RHB Research: Government Set to Announce Marginally Higher Budget Spending for 2017


RHB Research: Government Set to Announce Marginally Higher Budget Spending for 2017

KUALA LUMPUR, October 5  — The 2017 Budget, which will be announced on Oct 21, 2016, is expected to be marginally higher than that for this year, said RHB Research.

In a ‘Budget Outlook 2017’ report released today, RHB Research said, priority will be given to people-centric projects like affordable housing, rural electrification, water supply and public transportation.

“We expect the government to remain on track to consolidate its fiscal position although the pace will likely be slower than earlier expectations despite the mounting challenges amid the weak global economy, low commodity prices for crude oil and rubber, as well as weak ringgit,” it said.

It said despite the rising challenges to its fiscal consolidation drive, the government was expected to remain committed to continue lowering its budget deficit further, albeit only slightly to three per cent of gross domestic product (GDP) in 2017, from -3.1 per cent of GDP in the 2016 Budget.

RHB Research said the government will continue to rely on income transfers to help the lower income group and in turn support consumer spending, which accounted for over 50 of the economy.

“This will likely be done through expansion of the 1Malaysia People’s Aid (BR1M) programme, which is expected to distribute a total of RM5.9 billion in 2016 across a major part of households and individuals.

“In this respect, we envisage the government to increase the allocation of BR1M further to RM6.6 billion in 2017.

“Following a RM50 increase in BR1M handouts in 2016, we expect the BR1M payout to increase by another RM100 this time, to RM1,100 (households with income below RM3,000), RM900 from RM800 (household income of RM3,000-RM4,000), RM500 from RM400 (individuals with income below RM2,000),” it said.

As the Government still faced pressure in revenue collection, RHB Research said, this will most likely result in further delay in income and company tax cuts.

“Instead, we foresee the government to continue extending the tax relief either to a wider income range or by increasing the relief amount,” it said.

To further boost home ownership, RHB Research said, the government may relax loan assessment methods, increase allocation of EPF Account 2 and more 1Malaysia People’s Housing schemes may be introduced.

“We see the government continuing to provide further tax cuts and perks, including extending loan facilities to SMEs to stimulate their growth in periods ahead,” it said

RHB Research said the government might exempt first-time car buyers from having to pay excise duties.

Under the construction sector, the government was expected to reaffirm its commitment towards the implementation of rail-based mass transit networks in Budget 2017, it said.


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