Lee: It will be good for the market if they do not introduce new taxes. Let us look at the advantages and disadvantages that the government has, going into Budget 2019. First, the advantages.

The country’s economic fundamentals are still solid. The price of crude oil has improved. In the previous budget, the average oil price assumption was US$52 per barrel. This time, the government is estimating the budget allocation based on an average crude oil price of US$70 per barrel, although prices are at about US$80 currently. The government gets about RM300mil for every US$1 increase in the price of oil. Dividends from Petronas are also higher, from RM16bil to RM24bil – it could be even higher than this. All this helps provide a buffer for the RM23bil shortfall in revenue due to the abolition of the GST. Exports, on the other hand, have grown about 7.3% during the first seven months of the year. The economy is still growing.

Now, the disadvantages. We saw a surge in consumer sentiment and business confidence right after the election, but the latest numbers show that this has now normalised. Globally, there are still trade tensions, rising US interest rates, and capital outflows. Also, as the government has been telling us, we have limited fiscal space. There could be a two-year period of adjustment on the government spending programme. They may not be able to roll out all the big projects, but are continuing with the ongoing projects with costs slashed.

All this will keep the economy growing, but it may not be as robust as we are used to seeing. I believe this will be a lean budget, but this doesn’t mean it will not have measures to support the targeted industries and households. We just should not hope for too many goodies.

Gomez: I have a lot of sympathy for Finance Minister Lim Guan Eng based on what he has inherited from the previous administration.

Clearly, the situation is quite bad, and I must say that he, and his ministry, have been doing a commendable job in terms of trying to clean up the situation. His role is to get the budget back on track.

When I looked at the mid-term review, I thought it would give us an idea about how the government is preparing the ground for the budget. The mid-term review should tell us what the major structural problems are, and how they are going to be addressed. I did not see that preview.

Among the fundamental issues I was hoping to see detailed in the mid-term review was on education. The mid-term review was quite scathing in its discussion on the quality of education in Malaysia.

This is something the government has to redress in the upcoming budget. One of the pertinent issues is on funding for research. The mid-term review talks about the need for collaboration between universities and industries, and for this, you need funding. I am wondering how much expenditure is going to be put aside for education if this is indeed a major structural problem that they have identified.

Secondly, Pakatan Harapan stressed many times in the run-up to the election that it will plug leakages. If you plug leakages, you can save a lot of funds that can then be channelled into development expenditure.

To plug leakages, you must look into the GLCs. These are issues we have to redress because investor confidence is dipping. If these issues are not addressed in the budget, then we are going to have a serious problem in terms of regaining investor confidence. 

https://www.thestar.com.my/business/business-news/2018/10/27/expectations-running-high-ahead-of-budget-2019/