KUALA LUMPUR: United Overseas Bank (M) Bhd (UOB) has projected a slightly higher allocation for development expenditure of RM47 billion in Malaysia’s Budget 2017 versus RM46 billion for 2016.
Its economist, Julia Goh, said the development expenditure will be focused on transportation, logistics, education, health, housing, defence and national security, agriculture and rural development. “We do not expect new mega construction projects in the coming budget.
“The government will reiterate construction and transportation projects, including the Mass Rapid Transit Two and Three, Light Rail Transit Three, Bus Rapid Transit, highways and airports,” she said in UOB’s Budget 2017 preview.
The government spent over RM30 billion on rail infrastructure over the past four to five years and was expected to spend another RM40 billion to enhance connectivity, she said. The Budget 2017, themed ‘Accelerating Growth, Ensuring Fiscal Prudence, Enhancing Well-being of Rakyat’, will be tabled in Parliament on Oct 21.
Goh said given tight government revenues amid low oil prices and slower growth, the bank believed any expansionary plans had to be done with fiscal discipline to avoid the risk of sovereign outlook or ratings downgrade.
“We think the government’s higher spending will be focused on growth areas like transportation, logistics, digital economy, value-added exports, tourism, higher BR1M cash handouts, tax relief for middle-income earners, property and affordable housing,” she said.
Meanwhile, on measures for the property sector, Goh said, the bank expected the coming budget to continue its focus on addressing issues of affordable housing.
“This includes facilitating loan transactions between first-time buyers and banks, whereby new entrants to the job market can get full loan for the purchase of houses priced below RM300,000.
“Another possibility is extending the 50 per cent stamp duty exemption on transfer and loan agreements for property below RM500,000,” she said.
