8 WONDERS OF HBMK, PG3 PLUS
En Route to Full Recovery in 2023 pg8 Balancing Act Spotted in the Market pg10 Consideration of ESG in Business Valuation - Part 2 pg11
Helping You Maximise Your Capital Allowances IBC OCTOBER - DECEMBER 2022
BUDGET 2023 – NO SIGNIFICANT IMPACT ON THE PROPERTY SECTOR By Tang Chee Meng
KDN PP18893/11/2015(034373)
General Overview The tabling of Budget 2023 was more anxiously awaited compared to other years basically because everyone expected parliament to be dissolved immediately after the budget has been tabled. The first hint came when the tabling was brought forward from the originally scheduled date of 28 October to 7 October, presumably so that the elections can be held before the usual flooding season begins in mid-November. In fact, rumours swirling around the dissolution of parliament and GE15 overshadowed the budget and became the main focus rather than the budget itself. True enough, three days after the presentation of the budget proposals by the Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz on 10 October which incidentally was a public holiday in Malaysia, the Prime Minister Datuk Seri Ismail Sabri Yaakob announced that he has received the consent of the Agong to dissolve parliament. This means that 15th General Elections (GE15) is likely to be held sometime in November despite the warning by the meteorological authorities
that the flooding season which usually starts in November may cause a lot of inconvenience and disrupt the balloting process. The dissolution of parliament also means that the budget proposals will just remain that; as it will not be able to go through a debate and approved by parliament and will have to be retabled by the new Finance Minister, with or without any modifications, after the cabinet has been formed by the new government voted in after GE15. Notwithstanding that the budget will likely only be approved early next year, we have studied the budget proposals and carried out an assessment on how some of these proposals will impact the property sector. The following are the key points noted by us.
Projected Improvement in GDP Growth Based on the statistics presented by the Finance Minister, Malaysia’s economy is projected to have grown by 5% in Q1 2022 and further improved by 8.9% in Q2. As such, the government has revised the growth forecast for full year 2022 from the previous projection of between 5.3% to 6.3% to now between 6.5% to 7%. Nevertheless, as Covid-19 has not completely been eradicated and in view of the anticipated global economic slowdown resultant partly from the Russia-Ukraine war and the ensuing trade sanctions imposed by Western countries
on Russia as well as inflationary pressures amidst tightening monetary policies, the country’s GDP growth for 2023 is expected to moderate to between 4% and 5%. With an eye on GE15, the proposals in Budget 2023 are clearly expansionary in their thrust, with total government expenditure projected to jump from RM332 billion to RM372.3 billion, despite government revenue projected to decline from RM285.2 billion to RM272.6 billion in 2023. Budget 2023 has been described as people-centric which is to be expected given that it is an election year budget but the major concern expressed by some experts is that it is lacking in structural reforms which are much needed to move the country to the next level of growth. A stronger and stable economy which continues to expand is crucial for the wellbeing of the property sector. Although economic growth in 2023 is expected to moderate to a slower pace, the projected growth of between 4% to 5% is still a commendable growth rate and this will help to support investment and buying interest in the property sector although it is foreseeable that the sector will continue to face a challenging market environment.