Friday September 30, 2005

Budget message: Adjust lifestyle

BY YAP LENG KUEN and JAGDEV SINGH SIDHU

HEAVY LOAD: Abdullah posing with his bag, containing his Budget speech, which he jokingly said was too heavy to carry at the Finance Ministry last night after going there to check on the final preparations for today’s Budget 2006. At his right is Nor Mohamed.

KUALA LUMPUR: Adjust your lifestyle to the new circumstances and don't expect too many goodies from the Budget.

That is likely to be the main message from Prime Minister Datuk Seri Abdullah Ahmad Badawi in Parliament today, according to observers canvassed by The Star.

There will certainly be some relief for the people, particularly the poor, but most of the measures had already been announced last month, said one analyst.

Yet, Abdullah is expected to hand down what many are saying will be a caring Budget as the people grapple with the pressure of rising costs.

Analysts also believe that Budget 2006 will be pro-business and will encourage companies to invest more by lowering the cost of doing business.

Record global oil prices have forced the Government to raise the price of petrol and diesel as the subsidy bill bloats.

In turn, this has seen prices of many goods and services rise, in percentage terms, faster than the price of fuel at the pump.

In view of that, analysts say the Government wants the burden of higher oil prices to be shared equitably and not chiefly by the end-user.

Enforcement to check and punish profiteering, which the Prime Minister has spoken about before, is expected to be on the agenda today.

While enforcement is welcomed, analysts say relief measures such as the recently announced reduction in road tax to ease the burden on the rakyat would be contained in the budget.

Apart from lowering the cost of doing business through fiscal measures and efficiency improvements, analysts suspect there would be measures to spur corporate activity.

They, however, feel that relying solely on the corporate sector to drive the economy might not be enough given the uncertainties that still prevail in the global economy.

In view of this, some analysts believe the Government could jumpstart spending as its budget deficit is now considered to be under control.

“Spending is expected to be targeted at specific areas for long-term resilience and competitiveness.

“Sectors that have been in the doldrums such as construction are expected to receive a boost in the Ninth Malaysia Plan to be unveiled early next year.

“So we can afford to spend some money but it must be done wisely,” an economist said.

Challenges of globalisation, with the emergence of China and India as economic powerhouses, are likely to be addressed as policies could be fitted together to ensure Malaysia grows in tandem with China and India.

Some measures likely to be in focus are:

Sin taxes as the Government moves to encourage and inculcate a healthier lifestyle;

Policies on energy and conservation, the promotion of biofuel and biodiesel;

New areas of growth such as biotechnology in relation to agriculture and health;

Education, which will probably get the most attention as the Government strives to improve the level of human capital in the country;

Capital market measures to lift sentiment and help create wealth from the stock market; and

Agriculture, especially as a new growth area and a way to reduce the food bill.

“It will not be something to shout about but certain measures could put a smile on some faces,” economists said.

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