KUALA LUMPUR, Oct 15 — Next year’s budget will carry the burden of kickstarting the Najib Administration’s economic initiatives that are friendly to a possible snap general election.
Already looming are two by-elections and the Sarawak state elections apart from projects for the Economic Transformation Programme (ETP) and the New Economic Model (NEM) that Prime Minister Datuk Seri Najib Razak is pinning his hopes on to regain popular confidence in Barisan Nasional (BN).
The budget will likely contain high profile big ticket infrastructure projects such as the new MRT system and the redevelopment of key pieces of government land in KL that will boost the economy and the stock market and bolster the BN campaign to win over voters.
The prime minister said yesterday that it would be a “budget by the rakyat” and will incorporate key public financial concerns such as employment and the rising cost of living as well as set the pace for making Malaysia into a high income nation.
The visit by Indian prime minister Manmohan Singh later this month and a possible visit by Chinese premier Hu Jintao in November could also boost Najib’s standing amongst older and more conservative members of the non-Malay community.
Good news in the form of major infrastructure development in the run-up to possible general elections in the second half of next year could spur further rallies in the Kuala Lumpur stock exchange said OSK Research in a report yesterday.
“We believe that the delay in GST implementation confirms our earlier view of a possible early General Election in 2011,” it said.
Pakatan Rakyat (PR) MPs also predicted that Najib would unveil an “election budget” aimed at mobilising support for snap polls.
“I predict that tomorrow’s budget would be towards an election budget,” PR de facto leader Datuk Seri Anwar Ibrahim told reporters yesterday.
Economists meanwhile will be looking to the budget as a dipstick of the Najib Administration’s seriousness in pursuing reforms as laid out by the ETP and NEM.
“This budget will establish the government’s commitment toward the ETP,” said Affin Bank chief economist Alan Tan.
OCBC Bank economist Gundy Cahyadi said that the budget promises to be “exciting.”
“The limelight seems set to fall on how authorities are going to kick off the NEM,” said Gundy.
He noted that a total of RM 230 billion has been allocated for development expenditure under the 10th Malaysia Plan (10MP), which should come to an average of RM 46billion over the next 5 years.
“Frontloading this allocation to the early half of the 10MP period will be a signal of the government’s will to fulfill its Vision 2020 ambition and we expect the authorities to do just that,” he said.
RAM Holdings chief economist Yeah Kim Leng said that apart from mentioning some major ETP projects such as the RM43 billion KL MRT, the budget will likely lay the foundation for greater entrepreneurship and private investment.
“We think a major thrust of the budget is what sort creative incentives will be available to boost innovation and entrepreneurship,” he said.
He added that he hoped to see the budget address ways to boost the human and scientific capital of the country and incentivise the private sector to invest in upgrading their capacity.
“They have to make investing more attractive for companies but at the same time not have companies pass the risk to the government,” said Yeah.
