PETALING JAYA: Tax experts and economists have deemed Malaysia’s economic growth forecast of 4.8% next year as being “quite optimistic, ” in light of the challenging external environment.
Speaking at a panel discussion on the recent budget, Axcelasia Taxand Sdn Bhd chairman Veerinderjeet Singh said he expected Malaysia’s economic growth to be lower in 2020.
“I thought 4.8% is quite optimistic, which was why I think we did not see a substantial tax increase at the recent budget, ” he said at a post-budget dialogue.
World Bank country economist Shakira Teh Sharifuddin, who was also a panellist, concurred.
“We leave it to the government to provide a narrative on their gross domestic product (GDP) forecast. On our end, our forecast is 4.6% for this year, 2020 and 2021.
“We think private consumption will continue to be the main driver of growth but we are also cautious of the challenges in the external environment.”
DBS Group Research in a report earlier this week said while the government expected a higher GDP growth of 4.8% in 2020 (4.7% in 2019), a synchronised global growth slowdown, partly exacerbated by the protracted trade war, remained the overarching factor for equity market sentiment.
Nevertheless, Veerinderjeet said Malaysia remained a “desirable” investment destination. “However, how do we compete better with the region? Who is the lead investment agency in Malaysia? If it’s MIDA (the Malaysian Investment Development Authority), then they need to be given more capacity to do it.”
He added that Malaysia also needed to come up with a tax expenditure statement like other countries.
Meanwhile, Finance Ministry National Budget Office director Johan Mahmood Merican said the government’s Budget 2020 policy to lower the threshold on high-rise property prices in urban areas for foreign ownership from RM1mil to RM600,000 could be reviewed as the market picked up.
“In reducing the cap to RM600,000, it’s targeted at completed, unsold units. There will be flexibility as it (the policy) will be for 2020. The government will likely review the situation again in 2021.”
In a StarBizWeek report on Saturday, Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker cautioned that the policy should not be amended “as and when” the situation warrants it.
“What’s to stop the developer from raising the price of a RM500,000 unit to RM600,000? Or, what’s to stop the government from raising the threshold back up to RM1mil in the next budget?
“These kind of policy decisions need to be carved in stone and not be a temporary fix to suit market conditions. You can’t simply change it when the market picks up or comes down, ” he was quoted as saying.