02 Nov BUDGET 2019 Will It Be Good or Bad?
A look into what might be for the financial future of Malaysia
Imagine budgeting for your child, it can be a tedious task don’t you think so? Now imagine budgeting for a whole country with a population 31.62 million. Now that’s a challenge only our new government is tasked to solve. #Belanjawan2019 or BUDGET 2019 has been on the minds of Malaysian citizens ever since the government reformed and brought the country into the new “Pakatan era”.
BUDGET 2019 will be read in Parliament today by Finance Minister Lim Guan Eng and will see the Pakatan Harapan government’s plan on how it will be attending to policy changes that will bring an overall betterment to the general populace.
This Budget will be the first step the new government will take to put into effect the plans of change that are needed for the country as it rebuilds its foundations on the rule of law.
Here are a few speculations that could be featured and discussed in the BUDGET 2019
BUDGET CUTS
The government is expected to trim operating expenditure, with possible cuts in pensions, gratuities, emoluments, and in debt service charges. Prime Minister Dr Mahathir Mohamad announced two weeks ago that the government will slash its total development budget by 15% to a RM220 billion ceiling under its five-year development plan ending in 2020.
FISCAL DEFICITS
Our Finance Minister mentioned before that he expected the fiscal deficit to remain at 2.8% of the economy even after the removal of the Goods and Services Tax (GST) and the implementation of subsidies for fuel which would lead to a shortfall in revenue.
On the other hand, economists are actually expecting the deficit to be up to 4% as they believe that the government would be able to cut expenditure as quickly as they had envisioned.
However, when tabling the mid-term review of the 11th Malaysia Plan two weeks ago, Mahathir said the government will not be able to meet its fiscal deficit target, and that the deficit will be at 3.0% by the end of the five-year plan in 2020.
NEW TAXES
Digital tax and new levies in the ever fast growing e-commerce worlds,
Sugar tax to promote a healthier living, to reduce sugar consumption.
Logging and carbon tax to improve and protect the environment,
Overall this will increase government revenue and also help the environment.
TAX HIKES
The government is expected to raise several existing taxes such as gambling, tobacco, and alcohol. Health Minister Datuk Seri Dr Dzulkefly Ahmad had alluded to an imminent increase in the price of cigarettes.
WELFARE AID
Mahathir also mentioned that the government will eventually halt the annual cash aid programme started by his predecessor, Najib Razak.
Mahathir has told local media that the government will eventually end an annual cash aid programme started by his predecessor, Najib Razak. The programme, which has been renamed as cost of living assistance, will be replaced with a more targeted system to keep public spending in check.
AFFORDABLE HOUSING
A hot topic would be that of housing. The rising costs of homes and the ever-seemingly slow down of rental and purchases will be on the minds of everyone this time around.
Analysts cited by The Edge business daily expect an affordable housing policy aimed at boosting homeownership among the country’s lowest wage earners. Prior to 2015, the amount set aside for development expenditure as a percentage of federal government revenue was shrinking until 2016 when it saw a hefty jump, thanks to extra income from the GST. But in 2017, it fell again. The amount set aside for this year is expected to shrink further before some pick-up in 2019.
FUEL SUBSIDIES
Under Budget 2018, which was unveiled in October last year, the oil price was assumed at RM 217 per barrel. However, the average price was higher this year, giving the government leeway in its spending.
The fuel subsidy scheme in 2019 would most likely be maintained as it works on a more targeted scheme. The assumption of oil price used in preparing Budget 2019 will be a guide to the government’s coffers for next year.
HI-TECH INCENTIVES
Incentives will be given to companies to embrace automation and information technology innovations as well. Deputy International Trade and Industry Minister Ong Kian Ming told local media, as part of the country’s push towards the digital transformation of the manufacturing sector.
SST WILL GENERATE INCOME
The previous government estimated the GST collection at RM42bil for this year.
However, the collection from the SST will be lower than the GST.
THE B40 GROUP
Even though the government has said that spending in the budget will be tight, most of the cuts in the excesses will be channeled to the B40 segment.
Previous budgets have always given benefits and cash payouts to those in the bottom 40% B40) of the population. Civil servants are normally given a half-month bonus or a lump sum payment. Hence, it remains to be seen how much will be allocated to the B40 group in the form of Bantuan Sara Hidup, housing and other forms of payouts to select groups such as fishermen and those in the agriculture sector.
Former prime minister Najib Razak today said there is a possibility that assistance to underprivileged groups such as fishermen, padi farmers, and rubber tappers will not be continued in Budget 2019. But what has been made known is that there will be a Social Health Insurance (SHI) for the B40 low-income group.
#Belanjawan2019 will definitely be a wide variety of measures that aims to tackle issues like home ownership on one hand while on the other there are economists that are saying the public shouldn’t expect tax cuts or reliefs as the government cannot afford it.
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