Malaysia PM Anwar addresses investors’ concerns over proposed capital gains tax

KUALA LUMPUR: In addressing investors’ concerns, Malaysian Prime Minister Anwar Ibrahim said that the proposed capital gains tax on unlisted shares announced during the recent tabling of the budget will only be finalised after engagement with the stakeholders. 

He said on Wednesday (Mar 8) that Putrajaya wanted to better meet the needs of companies and investors. He also noted that there were parties who were concerned about the government's recent announcement to study the tax on unlisted shares at a low rate.

“First, the tax will only be finalised upon extensive engagement with stakeholders.

“Second, the tax will not be introduced on listed shares. And third, the disposal of unlisted shares for an approved initial public offering will also not be subject to capital gains tax,” he said during his keynote address at the Invest Malaysia 2023 event. 

In tabling Malaysia’s 2023 budget, Mr Anwar, who is also the finance minister said that the government was studying how to introduce a capital gains tax for unlisted share disposal by companies. He added that the government will have a meeting with the relevant parties to look into the details.

The proposal received mixed reviews, with sceptics saying that the tax was not the right move as the country was struggling to attract investments. 

In his speech on Wednesday, Mr Anwar also said that the country’s new investment policy was a forward-looking framework to ensure Malaysia remains ready to cater to changes in the global economy and to spur investment in future growth sectors. 

Mr Anwar said that in many ways, the policy guides, facilitates and helps implement reforms to strengthen the fundamentals of Malaysia’s investment ecosystem.

The policy, launched in October of last year, is to ensure that Malaysia becomes a preferred investment destination in Southeast Asia.

COMMITMENT TO SUPPORT HIGH VALUE-ADD LOCAL STARTUPS

In his speech, Mr Anwar also said that his administration was committed to support high value-add local startups from an early stage right up to listing onto the local bourse.

He said that RM1.5 billion (US$331 million) will be set aside by government-linked investment companies to invest in home grown startups. 

He added that a tax deduction will be provided on listing costs for companies listing on the ACE and LEAP markets as well as technology stocks onto the main board.

The ACE Market is a sponsor-driven market designed for companies with growth prospects while the LEAP market is an adviser-driven market that aims to provide emerging companies with greater fund raising access and visibility via the capital market. 

Listed companies will also be allowed to issue dual-class shares, said Mr Anwar. Dual-class shares refer to the issuance of two classes of shares, with distinct voting rights and dividend payments.

“We certainly want to ensure that successful startups will have access to later stage financing here in Malaysia, so that they do not need to seek listing abroad,” he said.

Mr Anwar also touched on green businesses. He said that through Bank Negara, the government would provide financing to support green technology startups, while also helping SMEs implement low-carbon practices.

Mr Anwar said that other forms of support in this area include a green technology financing scheme, investment tax allowance and income tax exemption for eligible activities.

“(These supports) which run alongside the enhanced focus in investments in green growth areas which include hydrogen technology, bioenergy and electric mobility, are enablers of green adoption across sectors as well as future economic engines,” he said.