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First budget after oil revenue losses

 | October 21, 2016

Can Putrajaya match public expectations with a good plan to lower the cost of living and take care of housing, health and education needs?

PETALING JAYA: Prime Miniser Najib Razak will table proposals for the 2017 national budget today as concerns over living costs continue to dominate public discourse.

Last year’s budget was forced to be revised following a sudden fall in oil revenues.

As in previous years, Najib took to social media to get public suggestions for the upcoming budget. The responses reflect public concerns over economic uncertainty and stagnant incomes. Other concerns include housing, health, education and economic growth.

The issue of a lack of affordable housing and bad maintenance of low-cost flats has attracted attention from politicians from both sides of the political divide. The recent suggestion by a minister to allow developers to give out housing loans was closely linked to difficulty in getting housing loans as banks seek to tighten conditions.

Observers will be monitoring to see whether funding of education will be reduced further. There are concerns the government might cut back on scholarships, something parents with children studying overseas have to worry about on top of concerns over increases in costs due to the weakness of the ringgit.

This year has seen thousands of Malaysians losing their jobs, not only as a result of declining global oil prices, but also because large companies are taking their businesses elsewhere.

So what kind of budget can Malaysians expect?

Najib has said that the major focuses of the budget will be raising disposable incomes, encouraging development of skills and entrepreneurship, addressing the rising cost of living, providing more affordable housing as well as allocations for education and healthcare services.

Talk is rife on the ground that the government will announce excise duty exemptions for first-time car buyers and give more details on the proposed move to allow developers to issue home loans.

PKR lawmaker Sim Tze Tzin has warned that both measures are short-term measures which may ease the people’s burden for a while but “bait” them into making costly commitments for the long run.

There is also concern that new taxes may be introduced, two years after the Goods and Services Tax came into effect. The government claims the GST has saved the economy amid falling oil prices.

New taxes on online businesses may be in the pipeline, something that Indonesia is also contemplating. A tax on online businesses could affect e-hailing services such as Uber and Grab, as well as online business operators who are largely small-scale entrepreneurs.

Such a move is not impossible. Putrajaya raised the possibility in May, although the proposal was criticised by Youth and Sports Minister Khairy Jamaluddin, who said it would burden young entrepreneurs.

Whether or not GST, now at six per cent, will be increased, is also a major cause of anxiety. Early this week, an economist predicted a two per cent increase, although any notion of an increase was dismissed by Second Finance Minister Johari Abdul Ghani two months ago.

Many will see Budget 2017 as an “election budget” as speculation mounts of a general election before the next budget is tabled.

Najib dismissed such a speculation yesterday, saying the government would not put short-term political gain first and instead focus on ensuring that economic fundamentals remain strong and resilient.

 


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