Budget 2023 Commentary: Banking Sector

Founder of Public Bank Bhd, Chairman Emeritus, Director and Advisor Tan Sri Dr Teh Hong Piow

We salute the vision of the government which has defined the short and medium term direction of our country with a well-planned 2023 budget. It strikes the right balance between continuing to prioritize the well-being of the rakyat while guarding against potential challenges, and maintaining Malaysia. post-pandemic growth. Budget 2023’s spirit of inclusion reflects the government’s promise to leave no one behind.

The government’s planned expenditure of significantly higher amount of RM372.3 billion in 2023, of which 37.2% is allocated to social sector programs and projects, shows its determination and commitment to closing the income gap between the rakyat and the development gap between states. This will help ensure that Malaysia progresses successfully and sustainably as a nation.

The 2023 budget adequately addresses the current needs of the B40 and M40 groups through various cash assistance programs with expanded eligibility criteria, tax incentives for home ownership and the extension of initiatives related to employment, among others. Micro, small and medium-sized enterprises (MSMEs) will also be supported through access to traditional and alternative financing options, tax incentives and the extension of subsidies, among others. Issues such as food security and natural disaster preparedness were also addressed, in addition to infrastructure spending covering healthcare and education, and digital infrastructure to bridge development and digital gaps. .

We commend the government’s renewed focus on sustainability-focused initiatives in Budget 2023, with greater emphasis on enhancing green investments for the development of low-carbon, resilient and healthy urban environments. . To this end, the government’s higher spending of RM95 billion for development in 2023 will see allocations channeled to programs and projects with high socio-economic impact in line with the United Nations Sustainable Development Goals. The Public Bank Group has already embarked on this adventure and reaffirms its commitment to partner with the government and various stakeholders to move these programs forward.

We fully support Budget 2023, which is expansionary but necessary at this time to support the nation’s post-pandemic recovery. We are convinced that the continued partnership between the public and private sectors will strengthen the resilience of our economy and strengthen our recovery, while improving the well-being of the rakyat.

Datuk Khairussaleh Ramli, CEO of Maybank Group and President of Malaysian Banking Association

Budget 2023 aims to balance the need for sustained domestic growth amid global economic headwinds while ensuring fiscal prudence given the current volatility in financial and currency markets.

We welcome budgetary allocations, tax incentives and tax measures that support national economic growth and that are geared towards the themes of inclusiveness, equality, sustainability, security and building resilience, that apply to all segments of society and business sectors.

These incentives and measures are illustrated by the reduction of two percentage points in personal and SME income tax rates; improvements in financial assistance and social benefits for low-income and vulnerable groups; reconstitution of retirement and voluntary savings; strengthening food and social security; accelerating the recovery of the tourism industry; making home ownership affordable; improve essential public services like health care and education and improve the preparation, response and mitigation of natural disasters.

It is equally important that the 2023 budget lays the groundwork for tax reforms, starting with the move to targeted subsidies. This needs to be complemented by sustainable revenue streams to reduce reliance on volatile commodity income and one-off tax revenues as seen in 2022.

The 2023 budget also highlights the latest measures that will be taken by banks in Malaysia to combat financial scams, as recently announced by Bank Negara Malaysia, to which the banks are fully committed. We also welcome additional spending under Budget 2023 to strengthen detection and reporting of cyber threats, including cybercrime capacity building.

We also support the continued focus on the ESG and climate change agenda under Budget 2023, which is a key agenda for the Malaysian financial sector. ABM members have already agreed on a set of seven key ESG principles for the Malaysian banking sector.

Datuk Abdul Rahman Ahmad, CIMB Group CEO

We welcome the focus on initiatives that will benefit our young people, the B40 group and those who are self-employed or in the gig economy, as well as micro, small and medium-sized enterprises (MSMEs), the spine backbone of our economy. This includes, for example, various tax incentives, grants and funding opportunities, which CIMB is proud to support through programs such as Bank Negara Malaysia’s iTEKAD initiative. We believe that the initiatives announced in Budget 2023 will ultimately help promote a broader and more sustainable recovery.

We also welcome the increase in the investment cap of Amanah Saham Bumiputera (ASB) and Amanah Saham Bumiputera 2 to RM300,000, which will increase bumiputra’s ownership and equity participation and in the long run will help to ensure their financial resilience.

The CIMB welcomes government initiatives such as the creation of a national scam response centre. On the part of the bank, we are firmly on track to fully implement the enhanced security measures against scams recently announced by Bank Negara Malaysia. We will continue to work closely with authorities to protect consumers against fraud.

CIMB plays a critical role in channeling finance and capital in ways that support a just transition to a net zero economy and greater social equity. We will continue to support Malaysia’s ESG agenda through our sustainable finance products and services, including through Islamic finance value-based intermediation.

Ong Eng Bin, CEO of OCBC Bank (Malaysia)

The 2023 budget is responsive, responsible and reformative, although much more can and still needs to be done. It is heartening to see that the needs of low-income and marginalized groups continue to be met with a focus on their well-being.

The reduction in personal income tax for people in the RM50,000-100,000 income category is good news, although people in this group continue to face difficulties associated with the steady increase of the cost of living.

I am also pleased to see that education continues to be a priority through the increased budget allocation to RM55.6 billion and the many forward-looking initiatives contained in the associated plans; commitment to creating employment opportunities for those struggling to find one; and the emphasis on empowering women.

We hope these will pave the way for greater responsiveness and an even more responsible posture as we respond to the underlying needs of the nation as a whole so that we can renew our journey to becoming a developed nation and to high income, one where the needs of everyone, regardless of social status, is catered for.

Above all, the reformist agenda must remain a top priority. We have come through the pandemic together. Now we have to stay together. By keeping sustainability as an integral part of the equation, including a strong focus on youth and development at the grassroots level, we believe the right signals are being sent for our reconstruction efforts to thrive.

Mak Joon Nien, CEO of Standard Chartered Malaysia

Malaysia’s 2023 budget of RM327.3 billion is an inclusive budget that balances modest fiscal consolidation with the need to support the economy and improve the welfare of the rakyat. Amid global headwinds, the budget will bolster the country’s long-term resilience with a record RM95 billion allocated for development spending.

Allocations of RM55 billion for grants, assistance and incentives, in addition to reduced income tax and price controls on goods and services, are a welcome respite for the rakyat by helping them manage the rising cost of living. Targeted grants will help the most vulnerable community cope as the country accelerates its growth momentum.

It is encouraging to see an allocation of RM73 million to improve surveillance, detection and forensic capabilities to combat cybercrime, in addition to the five key security measures recently implemented by Bank Negara Malaysia to help protect bank customers against scams. We are committed to providing full support to authorities in establishing a National Scam Response Center as a crucial platform for victims to receive timely and necessary assistance.

Standard Chartered is encouraged by the women’s empowerment program in the budget, from allocating RM235 million to help women start, upgrade and market their businesses, to training programs to increase the number of women in positions management, and income tax exemptions to help women. back to work.

As a strong supporter of Micro, Small and Medium Enterprises (MSMEs) access to financial support, SemarakNiaga’s financing facilities amounting to RM45 billion and provision of guarantee schemes worth RM9 billion by Syarikat Jaminan Pembiayaan Perniagaan (SJPP) will help them in their recovery in the aftermath of the pandemic. The 15% tax reduction rate for MSMEs’ taxable income will help ease their cash burdens in the current context of rising interest rates.

The provision of RM92 million for the development of the halal industry will increase the value of the country’s halal exports. We are proud to be the first international Islamic bank in Malaysia to offer Halal360 to help local Halal businesses thrive in the global Halal business economic landscape.

The introduction of more efficient tax processes such as electronic invoicing and tax identification number will improve the tax experience and reduce the administrative burden for businesses, especially for small businesses. This new framework of tax incentives will position Malaysia as an attractive investment destination in light of global tax developments.

As a facilitator of cross-border trade, the introduction of an investment fund with an allocation of over RM1 billion is timely and will enhance Malaysia’s ability to continue attracting investment from quality.

The RM10 billion allocation provided through Bank Negara Malaysia, which covers automation and digitization of SMEs, will act as a catalyst to open access to the global economy for everyone to participate in to ensure a more balanced growth and reset globalization.

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