High hopes for Budget 2021

Creating jobs and safeguarding frontliners are expected to be key areas of focus for Budget 2021.

There are high hopes for comprehensive measures in the budget that would be tabled today by banker-turned-Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, especially in ensuring the country’s economy remains on track towards recovery from the pandemic and stages a steady growth.

The government has so far introduced four “mini budgets” amounting to RM305 billion to provide immediate assistance to lessen the burden of Malaysians, especially those who are affected during the unprecedented global war against COVID-19.

They were the Prihatin Rakyat Economic Stimulus Package (PRIHATIN), Additional Prihatin SME Economic Stimulus Package (PRIHATIN SME+), National Economic Recovery Plan (PENJANA) and Prihatin Supplementary Initiative Package (KITA PRIHATIN).

Economic experts believe the government would loosen the purse strings and go for an expansionary budget for next year, in tandem with the upcoming initiatives and programmes to resuscitate the domestic economy and spur its revival.

They also believe the budget will break new grounds in terms of the amount the government is willing to spend to kick-start the economy.

Apart from nursing the local industries back to health, experts also foresee the government playing a stronger role in creating new employment opportunities for job seekers, assisted by the private sector and government-linked companies.

The government is also expected to lay out more social safety-net initiatives to further help Malaysians affected by the pandemic and its economic effects.

Experts also believe the budget would to be aligned with the 12th Malaysia Plan (12MP), especially in addressing short- and medium-term issues, while focusing on revitalising the economy under the fifth phase of the country’s 6R Economic Recovery Strategy.

They believe many initiatives will be announced tomorrow to help restore investors’ and consumers’ confidence while assisting the small and medium enterprises in riding out the economic storm as well as empowering the digital and gig economy.

Companies involved in sectors from logistics to oil and gas are hoping for tax incentives to encourage digitalisation, automation and green investment while the aviation sector seeks a lifeline to ensure its survival.

The healthcare sector is expected to be the biggest beneficiary of Budget 2021 as economists anticipate more funding for the Ministry of Health and other ministries to help them win the battle against the pandemic.

Additional funding is also expected to better prepare the country and its agencies against future “unseen” threats.

Meanwhile, the corporate world is keen to know the fate of six mega-projects worth RM143.06 billion that were announced during last year’s budget but were hit by delays and tender disruptions caused by the COVID-19 pandemic and the Movement Control Order (MCO) imposed by the government.

Economic experts told Bernama they expect the government to continue with the development of major infrastructure projects as curtailing their progress would only hamper efforts to revive the local economy.

The projects include the Kuala Lumpur-Singapore High-Speed Rail (HSR), which is expected to cost RM68 billion, the Mass Rapid Transit Line 3 or MRT3 (RM45 billion), the Penang Transport Master Plan (RM18 billion), Serendah-Port Klang Rail Bypass (RM8.3 billion), Johor Baru-Singapore Rapid Transit System (RTS) (RM3.16 billion) and Phase 1 of the Pan Borneo Highway (RM600 million).

Indeed, the 2021 budget would be the central focus toDAY. However, the question is: how much will the government allocate to fulfil its one-year agenda?

In pursuit of a good long-term recovery, the allocation in Budget 2021 would likely be higher than Budget 2020.

A total of RM297 billion, or 18.4 per cent of the Gross Domestic Product (GDP), was allocated for Budget 2020, of which 81.1 per cent or RM241 billion was for operating expenditure while the balance of RM56 billion was for development expenditure.

Research firms expect the 2021 budget would be the largest budget in the country’s history with higher government spending, selective tax reliefs and breaks as well as targeted incentives to support private domestic demand.

They expect the Finance Ministry to calibrate a targeted expansionary budget deficit estimated at between 5.5 and 6.0 per cent of GDP in 2021, against 6.5 per cent in 2020, in line with the need for fiscal consolidation.