KUALA LUMPUR: The government will prioritise on strengthening the middle class and micro, small and medium enterprises to alleviate the burden from rising cost of living under the 2024 Budget.
Towards this, the national budget will be aligned with medium-to-long-term policies such as the Madani Economy, the 12th Malaysia Plan's (12MP) mid-term review, New Industrial Master Plan (NIMP) and the National Energy Transition Roadmap, analysts said.
"The 2024 Budget is expected to build upon the foundation of fiscal discipline laid by the Malaysia Madani Budget 2023, aiming to provide a clearer roadmap for fiscal reforms and the nation's financial landscape," Public Investment Bank Bhd (PublicInvest) said.
"Given the imperatives of investment attraction, socio-economic restructuring and fiscal resilience, we believe that a robust probability exists for fiscal consolidation, underscored by a deliberate reallocation of resources toward bolstering the welfare of vulnerable households and sectors."
PublicInvest believes that within the contours of the 2024 Budget, a unique opportunity has emerged for the government to articulate comprehensive tax policies and enduring fiscal strategies.
The government's commitment to domestic direct investment as a lynchpin of the nation's overarching investment agenda underscores its steadfast dedication, the firm said.
"It is imperative to maintain a robust support system for MSMEs, enabling their greater integration into the global value chain.
"This resonates with the objectives outlined in the 12MP mid-term review, aiming to elevate MSMEs' shares to GDP to 41 per cent and exports to 15 per cent by 2025. Beyond these economic objectives, this strategic approach will position Malaysia among the top 20 nations in the global innovation index, a notable ascent from the current 36th rank."
CGS-CIMB Research, meanwhile, believes the budget will focus on fiscal tightening with an emphasis on funds reprioritised to households and sectors most needy.
It also feels that the Madani framework, involving several announcements recently such as the NIMP and 12MP mid-term review, will be implemented into actionable policies.
"With the state elections in the rearview mirror, we think the political risk is significantly reduced, allowing the government to focus on economic matters. Within this environment, we believe the government may target a fiscal deficit of 4.3 per cent of GDP next year versus 5.0 per cent this year," the firm said.
