The Malaysian government’s decision to reduce the stamp duty for shares traded on Bursa Malaysia Securities to 0.10% of the contract value starting in July is expected to attract more investors to the market, according to economists. The measure aims to lower transaction costs for investors and encourage both institutional and retail investors to participate. The reduced stamp duty is expected to improve market liquidity, enhance the price discovery mechanism, and promote a better investment environment. The government also plans to implement structural reforms, expedite the initial public offering (IPO) process, and attract high-quality investments to stimulate long-term growth.
Prime Minister Anwar Ibrahim announced several measures to strengthen the capital market and generate more wealth for the people. In addition to the stamp duty reduction, the government plans to attract family offices to Malaysia, promote corporate venturing through favorable tax and incentive policies, and facilitate IPOs and fundraising for public-listed companies. The lower stamp duty rate will directly reduce the cost of securities transactions, increase market liquidity, and attract domestic and foreign funds to the Malaysian stock market. The government aims to encourage small and medium-sized enterprises to pursue IPOs, expand their businesses, and create more job opportunities.
While these measures are seen as beneficial for boosting the capital market, it is important for the government to translate them into action, according to experts. Factors such as political stability and a stable foreign exchange rate play a significant role in attracting investors. A stable and receptive government, coupled with a favorable exchange rate, instills confidence and positively impacts the profitability of investments. The government should also encourage local investors and enterprises, particularly in new and innovative sectors, to invest more actively. These actions, if implemented effectively, have the potential to enhance Malaysia’s economic growth and foster innovation and productivity gains.
The immediate impact of the lower stamp duty is expected to encourage greater participation from local investors in the capital market, according to industry experts. While there may be temporary increases in market volatility due to heightened transactions, the long-term effects remain uncertain. However, the presence of rational and fundamental traders in the market could stabilize prices by aligning them closer to the true underlying values of stocks. Overall, the reduction in stamp duty is viewed as a positive development that could stimulate market activity and create a more competitive Malaysian stock market.
