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PUTRAJAYA (Bernama): The government will embark on an expansive budget to ensure the prosperity, business continuity and economic resilience of the rakyat in these unprecedented times, says Tan Sri Muhyiddin Yassin.
The Prime Minister said that the first focus in the 2021 Budget is to fight Covid-19 from a health perspective and a substantial amount of funds would be channeled for the purpose of managing the pandemic and extending the necessary support to leaders, especially in the form of infrastructure.
“We will do it now and we will continue to do so until Covid-19 is over,” he told Bernama on Wednesday (November 4) before the budget announcement on Friday (November 6).
This is the first budget under the Perikatan Nasional administration.
He stressed that the budget is a continuation of the four stimulus packages worth RM305bil that have been disbursed since Malaysia was hit by the pandemic.
The most recent stimulus package was additional assistance under the RM10bil Prihatin (Kita Prihatin) Supplemental Initiative Package in line with the government’s efforts to drive economic recovery.
The Kita Prihatin package is an extension of the previous economic stimulus packages, namely Prihatin, Prihatin SME Plus and Penjana for a total value of RM295bil, or about 20%, of the nation’s Gross Domestic Product (GDP), with an additional tax injection for a total of RM45bil. by the Government.
Bank Negara Malaysia has revised its GDP growth forecast for 2020 to -5.5% to -3.5% from -2% to 0.5% previously, as the initial assumption was based on a lock-in period of only four weeks instead of seven weeks.
The economy is expected to recover and register growth from 5.5% to 8.0% in 2021.
“The budget is part of the 6R plan undertaken by the government, namely Resolution, Resilience, Restart, Recovery, Revitalization and Reform,” Muhyiddin said in the hour-long interview.
The government remains focused on ensuring that the 2021 Budget as a priority provides sufficient resources.
“The government will continue to spend in a relatively difficult situation to boost the country’s economy,” he said.
He said the increase in the debt-to-GDP ratio from the legal limit of 55% to 60% now, gives ample room for the government to embark on an expansive budget.
Maybank Kim Eng’s economic research forecast a deficit of RM90bil, or 6.0%, of GDP versus an estimated RM95bil, or 6.7%, of GDP in 2020.
The 2020 budget announced last year was worth $ 297 billion.
Besides health, the second area of focus is helping the vulnerable, both individuals and micro-businesses, especially those affected by Covid-19, Muhyiddin said.
“The third is to stimulate economic activities to provide job opportunities, business activities, in addition to driving growth and recovery in 2021,” he said.
The government would also create incentives to attract foreign direct investment (FDI) to further boost the country’s economy.
“The situation globally is challenging and many countries are competing for investments in their countries. So this is something that we are paying attention to in the future. We want to launch an ecosystem of business infrastructure,” he said.
Therefore, Muhyiddin said that incentives to attract FDI to the country would not only focus on 2021 but also on 2022.
During the first six months of 2020, Malaysia recorded investments worth RM64.8 billion in the manufacturing, services and primary sectors.
Of the total approved investments, domestic direct investment (DDI) accounted for 69.8%, or RM 45.3 billion, while FDI comprised the remaining RM 19.5 billion.
Ranked 12th in the World Bank’s Ease of Doing Business 2020 survey, Malaysia’s total approved FDI in 2019 amounted to RM82.4 billion.
Muhyiddin assured that the 2021 Budget will be the most comprehensive budget the government has ever embarked on.
He also hoped that all the deputies would support him for the benefit of the people and the country. – Bernama
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