World Bank: Malaysia needs to build fiscal buffer to shield from shocks

With various trade tensions and Brexit, it is necessary for the govt to make sure there is enough fiscal space to address uncertainties

by S BIRRUNTHA/ pic by TMR FILE

MALAYSIA needs to build a fiscal buffer to shield the country from financial shocks and economic uncertainties despite its continuous economic growth, the World Bank said.

World Bank Group’s (WBG) Malaysian representative and country manager Dr Firas Raad (picture) said it is important for the country to set up a fiscal buffer due to the external uncertainties.

“Obviously, the external environment is still uncertain with the various trade tensions. And we also have Brexit.

“So, our general advice to the government at the moment is to think about building a fiscal buffer and make sure there is enough fiscal space to address any possible contingencies.

“The Malaysian economy is still growing and the second quarter have grown 4.9%. Our expectation is that Malaysia will continue to grow at about 4.6% which is our current forecast,” he said after the launch of WBG Report on Monitoring Occupational Shortages: Lesson from Malaysia’s Critical Occupational List (COL) in Putrajaya yesterday.

He said the government is looking to boost economic growth without interrupting the fiscal discipline, but faces difficulties in balancing both.

“The government is thinking about how to balance different priorities and policy objectives.

“One is to grow the budget, and another is on how to grow the economy and also to make sure the fiscal position is maintained.

“This is going to be an active balance that we are trying to achieve. So, we will see how things turn out in the next few weeks or months,” he said.

Raad said Malaysia should adhere to its previous forecast fiscal deficit target of 3% of the GDP next year when the federal budget is announced in October.

Meanwhile, Human Resources Minister M Kulasegaran said the ministry has suggested to the government to focus more in providing funding and special incentives to learn occupational skills in the coming budget.

“It is crucial to secure the right expertise in the right places to ensure industry’s needs are met both now and in years to come.

“To this end, the COL was created by the government to effectively monitor shortages and identify Malaysia’s most in-demand current and future skills.

“A greater impetus is needed to ensure we fully utilise the potential of Malaysia’s skilled workforce,” he said at the launch of WBG report.

Kulasegaran said the shortage of skilled workers and job mismatches among employees could lead to serious repercussions to the economy, as well as key industries if they are left unchecked.

According to the latest WBG report, the COL is an innovative platform for keeping abreast of changing labour market demands associated with new technologies, automation and Industry 4.0.

“Our collaboration with the World Bank to create the COL is critical for its evolution into a best practice tool for labour market observation and analysis,” Kulasegaran said.

Raad also stated that Malaysia’s experience with the COL showed that effective skills monitoring could help expedite the process of addressing labour market shortages.

Based on the COL report, among the jobs that are high in demand right now are sales and marketing managers, mathematicians, actuarists, statisticians, higher education professional teachers, graphic and multimedia designers.