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Malaysia cuts stamp duty for share trading and expedites IPO process to revive market

Justin Lim, Sufi Muhammad & Chester Tay
Justin Lim, Sufi Muhammad & Chester Tay • 4 min read
Malaysia cuts stamp duty for share trading and expedites IPO process to revive market
Prime Minister Datuk Seri Anwar Ibrahim speaks at the launch of Capital Market Talent programme for graduates on Monday, June 19, 2023. Photo by Shahrill Basri/The Edge Malaysia
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The Malaysian government has reduced the stamp duty for shares traded on Bursa Malaysia, lowering it to 0.10% from 0.15% of contract value, subject to a maximum cap of RM1,000 ($289.61) per contract, effective July 2023.

This was announced by Prime Minister Datuk Seri Anwar Ibrahim at the launch of Capital Market Talent programme for graduates on Monday (June 19).

To recap, last year, the government removed the RM200 stamp duty cap on contract notes for trading of listed shares, and increased the rate to 0.15%, from 0.1%. Concurrently, sales tax is exempted from brokerage activities for the trading of listed shares. This was announced by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz at Dewan Rakyat during the 2022 budget speech on Oct 29, 2021.

On Monday, Anwar said reducing the stamp duty for shares traded on Bursa Malaysia will directly reduce the cost of securities transactions and make the Malaysian stock market more competitive.

“I am confident that this step will stimulate the market and enhance its attractiveness. The increase in market liquidity will attract more domestic and foreign funds into the Malaysian stock market, thereby encouraging SMEs (small medium and enterprises) to pursue initial public offerings (IPOs) and facilitating public-listed companies in raising funds to expand their businesses and create more job opportunities,” he added.

To encourage more companies to be listed on Bursa Malaysia, Anwar said the Securities Commission (SC) and Bursa Malaysia will implement reforms this year to expedite the initial public offering (IPO) process, and reduce time-to-market to ensure Malaysia’s competitiveness and attractiveness is sustained.

In addition, he said in order to attract a larger pool of investors to support financing for SMEs and the new economy, the Ministry of Finance (MOF) and SC will look at policies to facilitate and attract the setting up of family offices in Malaysia.

Both MOF and SC will also work to promote corporate venturing to drive greater domestic direct investment (DDI) through more facilitative tax and incentive policies, and widen the definition of sophisticated investors including angel investors, Anwar added.

Anwar said any reform requires discipline and patience. It also requires confidence and courage to do new things and make difficult decisions for the benefit of the people and the nation.

Despite the multiple challenges inherited by the government, early economic indicators show that the government’s fiscal policies and Budget 2023 measures are bearing fruit, such as Malaysia’s strong growth of 5.6% in the first quarter of 2023 and reduced unemployment rate of 3.5%.

“The affirmation of credit rating by Fitch and Moody’s earlier this year also reflect their confidence in the government’s determination to sustain economic growth momentum,” said Anwar.

“This government will do all that is needed to drive inclusive and sustainable growth, an open economy that respects free financial flow. To further promote domestic growth, the Cabinet will accelerate the implementation of government projects and facilitate approvals for businesses such as applications for skilled expatriates,” he added.

Meanwhile, Apex Equity Holdings Bhd executive director Lim Kok Eng said any reduction in transaction cost will be good for the market as it will promote market participation and boost liquidity..

"It will be even better if the Government can consider reducing the cap of RM1,000 as well," said Lim when met at the group’s annual general meeting on Monday.

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