KUALA LUMPUR, Oct 18 — Bank Islam Malaysia Bhd is hoping that more incentives would be considered for financial institutions (FIs) and alternative financing providers during the tabling of Budget 2022 in Parliament on October 29, 2021. 

Chief executive officer Mohd Muazzam Mohamed in sharing his Budget 2022 wish list said the government should consider providing tax incentives to all FIs providing microfinancing to micro-entrepreneurs.

"Under microfinancing programmes to empower the Asnaf community and bottom 50 per cent (B50) income group, microfinancing is granted not for profit and in most circumstances, the operation cost is higher than revenue,” he told Bernama.

He also hoped to see more impetus for banks and alternative financing providers, such as crowdfunding and peer-to-peer (P2P) lending, as they work together to provide customised and holistic financial services to micro, small and medium enterprises (MSMEs).

"Incentives could be in the form of waiver in stamp duty for financing contracts and tax exemption on income received by the investors when investing in collaborated products among banks and alternative financing providers,” he said.

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

"This would allow more banks to grow credit participation in spurring the SME segment. In turn, SMEs can generate income and lead to potential tax revenue to the country,” he noted.

He also suggested that relief and recovery facilities via Bank Negara Malaysia and the zero per cent cost of funds (COF) be continued, as this would allow more SMEs to access cheaper financing to recover from the pandemic.

Mohd Muazzam also said the government should consider an allocation of special grants or funds, non-deposit based for banks to develop special financing programmes such as microfinancing to the unbanked or the underserved.

"Islamic banks would allocate funds or grants as investment accounts backed by underlying assets comprising the vulnerable customers under back-to-back equity-based products of Mudarabah or Musyarakah.

"The principle of profit-loss sharing and high-risk, high returns linked to Islamic finance can be explored under this proposal,” he explained.

In view of the Islamic economy, he said Waqf, as a government policy, is key to inclusive growth strategy and the 12th Malaysia Plans (12MP) has indicated that there will be a master plan for Waqf.

"The Islamic banking institution has been embarking on social finance initiatives and it augurs well with the plan to introduce a more holistic approach, especially on Waqf.

"Devoting more resources for this purpose will elevate the role of Islamic banking institutions in helping the ummah, therefore, we expect more deliberation on this initiative during the tabling of Budget 2022,” he said.

Meanwhile, Mohd Muazzam said data from the Department of Agriculture (DOA) has shown that 119,173 hectares of land suitable for agriculture have been left idle, with 117,198 hectares in Peninsular Malaysia.

He highlighted that the utilisation of these lands can increase food production as the country has been consistently recording trade deficits in foodstuff 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 commercial activities in rural areas,” he said.

On another note, Mohd Muazzam also hoped for timely dissemination of relevant information on the plight of the rakyat to facilitate the industry’s engagement with the relevant ministries on a real-time basis.

"The government should set up joint commitments by all FIs in a targeted manner with pre-set or standardised relief packages for affected individuals, catering to all specific and exceptional circumstances such as natural disasters and outbreaks in public health.

"A targeted approach to the repayment assistance programme will extend relief more sustainably in ensuring banking institutions preserve their capacity to absorb losses and sustain financing activities,” he opined.

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

AKPK acts as a one-stop centre in providing customised assistance and financial counselling for affected individuals that lost their jobs or source of income.

Lastly, Bank Islam would like to hear more measures to address the government’s revenue, especially tax, to be better prepared in Budget 2022, since the government has set a fiscal deficit target of 3.0 to 3.5 per cent by 2025 in the 12MP, he said.

Moving forward, the bank foresees livelier economic activities as the vaccination rate reaching over 90 per cent among adults and interstate travel allowed as per the National Recovery Plan (NRP).

"Consequently, the return to normalcy would mean more businesses and individuals would require additional funding.

"As such, we are projecting gross domestic product (GDP) to grow further to 5.3 per cent in 2022 from an estimated growth of 4.2 per cent this year,” he added. — Bernama