BUDGET 2021: GOVERNMENT LIKELY TO REDUCE SPENDING, SAYS ECONOMIST

KUALA LUMPUR, Oct 6 -- The Federal Government is likely to spend less in the upcoming Budget 2021 due to revenue contraction over the last two quarters, according to an economist.

University of Malaya economics professor Datuk Dr Rajah Rasiah said the gross domestic product (GDP) contractions were mainly due to commodity trade restrictions on Malaysia’s export-driven economy.

“I hope the government would propose a sustainable budget because it is important to make sure Malaysia’s economy is kept afloat and ready to grow once the COVID-19 pandemic ends.

“If you stick solely to budget-tightening measures, it (the budget) may not move in the right direction for economic growth,” he said on Bernama TV’s The Nation programme themed “Exploring Budget 2021" today.

Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz is scheduled to table the budget on Nov 6. This will be Perikatan Nasional’s first federal budget since coming into power in March.

A total of RM297 billion or 18.4 per cent of the 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.

To further enhance this year’s budget, Rajah suggested finding ways to promote local goods and services in order to expand their domestic market share.

“This will ensure we prevent money withdrawal leakages,” he said.

Meanwhile, PNB Research Institute Sdn Bhd chief executive officer, Intan Nadia Jalil, who was also on the programme, said leakages could be avoided by stopping any kind of inefficient or ineffective government spending. 

“Perhaps it is time for the government to really look at some corporate tax incentives that we have had for several decades now.

“It is best to see how it could be aligned to be more effective and efficient for the economy as a whole, given that the government is working on a very tight budget,” she said.

Intan Nadia said Budget 2021 should be a recovery and rebuild budget especially for targeted groups, such as the small and medium enterprises, which were severely affected by the COVID-19 pandemic.

-- BERNAMA