Monday, November 5, 2018

Pakatan Harapan's First Ever Budget

The first federal budget by the Pakatan Harapan government was unveiled by Minister of Finance Lim Guan Eng (right) on Friday. 

Budget 2019 can be best described in two words: “boldly expansionary”. 

Meaning, the budget shows that the government are not sacrificing growth at the expense of fiscal discipline. Just compare its total allocation of RM314.5 billion against the last two federal budgets. This is a RM24.1 billion increase from last year’s budget, which saw an allocation of RM290.4 billion, while Budget 2017 had an allocation of RM260 billion. 

It was brave of Lim to not try to do magic in order to achieve the 2018 deficit target of 2.8% – in spite of his government’s best efforts to reduce cost and postpone non-critical expenditures. 

That was a fictional target that was wholly unrealistic – unless the PH government continue the previous practice of hiding expenses off-balance sheet. 

Not surprisingly, it is a deficit budget – and for the next three years, emphasis is on fiscal consolidation to achieve a deficit of 3.4% in 2019; 3.0% in 2020 and 2.8% in 2021. And over the medium term, the fiscal deficit-to-GDP ratio is expected to reduce further to around 2%. 

Still, there is a disquieting concern how investors and rating agencies will respond to the budget deficit numbers. 

If Malaysia’s sovereign rating gets downgraded because of the wider fiscal deficit, it can put the country in a very vulnerable position with regard to capital outflows. This means, in a risk-off environment, foreign funds could pull out of the country in an accelerated manner, resulting in a further weakening of the ringgit. 

The government have no choice really – they have to reset the budget to start on a clean slate. 

MIDF Research chief economist Kamaruddin Mohd Nor (left) considers Budget 2019 an “encouraging fiscal plan”, considering the financial challenges of the government, that could be a boost to the economy despite the issues facing the country.
I received this from BDO Tax’s Anna Hunston (right) today: "Budget 2019 will have 3 focus areas with 12 key strategies to restore the Malaysian economy as an Asian Tiger. 

BDO Tax Professionals once again deliver our insights and highlights that matter to us. To get all the important details, please go to
http://www.bdo.my/en-gb/insights/publications/2019-budget-highlights".

The one thing I dislike about the budget is the excise duty of 40 sen per liter for sugary drinks! My Coke will become more expensive, sob, sob!!

 

This morning, I was enjoying my ‘refreshment’ in USJ16 in Subang Jaya, Selangor and there, right in front of me was Coke’s rival! 

Looking at how Pepsi Cola is being represented – one adjective immediately jumps to mind that best illustrates what I think of this brand – puny Pepsi!














That's because the brand is made to look stupendously small. 

Therefore, I’m not the least surprised why PepsiCo can never ever be the No. 1 Cola – they don’t quite understand Marketing! 

Methinks, even Red Bull can teach them a thing or two:


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