As October arrives, we once again find ourselves at the juncture of preparing the fiscal budget for the upcoming year. It has been reported that Prime Minister Datuk Seri Anwar Ibrahim will present the 2024 fiscal budget to Parliament on October 13th, a Friday. However, the external macroeconomic environment is fraught with challenges, and the domestic political landscape remains turbulent. Next year's budget will test the government's execution capabilities and unity.

One of the key points of this budget is the Capital Gain Tax. According to the amended 2023 budget, the government announced its intention to impose a capital gains tax on profits from the sale of shares in unlisted companies in 2024. Additionally, the Goods & Services Tax (GST) is under consideration. Given the persistently high government debt and budget deficit, the reinstatement of the Goods & Services Tax is viewed as a means to address fiscal issues, though it is not expected to be hastily implemented in 2024. Targeted subsidies are also on the horizon. Economic Affairs Minister Rafizi Ramli has indicated that the government plans to implement targeted subsidies starting early in 2024, initially focusing on diesel and electricity, with a gradual expansion to include RON95 gasoline.

So, which sectors are poised to benefit from this budget? I believe that the electronics, manufacturing, construction, building materials, renewable energy, and electric vehicle sectors are likely to thrive.

When the government announced new tax policies and targeted subsidy plans, the market reacted in various ways. Nevertheless, these measures are generally seen as having a positive impact on the market. The reason behind this positivity is their alignment with initiatives such as the 2030 New Industrial Master Plan (NIMP) and Iskandar Malaysia 2.0, among others.

During the launch of the 2030 New Industrial Master Plan, the Prime Minister mentioned the announcement of special incentives in the budget. This master plan aims to drive the development of regional champions and serve as a catalyst for emerging sectors like electronics and electrical appliances, which account for 40.0% of the export sector. Consequently, technology companies such as INARI (0166), MPI (3867), and UNISEM (5005) are being favored by investment institutions.

In order to align with the goal of achieving net-zero emissions by 2050 and the National Energy Transition Roadmap (NETR), the budget will introduce a series of measures to promote electric vehicle (EV) development. These measures include the launch of an EV charging infrastructure incentive program and a reduction in EV road tax, all aimed at fostering a cleaner transportation and energy system. As a result, companies involved in the production, supply, sale of EVs, and related products and services, as well as solar energy systems and solutions companies like SLVEST (0215) and SUNVIEW (0262), are expected to benefit.

Furthermore, the relaxation of conditions for the Malaysia My Second Home (MM2H) program and the development of Iskandar Malaysia will make property companies with development projects in Johor among the biggest beneficiaries. This will facilitate attracting more investment and stimulate economic growth.

Additionally, the launch of the Johor Bahru-Singapore Rapid Transit System (RTS) will be a major incentive for the Iskandar Malaysia 2.0 investment theme. This transit system will drive development activities along its route, offering new opportunities for regional economic growth. Consequently, companies in the construction and building materials sector, such as GAMUDA (5398), IJM (3336), and SUNCON (5263), are set to benefit.

In summary, while the new tax policies and subsidy plans have garnered market attention, it is believed that when combined with other incentive measures, they will have a positive impact on the national economy and the market. The government's objectives include promoting economic growth, attracting foreign investments, improving environmental governance, and achieving fiscal sustainability. These measures will create a more stable and favorable environment for the market.

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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