Post date: Nov 07, 2010 10:57:39 PM
KUALA LUMPUR: Private investment through construction activity got a serious boost from Budget 2011 after a slew of costly projects headlined by the RM40bil mass rapid transit project were announced as the building blocks towards reinventing the economy got under way.
Action on plans already laid out in the New Economic Model and the Economic Transformation Programme were introduced in the budget as funding and certainty for a number of ideas and projects previously identified were fleshed out.
“It is a budget set to springboard the initiatives of change by the Government and put Malaysia well on the path towards a stronger nation and a high income economy. The Government’s bold moves to assure investments in new growth areas and creating many jobs are exciting for us all,’’ said Malayan Banking Bhd chairman Tan Sri Megat Zaharuddin Megat Mohd Nor.
Headlining the entire budget were a number of big ticket and high-impact projects, and a number of them were earmarked in the development of Greater Kuala Lumpur such as the construction of a landmark RM5bil 100-storey tower by 2020 and RM10bil to building affordable housing and commercial properties in Sungai Buloh which would be completed by 2025.
Those projects would be developed by government agencies and the Government would also utilise RM1bil from the RM20bil Facilitation Fund, previously set up in the previous budget, as a tipping point for a number of public-private partnership projects.
“These strategic high impact projects will assist in meeting the targeted GDP growth of our economy,’’ said group managing director of MIDF Datuk Mohd Najib Abdullah.
The use of the private sector in its development plans has allowed the Government to scale back its development expenditure for 2011 to RM49.2bil while getting as much impact as possible on the economy.
“I believe this budget will fast-track the transformation process and set the pace for the private sector to contribute effectively to this national ambition,’’ said senior partner of UHY Malaysia Alvin Tee.
“The groundwork and the timeline have been clearly spelt out for National Key Economic Areas. They will create a multiplier effect which is exactly what is required for us to become a high income economy.’’
Some entry point projects (EPP) highlighted by the ETP were given the go-ahead in the budget.
The Government would spend RM146mil on an oil field services and equipment centre in Johor that would have a private investment potential of RM6bil over the next 10 years and RM50mil would be spent on a shaded walkway for the KLCC-Bukit Bintang vicinity as a boost to tourism.
The Government would also provide RM100mil towards a RM3bil integrated eco-nature resort at Nexus Karambunai resort in Sabah, which was an EPP.
“What matters most is the timely and effective implementation of the NKEA initiatives so as to produce significant tangible growth dividend in the medium term,’’ said CIMB Investment Bank chief economist Lee Heng Guie.
The budget also took cognisance of the role capital markets have in an economy by introducing a number of proposals which include increasing the number of day traders, boosting the Islamic capital markets and GLICs cutting down their stakes in listed firms on Bursa Malaysia.
The raising of the cap of foreign investments by the EPF should allow for the fund to seek higher returns and by introducing a private pension fund scheme, it would open an avenue for workers to seek alternative retirement scheme.
“The measures and initiatives announced are predominantly targeted towards enhancing liquidity, velocity and vibrancy,’’ said Bursa Malaysia CEO Datuk Yusli Mohamed Yusoff.
The budget also allowed for more risk taking by revamping insolvency laws which would amend the bankruptcy limit of RM30,000 per person and by building more technopreneurs in the country by intensifying the venture capital industry.
Green measures were also provided for, as imported hybrid cars would incur no more taxes or excise duties, biodiesel would be introduced in more states from June next year and a feed in tariff mechanism would be implemented to allow for more renewable power to be generated in the country.
Although increasing private expenditure is important in transforming the economy, the budget also contained proposals to improve human capital in the country by improving the quality of education and the range of vocational training.
“In an ever-increasingly competitive environment, its is crucial to build a workforce comparable with global talents. Our workforce needs to harness its full potential through education, training, up-skilling and re-skilling programmers to achieve national growth targets,’’ said Kelly Malaysia managing director Melissa Norman.
While the broader economy would get a lift from the anticipated rise in private investment, the Government sought to increase its revenue by increasing sales tax by one percentage point to 6%. Subscribers of paid TV services, such as Astro, would be hit from an imposition of the 6% service charge on their bills.
Furthermore, the Government is taking steps to reduce the number of low skilled foreign workers in the country by gradually increasing the levy on such workers.
“Concentrating on lower skilled foreign workers is an impediment to us becoming a high income nation,’’ said Deloitte KassimChan Tax Services Sdn Bhd country tax leader Ronnie Lim.
Measures to help first-time home buyers were announced but the budget has in essence sidestepped the issue of rising house prices.
The housing lobby would not be the only special interest group that would be smiling.
Guinness Anchor Bhd managing director Charles Ireland said it was prudent for the Government not to impose another round of excise duty on alcohol for next year as that would have exerted tremendous pressure on the industry and put further pressure on the F&B industry and tourism.