Don: Budget to buffer against slower growth

BUDGET 2019 is a pro-growth planner that should help buffer Malaysia against next year’s projected global economic slowdown, says an economics professor.

Sunway University Business School’s Prof Dr Yeah Kim Leng said the forecast by Finance Minister Lim Guan Eng was largely in line with current external developments.

“The gross domestic product (GDP) revised growth to 4.8% for 2018 and 4.9% next year is largely in line with market expectations,” Dr Yeah said.

He said the allocations of RM259.8bil for operating expenditure and RM56.7bil for development expenditure also exceeded expectations.

In Budget 2018, the Barisan Nasional government allocated RM234.25bil for operating expenditure and RM48bil for development expenditure.

Dr Yeah said the beefed-up budget would serve to buffer slower growth resulting from tensions such as the US-China trade war.

He said any efforts to recover monies stolen from 1Malaysia Development Bhd would be viewed favourably by investors as they would go towards reducing total debt.

He also pointed out that levera­ging government assets, such as creating the Airport Real Estate Investment Trust (Reit) was an innovative move.

“You’re not only monetising government assets to reduce the debt levels, but you’re also unlocking asset value and increasing private sector activity at the same time.”

Dr Yeah said other revenue enhancement measures, while not large, could be seen as complementary for other policy objectives.

“The soda tax is an example where the revenue generated might be quite small but the objective is to build a healthier Malaysia,” he said.

Similarly small but a significant step in debt reduction included mandating a 10% savings in construction cost for government agencies which had signed the Letters of Acceptance for RM19bil worth of projects awarded through direct negotiation or limited tenders.

“This measure will be effective not just to increase cost savings for the government, but also to ensure projects are not held back pending closer scrutiny as effected for the mega projects,” he said.