KUALA LUMPUR (Oct 23): Malaysia Industrial Development Finance Bhd (MIDF) said the measure revealed during Prime Minister Datuk Seri Najib Razak's Budget 2016 speech today to reduce the cost of sukuk issuance for sustainable and responsible investments (SRI) will further increase the competitiveness of Malaysia as an Islamic financial hub.

"SRI is at the heart of Islamic finance, and a more vibrant SRI-related funding and financing activities will add a new dimension to the local capital market scene," said MIDF group managing director Datuk Mohd Najib Abdullah in a statement today.

"More importantly, MIDF Group welcomes the proactive move by the government to reinvigorate the capital market, where fund raising activities in the bond and stock markets have decreased significantly in 2015. In particular, we look forward to more initiatives to be announced in due course, as indicated during the budget speech," he added. 

Mohd Najib is confident that Budget 2016 will form an effective and potent fiscal policy to steer the economy next year.

"While the country’s monetary policy direction remains uncertain amid the situation with respect to the US Federal Reserve’s interest rate stance, China’s economic slowdown and globally depressed price inflation, Budget 2016 proposes concrete fiscal measures that will help keep the momentum of growth and economic transformation going," he said.

"Although gross domestic product (GDP) growth is expected to be slightly slower next year, it should be reasonably healthy amid external headwinds, especially with China still undergoing internal transition and adjustments, and against the backdrop of a volatile global financial landscape.

"The marginal deceleration in economic growth is not expected to derail Malaysia’s march towards attaining a high-income economy status by 2020," he added.

Mohd Najib said the government’s commitment towards fiscal probity by budgeting a smaller deficit of 3.1% of GDP next year is also a necessary stabiliser for the ringgit and should be positively welcomed by financial markets.

He also pointed out that Budget 2016 has not disappointed in terms of the small and medium enterprise (SME) agenda.

"SME development programmes have evolved from focusing on building capacity to that centring on innovation and productivity, as guided by the SME Masterplan.

"As one of the enablers in the development of SMEs in Malaysia, MIDF Group is pleased to note that incentives and investments continue to be allocated under Budget 2016, into efforts to further increase SME productivity and innovation and to encourage entrepreneurial activities, including the development of agropreneurs," he said.