KUALA LUMPUR: Malaysia is expected to meet its gross domestic product (GDP) growth target of 4.9% despite the challenges it faces.
Finance Minister Lim Guan Eng said factors backing this confidence in the economy included the positive effect of implicit stimulus financed by the RM37bil refunds for the goods and services tax and the income tax.
As at end-February, the government had returned RM7.9bil to business taxpayers.
Lim said these refunds would provide businesses and individuals with additional cash, which would improve the outlook for spending and investment growth.
Other international bodies and institutions were not as optimistic on Malaysia’s GDP expansion.
The International Monetary Fund has forecast 4.7%, Bloomberg 4.5% and Moody’s Investors Service, a 4.4% growth. Even Bank Negara has taken a cautious forecast of between 4.3% and 4.8%.
Lim added that the government was seeking to increase SMEs’ contribution to GDP to 41% by 2020, compared to 37% in 2017. “The government is also targeting to raise SMEs’ contribution to total exports to 23% by 2020 from 18% in 2017.
“We have allocated RM17.9bil for SME development in Budget 2019, which is expected to ease access to financing, increase productivity, raise the level of human capital, reduce the cost of doing business and hasten the adoption of technology,” he said in his speech at the 24th Credit Guarantee Corp SME Awards 2018.
Lim urged SMEs to seize opportunities from the unresolved trade war between the United States and China. He added that a huge chunk of approved foreign direct investment came from China and the US, which indicated Malaysia’s role as a safe haven in a global trade war.
Meanwhile, speaking to reporters after the event, Lim clarified that the proposed departure levy of RM20 for Asean countries and RM40 for non-Asean countries was only applicable to air travel.
Those who are performing the haj or umrah for the first time will be exempted from the levy.
The government is still deciding on the rate and Lim said it is expected to be imposed after Hari Raya Haji.
He also said that cost-saving measures undertaken by the government have “disappeared” as it now needed to bail out debt-laden organisations such as Lembaga Tabung Haji (TH) and Felda.
“As a government, we have to support both Felda and TH where the previous government did everything wrong that caused such huge losses.
“The entire bailout for TH is around RM17.8bil over 10 years. We’ve looked at our finances. This is something we can manage. Many should be asking, how come TH lost so much money under the previous government?
“We have cut cost for projects like the MRT2 and LRT3. People are asking where all these savings went to. Now you know the answer,” said Lim.