JUST before the curtain comes down on a turbulent 2021 – at least for the Malaysian equity market – the Finance Ministry (MOF) has reversed its decision pertaining to stamp duty hike by capping the duty at RM1,000 with a rate of 0.15%.
During the tabling of Budget 2022, the Government had proposed to impose a stamp duty rate to 0.15% versus the 0.1% currently in force with the abolition of the RM200 cap on the duty with effect from Jan 1, 2022.
With the new policy decision, (i) stamp duty is set at RM1.50 for every RM1,000 or fractional part of RM1,000 of the value of the contract note of any shares or stock; and (ii) is capped at RM1,000. This is valid from Jan 1, 2022 to Dec 31, 2026.
In a research note dated Dec 9, Hong Leong Investment Bank (HLIB) Research highlighted that Bursa Malaysia should learn from the Hong Kong Stock Exchange (HKEX) experience with the latter seeing red with its monthly average daily volume (ADV) falling -44% between the February to November period following the implementation of a stamp duty hike.
Above all else, the stamp duty hike would also make the local bourse the most expensive exchange to trade within ASEAN-5.
“The Hong Kong experience and comparison of trading cost within ASEAN-5 suggests that a contraction in ADV seems inevitable for Bursa once the higher stamp duty kicks in next year,” head of research Jeremy Goh pointed out in a company update.
“Evidently, the quantum of the hike is also higher for Bursa (50 basis points vs 30bps for HKEX) and is further exacerbated by the cap removal.”
In extending his appreciation to the MOF for its agility in responding to market operating conditions, Bursa Malaysia’s CEO Datuk Muhamad Umar Swift said the move “exemplifies the Government’s attentiveness to industry feedback, and in managing the delicate balance between tax collection and nurturing growth in our capital market.”
Moreover, it also maintains the local bourse’s regional competitiveness and attractiveness, according to chairman Tan Sri Abdul Wahid Omar.
“The exchange together with MOF will continuously ensure that our marketplace remains an attractive destination for investors and issuers to invest and raise funds,” he added. – Dec 31, 2021
