Budget 2018 to revolve around cost of living, Industry 4.0

Putrajaya will need to ensure there is enough liquidity on both ends to keep the positive momentum going, says group CEO

By ALIFAH ZAINUDDIN / Pic By ISMAIL CHE RUS

The government will likely anchor the upcoming Budget 2018 in addressing key areas such as the fourth Industrial Revolution (Industry 4.0) and the rise in cost of living in the country.

Prime Minister Datuk Seri Mohd Najib Razak — who will table the budget on Oct 27 — earlier denied that it will be a “populist” budget and reiterated that the fiscal plan will address the welfare of the nation, as well as economic growth.

In response to the economy’s gross domestic product (GDP) growth of 5.7% in the first half of 2017, AMMB Holdings Bhd group CEO Datuk Sulaiman Mohd Tahir said Putrajaya will need to ensure there is enough liquidity on both ends to keep the positive momentum going.

Sulaiman hopes the budget will offer incentives to facilitate the advancement of the digital economy, particularly in high-tech industries, e-commerce and the manufacturing sector.

“Small and medium enterprises (SMEs), along with the digital economy, are key growth drivers. These segments should benefit from incentives that can stimulate further growth,” he said in a statement.

Second Finance Minister Datuk Seri Johari Abdul Ghani said SMEs and the digital economy are the government’s “priority” as they roughly comprise 98% of businesses in Malaysia — contributing 65% on employment, which is equivalent to 6.6 million.

He also pointed out that both SMEs, as well as the digital economy, hold a total GDP of 36% to date, while 80% of SMEs contribute about RM800 billion on total exports.

In aims to engage the younger generation, Sulaiman believes the government will lay the foundation for the National Transformation 2050 in the budget, in conjunction with this year’s theme, “Shaping the Future”.

Measures to promote technology — such as improving Internet connectivity and developing the digital economy — are also expected in the upcoming budget.

Sulaiman added that Budget 2018 will likely continue with targeted incentives for the middle 40% and bottom 40% households to address higher living costs in the country.

“We also anticipate a continued focus on affordable housing, with measures to support homebuyers and developers.”

AmBank (M) Bhd anticipates this year’s GDP growth to surpass the government’s projection of 4% to 5% as described in Budget 2017 by a significant margin.

Given the stabilising commodity prices, healthier tax collection and improving global growth paired with ongoing fiscal consolidation, the budget deficit target for 2017 of 3% is likely to be attained.

The bank expects fiscal deficit for 2018 to reduce to 2.9% in GDP with the anticipation of higher revenue from stronger crude oil prices, solid tax collection, as well as prudent spending.