The Federation of Malaysian Manufacturers (FMM) commended Budget 2006 presented yesterday as a "caring, comprehensive and innovative" budget.

"It is caring because of the large allocations towards improving the standard of living of the rakyat; comprehensive because it covered a number of sectors," FMM said in a statement.

FMM is the largest private sector economic organisation in the country representing over 2,000 manufacturing and industrial service companies of varying sizes.

It said it was pleased with the government's emphasis on energy efficiency such as encouraging the use of natural gas for vehicles, review of tax incentives for the renewable energy and for conversion of energy.

The federation supported the government's emphasis on biotech and halal food industries, which it viewed as a move to encourage greater development of these industries.

Two areas of concern

On the establishment of a small and medium-sized enterprises (SME) development bank, FMM suggested the bank to be more creative in providing financing by moving away from the conventional collateral-based and securities requirement.

"Nevertheless, FMM looks forward for a clearer and better understanding of the bank's mode of operations and to exchange views on enhancing SME access to financing," it said.

Despite the approval given to Budget 2006, FMM also cautioned that the government should give due concern to two areas - petrol subsidies and environmental measurers.

"FMM is aware of the high subsidy bill borne by the government. We hope that the oil and petrol subsidies could be gradually phased off so that companies could absorb the cost of increase."

The federation added that while it welcomed the government's environmental measures and incentives, the measures introduced however should not add to the cost of doing business.