Budget 2019:Tough Times Ahead for Malaysia

Budget 2019:Tough Times Ahead for Malaysia–The Price of UMNO’s Fiscal Indiscipline

Domestic Demand to grow at 5 and 4.8pct in 2018 and 2019

by Bernama@www.malaysiakini.com

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BUDGET 2019 | Domestic demand growth is expected to remain resilient at five percent and 4.8 percent this year and in 2019 respectively, steered by sustained private sector expenditure.



According to the Economic Outlook 2019 report released by the Ministry of Finance today, private sector growth expenditure is expected at 6.5 percent this year and 6.4 percent in 2019, constituting about 72 percent of the Gross Domestic Product (GDP).

Meanwhile, the report said public sector expenditure is anticipated to further decline to 0.9 percent in 2019, after recording a marginal growth of 0.1 percent this year, mainly due to lower investment by public corporations.

“Private consumption will remain the major growth determinant, expanding by 7.2 percent and supported by a stable labour market, benign inflation and conducive financing conditions.

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“Other factors such as the zerorisation of the Goods and Services Tax, subsidised pump prices, the general elections, FIFA World Cup season, and termination of toll collection on two highways, provide further impetus to household spending,” the report said.

Private investment, the report said, is expected to grow 4.5 percent this year, accounting for 17.3 percent of GDP with capital outlays concentrated in the services and manufacturing sectors.

It is expected to post a higher growth of five percent next year, attributed to capital spending in technology-intensive manufacturing and services sectors, it added.

According to the report, as Malaysia moves towards digital technologies and the Industrial Revolution 4.0, investment will focus on catalytic industries.

These include the Internet of Things (IoT), software, advanced electronics, smart machinery, automation and robotics, automated guided vehicle, aerospace and medical devices.

On the other hand, public consumption is anticipated to expand marginally by one percent this year, in line with the continuous efforts by the government to rationalise and optimise expenditure without compromising the quality of public service delivery.

In 2019, the report said, public consumption is expected to expand 1.8 percent on account of higher spending on emoluments as well as supplies and services.

As for public investment, it is expected to decline 1.5 percent and 5.4 percent in 2018 and 2019 respectively, mainly weighed down by public corporations’ lower capital spending.

Nevertheless, sustained federal government capital formation is expected to continue to support overall growth of public investment. Despite lower capital spending by public corporations, some of the ongoing projects are expected to continue in the oil and gas industry.

The report said capital spending in the utilities and transport segments is projected to continue to expand capacity and upgrade services.

Meanwhile, federal government development expenditure will be channelled mainly to upgrade and improve transport, infrastructure and public amenities, as well as enhance the quality of education and training.

“In line with steady economic growth, Gross National Income (GNI) in current prices is expected to grow 5.6 percent in 2018 to RM1.4 trillion, while gross national savings (GNS) is anticipated to increase marginally by 0.4 percent to RM387.8 billion with the private sector accounting for 82 percent of total savings.

“With the level of GNS continuing to exceed total investment, the savings-investment gap is expected to record a surplus between 2.5 percent and three percent of GNI, enabling Malaysia to continue to finance its growth primarily from domestic sources.

‘’Growth momentum in GNI is also expected to continue next year expanding 7.1 percent to RM1.5 trillion, with the private sector accounting for 86.9 percent of total savings, while GNS is anticipated to grow 3.4 percent,” the report noted.

Total investment is projected to increase five percent to RM366.8 billion, leading to lower savings-investment surplus, ranging between two percent and three percent of GNI.

10 thoughts on “Budget 2019:Tough Times Ahead for Malaysia

  1. CLF,

    If we are not fiscally prudent, we will be a basket case like Argentina. I understand, that country used to be our current PM’s favourite haunt. –Din Merican.

  2. LGE replaced GST with half the revenue SST, and still came out with only a slight increase in budget deficit. Of course he cut some development spending off to get there but they were non-urgent. Even if its just to make the budget look good, LGE achieved it in a tough environment.

    Problem is two years from now, we would like be heading into slowdown, the savings now would be needed then, but the budget will have to be ballooned up again.

  3. The way i see it, Din is that Tokong’s budget is full of: Status Quo.

    1. Bullshit polemics, e.g by giving a 30 sen/per liter ‘subsidy’ for 100 L/mth to some motorists essentially equals RM 30 per month. Does that mitigate anything, while the coffers run dry? Not only will it look bad to IMF/WB but what about the Ali-Ah Chong-Muthus driving a turbo-charged (less than 1.5 L) Honda, BMW, Ford, VW etc, which can guzzle RON 95??
    2. Unresolved problems like leakages (albeit with different players),
    3. Having the same administrative/management/supervisory/monitoring FUBARs due to a thoroughly compromised and incompetent civil service’
    4. Instead of less restrictions and self responsibility, they thin they know best – and add on taxes – supposedly all for the good of the ignorant peasants who smoke, gamble and drink sugary syrups. So much for ‘minor’ vices..

    As my Good Book (Is 28:13, NIV) says:
    “So then, the word of the Lord to them will become:
    Do and Do, Do and Do,
    Rule on Rule, Rule on Rule,
    A lil bit here, a lil there – so that they will go and fall backward,
    be injured and snared and captured.”

    Octo’s watching Tokong sweat thru’ a 130 min nothing’s-new budget. While i laud the effort at being transparent until it becomes ‘Ghostly’, i sense a growing desperation to appease the polity as they have failed in almost all their so-called bunkum manifesto. By not honoring it they show how clueless and incompetent they truly are – regardless of KleptoMo1 and geng’s shenanigans.

  4. 100 more officers to be hired by the MACC. Fantastic ! Those who stole with impunity during the previous klpetocratic 1Malaysia regime will be getting more sleepless nights.

  5. 6 months after the election these “smart morons” are still campaigning.

    Nothing in the budget designed to combat corruption and encourage to uphold and implement the’ rule of law”, improve competency and accountability, to reward excellence in education , research and plugging leakages, discourage religious ,race and money politics

    What we hear are rhetorics without clear economic financial compass– generally unimpressive budget—can’t find much omhp and inovation ; lack substantial policy focused ,going forward.

  6. Our country’s economic and financial situation could have been summed up in one simple sentence in the budget…”fellow Malaysians, your elected representatives can only give one message for the forseeable future…tighten your belts…”.

    Too much DEBT lah…

    • When were you born? Are you so lacking in discernment?

      A responsible, stable and aware political entity hits the ground running as soon as it wins the General Election. That’s why they were voted in by a majority (in this case a minority of popular vote, as in GE-13), fed-up of the previous Kletpo-Kakistocrats.. In fact i would say that GE-14 was a single topic election: KleptoMo1 X FLOM.

      Many like me voted for PH, not because we were enamored by their arrogance, holier than thou-ness or sheer dishonesty – but because they were a lesser evil.

      Unfortunately, this present bunch of ministers aren’t able to ascend the extremely steep learning curve that characterizes all clueless freshies. Until Octo failed all of them – by giving them between 40-50% approval rating after almost 6 months on the job. You call that Hope? It would seem they equate increasing amounts of bureaucracy and procedural bottlenecks as better or efficient governance. Thus a proliferation of lil laws, cannots and must do..

      What about preparing the polity for the technological and ecological upheavals that are sure to erupt soon? Where is the contingent divergent and convergent thinking that is required to survive the chaos of Industry 4.0? The problem is that PH does not have a common coherent educational, political and socio-economic base on which to stand-on, okay? Everything is made-up and ad hoc – Presidential Council notwithstanding.

  7. I too would like to think what CLF think. But l cannot. I just got 8 n half years of education. In our belove land no gov can make change as soon as they assume power. Only one party with two third majority in parliament gov can do it. I was older than merdeka.

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