KUALA Lumpur Business Club president Datuk Dr Munir Majid yesterday congratulated the government for not letting the budget deficit get out of hand.
He said by not widening it and bringing it down to an expected 3.3% of GNP in 2004, the government was signalling that it took the issue of the deficit seriously and, even if it might not achieve the target of a balanced budget by 2005 because of exigencies like the SARS outbreak and the Iraq war which required countervailing measures, the budget would be brought to as close a balance as possible in the near future.
Given the discipline and fiscal responsibility of reducing the budget deficit, there is not much the government can give away in direct and indirect taxes, even if there will still be the assertion that this is an election budget.
Actually, there is a fortunate convergence of appeal and need, in the giveaways to small enterprises and the younger segment of the population, so as to strengthen home-grown industries and encourage consumption, just as the takeaways the increased taxes on alcohol and tobacco have a political resonance while also raking in some useful revenue,'' he said.
He added that the issue of restructuring the economy and driving new sources of growth, however, was one which this budget alone could not address and move.
It is the greatest challenge for the national economy and should be the subject of urgent policy concentration.
The Budget speech presages some of the new considerations, such as reviewing our dependence on FDIs in the traditional sense, growing the SMIs and increasing local content.
Most of all, in my view, there must be a fresh look with no policy baggage and orthodox assumptions at how to position Malaysia for the growth of the services sector, including big-time outsourcing, he added.