Budget 2020 - Job Creation Prime Focus
ADDED:
14 October 2019
PREPARED BY:
SHARE:
Flash Points:
  • Budget 2020 struck a prudent approach in balancing fiscal discipline and growth at volatile times
  • Job creation was the main focus of the budget in a move to wean off subsidy mentality
  • Consumer and tech seen as beneficiaries with large allocation and incentives

Sticking to the Script
At the tabling of the budget, Finance Minister YB Lim Guan Eng struck a balanced tone by sticking to the need for fiscal discipline whilst also remaining expansionary.

The budget placed a lot more emphasis on job creation and shifted away from the outright disbursement of large cash handouts and subsidies as seen in prior budgets before.

Among the measures include a [email protected] initiative aimed at creating better employment opportunities for youth and women, as well as reduce dependence on foreign labour.

Malaysians who replace foreign workers will get a monthly wage incentive of RM350/RM500 for two years, depending on the sector. Similarly, employers will get a monthly incentive of up to RM250 a month throughout the same period.

With expectations that 2020 will be another year of a sustained global economic slowdown, the government also focused on the attraction of FDIs and incentives to attract large multi-national corporations (MNCs) to set-up shop in Malaysia.

These include a RM1 billion allocation in investment incentive to attract Fortune 500 companies and global unicorns. The move is intended to create supporting industries that will boost job creation and aid development of the SME segment as an important pillar of the economy.
Table 1: Federal Government Revenue

Technology also received a large allocation of the budget particularly to accelerate the deployment of 5G in the country through a RM50million grant.

There were also initiatives to propel the use of e-wallet via a RM30 seeding incentive to qualified Malaysians aged 18 and above with annual income less than RM100,000 as the economy evolves towards a cashless society.

On a fiscal level, the government revised its Budget 2020 deficit target to 3.2% of GDP, which is slightly higher than the 3% originally announced in Budget 2019.

Sectors in the Spotlight
In terms of impact, the budget was market-neutral with no immediate catalysts that could drive Bursa higher for now.

The absence of any pump-priming measures or announcement of mega infrastructure projects came as a disappointment to the construction sector.

The consumer sector could benefit incrementally over time as the trickle-down effects of job creation, allocation of social subsidies to address high cost of living will help spur consumption.

Allocation for subsidies and social assistance were increased to RM24.2 billion including welfare aid such as Bantuan Sara Hidup (BSH). The government also proposed to raise the minimum wage in urban areas to RM1,200 per month in 2020.

Another sector seen as a beneficiary include the technology sector via grant incentives and also measures to boost adoption of e-wallets. Other incentives including a 50% matching grant to increase the digitalisation of operations for SMEs and for technology entrepreneurs.

We remain neutral on the property sector as the measures outlined are not expected the move the needle in boosting demand and elevating the oversupply overhang in the market in a meaningful way.

No new tax measures or duties announced in the budget for the sin sectors was also positive for gaming, tobacco and brewery players especially for the latter two which has been assailed by the illicit market.
Table 1: Ministry of Finance GDP Forecasts
Disclaimer
This article has been prepared by Affin Hwang Asset Management Berhad (hereinafter referred to as “Affin Hwang AM”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to Affin Hwang AM and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of Affin Hwang AM.

The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, Affin Hwang AM makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions.

As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product.

Affin Hwang AM is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers.

Affin Hwang AM and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities.

Neither Affin Hwang AM nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.
Hello, I'm Nadia. How may I help you?
Talk to Nadia
Close
Not sure what to ask? Try these.
  1. I forgot my i-Access password.
  2. How to perform redemption?
  3. What is the minimum amount to open an investment account?
  4. Checklist for deceased redemption.
  5. What is the best fund for me?
<  Slide to cancel
I'm listening ...
Click to stop recording
TENG CHEE WAI

Managing Director
Teng Chee Wai is the founder of Affin Hwang Asset Management Berhad (Affin Hwang AM). Over the past decade, he has built the Company to be the fastest growing and only independent investment management house in Malaysia’s top three, with an excess of RM47 billion in assets under management as at 31 December 2018.​

​In his capacity as Managing Director / Executive Director, Teng manages the overall business and strategic direction as well as the management of the investment team. His hands-on approach sees him actively involved in investments, product development and marketing. Teng’s critical leadership and regular participation in reviewing and assessing strategies and performance has been pivotal in allowing the Company to successfully navigate the economically turbulent decade.

Teng’s investment management experience spans more than 20 years, and his key area of expertise is in managing absolute return mandates for insurance assets and investment-linked funds in both Singapore and Malaysia. Prior to his current appointments, he was the Assistant General Manager (Investment) of Overseas Assurance Corporation (OAC) and was responsible for the investment function of the Group Overseas Assurance Corporation Ltd.​

​Teng began his career in the financial industry as an Investment Manager with NTUC Income, Singapore. He is a Bachelor of Science graduate from the National University of Singapore and has a Post-Graduate Diploma in Actuarial Studies from City University in London.
Ooops!
Generic Popup