Tuesday September 18, 2012
Eastspring CEO expects govt to hand out more cash
PETALING JAYA: The coming budget is expected to continue being “people friendly” with the Government dishing out more cash assistance to help alleviate the cost of living for the lower income group, said Eastspring Investments Bhd chief investment officer (equities) Yvonne Tan.
With this theme in mind, she said that it was also likely that the Government might also come up with more policies to address the issue of affordable housing
“Other potential people-friendly policies in the budget could include additional personal tax relief, or additional child tax relief, which would help reduce the burden of income tax paying families,” she said. Tan's wish list for Budget 2013 includes further liberalisation in the financial industry to help spur the development for the industry.
“In the financial industry, skilled human capital is of the utmost importance and policies or incentives to reduce the brain drain' and promote freer flow of foreign talent within the industry would be a great benefit to the sector,” she said.
Tan said that it would be good if the budget could abolish the 10% withholding tax currently imposed on the real estate investment trust (REIT) sector.
“This would be beneficial for investors looking to that sector for REIT income, and continue to spur interest in growing the REIT sector,” said Tan.
On sectors that are likely to benefit the most, Tan believes the consumer sector will benefit broadly as cash assistance to the lower income group and civil servants increments and bonuses will enable consumer spending to be either maintained or improved in some cases.
Thus, the propensity to spend for the lower income group is high.
She added that construction could also be another beneficiary as the circle line of the My Rapid Transit may be announced, and perhaps other high value projects.
“Should the 10% withholding tax on REITs be abolished or waived, the sector will see a boost in interest from investors, which could potentially help drive the sectors growth in the future,” said Tan.
She feels that the Government's earlier gross domestic product forecasts of 4% to 5% should be achievable, and in fact there is a likelihood of the Government raising this target in the coming budget to about 5% to 6%.
“This higher target will need external markets to return to some economic normalcy which can give Malaysia's exports a boost.
“We believe that the consumer and services sector will likely be the main catalysts to help drive the economy. The construction and building materials sectors will also play a bigger role going forward in spurring the economy,” she said.