Budget 2024: “Continued support extended to MSMEs much welcomed,” say banks

PUBLIC Bank Berhad has applauded the government’s resolve on continuing to champion fiscal prudence, adding that balancing the diverse needs of all can be a tall order and as such the government’s success in achieving this with Budget 2024 should be commended.

The Budget 2024, which will see a total expenditure bill of RM392.8 bil, had addressed issues such as the high cost of living, the implementation of socio-economic measures to uplift the poor and low-income groups, empowerment of small-scale businesses, economic reforms and the improvement of basic public infrastructure and essential public services, among others.

“We welcome the continued support extended to the micro, small and medium-sized enterprises (MSMEs),” said Public Bank managing director and CEO Tan Sri Dr Tay Ah Lek in a statement today (Oct 13).

Tan Sri Dr Tay Ah Lek

“RM100 mil in the form of grants to support digitalisation and RM900 mil in financing support provided by Bank Negara Malaysia to encourage MSMEs to automate and digitalise will strengthen resilience of our SMEs, future-proofing our economy in the process.”

Tan was referring to Prime Minister Datuk Seri Anwar Ibrahim’s announcement this evening that RM1.5 bil will be set aside by government-linked corporations (GLCs) and government-linked investment corporations (GLICs) to encourage start-ups including Bumiputera MSMEs to venture into high-growth high-value industries.

Tay further described the government’s pioneering plan for a RM1 bil biodiversity-based sukuk a welcome move, saying studies have shown Malaysia to be among the most vulnerable regions in Southeast Asia to the effects of climate change and therefore, inaction is “no longer an option”.

“The Public Bank Group is well underway in embarking on sustainability-based initiatives, reducing carbon emissions from our operations and undertaking responsible lending practises, amongst others,” he commented.

“Budget 2024 adequately addresses the needs of today for the challenges of tomorrow, and is broad-based.

“We continue to be fully supportive of the government’s initiatives in this well-thought-out plan which will continue to strengthen the country’s economic fundamentals, while enhancing the well-being of the rakyat.’

Encouraging SME growth

Meanwhile, Hong Leong Bank group managing director and CEO Kevin Lam said despite the challenging external environment, the bank is cautiously optimistic that the expansionary budget and steady projected growth trajectory of 4–5% for 2024 would provide the much-needed backdrop for businesses including SMEs to grow.

He said this is more so with quick and effective implementation of budget measures and anticipated revival in investor confidence.

Kevin Lam

“In this regard, the government’s target to narrow the fiscal deficit from 5.0% of GDP this year to 4.3% of GDP in 2024, its lowest in five years, is well regarded and is expected to augur well with investor confidence in the international arena,” he commented.

This will be done via a combo of expanding revenue such as the introduction of a capital gain tax for unlisted shares by companies, proposed two-percentage-point increase in the Sales & Service Tax (SST) from 6% to 8% and increases in both direct (income taxes), indirect (SST, excise duty, export and import duties) as well as reducing development expenditure to RM90 bil, and plans on gradual subsidy rationalisation by eliminating price ceiling of poultry.

“Fuel subsidies and the electricity tariff rebate of up to RM40 to a targeted group will however be maintained for now, which would no doubt provide a temporary relief to the broader rakyat fazed by the rising cost of living, hence bolstering continuous growth in private consumption,” Lam remarked.

“We are positive the proposed budget initiatives will set the stage for longer-term sustainability of the Malaysian economy by addressing some long-standing economic and fiscal challenges.” – Oct 13, 2023


Main pic credit: Bloomberg

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