Finance Minister assures no fire-sale of govt assets, says CIMB Research

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KUALA LUMPUR (Nov 13): Finance minister Lim Guan Eng has clarified that the government does not plan to sell its non-core assets at fire sale rates, although thre are plans to beef up underperforming assets before putting them up for sale.

CIMB Research, which co-hosted Lim and representatives from Bank Negara Malaysia in Singapore and Hong Kong for post-Budget roadshows last week, said in a note today that the government also revealed that future land sales will be contucted via competitive tenders. 

In a strategy note Nov 12, CIMB Research's Ivy Ng Lee Fang said the finance minister stated that additional revenue from tax measures announced in the Budget Speech could yield RM4 billion to RM5 billion, including an estimated RM1.5 billion from the Special Voluntary Disclosure Programme.

This, she said, would be “providing buffers against slippages in macro assumptions, revenue collection or cost rationalisation”.

Ng described the Budget 2019 as “not expansionary” once the one-off goods and services tax (GST) and income tax refunds of RM37 billion are excluded.

“Neither is it an austerity budget as the government has opted against a “shock treatment” to the economy in order to lower public debt but is instead spreading the adjustment over three years,” she said.

Meanwhile, the government also revealed that it is unlikely to reduce excise duty in the alcohol sector, and justified the higher casino tax as not going to affect the long-term growth of the business in Malaysia considering its monopoly status here.

“The assessment of foreign investments will be ‘company-specific, not country-specific’,” added Ng. 

She said CIMB Research had earlier flagged that measures in the 2019 Budget could lower its KLCI earnings growth forecast for 2019 by 1-2% points.

"Malaysia Pacific Industries Bhd replaces Genting Bhd as one of our top three picks for KLCI. We maintain our end-2018 KLCI target of 1,678 points (based on 15.7x P/E)," she said.