Budget 2017: Pro-business budget to bolster economy

 |Oct 21, 2016
Najib unveils a pro business budget.
Najib unveils a pro business budget.

The government provided a major boost to private investments and small and medium scale enterprises through pro-business strategies in the 2017 budget that clearly is set to instill greater investor confidence and propel the economy to greater heights amid external headwinds.

In measures which encourage domestic demand, Prime Minister Najib Razak said private investment would expand 8.1 per cent to RM230 billion in 2017, arising from several infrastructuture projects that would lead to continued brisk construction activity much to the glee of contractors.

In tabling the budget at the Dewan Rakyat today, he also handed out incentives to heighten Malaysia’s position as an Islamic financial centre, empower Bumiputra entrepreneurship and further develop the country’s five economic corridors.

Najib, who is also Finance Minister, allocated RM50 million for scientific research to raise the quality of palm oil products and RM30 million for replanting, reflecting the golden crop’s position as major export commodity.

In pushing for a business-friendly environment, the Prime Minister also announced that fixed line broadband service providers will offer higher broadband speed at the same price which will facilitate international commerce and invigorate internet-based innovation.

In keeping the economic momentum moving forward and stimulate private investment, Najib proposed multi-billion ringgit infrastructure projects covering all states including Sabah and Sarawak.

Among the major infrastucture projects are the upgrading of Jalan Lok Kawi – Penglat – Papar, Sabah; Jalan Kampung Keruak – Gua Musang – Kuala Berang; construction of Batang Lupar Bridge, Sri Aman; and the reconstruction of Sandakan Power Station Project.

He also announced that the Goods and Services tax (GST), which was a savious to government in view of the plunge in crude oil pruices, managed to rake in a collection of RM30 billion as of Oct 19, 2016.

Najib also said a sum of RM2.1 billion will be allocated for infrastructure and socioeconomic development in the five economic corridors, namely, Iskandar Malaysia, Northern Corridor Economic Region (NCER), East Coast Economic Region (ECER), Sabah Development Corridor (SDC) and Sarawak Corridor of Renewable Energy (SCORE).

Malaysian Investment Development Authority (MIDA) will be allocated RM522 million with emphasis given to chemicals, electric and electronics, and R&D activities.

The budget, themed “Ensuring Unity and Economic Growth, Inclusive Prudent Spending, Wellbeing of the Rakyat,” was valued at RM260.8 billion, up 3.4 per cent from the 2016 recalibrated budget.

To invigorate the domestic capital market, government-linked investment companies will allocate a special fund up to RM3 billion to fund managers licensed under the Securities Commission to invest in potential small and mid-cap companies.

In addition, a Capital Market Research Institute will be established with initial funding of RM75 million, provided through Capital Market Development Fund.

For export promotion programmes to local SMEs by MATRADE, MIDA and SME Corp, a sum of RM130 million is provided through National Export Promotion Funds.

Loan financing totalling RM200 million and insurance credit facilities with coverage valued up to RM1 billion will be provided by EXIM Bank to SMEs.

A sum of RM286 million was also provided to increase exports of palm oil, rubber, cocoa and pepper.

While emphasising the importance of the roles of SMEs, Najib said the government had declared next year to be the Startup and SME Promotion Year in line with the role of SMEs in significantly contributing to the nation’s growth and labour market.