Malaysia boosts social spending

Malaysia’s Prime Minister, Najeeb Razak, is boosting subsidies and social assistance to lure voters ahead of a tough election battle while painting a rosier economic picture.

Growth is expected to remain strong next year, the budget deficit set to narrow and inflation could slow, according to an economic report released yesterday before Najib began his annual budget speech in Kuala Lumpur.

Malaysia’s economy is outperforming neighbours such as Indonesia and Thailand, with the World Bank forecasting growth of at least 5 per cent until next year. Strong economic growth and rising oil prices will help boost revenue by 6.4 per cent in 2018, allowing Razak to raise subsidies and social assistance by 15 per cent after two years of cuts, helping to shore up his support with voters.

The government will spend on big infrastructure projects including the East Coast Rail Link and a highway connecting the Borneo states of Sabah and Sarawak, states the report. It will also allocate resources to new growth areas such as the digital economy and medical tourism. Small-and medium-sized enterprises will be given incentives to use technology to raise productivity.