Malaysia will prolong tax breaks for additional expenditure incurred when issuing Islamic bonds, or sukuks, in addition to retail bonds.
The measure was announced by Malaysia’s finance minister, Lim Guan Eng, for the 2019 Budget
, which was presented to parliament on November 2, 2018. The budget was a first for the Pakatan Harapan, or “Alliance of Hope”, government.
The three-year extension to the bond tax breaks will take effect from the new year “to promote Malaysia as the hub and pioneer of the bond and sukuk markets.”
The finance minister also announced that a Special Committee on Islamic Finance will also be set up to boost these efforts. It will be led by the Ministry of Finance.
According to the budget’s forecasts, the fiscal deficit is set to widen to 3.7% of gross domestic product (GDP) this year. The previous administration had a target of 2.8%.
The World Bank Group representative to Malaysia and country manager, Dr Firas Raad, said: “This year’s budget required a careful balancing act between safeguarding growth, sustaining private sector confidence, promoting fiscal responsibility, managing debt sustainability and protecting the vulnerable.”
He also highlighted the positives in the budget, including a push for stronger governance and fiscal responsibility and transparency, amongst other things.
©2018 funds global asia