Positive on ‘rakyatfriendly’ Budget 2018
KUALA LUMPUR: Franklin Templeton Investments is positive on the ‘rakyatfriendly’ Budget 2018 and it also highlighted that the government also remains focused on exercising fiscal discipline to accelerate the nation’s economic direction and providing positive implications to the capital market.
Franklin Templeton GSC Malaysia’s chief executive officer Hanifah Hashim applauded the government’s move to address the rakyat’s concern about the rising cost of living, which affects private consumption - an important growth indicator of an emerging market economy.
“With further reduction in individual income tax rates and income-generating initiatives announced through Budget 2018, we hope that it would spur spending leading to higher consumption growth for the people,” Hanifah said.
She added that the multiplier effect from higher spending will inherently lead to higher economic activity, contributing towards higher government revenue come 2018, whether through goods and services tax (GST) or corporate and income taxes.
According to Hanifah, the Malaysian bond market development has largely
With further reduction in individual income tax rates and income-generating initiatives announced through Budget 2018, we hope that it would spur spending leading to higher consumption growth for the people. Hanifah Hashim, Franklin Templeton GSC Malaysia’s chief executive officer
been achieved through the exceptional growth of the corporate bonds and sukuk markets.
She highlighted that the improving ringgit along with the raised infrastructure and development expenditure to boost domestic demand and ease the rakyat’s housing concerns for example, has resulted in higher issuance in the bond market in 2017, and the trend is likely to continue in 2018.
“While investor sentiments are mixed on the upward turnaround trend of Malaysian stocks, bonds and other financial assets investments in the first half of the year, we are confident the country will continue to be resilient on the back of strong domestic demand and robust exports.
“Normally, an expected pickup in growth in 2018 with growth forecast at five to 5.5 per cent will raise bond yields,” she said.
However, with inflation expected to reduce to 2.5 per cent to 3.5 per cent in 2018 from three per cent to four per cent in 2017 couple with continued fiscal consolidation and diversification of government revenues away from petroleum, Franklin Templeton Investments expected overnight policy rate (OPR) to remain accommodative with an upward bias in 2018.