KUALA LUMPUR: The estimated gross domestic product (GDP) growth forecast of 4.8% for 2020 can be realised, according to Finance Minister Lim Guan Eng, despite some quarters saying that the projection looks to be high amid global headwinds and weak demand.
Speaking during a moderated panel session at the Budget 2020 Forum today, Lim said that while the figure was contingent on the country’s economic performance this year, the projection was made based on available data.
“If there is any necessity to revise the figures, then we will do so. We want to be transparent and open,” he said.
According to the 2020 Economic Report, GDP growth is projected to improve marginally to 4.8% in 2020 from 4.7% in 2019.
Lim also defended the government’s fiscal deficit target of 3.2% and tabling an expansionary budget.
“These figures are in line with what other institutions like Bank Negara Malaysia (BNM) have projected for next year. The fact that we have widened the deficit estimate from 3% will allow us fiscal room to make the necessary adjustments (if there is a slowdown in global trade).
“Malaysia is a trading nation, and the WTO (World Trade Organization) has lowered their trade projections to 1.2% from 2.6%, so we must offer ourselves that fiscal space. This is a necessary pre-emptive measure in case the worst happens,” he said.
As for the collection expected from the new 30% income tax band, Lim said that about RM100 million in revenue is expected to be raised.
“This proposal was actually made by the World Bank. The World Bank feels that our top marginal tax rate for the wealthy is too low compared to neighbouring countries. Even by increasing the income tax to 30%, we are still among the lowest.”
He said the wealthy should be able to afford the increase in tax, adding that this will contribute to economic growth, which will in turn grow the income of the wealthy and hence cover the marginal rise in tax.
Addressing concerns that the budget did not have many measures included to increase overall revenue collection, Lim said the government’s expectations for the coming year still stood.
“The projections we made are based on stress-tested figures. We have kept within the projections for the last two years, and we will maintain that for next year. If there are any contingencies, then we will make the necessary revisions, but at the moment, no,” he told the media on the sidelines of the forum.
According to the 2020 Economic Report, revenue for next year is expected at RM244.53 billion, down 13.1% from RM263.3 billion this year.
On the second issuance of yen-denominated bonds (also known as samurai bonds), Lim said the low rate was a sign of the Japanese government’s confidence in Malaysia.
“I was informed that the Japanese government has not offered such a low rate to other countries. The offer given is at 0.5% and we are still continuing discussions on how we can get a better deal. Of course, the size of the bond issuance is dependent upon these discussions,” he said.
Commenting on the proposed merger of Bank Pembangunan Malaysia, Danajamin Nasional, SME Bank, and the Export-Import Bank of Malaysia, Lim was tight-lipped on who would be leading the merger, but said the proposal was made by BNM.
“The central bank is independent, so when they make a proposal they want to study it and we have to give due consideration to them. Depending on the outcome of this study, only then the government will consider it,” he said.
On the privatisation of highways owned by Gamuda Bhd and PLUS Malaysia Bhd, Lim reiterated that the government will consider acquisition proposals that do not add to its debt burden.
