Brace for 'pain and sacrifice' in Budget 2019, warns Guan Eng

Finance Minister Lim Guan Eng has forewarned investors to expect "pain and sacrifice" in Budget 2019 and fiscal measures from the Pakatan Harapan government.

"Fiscal consolidation will not be achieved easily. We must be willing to expect some pain and even offer some sacrifice,” he said at the 'Malaysia: A New Dawn' conference in Kuala Lumpur this morning.

Quoting Prime Minister Dr Mahathir Mohamad in his previous interview with Malaysiakini, Lim again spoke of sacrifice.

“To quote our prime minister, “The budget is of sacrifice – everyone will have to sacrifice," and “we have to accept that we must sacrifice.”

Lim added: “The fiscal targets set by the previous administration are hence unrealistic in the short term and it would be foolish for this government to maintain these targets.

“Over the medium term, however, we will remain strictly on the path of fiscal consolidation as we reform our institutions and processes, increase our revenues, optimise our expenditures as well as rationalise our debts.”

The minister is set to present the Budget 2019 speech in the Dewan Rakyat on Nov 2.

When his remarks drew nervous murmurs from the audience, comprising mainly of those from the financial sector, Lim paused. He then had those present in stitches when he stated, "Twenty-four percent only, lah."

The figure refers to the amount of corporate tax in Malaysia.

Despite the laughs, those who heard the speech appeared to be rattled by it.

On the sidelines of the event after his speech, some attendees murmured among themselves about the continued use of the word "sacrifice".

"He kept saying ‘sacrifice, sacrifice’," a woman was overheard saying.

Tax incentives to be reviewed

During his speech, Lim said the government, through the Tax Reform Committee, also plans to diversify tax revenue sources and review existing tax incentives.

"The tax reform committee has been given the mandate to minimise the tax gap, diversify the tax revenue and make the tax system more neutral, efficient and progressive.

"It is also tasked to explore ways to minimise leakages and evasion.

"The same committee will review all tax incentives given out previously to ensure that these measures are still relevant and supportive of high-quality economic growth," he added.

Other fiscal measures already announced include the cancellation of two gas pipeline projects by MOF-owned Suria Strategic Energy Resources (SSER) and reducing the cost of infrastructure projects like the MRT2 and LRT3.

Earlier, during his keynote address, Mahathir had hinted that the government might introduce new taxes but he was scant on the details.

The one-day conference, hosted by the Finance Ministry along with CIMB, Maybank and RHB, gathered stakeholders from the financial sector and various industries to share their input on how to boost the country's economy. - Mkini

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