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Malaysia’s government led by Prime Minister Mahathir Mohamad on Friday proposed its first budget after coming to power in the May general election, allocating 314.55 billion ringgit (75.49 billion U.S. dollars) for the 2019 budget.
The new budget will be up from last year’s 280.25 billion ringgit, agency reports.
In unveiling the budget, Finance Minister Lim Guan Eng said it was different from all previous national budgets as it would be a zero-based budget unlike previous budgets which were tweaked from previous ones.
“This avoids providing an allocation for items that may have become unnecessary over time and minimizes the practice of ‘spending for the sake of spending’ towards the end of the year to finish up a budget allocation.”
Lim said the budget was largely focused on savings for the government and the introduction of new taxes and the raising of existing taxes to boost revenue, but the welfare of the people would not be forgotten.
Among the measures is a sugary drinks tax imposed on sugary drinks including fruit and vegetable juices containing sugar.
The Real Property Gains Tax will be raised for locals from 0 percent to 5 percent except for low-cost homes and foreigners will have to pay 10 percent up from the current 5 percent.
Mahathir’s government has said it would be focusing on alleviating the country’s debt accumulated during the previous government.
Lim also announced that the fiscal deficit this year was revised up to 3.7 percent of its gross domestic product (GDP), from 2.8 percent previously, saying the early figure did not reflect the true deficit amount, as many expenses were off the balance sheet and despite the government’s best efforts, it is not realistic to achieve a deficit of 2.8 percent for 2018.
Following the efforts to regain fiscal consolidation momentum during the adjustment period, the fiscal deficit is expected to reduce to 52.1 billion ringgit (12.51 billion U.S. dollars) or 3.4 percent of GDP in 2019.
After an unexpected victory in May election, Mahathir’s government has withdrawn the goods and services tax which was introduced by the former Prime
Minister Najib Razak. The move has resulted in an estimated revenue shortfall of 21 billion ringgit (5.04 billion U.S. dollars).
For 2018, the government expects the reduction will be cushioned by additional revenue, particularly underpinned by the reintroduction of the
Sales and Services Tax (SST), dividend and oil-related revenue that is supported by higher crude oil prices.
Challenge or catalyst? What increased imports mean for China’s economy :
Economic Watch
BEIJING, Nov. 3, 2018 (BSS/Xinhua) – China’s landmark import expo comes as the government moves to open domestic markets wider globally in the year marking the 40th anniversary of the reform and opening-up policy.
The China International Import Expo (CIIE), the world’s first national-
level import expo, starts Monday in Shanghai. With the slogan “New Era,
Shared Future,” the event will strengthen business ties, promote easier access and garner support for free trade.
As the world’s second-largest importer of goods for nine consecutive years, China remains committed to pro-import policies.
Instead of seeing imports as a threat to the domestic economy, analysts believe increasing quality products from overseas will help satisfy a bigger appetite from domestic buyers and serve as a catalyst for faster industrial transformation.
“The market supply will be enriched, and the prices will be more wallet- friendly for Chinese consumers,” said Liu Shangxi, head of the Chinese
Academy of Fiscal Sciences.
China has impressed the world with its rising consumption power, which
largely stems from a rapidly growing middle-class.
Wooed by an ever-growing Chinese market, more than 3,000 companies from over 130 countries and regions plan to bring their new products and technologies to the CIIE, including Italian helicopters and German machine tools.
Many products at the expo will enjoy lower import tax rates, as a total of 1,585 tariff lines, including electromechanical and textile products, started seeing lower levies on Thursday, down from 9.8 percent to 7.5 percent on average.
This latest round of tariff reduction is expected to boost imports to China.
Zhao Ping with the China Council for the Promotion of International Trade
said the increase in foreign products would intensify competition, see
upgrades in domestic industries and push Chinese companies to move up the
global value chain.
Automakers are among the first batch of domestic players that will more
directly face global counterparts, as new tariffs for vehicles and auto parts
came into effect on July 1, with rates lower than the average of other
developing economies.
“China has a complete automotive industrial system but needs fiercer
competition for further development,” said Cui Dongshu, secretary general of
the China Passenger Car Association. “The reduced tariffs will bring more
imports and push the sector to realize quality development in a more open
circumstance.”
A wide range of other industries from food to fashion will also experience
this no-pain-no-gain process.
The import-triggered industrial upgrades are in line with China’s new
development concepts and the drive to high-quality growth, and efforts have
been taken to motivate companies to innovate and improve their
competitiveness, including tax breaks and easier loans.
By expanding imports, China will share the benefits derived from its
development model with other parts of the world and achieve common growth,
according to analysts.
Chinese authorities expect the country will import goods worth 24 trillion
U.S. dollars in the next 15 years.