Budget 2021: Industry leaders and analysts welcome initiatives but signals for more to be done
|Monday, 9 Nov 2020 |
With a total allocation of RM322.5 billion for Budget 2021, it has become Malaysia’s biggest budget to be tabled. With more focus on digitalisation, the government has also extended their priorities to cover mental health, aid for the vulnerable as well connectivity in the country.
Experts and industry players have signaled a general acceptance, lauding its new focus areas. However, not all responses have been positive. Expectations fell short when it came to tourism, where tourism players had hoped for more aid and relief programmes.
Business Today speaks to think tank researchers and analysts on their thoughts on the recently tabled Budget 2021.
IDEAS research manager, Lau Zheng Zhou tells BusinessToday that he welcomed the focus on mental health, particularly with the stress created by unemployment and other crisis brought on by the pandemic. He also praised the move to encourage companies to hire local labour instead of foreign.
However, Lau has also expressed concern in the short term measures by the targeted moratoriums as it does not take into account credit card expenditure as well as unemployed young people with no property but would still have to pay rental.
On the sustainability side, Lau says while it’s a positive sign Putrajaya has included sustainability in the Budget, a bolder statement with a bigger allocation would have been welcomed along with initiatives to make green tech as a new source to make the country more competitive.
Visiting Senior Fellow at the ISEAS-Yusof Ishak Institute, Jayant Menon says the Budget is designed to provide fuel to continue the “holding pattern” and avoid further declines in the economy. “It should support an uncertain recovery with signs of a bottoming out of the downturn beginning to emerge, as long as viral spread is contained so that the MCO is temporary.”
He further adds that given Malaysia’s fiscal constraints, it has to focus on the short to medium term, does not have the luxury of doing much about the long term.
On the revenue side, Menon says the drop in oil prices is a major blow, while the absence of a broad-based consumption tax will continue to limit fiscal space. “Malaysia will already have to address a major debt problem in the future and it should wary of adding to it if it can wait,” Menon tells Business Today.
Additionally, Putrajaya had announced stamp duty exemption for first homes up to RM500,000 and has allocated RM1.2 billion for the provision of homes for low-income house buyers. Property players have lauded this initiative however, IDEAS senior fellow, Carmelo Ferlito says he did not believe the government should have supported the property market even more in the Budget.
“Contrary to other industries, the property segment was suffering before the lockdown because of its natural cyclical dynamic.”
“The industry should find its way out of that cycle by itself, not with government support,” he told Business Today.
“What I see is the ongoing attempt to push-up home ownership. Even before the health crisis, I was advocating against such a rhetoric, as home ownership is high in Malaysia at 76.9% and household debt currently 85% of GDP.” He added.
Here’s what industry leaders have to say:
“With good intentions to help both the B40 and low income households, it is imperative to note that the right homes in the right locations need to be developed to ease the overhang that is currently being faced by the market.” – Sheldon Fernandez, Country Manager of PropertyGuru.
“We hope that the government will consider to take over the responsibility to build affordable housing for the group as this will enable a more cohesive, consistent and efficient macro implementation and results while the developers can concentrate fully on the free market housing. Developers can contribute to a fund for this purpose.” – Khor Chap Jen, President and Chief Executive Officer of S P Setia.
“The announcement of full stamp duty exemption on the instruments of transfer and agreement for the purchase of first residential properties worth up to RM500,000 will definitely help to boost home ownership within the next five years.” – Mah Sing Founder and Group Managing Director, Leong Hoy Kum.
“These necessary fiscal responses to the ongoing crisis, coupled with a persistent decline in government revenue, however, will pose a challenge to the medium-term fiscal outlook. As such, we welcome the announcements of several medium-term fiscal reform initiatives today, including the development of the Medium-term Revenue Strategy (MTFF), to address the fiscal legacies of the crisis, and to enhance the government’s revenue capacity to sustainably finance Malaysia’s long-term sustainable and inclusive growth agenda. – Richard Record, Lead Economist, World Bank.
“The effective channelling of financial resources to the consumer has also been facilitated by several Budget initiatives. Collectively, these would provide a multiplier effect in the Malaysian economy, bolstering its recovery.” – CIMB Group Chief Executive Officer, Abdul Rahman Ahmad.
“We trust that the allocation will enhance critical preparedness, readiness and response of our frontliners. Expanding the ongoing targeted repayment assistance for the B40 segment and micro enterprises will help people and businesses cope and navigate through the ongoing tough period.” – Standard Chartered Managing Director and Chief Executive Officer, Abrar A. Anwar.
“The renewed programmes are expected to positively impact over 500,000 entrepreneurs and enterprises. These initiatives equip and support enterprises with digital tools and strategies that will go a long way in setting up these businesses to become crisis-proof as we enter somewhat uncharted territory in a post-pandemic era.” – Mohd Khairil Abdullah, CEO of Boost.
“The decision to extend the Digitalisation Transformation Scheme will help stimulate digitalisation initiatives with availability of funds until 31 December 2023. We believe these financial support schemes are timely and effective in catalysing national economic recovery.” – BPMB President and Group CEO, Arshad Mohamed Ismail.
“Loosening conditions to allow micro-SMEs and startups to also be eligible for the additional RM150 million allocation provided under the SME Digitization Grant Scheme and the Automation Grant, not to mention the efforts to encourage e-commerce, will also have spillover benefits that will serve to increase confidence in the national economy as a whole.” – WeWork’s Managing Director, Pacific, Samit Chopra.
“We are pleased that the Government, through cooperation with the UN, will establish the Malaysia-SDG Trust Fund with an initial allocation of 20 million ringgit. This allows various parties to contribute and be involved in efforts to ensure the SDG is achieved by 2030. This encourages Malaysian companies to embrace sustainable goals, as they stand to benefit in the long term with better governance.” – Chief Executive Officer and Founder of Plus Solar, Ko Chuan Zhen.
“The bank is pleased to see the Budget has measures to achieve the Sustainable Development Goals, promote green investing and protect the environment and natural resources.” – Group President and CEO of Maybank, Abdul Farid Alias.
“These forms of financial aid can act as a much-needed reprieve to enable tourism players to continue weathering challenges brought on by the pandemic, particularly for members of the host community and micro-entrepreneurs. Airbnb will continue to discuss with the government to ensure these incentives extend to regular Malaysian hosts, whose livelihoods have been significantly impacted by this health and economic crisis.” – Mich Goh, Head of Public Policy (Southeast Asia), Airbnb.
“We were disappointed to see that there were no allocation to stimulate our domestic tourism further included in Budget 2021. One of the key aims of OYO’s suggestions in our wishlist was to stimulate domestic tourism through the issuance of digital tourism vouchers and temporary waiver of all sales and service taxes and licensing fees for one year. The temporary waiver of all sales and service taxes meanwhile would have put more working capital in the hands of SMEs for them to weather the economic downturn.” – Tan Ming Luk, Country Head for OYO Malaysia
“Given the vulnerable and fragile situation of the tourism industry, Budget 2021 does not take into consideration the welfare of 3.6 million workers in the field and SME tourism companies. Travel demands will continue to diminish with the ongoing travel restrictions until a vaccine is widely made available.” – MATTA President Tan Kok Liang.