Infrastructure remains high in Malaysian budget plans
MALAYSIA’S budget for 2017, which will be tabled on October 21, is likely to be modestly expansionary with emphasis on high infrastructure spending, selective relaxation for property purchases, promotion of growth areas, relief for middle income and low i
UOB Kay Hian said yesterday that although widely seen as an election budget, Budget 2017 is likely to be modestly expansionary at best as the government keeps fiscal discipline -2016 fiscal deficit target at 3.1 per cent of gross domestic product GDP)- amid a slow economic growth and low crude oil prices.
UOB’s Global Economics and Markets Research Team forecasts annual GDP growth for 2016-17 at 4.2 per cent and 4.5 per cent respectively.
Nevertheless, fiscal stimulus efforts would continue to be reinforced by off-balance-sheet mega infrastructure projects and fiscal spending by the government-linked companies.
The key fiscal stimulus announcements according to the brokerage are expected in infrastructure spending (via development expenditure), selected relaxation in the property sector, particularly on re-allowing DIBS (interest cost absorption scheme) for first-time house buyers and promoting affordable housing, promoting growth areas such as value-added exports, transportation and logistics, digital economy and tourism, relief for the middle income (tax relief) and low income earners.
Budget 2017 should benefit from a total of RM12.75 billion (Bt107 billion) allocated for current projects in rails (RM8.59 bilion), roads (RM1.13 billion), maritime (RM3.03 billion), and aviation, on top of an additional RM 34 billion worth of infrastructure investments under study.