PCCC’S Comments On The 2013 Budget

28 September 2012

The Penang Chinese Chamber of Commerce (PCCC) views the 2013 Budget released by the Prime Minister this afternoon with mixed reaction.

In this regard, we notice that the Prime Minister has outlined 5 key areas:
1) Boosting investment activity
2) Strengthening education and training
3) Inculcating innovation, increasing productivity
4) Fiscal consolidation and enhancing the public service delivery, and
5) Enhancing the well-being of the rakyat
In the past, concerns have been raised by the public on the perennial budget deficit. In this regard, we are pleased to note that despite various goodies and handouts, the Finance Minister has taken the effort to reduce the deficit to 4% of GDP.

The announcement to give one and a half months salary to the civil servants will boost the domestic demands and help to stimulate the economy. On the other hand, this announcement will bring pressures to the private sectors. This year alone, the Government has just implemented the minimum wages and extended the retirement age to 60 years old, together with the unprecedented one and a half months bonus, we are concerned that all these will increase the cost of doing business.

Lately, the sharp increase of real property prices has affected the salary earners. In this regard, we are pleased to note that the 2013 Budget has allocated RM1.9 billion to build 123,000 affordable houses. In addition, the Budget also extended the 50% stamp duty exemption to 31 December 2014 with the price limit on residential properties raised to RM400,000.

On the proposed revision of real property gains tax at the rate of between 15% and 10% of disposal of property within a period of 2 to 5 years, we are of the view that this is a positive move and will help to ensure the healthy growth of the property sector.

In the 2013 Budget, the Prime Minister also disclosed that only 1.7 million persons pay tax compared to the overall workforce of 12 million. With the proposed reduction of 1 percentage point for each grouped annual income tax exceeding RM2,500 to RM50,000, another 170,000 taxpayers will be exempted from paying tax as well as providing savings on their tax payment. With this measure, we foresee that the implementation of GST is forthcoming. We opine that any tax reform must start with proper and adequate education and publicities so as to give the tax payers sufficient times to adapt. At the same time the tax reform must be fair and equitable in order not to burden the business community.

As anticipated, this Budget is the last budget before the 13th General Election, as such the Government will come out with goodies and handouts to please the voters. The Chamber hopes that all levels of governments must adopt a cautious and responsible fiscal strategy for the long term interests of the nation.