What Malaysia's banking chiefs say about Budget 2020

KUALA LUMPUR (Oct 11): Pragmatic, carefully curated to benefit the rakyat across ethnic groups and with timely incentives to reduce the country's dependence on foreign labour — these are among the comments from Malaysia's top bankers on Budget 2020, which was tabled in Parliament today by Finance Minister Lim Guan Eng.

Below are excerpts from immediate responses to the budget from the chiefs of OCBC Bank (Malaysia) Bhd, Standard Chartered Malaysia, CIMB Group, RHB Banking Group, Malayan Banking Bhd (Maybank) and Public Bank Bhd:

OCBC Bank chief executive officer (CEO) Datuk Ong Eng Bin

We are glad that despite the lower revenues projected for 2020, the government was pragmatic enough to surpass its previous budget deficit targets. This is a good move to support the local economy amid uncertainties brought about by the ongoing US-China trade war and a slowing global economy.

We are heartened by the focus on growing the digital economy as well as the incentives and exemptions provided for green investments, to which OCBC Bank is deeply committed. At the same time, it is timely that incentives have been put in place to reduce our dependence on foreign labour.

For the man in the street, whose key concerns are the cost of living and rising prices, it certainly comes as a great relief that the goods and services tax will not be reintroduced despite earlier speculation to the contrary. Overall, this is a decent budget for all amid the significant challenges being faced by the country.

CIMB Group Holdings Bhd group CEO Tengku Datuk Seri Zafrul Aziz

This is a budget that truly reflects the government’s shared prosperity vision, carefully curated to benefit the rakyat across all major races, as well as main segments like small and medium enterprises (SMEs) and the bottom 40% income group (B40).

We laud the sharper focus on advancing the nation’s digital transformation, while also ensuring the benefits will be broad-based, enabling all segments of society to capitalise on the country’s enablement of fifth-generation (5G) and other new technologies. This is clear from the tax incentives for knowledge-based foreign investors, encouraging a cashless society to pilot technologies like autonomous vehicles and the blockchain.

Further, the enabling policies for SMEs to embrace digital in running their businesses are well thought out. Going digital is crucial for them to capitalise on the potential afforded by the regional and global e-commerce industry.

CIMB also looks forward to Bank Negara Malaysia's (BNM) announcement on digital banking licences, which we will definitely consider.

Moving towards a more sustainable social agenda, policies for the B40 segment are predicated on a good balance between direct assistance and enablement, which is crucial to ensure as many of them as possible are able to help and advance themselves economically.

Overall, it is a budget with a good combination of conservative and creative measures to collectively drive the nation towards a path of long-term sustainable and inclusive growth.

Standard Chartered Malaysia managing director and CEO Abrar A Anwar

We welcome the move by the government to introduce special investment packages worth up to RM1 billion a year for five years to Fortune 500 companies, "global unicorns" as well as local companies that are able to break through international markets. We also laud the government’s targeted measures to promote economic growth, drive foreign direct investment (FDI), and help companies grow and connect globally.

Being a financial institution dedicated to promoting the growth and development of dynamic SMEs, we are pleased to see RM300 million worth of allocations to support SMEs with the potential to become regional players. Continued growth of SMEs and entrepreneurs is key to a robust economy, and we are pleased to see the government continue paying close attention to this sector.

We support the government’s commitment to moving Malaysia towards a digital economy via various tax incentives, setting up one-stop digital improvement centres nationwide as well as introducing stimulation packages to boost the adoption of e-wallets. This will have a lasting and positive impact on the financial services industry, and we take pride in walking side by side with the government's digital initiatives.

We also look forward to the availability of virtual bank licences from BNM in 2020.

Islamic financing is another area in which the government has clearly prioritised. We believe that continued tax exemption for syariah-compliant, sustainable and responsible investment funds will further spur growth in Malaysia's Islamic capital market.

Accelerating gender parity and empowering women are important to the bank’s diversity and inclusion agenda. In this regard, we laud the government’s guarantee schemes worth RM500 million to provide working capital financing to women entrepreneurs as well as the Women@Work initiative, which aims to create 33,000 job opportunities a year for women aged between 30 and 50 years. Raising productivity and enhancing human capital among women are essential to sustainable economic growth.

RHB Banking Group managing director Datuk Khairussaleh Ramli

Budget 2020 is comprehensive. It has an eye trained in fiscal discipline and emphasis on stimulating the economy and strengthening public welfare.

We applaud the government's continued focus on addressing the people’s welfare, particularly in improving the quality of life of the middle 40% income group and B40 segments. The emphasis on education would increase job opportunities and earning capabilities, in line with the recently launched Shared Prosperity Vision 2030.

Budget 2020 also offers incentives to attract global unicorns involved in high-tech areas, boosting FDI. This would in turn significantly benefit local SMEs. The government also encourages the transformation of SMEs, through digitalisation and automation, to be more export-oriented. This would further boost efficiency and productivity of SMEs.

We are also excited by developments in the digital space, especially in the ongoing digital transformation drive, with the issuance of virtual bank licences that would indeed accelerate shifts within the banking industry, in line with RHB’s FIT22 strategic aspirations.

Maybank group president and CEO Datuk Abdul Farid Alias, who is also chairman of Association of Banks in Malaysia

Budget 2020 strives to strike a balance between the immediate and medium-term needs of the country.

Tun Dr Mahathir Mohamad started Malaysia on a move towards becoming a "cyber nation" in 1996, ahead of other countries back then. The financial crisis in 1997 diverted our attention and now we need to get back on track.

There is an array of customised incentives targeted to stimulate investments and develop enabling infrastructure for 5G technology and Industry 4.0, which shows the government’s commitment to accelerating economic growth — to be supported by growth in the digital economy.

There is also an initiative to encourage SMEs to digitise their operations. Perhaps what we can add in this area is an effort to reskill the workforce and curate an environment where an evolution towards digital immersion will not just be allowed but encouraged.

We are glad to see the government's objective to maintain fiscal discipline. It is important to do this during the times when we can do so, so in the times when we do not have much choice, we will still have other tools at our disposal.

We believe enhancements and additions to funding schemes by the government, and development of financial institutions to complement banking industry financing for SMEs and entrepreneurs, are positive and will further enhance growth in these sectors. We believe the SME sector is under-represented in our economy and this initiative can help the sector to expand further.

In the spirit of shared prosperity, the immediate needs of the B40 segment need to be supplemented while the medium-term initiatives are executed. These range from immediate measures to address income and cost of living issues for the B40 and vulnerable groups to longer-term initiatives, such as an improvement in social safety nets, job creation and investments in human capital development, particularly to address the high youth unemployment and low female participation in the labour force.

Public Bank founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow

We applaud the government and the finance minister for taking a holistic and comprehensive approach in crafting Budget 2020. We are delighted to note that Budget 2020 has outlined a wide range of initiatives, action plans, fiscal measures and incentives seeking to address the challenges that Malaysia is facing, which include setting a new growth direction, intensifying the growth momentum, addressing the high cost of living and increasing the income level of the rakyat.

The government is cognisant of driving growth in the new economy and digital era. We welcome the measures to make Malaysia a preferred destination for investment, accelerating the digital economy, enhancing access to financing for businesses as well as strengthening the diversity of the Malaysian economy.

In particular, we note that the government is also developing the relevant infrastructure to enhance the ecosystem to drive growth — for example, economic zones, transportation, 5G connectivity and digital applications.

We will continue to play our role as a financial intermediary in support of the government’s measures to facilitate access to financing for businesses, particularly SMEs.

In addition, we will continue to support financing for affordable housing, in line with the government’s efforts to increase homeownership. As a bank, we will strengthen our efforts to promote higher adoption of e-payment among our customers in support of Malaysia becoming a cashless society.

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