Editorial Notes

Growth should be the focus of Malaysia's 2016 budget: Sin Chew Daily

The Petronas Twin Towers in Kuala Lumpur, Malaysia.
The Petronas Twin Towers in Kuala Lumpur, Malaysia. PHOTO: BLOOMBERG

In its editorial on Oct 9, 2015, Sin Chew Daily says the biggest hope from Malaysians is for measures to stimulate the sluggish economy. 

The 2016 Budget will be tabled in the Parliament on October 23, with high expectations from various industries and economic sectors in the country. 

Of these, the biggest hope from Malaysians is none other than for the government to introduce effective measures to stimulate the sluggish economy and relieve the financial burden of the people.

Web users expressing their views on the prime minister's Facebook account have voiced out such expectations. Among the key points are to reduce the GST rate and increase subsidies to ease the people's burden.

It is therefore anticipated that the government will very likely restructure the BR1M (a government initiative to help lower income families) in order to increase the quantum of assistance to help reduce the load upon the shoulders of ordinary citizens.

That said, a slowing regional economy and possible interest rate hike by the Federal Reserve are anticipated to take their toll on the country's economic prospect during the last quarter of this year.

Corporate performances in terms of sale, net profit, selling prices, inventory levels and new orders have been anything but satisfactory, and this is what should draw the government's attention.

The "Malaysian Economic Status Report for H1 2015" released by The Associated Chinese Chambers of Commerce and Industry in Malaysia shows that 84.8 per cent of local Chinese businessmen under survey hold pessimistic outlook for the country's economy on the back of various negative issues, significantly higher than in previous years.

The drastic devaluation of ringgit, sharp decline in international oil prices, depressed commodity prices, GST, lackluster equity market, depreciating renminbi, coupled with the 1MDB issue and political turmoil in the country,are all unfavorable factors that have remarkably dampened market sentiment.

Against the backdrop of generally negative economic atmosphere, the government is poised to encounter even more mounting challenges than before when it comes to planning for the 2016 Budget.

While the government aspires to tame the public sentiment through various people-friendly policies and handouts, it must also come to terms with the real fiscal predicament of the treasury. 

The government will need to strike a balance between populism and strengthening the country's finances in a bid to win the nod of investors.

Revitalising the national economy must be prioritised to boost the development of local business sector and stabilise the national economy by way of introducing healthier and more pragmatic economic measures.

External factors have had a negative bearing on Malaysian corporate sector of late. 

With this in mind, it is imperative for the government to adopt the necessary measures to assist the affected industries, in particular the SMEs, including lowering of corporate income tax rates.

Thanks to the spiraling inflationary pressure stemming from the GST implementation and a fast depreciating local currency, the purchasing power of Malaysians has suffered a tremendous setback. 

The government can help boost liquidity in the market by way of making adjustments to individual tax structure so that Malaysians will have adequate cash to deal with the rising living cost.

As for cash or non-cash assistance to relieve the financial pressure of low and medium-income families, this has to be done prudently and sparingly.

Cutting down budgetary deficits has always been the short to mid-term goal of the government, but given the inhospitable economic environment, even this is getting increasingly tough now. 

In accomplishing this end, perhaps the government should review the public sector operating expenses.

Government agencies are widely known to be plagued by the perennial problems of overstaffing and gross inefficiency. 

It is now time to re-allocate the resources to where they are most needed in order to lessen the government's burden.

Sin Chew Daily is a member of The Straits Times media partner Asia News Network, a grouping of 22 newspapers seeking to promote coverage of Asian affairs.