TAN BENG LING
Chief operating officer
AS WITH most people, we do have a long wish list as far as Budget 2004 is concerned. Realistically though, we would have to balance our expectations against various considerations.
First of all, one should not forget the third stimulus package, totalling RM7.3bil, which was earlier announced in May.
This, taken with the successive years of budget deficits and the target of a balanced position by 2005, should set a more realistic platform in terms of budgetary allocation and the upcoming goodies.
One also has to bear in mind the relatively short-term budgetary horizon (two years), which to some extent would limit the scope for the annual event in terms of addressing long-term economic policy issues.
Rather than a broad corporate tax cut which seems less likely, we hope to see specific incentives on promoted sectors in the “paradigm shift” to strengthen domestic resilience and reduce over-reliance on manufacturing, trade and foreign investment.
To recap, the promoted sectors that have been identified to facilitate the transition of the economy are agriculture and services; tourism, education, transport, and health have been highlighted as new service niches.
The importance of small- and medium-sized enterprises in enhancing economic linkages is another consideration, with the private sector expected to play a bigger role going forward.
Noting the importance of the motor sector and its supporting industries, we also wish that the upcoming budget would shed light on the way forward in terms of the new tax structure to be expected under the Asean Free Trade Area.
We do not foresee immediate implementation, but greater clarity would better prepare the affected parties in 2005 and beyond.
As for the capital market, we do not expect much more from the budget given the various measures (including the 10 capital market measures) that have been announced and/or implemented this year.
Elsewhere, and in light of the high anticipation for a general election in 2004, we are hopeful for some goodies for individuals in the upcoming budget, which should be helpful towards consumer spending.
In the same light, the government may look to raise revenue via higher taxes for the non-essential areas.
Overall, our expectations are more for a “people-friendly” and “feel good” budget tomorrow, which should have a fairly neutral impact on the stock market.