UOB Kay Hian expects the Budget 2017 to be modestly expansionary with emphasis on selective relaxation in the property sector, high infrastructure spending, promotion of growth areas as well as relief for mid- and low-income earners.
To be tabled on 21 October, Budget 2017 is widely perceived as an election budget.
UOB’s Global Economics and Markets Research Team expect annual GDP growth for 2016 to stand at 4.2 percent and 4.5 percent in 2017. Nonetheless, the government’s fiscal stimulus efforts will continue to be reinforced by fiscal spending by the government-linked companies (GLC) and off-balance-sheet mega infrastructure projects.
According to the brokerage, key fiscal stimulus announcements are expected in selected relaxation within the property sector, especially on re-allowing DIBS (interest cost absorption scheme) for first-time home buyers and promoting affordable housing; infrastructure spending (via development expenditure); promoting growth areas like value-added exports, digital economy and tourism, and transportation and logistics; relief for the middle-income in the way of tax relief as well as low income earners through higher BR1M handouts.
It expects Budget 2017 to benefit from a total of RM12.75 billion allocated for current projects in maritime (RM3.03 billion), roads (RM1.13 billion), rails (RM8.59 billion) and aviation. This is on top of an additional RM34 billion worth of infrastructure investment that is under study.
It has to be noted that the net development expenditures in Budget 2016 were increased by 6.1 percent to RM49.2 billion.
“We do not foresee duty hikes being imposed for the brewery and tobacco sectors, particularly for the battered tobacco sector in which the duty hike on November 15 was counter-productive for tax collections, and noting that a duty hike was already imposed in the second quarter on the brewery sector,” said the research house.
“In addition, we do not expect any changes to the duty structures for gaming companies (casino and NFO subsectors) in 2016.”
Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email mangales@propertyguru.com.my
