In a recent statement, Tan Sri Kamal Salih, chairman of the Fiscal Policy Institute, urged Prime Minister Datuk Seri Anwar Ibrahim to implement urgent reforms in the upcoming national budget to avert economic stagnation in Malaysia [4132aae6]. Kamal highlighted that Malaysia has dropped seven positions in the World Competitiveness Index, indicating a need for immediate action to bolster the economy [4132aae6]. He warned that without serious fiscal reforms, the Madani economic framework could be derailed, further exacerbating the country's economic challenges [4132aae6].
The revenue for the first quarter of 2024 has shown a concerning decline, amounting to RM70 billion, which is a 13.1% decrease from the previous quarter [4132aae6]. To address inflation and improve revenue, Kamal advocated for the re-introduction of the Goods and Services Tax (GST), which he believes could provide a much-needed boost to the national coffers [4132aae6]. He also emphasized the importance of careful subsidy rationalization to prevent backlash from the public and avoid spikes in inflation [4132aae6].
In a related development, the Center for Market Education (CME) anticipates that the government will announce holistic tax reforms in the 2025 Budget aimed at enhancing fiscal stability and mitigating inflationary impacts stemming from monetary policies in the US and China [35d58a95]. CME CEO Dr. Carmelo Ferlito stressed the need for restructuring government spending rather than merely introducing new taxes. Proposed reforms include slight reductions in income tax and a multi-tier Goods and Services Tax [35d58a95]. Additionally, a special fiscal scheme for microbusinesses has been suggested to support this sector [35d58a95].
Ferlito noted that the recent recovery of the ringgit reflects market expectations rather than underlying economic fundamentals, warning of potential inflation risks due to excess money supply [35d58a95]. China's central bank has also cut policy rates to support its economy, further complicating the economic landscape for Malaysia [35d58a95].
As the government prepares for Budget 2025, experts are emphasizing the importance of focusing on agritech investments to attract high-net-worth individuals. Mohd Sedek Jantan, head of investment research at UOB Kay Hian Wealth Advisors, has called for tax breaks and subsidies for agricultural research and development to enhance Malaysia's appeal as an investment destination [8c037377]. With 754 ultra-high-net-worth individuals currently residing in Malaysia, expected to grow to 1,015 by 2028, the agritech sector presents a significant opportunity to attract diverse investors, particularly family offices [8c037377].
The upcoming budget, set to be tabled on October 18, 2024, is seen as a critical moment for Malaysia to innovate in sustainable agriculture, especially in light of climate change challenges [8c037377]. Innovations like precision farming are essential to meet food demands, and public-private partnerships alongside effective marketing strategies will be crucial for attracting foreign investment [8c037377].
Looking ahead, the Fiscal Policy Institute forecasts potential economic growth of 5.0-5.5% for 2024 if these reforms are enacted [4132aae6]. This growth projection underscores the critical nature of the upcoming budget and the need for decisive action to ensure Malaysia's economic stability and competitiveness on the global stage [4132aae6].