Friday: Signs and hints are aplenty as business community keeps fingers crossed.

Incentives and special allocations anticipated as speculation remains rife on key offerings

PETALING JAYA: Budget 2019, the Pakatan Harapan government’s first, will be the prime focus of Malaysian businesses this Friday.

While the 11th Malaysia Plan mid-term review, tabled about two weeks ago, provided some insight into what could be expected, speculation remains rife on the possible key offerings.

Investors are cautious on whether the Budget will introduce new taxes, particularly on inheritance and capital gains made from the stock market.

Towards this end, the government had set up a Tax Reform Committee on Sept 12 to look at the current tax structure and how to broaden the tax base.

A levy on the digital economy is also likely to be introduced.

Market observers believe that the concerns around the new taxes were largely priced in, considering the stock market’s subdued performance over the last few months.

Businessmen will also be looking out for goodies in Budget 2019, such as incentives and special allocations to spur investments and private sector activities.

Allocations, especially for the small and medium enterprises and new growth areas such as the digital economy, are much anticipated.

With the domestic economic growth projected to continue its slowdown next year, stimulus from the government will be crucial to build confidence.

However, expectations among businesses for higher allocations from the government seem to be contained, mainly because it has indicated that budget cuts were unavoidable, particularly on development expenditures.

Several sectors may also benefit from the government’s measures to uplift Malaysians’ socioeconomic well-being.

One such example is the property sector, whereby several issues related to home ownership will likely be addressed.

In order to help more Malaysians purchase residential units and reduce the property overhang problem in the country, the government may announce the relaxation of lending requirements as well as rebates on cost of owning property.

These measures are expected to lift property sales and, in turn, benefit players in the property sector.

Budget 2019 is also expected to see a review on fuel subsidies in order to make it more targeted.

The transition to a targeted fuel subsidy system will continue to benefit low-income earners while reducing the cost borne by the government.

Businesses that have benefited from the current blanket subsidy for RON95 fuel and diesel may no longer be eligible for such assis- tance, depending on the government’s plan to execute the subsidy mechanism.

Meanwhile, the fiscal deficit target for 2019 will also be unveiled in the Budget, providing an insight on the country’s public finances.

Economists generally expect a higher fiscal deficit next year – potentially breaching the 3% mark – even as the government continues its fiscal consolidation measures.

The tabling of Budget 2019 on Nov 2 is not only expected to provide greater clarity on the country’s fiscal direction, but also ease uncertainties in the local equity market.

A good Budget, especially one that exceeds the expectations of businesses and investors, will be a key catalyst to Bursa Malaysia’s performance, amid external vulnerabilities.