By Karina Imran & Sharifah Pirdaus Syed Ali
KUALA LUMPUR: A higher development expenditure (DE) to finance particularly infrastructure projects in upcoming Budget 2024 will help banks to improve total loans growth.
Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said construction companies may require working capital and capital expenditure to develop infrastructure projects.
“This will help improve total loans growth which has been experiencing a lethargic trend of 4.2 per cent as of August 2023 from 5.0 per cent in January this year,” he told Bernama.
On the same note, Affin Hwang Investment Bank chief executive officer Nurjesmi Mohd Nashir expects an expansionary allocation for DE in Budget 2024 scheduled to be tabled on Oct 13, 2023.
He noted that an expansionary allocation for DE is good for the domestic economy.
Initiatives to boost loan growth
To further support loan growth, Mohd Afzanizam suggested that the government extend the stamp duty exemption for house purchases to improve financing.
Also, further tax exemption on electric vehicle (EV) ownership will also help improve EV affordability, boosting demand for automotive financing.
Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz said the government will ensure that EV ownership is available to all income groups through targeted subsidies and financial assistance.
Malaysia is targeting to have 100,000 EVs on the road by 2030, of which 50,000 are expected to be commercial EVs.
EVs are currently exempted from road tax until Dec 31, 2025.
SMEs need government help
AMMB Holdings Bhd’s group chief executive officer Datuk Sulaiman Mohd Tahir said small and medium enterprises (SMEs) are crucial economic drivers. Offering focused support could safeguard their business continuity and enhance their creditworthiness.
Hence, the bank would like to see an extension of low-interest financing, matching grants and digitalisation incentives in the upcoming Budget 2024, he said.
Sulaiman also said the tabling of the budget comes at a pivotal moment for Malaysia, framed by the National Energy Transition Roadmap (NETR) and the New Industrial Master Plan (NIMP) 2030, which will chart a course for sustainable economic growth and fiscal resilience.
He also said complying with environmental, social, and corporate governance (ESG) principles is no longer an option but a necessity.
“We propose the establishment of a Centre of Excellence aimed solely at educating SMEs on ESG compliance. A matching grant can be an effective catalyst for SMEs to accelerate their ESG efforts.
“To fast-track Malaysia’s net-zero ambitions, tax exemptions for green financing are essential. Moreover, a specialised Centre of Excellence for green projects could act as a pivotal catalyst,” he opined.
Sulaiman also suggested incentivising companies to get independent ESG ratings via tax rebates as this promotes greater disclosure, builds investor confidence, and could attract more foreign capital.
Focus on high impact industries
HSBC Malaysia chief executive officer Datuk Omar Siddiq said a focus on developing high-impact industries or economic activities to push Malaysia across high-income threshold as outlined in the NIMP 2030 is needed.
Optimise Budget 2024 to focus on attracting foreign direct investment (FDI) in high-impact industries amid the extremely competitive demand and shifting global supply, he said.
“This can be achieved by enhancing Malaysia’s investment frameworks to make it easier for businesses to invest and grow in the country while also making the environment conducive for start-ups and for research and development (R&D) related investments.
“The government must also continue to allocate resources to enable local corporates – including large corporates, mid-market enterprises and SMEs – to enhance their prominence on an international stage,” he said.
Omar noted that this is fundamental to grow exports and to enhance their access global opportunities.
It is also important to continue investing in efforts to boost global investor community awareness of Malaysia’s strategic benefits to attract quality investments and to lift its position as a key regional investment hub. – BERNAMA
