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ASLI – CPPS take on Budget 2016

Post budget dialogue to explain features, implications and expectations.
AGAINST A BACKDROP of falling commodity prices, a weakened
Ringgit, rising cost of living, lower oil revenue and a less-than-optimistic
outlook of the global economy, the Government tabled its first Budget,
under the recently-launched 11th Malaysia Plan on October 23, 2015.
Conceded, in general, by the financial institutions, business community,
research bodies and study groups as “people centric”, Budget 2016 is
aimed at “prospering the rakyat” with fiscal measures to mitigate the
abovementioned maladies.
With the view to explain said measures, i.e., their features and
implications, and how these would be implemented, the Asian Strategy
& Leadership Institute (ASLI) in collaboration with the Centre for
Public Policy Studies (CPPS) recently convened a closed-door ‘Post
Budget 2016 Dialogue’. Officiated by the Honourable Deputy of
Finance, YB Datuk Chua Tee Yong, participants at the closed-door
roundtable discussion included the corporate and financial sectors, as
well as members of the international diplomatic corps.
Overview by Honourable Deputy Minister
Based on five priorities of (a) Strengthening Economic Resilience,
(b) Increasing Productivity, Innovation and Green Technology, (c)
Empowering Human Capital, (d) Advancing the Bumiputera Agenda,
and (e) Easing the Cost of Living of the Rakyat, YB Datuk Chua remarked
in his keynote address, that Budget 2016 has been “the most challenging”
by far, amidst the current economic scenario and factoring in prevailing
external uncertainties. It is a “balancing act” between the Government’s
commitment to fiscal consolidation and sustainable development and
growth, re-visiting and/or instituting moves to alleviate pressures on the
man in the street, caused by the rising cost of living, e.g., increases in
minimum wage and cash pay-outs under Bantuan Rakyat 1 Malaysia
(BR1M) and a new affordable housing policy.
To this end and in line with the Government’s consolidation plan
initiated back in 2009, the fiscal deficit is targeted at 3.1% of Gross
Domestic Product (GDP), marginally trimmed from 3.2% in 2015. Of
the total RM267.2 billion allocation for 2016, RM52 billion (the first
tranche of the RM260 billion to be expended in the next five years under
the 11MP) is for gross development expenditure, scaled up 7.2% from
RM48.5 billion in 2015. The larger portion of this, i.e., 57.9% or RM30.1
billion, will go to the economic sector whereas RM13.1 billion will be set
for “education and training, health, housing and the well-being of the
rakyat.”
In the bid to reduce public spending bills (e.g., for procurement
of supplies and services and transfers), RM215.2 billion is allocated for
operational expenditure in 2016, trimmed down by 1.2% compared
to 2015. In the final reckoning for Budget 2016, Federal government
revenue collection is projected at RM225.7 billion, up RM3.2 billion
from 2015, with Goods and Services Tax (GST), which comes into
first full year of implementation in April 2016, contributing RM39
billion, as against RM27 billion in the first eight months of 2015. All
told, with the foregoing scenario, the nation’s GDP growth is expected
to expand between 4 and 5%, growth driven by private investment and
consumption, and an inflation rate of “remaining manageable” between
2 and 3%.
46 Building & Investment | www.b-i.biz

MALAYSIA
BUDGET
2016

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