deterioration of investor appetite, could well worsen Malaysia’s fiscal standing then.