Bank Islam Hopes Financial Institutions and Alternative Finance Providers to Receive More Incentives in Budget 2022 | Malaysia


A bank employee talks on the phone inside the Bank Islam branch in Shah Alam, November 13, 2013. – Reuters pic

KUALA LUMPUR, October 18 – Bank Islam Malaysia Bhd hopes that more incentives will be considered for financial institutions (FIs) and alternative finance providers when the 2022 budget is tabled in Parliament on October 29, 2021.

Managing Director Mohd Muazzam Mohamed, sharing his wishlist for the 2022 budget, said the government should consider offering tax incentives to all FIs providing micro-finance to micro-entrepreneurs.

“In the context of microfinance programs aimed at empowering the Asnaf community and the poorest 50% (B50), microfinance is granted on a non-profit basis and, in most cases, the operating cost is higher than income, ”he told Bernama.

He also hoped to see more momentum for banks and alternative finance providers, such as crowdfunding and peer-to-peer lending (P2P), as they work together to deliver personalized and holistic financial services to micro, small businesses. and medium-sized enterprises (MSMEs).

“The incentives could take the form of an exemption from stamp duty for financing contracts and a tax exemption on income received by investors when they invest in collaborative products between banks and alternative financing providers.” , did he declare.

For SME financing, he said support to Syarikat Jaminan Pembiayaan Perniagaan (SJPP) and Credit Guarantee Corporation (CGC) should also be extended.

“This would allow more banks to increase their participation in credit by stimulating the SME segment. In turn, SMEs can generate income and generate potential tax revenue for the country, ”he noted.

He also suggested that the relief and recovery facilities through Bank Negara Malaysia and the zero percent cost of funds (COF) be maintained, as this would allow more SMEs to access cheaper finance to recover. of the pandemic.

Mohd Muazzam also said the government should consider allocating grants or special funds, no deposit for banks, to develop special funding programs such as microfinance to unbanked or underserved people.

“Islamic banks would allocate funds or grants in the form of underlying asset-backed investment accounts comprising vulnerable clients under Mudarabah or Musyarakah equity-backed products.

“The principle of profit and loss sharing and high and high risk returns associated with Islamic finance can be explored under this proposal,” he explained.

Considering the Islamic economy, he said the Waqf, as a government policy, is the key to an inclusive growth strategy and the 12th Malaysian Plan (12MP) indicated that there will be a master plan. for the Waqf.

“The Islamic banking institution has embarked on social finance initiatives and this bodes well for the plan to introduce a more holistic approach, especially on the Waqf.

“Devoting more resources to this end will increase the role of Islamic banking institutions in assisting the umma. Therefore, we expect more deliberations on this initiative when the 2022 budget is tabled, ”he said.

Meanwhile, Mohd Muazzam said data from the Department of Agriculture (DOA) showed 119,173 hectares of land suitable for agriculture remained unused, including 117,198 hectares in Peninsular Malaysia.

He pointed out that the use of these lands can increase food production as the country has consistently recorded food trade deficits amounting to RM21.8 billion in 2020 from RM1.1 billion in 1990.

“Rejuvenating the sector would also mean a more balanced growth strategy by reducing congestion in urban areas and providing business activities in rural areas,” he said.

On another note, Mohd Muazzam also hoped for a timely release of relevant information on the plight of the rakyat in order to facilitate industry engagement with relevant ministries in real time.

“The government should put in place joint commitments of all FIs in a targeted manner with predefined or standardized relief plans for affected people, responding to all specific and exceptional circumstances such as natural disasters and public health epidemics.

“A targeted approach to the repayment assistance program will extend relief in a more sustainable manner by ensuring that banking institutions preserve their capacity to absorb losses and support financing activities,” he said.

He also believes that the role of the Credit Counseling and Debt Management Agency (AKPK) should also be strengthened.

AKPK acts as a one-stop-shop to provide personalized assistance and financial advice to affected people who have lost their jobs or source of income.

Finally, Bank Islam would like to hear more measures to manage government revenue, in particular tax, to be better prepared in the 2022 budget, since the government has set a budget deficit target of 3.0 to 3.5% of here 2025 in the 12MP, he said. .

In the future, the bank foresees more dynamic economic activities, with the vaccination rate reaching more than 90% among adults and interstate travel allowed in accordance with the National Recovery Plan (PNR).

“Therefore, getting back to normal would mean that more businesses and individuals would need additional funds.

“As such, we expect gross domestic product (GDP) to grow further to 5.3% in 2022, compared to an estimated growth of 4.2% this year,” he added. – Bernama


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