Prof Yeah (left) and Mohd Afzanizam believe that Budget 2025 will reflect the Madani government's commitment to reducing fiscal deficits.
Last year’s budget created a more equitable future for all Malaysians. Will this year be better?
ANTICIPATION is building among eager stakeholders on how the government will continue addressing Malaysia’s socio-economic challenges and opportunities, as well as implement new initiatives that could further enhance growth and inclusivity.
However, we can only patiently wait for Budget 2025 to be announced on Oct 18 to find out. In the meantime, one can’t help but reflect on the previous budget and the benefits it brought to individuals, businesses, and communities.
According to experts Sunway University’s Jeffrey Cheah Institute on South-East Asia economic studies director Prof Dr Yeah Kim Leng and Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, Budget 2024 managed to bolster private sector growth and support the nation amidst ongoing fiscal consolidation.
Noting that Budget 2024's emphasis on restructuring the economy had led to higher-than-expected GDP growth in the first half of the year, Prof Yeah said the growth strategies based on digitalisation and green economy together with boosting quality investment and developing regional industrial hubs have attracted significant increases in investment approvals while sustaining investor and consumer confidence.
“The strengthening economy has resulted in lower unemployment which together with targeted social assistance programmes, enhancement of social protection and continuing access to quality education and universal healthcare have improved overall social well-being. The buoyant domestic demand together with the recovery in exports have enabled the economy to expand at the higher end of the 4% to 5% growth projected for the year,” said Prof Yeah.
Mohd Afzanizam said Budget 2024 had set a robust platform for the private sector, evidenced by a remarkable double-digit growth in private investment. He attributed the positive trend to effective government engagement with businesses and investors, which has clarified the government's aims and aspirations. Additionally, he notes that direct cash transfers have effectively mitigated the impacts of subsidy rationalisation, allowing Malaysia to chart a healthy growth trajectory.
On building secure social safety nets, Prof Yeah said social assistance for vulnerable groups and income enhancement programmes for low income households have enabled the targeted recipients to better cope with the rise in cost of living, while Mohd Afzanizam said measures under Budget 2024 such as cash transfer programmes were instrumental in providing essential relief and support to economically vulnerable populations.
Mohd Afzanizam added that despite a recent tax hike in the services sector, consumer spending remains robust, indicating a full employment status in the economy.
“With more Malaysians earning incomes, technology has empowered consumers to navigate rising living costs more effectively. However, there is still a need for continued government efforts to address income and wealth inequality, particularly through investments in education, healthcare, and infrastructure,” said Mohd Afzanizam.
Meanwhile, Prof Yeah highlighted that reinvestment incentives from the New Industrial Plan, tax incentives for global services hubs, green technology initiatives, and ESG incentives, along with tax reductions for carbon projects, have significantly boosted private investment. This surge in investment has contributed to higher employment growth, bringing the unemployment rate down to pre-pandemic levels.
He further noted, “The influx of new investments and the ongoing execution of multi-year infrastructure and industrial projects have expanded the job market, resulting in a continued decline in unemployment to pre-pandemic levels. As demand for labour strengthens, we are seeing sustained wage increases.”
Overall, Malaysia's Budget 2024 represented a significant investment in the nation's socio-economic future. By prioritising job creation, offering tax incentives, and enhancing social programmes, the Madani government has begun paving the way for sustainable growth that uplifts individuals, supports businesses, and strengthens communities. What will Budget 2025 bring to the table?
Prof Yeah said: “With increased capital investments driving capacity expansion and industrial upgrading, the country’s potential output will rise correspondingly.
“With domestic demand being strengthened by income growth and low unemployment amid a steady recovery in exports and imports this year, the expanding economy will result in a corresponding rise in government revenue.”
He noted that savings from fuel and other subsidies will enable the government to formulate a larger budget for 2025 while maintaining its commitment to fiscal consolidation and reducing the deficit.
Mohd Afzanizam asserts that government spending is integral to economic growth, and Budget 2024 will play a crucial role in shaping the economy this year. He anticipates that the budget size will remain stable, reflecting the government's commitment to reducing fiscal deficits.
