SOUTH EAST ASIA 26
MALAYSIA
Genting Malaysia seeks cost cuts to offset tax upsets Genting Malaysia has been forced into cost cutting mode to offset the negative impact of recent tax rulings, which are expected to take a major toll on earnings.
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n addition to an unexpected tax hike in last year’s budget, the company also recently dropped an appeal against changes to a tax incentive scheme to develop its Genting Integrated Tourism Plan (GITP), which will lead to higher tax rates for the group. Chairman Tan Sri Lim Kok Thay has taken the lead, saying he will take a 20 percent pay cut to mitigate the impact of the tax increases.
Asia Gaming Briefings | August 2019
Last year Tan Sri was paid MYR93.5 million and the reduction will save the company MYR18.7 million, according to Maybank analyst Samuel Yin Shao Yang. The savings would be MYR12.4 million if he takes that cut to his cash earnings, without bonuses. “Either way, the cost savings to GENM will be less than 1 percent of our FY19E core net profit estimate,” he said in a note.
“As much as Tan Sri’s move sits well with the investment community, it is unlikely to move the hypothetical needle,” he adds. Finance Minister Lim Guan Eng said in his budget last year that annual fees for casino licenses will be increased to 150 million ringgit ($36 million) from 120 million ringgit. Duties on casino gross income will rise to 35 percent from 25 percent previously.
