PETALING JAYA: Budget 2024 will prioritise subsidy reforms, food security and green economy initiatives to ease the cost of living and promote sustainability and economic growth, say financial experts.
They are of the opinion that the government is expected to strike a balance between immediate economic concerns and long-term sustainability.
UOB Kay Hian Securities wealth research and advisory head Mohd Sedek Jantan told SunBiz that he anticipated Budget 2024 to be pro-growth and promote the green economy.
“The budget will align its objectives with the Madani Economy, New Industrial Master Plan 2030 (NIMP 2030) and National Energy Transition Roadmap (NETR), which aim is to stimulate economic growth while fostering environmental sustainability,” he said.
There will be strategies to improve economic competitiveness, income distribution, fiscal sustainability and environmental responsibility, he added.
“The coming budget will prioritise strategies to enhance Malaysia’s competitiveness, including increased investment in R&D and support for low-income workers through the Progressive Wage System,” Mohd Sedek said.
Meanwhile Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid is of the view that a key aspect expected to take centre stage in Budget 2024 is subsidy rationalisation.
“How would the rationalisation of prevailing subsidies result in savings which can be channelled back to those who deserve to receive such cash assistance? The Central Database Hub should be able to help the government pay the cash assistance to a targeted group the way I see it,” he told SunBiz.
Similarly, MIDF Research economist Abdul Mui’zz Morhalim said he anticipates the government will emphasise its commitment to improving its fiscal position by moving towards targeted subsidies.
This move is expected to not only reduce the fiscal burden but also enhance the nation’s long-term economic sustainability, he said, adding that “improved fiscal position will provide greater room for the government to intervene during uncertain times in the future”.
Abdul Mui’zz said: “We foresee inflation will remain elevated next year as a result of the subsidy rationalisation. While we expect the increase in retail fuel prices to be adjusted gradually, we expect the government will continue to provide income assistance especially to the B40 to mitigate the effect of increased energy prices and overall cost of living.”
He added that despite the shift towards targeted subsidies, MIDF Research believes there will be continued support from the government to ease cost of living of the rakyat, which can also be in the form of price controls and subsidies for local producers.
The government indicated in the mid-term review of 12th Malaysia Plan that development spending could reach RM415 billion during the five-year period to 2025, with the commitment to spend RM90 billion annually in 2024 and 2025.
“On that note, we expect local businesses to gain from public development, which include continued infrastructure projects such as Pan Borneo Highway, MRT3 and Penang LRT. Improved infrastructure and connectivity will have a greater multiplier effect on economic development,” Abdul Mui’zz said.
The economist expects the government to provide detailed plans for improving revenue collection and overall fiscal management to ensure that the target of reducing the fiscal deficit as a percentage of gross domestic product to 3.5% by 2025 can be met.
Budget 2024 will be tabled on Friday.
