24-02-2023

The ACCCIM views the 2023 Budget as a responsive and inclusive growth-oriented budget encompassing rakyat, diverse business and industries, as well as integrating ESG into business practices to enhance economic resilience and sustainability that would buffer against future environmental and economic shocks.

Despite budgeting a new record high Development Expenditure of RM97.0 billion, the Government remains fully committed to fiscal consolidation and ensuring debt sustainability as it targets a reduction in budget deficit to 5.0% of GDP or RM93.9 billion in 2023 from -5.6% of GDP or RM99.5 billion in 2022.

The Budget’s speech indicates its commitment to rebuild fiscal space for future economic shocks. These include a more targeted subsidy rationalisation approach, gradually reducing debt and liabilities, exploring new sources of sustainable revenue and minimising leakages as well as prioritising public expenditure.

President of the ACCCIM, Tan Sri Dato’ Low Kian Chuan said that continual business and economic reforms must be a priority for the current government, and bringing in measures for ease of doing business, revitalising investment, generating jobs, a competitive tax regime and conducive investment climate as well as efficient public delivery services will help Malaysia achieve investor confidence and sustained economic growth.

The Budget contains measures and initiatives to enhance economic resilience, boost economic growth, mitigate cost of living pressures, manpower development and income as well as employment generation, and enhancing the micro, small and medium enterprises (MSMEs) eco-system.

The Budget is fittingly focused on increasing support for MSMEs, providing credit facilities and guarantees as well as other incentive measures. We welcome the reduction in company income tax rate for SMEs to 15% from 17% (resulting in tax savings of RM450 million benefitting 150,000 MSMEs), but the preferential threshold tax should be revised higher to RM1 million or at the current threshold of RM600,000 from the Budget’s proposal of RM150,000, to help them to be more competitive and have leeway to reinvest from the tax savings.

While there are incentives for private sector to hire TVET fresh graduates, MSMEs need financial relief to help ease their operating costs, which have had suffered increased cost pressures from all fronts, including higher electricity tariff and the implementation of the Employment (Amendments) Act.

The Budget also provides incentives and funds to support food production, enhance the tourism sector’s recovery and also encourage businesses for green and sustainable development, digitalisation and automation as well as R&D. Meeting our wish list, the Accelerated Capital Allowance in manufacturing, services and agriculture sector will be revised higher to RM10 million to encourage automation equipment.

We welcome the Budget’s initiative to facilitate investment through the enhancement of processes and easing of bureaucratic rules by incentivise the local authorities for expediting the process of approved project implementation. However, we hope that the Federal, State, local authorities, and relevant stakeholders to coordinate and streamline their approval process.

We are concerned that the proposal of imposing capital gains tax on the disposal of non-listed shares in 2024 would eventually widen to cover other asset classes, leading to capital outflows.

ACCCIM is looking forward to the roll out of the New Industrial Master Plan 2030 in the third quarter of 2023, and hopes for engagement with the business chamber and industry associations for inputs. The master plan must focus on how to deepen the industrial linkages between domestic SMEs and FDI as well as design a development program to help SMEs towards IR4.0.