By Professor Dr Hafezali Bin Iqbal Hussain
Overall, the budget as expected was expansionary, in-line with the expected headwinds in the economy especially on the global front as well as slowdowns in major trading partners.
Projected growth of 4.0 – 5.0% is a good indicator on the economic resilience of the country, which is expected to be driven by the services sector.
The increase of quantum as well as coverage for financial aid under JKM and BFM is well planned given that the execution is followed on by funding the social mobility for those in the hardcore poor category which includes initiatives for venturing into farming, services sector as well as other potential entrepreneurial endeavours.
The focus on gender equality is also evident given various initiatives which include tribunals for sexual harassment as well as funding for women entrepreneurs under various schemes.
In addition, the push for increasing the role of women in corporate leadership via the Securities Commission also would be beneficial for corporate Malaysia given that empirical evidence shows numerous benefits of having gender diversity on boards which include reduction in excessive risk taking as well as more prudent investment decisions.
The sustainability of the current economic recovery is also supported via the introduction of return-to-work incentives which is the tax exemption from 2023 to 2028 for women who have taken career breaks.
The pre-school financial aid for RM 150 per child regardless of income will provide much needed relief to parents whom children are returning to school.
Income tax reduction of 2% for the M40 will be helpful in increasing the disposable income which allows those in this income strata to cope with the expected increase in cost of living.
Other Budget Measures for Growth
ePemula initiative for the youth and M40 will accelerate digitalisation efforts.
In September 2022, Dr Mohsin Ali and Prof Dr Hafezali wrote in the Edge about the importance of insuring gig workers, thus we are happy to see the SOCSO mandate being enhanced for gig workers where implementation has also been made feasible with an 80% subsidy from the government.
The increase of stamp duty exemption from 50 to 75% for houses from RM 500,000 to RM 1million will encourage more young people to purchase their first house. This is especially important given that those purchasing houses in these price brackets are not qualified for government affordable housing schemes.
Reduction of income tax for SMEs for the first RM 100,000 from 17% to 15% will prove encouraging for entrepreneurs, likely leading to expansion of business in the following years.
The fund allocation of RM 10b for SMEs in order to facilitate the automation and shifting to a digital business model will ensure resilience and sustainability going forward. It provides a much-needed boost to transform these businesses in the ongoing economic recovery.
Anti-scam measures will ensure the resilience of the digital economy as well as ensure trust and security in online transactions.
Increasing connectivity of rural areas as spelled out in the budget will reduce the digital divide and provide greater opportunities leading to reduced income inequality.
Increasing the coverage of 5G across densely populated areas serves as another impetus in focusing on the digital economy and benefits will be enjoyed across the board allowing firms to harness the power digital technologies hence reducing the data divide.
Professor Dr Hafezali Bin Iqbal Hussain is the Head of Research in the Faculty of Business and Law and Director of Digital Economy and Business Transformation Impact Lab at Taylor’s University. Taylor's Business School is the leading private business school in Southeast Asia for Business and Management Studies based on the 2022 QS World University Rankings by Subject.