[Malaysia] No excitement over 2006 Budget

No excitement over 2006 Budget

Kuek Ser Kuang Keng, Malaysiakini

Oct 1, 2005

The 2006 Budget is ‘business minded’ where the focus is to reduce physical deficit and business cost, said Federation of Malaysian Consumers Associations (Fomca) deputy secretary Indrani Thuraisingham.

She said the measures taken in relation to the public sector such as cutting down red rapes and bureaucracy as well as improving the delivery system, were aimed to reduce the cost for the government and business sectors. According to her, the budget has neglected consumers, except for those in rural areas where infrastructure facilities and basic amenities will be improved. . "Although the government tries not to burden the consumers, there is no real goodies given (either)," she said when contacted.

"Maybe the government hopes that consumers will benefit indirectly from the budget but it really depends on the goodwill of the businessmen to translate those benefits to the consumers," she added.

‘Not exciting’

Meanwhile, the Malaysian Institute of Economic Research director Prof Dr Saiful Azhar Rosly described the budget as ‘not exciting'.

"Basically the budget is to stimulate domestic demand by reducing the business cost after the government found out that the Foreign Direct Investment (FDI) is not as hopeful as before," he said. However, he said in order to stimulate domestic demand, the government should have reduced both the corporate and personal tax to increase consumption power.

"I was looking forward for it (tax reduction) but the government is not doing that," he said. "Maybe after the Government Service Tax (GST) is introduced in 2007, there will be tax reduction," he added.

Subsidy from PETRONAS

On the setting up of a Small and Medium Enterprise (SME) Bank, he said this was another measure to stimulate domestic demand. "The current banks are reluctant to give loans to local SMEs," he added.

He also expressed disappointment over the issue of oil subsidy. Saiful had hoped that the government would direct PETRONAS to allocate some of its revenue as oil subsidy to the people.

"The current oil subsidy is RM25 billion and if the government cuts it down, it would lower the purchasing power which is essential in stimulating domestic demand," he said. As for the other aspects of the budget, Saiful termed them as ‘quite routine’ and ‘reasonable’.