The upcoming Budget 2013 announcement will likely be an election budget with sweeteners such as pay rises for civil servants, said an economist.
“The budget will be announced in September and I suspect the election will be called soon after”, Economist Corporate Network (ECN) Chief Economist for South and South-East Asia Justin Wood said at a briefing hosted by Philip Morris (M) Sdn Bhd yesterday.
“It will probably be an election budget packed with goodies for the various segments of the electorate.”
ECN, a unit of the UK-based Economist group, provides briefing and networking services for business executives.
Wood also said it may upgrade its full-year gross domestic product (GDP) growth forecast for Malaysia to above 4.7% after the country’s robust economic performance in the second quarter and first half of the year.
“We were always of the view that Malaysia is becoming more resilient but the second-quarter numbers surprised us with how it looked in the face of the global situation,” he said, adding that the group saw Malaysia’s economy expanding 5.5% yearly till 2016 supported by robust domestic consumption and investment.
The country’s GDP improved at a faster pace of 5.4% in the three months to June, underpinned by the construction and manufacturing sectors, which exceeded expectations for a 5% growth.
In the first half, the economy grew by 5.1% following a 4.8% expansion during the first quarter.
Noting that both domestic and foreign investments in Malaysia were poised to remain strong, he said its Asia Business Outlook Survey, which polled the investment priorities of 260 multinationals earlier this year, placed Malaysia in sixth place behind China, India, Indonesia, Vietnam, Singapore, and Thailand, and just ahead of South Korea.
The study revealed that half of the respondents would increase their investments in the country while the remaining half would maintain it. Malaysia and Indonesia were the only two countries which did not receive “reduce investment” rating.
On fiscal policy, however, he stressed that there was a need for the Government to implement reforms such as the goods and services tax and subsidy reductions as the deficit could deteriorate over the next year.
Meanwhile, Philip Morris corporate affairs director Richard James pointed out that the company was hoping for a “moderate increase” in excise duties on tobacco as higher taxes would lead to an increase in the trade of contraband cigarettes.
The latest illegal cigarettes study from March to May this year commissioned by the Confederation of Malaysia Tobacco Manufacturers had shown a 2.6% drop in illegal cigarette trade incidence to 34.7% from 37.3%.
Source: The Star Online
