KUALA LUMPUR: The uptick in Malaysia's development expenditure of RM75.6 billion in 2022 Budget, although more muted than expected, should help to juice up growth in the near term, market observers said.
Overall, the RM332.1 billion spending package for next year's national budget is easily the country's largest on record.
However, without a requisite marked uptick in revenue, the fiscal deficit is left wide, said OCBC Bank economist Wellian Wiranto.
"As we had expected, it remains an expansionary budget, which is not surprising given the need to boost the nascent economic recovery and the political compulsion ahead of a potential election next year.
"Indeed, at 6.0 per cent of GDP, the deficit is higher than the 5.0-5.5 per cent that we had in mind, signalling the government's keenness in maximizing whatever fiscal space it has on hand," Wellian added.
He said the projected development amount for 2022 marks a significant uptick from RM62 billion in 2021, although a tad short of the RM80 billion that OCBC thought would showcase the government's seriousness about the medium-term plan.
Meanwhile, Public Bank Bhd founder, chairman emeritus, director and adviser Tan Sri Dr Teh Hong Piow welcomed the government's ongoing initiatives in providing support by way of subsidies, grants, and various other measures of assistance totalling RM31 billion.
Public Bank and other Malaysian financial institutions reaffirmed their commitment to support local businesses affected by Covid-19 as Malaysia charts its post-pandemic growth.
CIMB Group Holdings Bhd said it is optimal that the government continues to emphasise policies that are aligned with the UN Sustainable Development Goals (SDGs).
Its group chief executive officer Datuk Abdul Rahman Ahmad said through 2022 Budget, the government has reiterated its goal to achieve carbon neutrality by 2050 and doubled down on its commitment towards driving the environmental, social and governance agenda.
"As a financial intermediary, CIMB Group plays a critical role in channelling financing and capital in ways that will support the transition towards a net-zero economy and greater social equity.
BMW Group Malaysia managing director Hans de Visser said the 2022 Budget marked a welcome step towards electrified mobility – one that has long been in the making for Malaysia.
"The government's motion to further incentivise and support the development of the electric vehicle (EV) industry in Malaysia moves in the same vein as our vision for electrified mobility at the BMW Group," de Visser said.
NanoMalaysia Bhd welcomes the budget's proactive measures, allocation and initiatives to strengthen the green ecosystem agenda and carbon neutrality objective for the nation by 2050 as with a special interest in electric mobility.
Its chief executive officer Dr Rezal Khairi Ahmad said the tax exemption on electric vehicles is a commendable and much-needed incentive to progress the nation and the economy into a sustainable future by creating early market acceptance for energy-efficient vehicles (EEV).
Source: https://www.nst.com.my/business/2021/11/741669/increase-development-expenditure-provide-near-term-growth-boost