With a smaller budget this year, Malaysia will increase spending on development and enact new taxes on the wealthy as the new administration attempts to strike a balance between promoting economic growth and reducing the budget deficit.
The national budget, which totals 386.1 billion ringgit ($87 billion) and was unveiled by Prime Minister Anwar Ibrahim in front of the legislature on Friday, three months after his election victory, focuses on assisting those who are struggling with rising living expenses amid a slowing economy.
Cash assistance for the poor, farmers, and businesses is still provided, along with fuel and other subsidies. New incentives will be introduced to combat youth unemployment and encourage foreign investment.
According to Anwar, the income tax system will also be changed, with taxes for the roughly 2.4 million middle-class earners being reduced while being increased for the high-income earners.
The government is considering a capital gains tax, according to Anwar, who is also the finance minister, and plans to enact a tax on luxury goods this year.
Furthermore, the budget proposed spending 97 billion ringgit ($21.9 billion), up from 71.6 billion ($16.1 billion) the previous year, on development.
But according to Anwar, the nation is facing significant difficulties, such as a high national debt, a slowing of the global economy, and a sluggish recovery of foreign investment.
According to him, Malaysia’s economy is expected to grow by 4.5 percent this year, a sharp decline from 8.7 percent in 2017.
As national debt and liabilities increased to over 1.5 trillion ringgit, or 80% of GDP, he said the nation needs to strengthen its public finances.