Analysis: Malaysia Heads For Recovery With Strong Financial Support In Budget 2022 | Daily Express Online

Analysis: Malaysia Heading For Recovery With Significant Financial Support In Budget 2022

Posted on: Saturday, October 30, 2021

By: Bernama

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Kuala Lumpur: Budget 2022 is clearly a pragmatic financial plan, grounded in substantial financing, including concessional loans to stakeholders, to ensure growth and an overall economic recovery. These stakeholders include micro, small and medium enterprises (MSMEs) as well as large enterprises, where sufficient financing would boost business activities and create jobs, putting Malaysia firmly on the path to economic recovery. With the recovery not coming as planned this year, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz had to consider it prudent to get back to basics by ensuring adequate funding to ensure business resilience.

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Hence the largest budget ever allocated with an allocation of Ringgit 332.1 billion, including Ringgit 233.5 billion for operating expenses and Ringgit 75.6 billion for development spending, for which the government is to be commended for sparing no effort to stimulate growth. One of the highlights of the 2022 budget was the setting aside of 40 billion ringgit for the financial package “Semarak Niaga Keluarga Malaysia” – a fundamental initiative which will undoubtedly have a large ripple effect on companies, including Bumiputera companies. Of the 40 billion ringgit for MSMEs, some 1.8 billion ringgit has been set aside for micro and informal enterprises as well as publicly traded companies, where the funds will be used through various methods, including capital injection. , as well as allocations through TEKUN, Agrobank, Bank Simpanan Nasional and others. It should be noted that the funding initiatives also include easy and interest-free financing to support micro-entrepreneurs, as advocated by Prime Minister Datuk Seri Ismail Sabri under the “Keluarga Malaysia” concept. A major incentive justifying the large amounts of funding was that despite eight aid packages worth RM 530 million distributed by the government since the start of the pandemic, the recovery has not lived up to expectations. The proposal is also timely, as these players in the economy have clearly continued to need financial assistance to operate after being battered by the COVID-19 pandemic. It is shocking that 37,000 SMEs have closed their doors since the pandemic, with severe repercussions on jobs, the economy and livelihoods. This is why such an important fundraising initiative is to be welcomed as it gives a boost to the recovery expected next year, including the creation of 600,000 jobs. The growing popularity of equity crowdfunding was also boosted with an allocation of RM 80 million in matching grants for the Malaysian Co-Investment Fund, in addition to the RM 100 million investment from Bank Pembangunan Malaysia Bhd.

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The initiative aims to increase the use of cloud computing and increase the use of cloud storage in public services to 80% next year. To this end, Malaysia must step up its digitization efforts, as this will help accelerate economic recovery. Another welcome proposal in the budget is the allocation for the transformation of the Fourth Industrial Revolution (IR 4.0), the development of the drone industry, esports and startups, as this bodes well for the digital agenda. Allowing tax deductions of up to RM 7,000 for refresher courses would strengthen this effort and complement JaminKerja’s initiatives by creating 600,000 job opportunities. Listed companies would also benefit from financial assistance through a government-owned special-purpose vehicle in the form of equity instruments, showing that both large and small companies need financial injections. It is this strategy of providing block funding that has given the government the confidence to project an economic expansion of 5.5 to 6.5 percent next year. The Ringgit 2 billion special fund to encourage strategic foreign investment is vital, and this includes measures to attract high impact investment and seek new export markets to ensure Malaysia remains an attractive destination for foreign investment. . It also involves penetrating markets for Malaysian halal products and services, for which 25 million ringgit has been made available to the Halal Development Corporation. Government-linked enterprises (GLCs) have also not been left out, given their contribution to the economy, with RM30 billion allocated for capital spending and investments to build their resilience and investment in the economy. areas such as renewables, supply chain modernization and 5G. It is crucial to rehabilitate and catalyze reform of several targeted sectors such as tourism, creative, retail, agriculture and raw materials sectors so that they can resume their activities to their capacity. maximum. As for the prosperity tax, it is much fairer as it is a one-off tax compared to a one-off tax and will not affect the investment climate in Malaysia. The government had also announced full exemptions from import duties, excise duties, as well as sales tax for electric vehicles (EVs) as well as a 100% exemption from road tax for EVs, which is certainly a step in the right direction towards achieving energy efficiency. . Being energy efficient, electric vehicles are said to help reduce air pollution, demonstrating Malaysia’s commitment to tackle climate change and preserve the environment. Budget 2022 is not a “business as usual” budget as it takes into account the immense challenges Malaysia and the global economy face in the face of the onslaught of the pandemic. But with a high vaccination rate of 95% to date, strict standard operating procedures and the combined ingenuity of the people as part of the Keluarga Malaysia concept, the 2022 budget would certainly shed light on what has been up to the end. now a perilous tunnel.
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Michael J. Birnbaum

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