Govt's fiscal reforms will provide support for banking industry

Business & Markets 2013
Written by Bernama
Friday, 25 October 2013 21:57
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KUALA LUMPUR (Oct 25): Banks in Malaysia are positive with the
government's fiscal reform announcement in the 2014 Budget, especially to
introduce the Goods and Services Tax (GST), as the move will support financial
growth and economic development.
Prime Minister Datuk Seri Najib Tun Razak in tabling the 2014 Budget in
Parliament today, said the GST — which would be implemented on April 1,
2015, at a rate of six per cent — would improve public finances for the
medium-and long-term benefit of the people.
OCBC Bank Economist Selena Ling said the GST would broaden the
government's revenue base and help narrow the budget deficit, going forward.
"Given that a four per cent GST rate would largely be revenue-neutral, the six
per cent rate bodes well in terms of signalling the government's serious intent to
improve its fiscal housekeeping.
"This should garner positive market reaction and bode well for ringgitdenominated
risk assets, in the near-term," she said in a statement.
Meanwhile, CIMB Group Chief Executive Datuk Seri Nazir Razak said the bank
specifically welcomes the government's initiative to improve operations of the
derivatives market.
"(The move) will reduce credit risk and cost of hedging for banks, as well as
corporates, he said.
Maybank President and Chief Executive Officer Datuk Abdul Farid Alias said,
incentives for the small-and-medium enterprises and private retirement
schemes, the formulation of the Netting Act to promote derivative trading, and steps to develop Malaysia as a market for Socially
Responsible Investment, would further broaden and deepen the financial industry and the capital market, in terms of the product offerings
and the range of services.
He also said, the continuation of high-impact major infrastructure and investment projects was positive for the banking sector and the
capital market, in terms of continuing to support fund raising and market activities.
Public Bank Founder and Chairman Tan Sri Dr Teh Hong Piow said, the 2014 Budget would stimulate the momentum of economic growth.
"Various initiatives are taken to increase private investment across broad-based economic sectors, which will further strengthen the
country's domestic fundamentals, amid the weak global growth.
"With Malaysia's strong economic fundamentals, coupled with the government's strong commitment of prudent fiscal management, we are
confident, the 2014 Budget will bring Malaysia towards a sustainable high income economy," he added.