Comments from Dato' Sri Abdul Wahid Omar, President & CEO of Maybank and Chairman of the Association of Banks in Malaysia
I must say that I am pleasantly surprised by the Government's commitment to reduce Budget deficit from 7.4% in 2009 to 5.6% in 2010. This is more aggressive than the level forecast by most analysts at around 7 to 8%. This should instill greater confidence in the Government's prudent financial management, promotion of 'value for money' concept in spending, targetted fuel subsidy management and even instilling the entrepreneurial spirit among civil servants. I am referring to the proposal to encourage Government agencies to rent out their premises & equipment to third parties where they get to keep 50% of the revenues!
For the financial services industry, we welcome the extension of tax incentives for the promotion of Islamic financial services and further liberalisation of the capital markets. The flexible brokerage sharing between stockbrokers and remisiers will allow greater flexibility for brokers to reward good performing remisiers which is currently capped at 40% of brokerage fee. We also welcome the mandating of electronic payment of dividends for listed companies which will further promote e-payments and reduce administrative burden of listed companies and shareholders alike.
The Budget 2010, however, contained two aspects which will affect the financial services industry. Firstly on the introduction of RM50 per annum service tax for credit and charge cards. Secondly on the reintroduction of RPGT, albeit at a much lower rate of 5%. Whilst this may reduce some speculative elements in the property market, it will also result in lower growth in housing/property loans for the banks.
For the individual taxpayers, there is plenty to cheer in the form of higher tax reliefs totaling RM2,500 (inclusive of broadband subscription) and lowering of top personal income tax rate from 27% to 26%. Thank you YAB Prime Minister.