Malaysia Macro: Ambitious Fiscal Consolidation Announced in Budget 2010 (23 Oct 2009)

by world@nextvietnam on 26/10/2009

Major Points

  • Budget 2010 signals the start of medium term fiscal consolidation.
  • Ambitious 2009 and 2010 deficit targets at RM51.1bn (7.4% of GDP) and RM40.5bn (5.6% of GDP) respectively; official GDP forecasts revised upwards.
  • Lower gross issuance in 2010 short term positive for MGS market
  • Key measures — [1] Proposed 5% property gains tax from Jan 2010 [2] 1%-pt cut in personal income tax rate to 26% (capped at 15% for employees in Iskandar) [3] RM10K levy on import permits to finance fund to develop auto sector for Bumiputeras [4] Allow 100% ownership in corporate finance firms and financial planning firms (from 70%) [5] Tax incentives for Islamic Finance [6] EPF contribution rate to be reinstated to 11% effective Jan 2011 [7] RM1.5bn in green technology funds [8] RM3bn 1Malaysia sukuk to be issued.
  • Flip side of a smaller deficit is less near term fiscal support for the economy

Figures:

  • Figure 1. Budget 2010 Measures
  • Figure 2. Federal Fiscal Revenue and Expenditure Estimates

Download Citi Research’s Malaysia Macro Flash, 23 Oct 2009

Read Related Post

  1. Philippines: Buoyant Revenues Restrain Fiscal Deficit in Jan to Php37.1bn
  2. Japan: Fiscal Risk Behind Stable Long Term Interest Rates
  3. India Budget FY11 – Positive Moves Towards Fiscal Consolidation
  4. Singapore Weekly: Budget 2010 Focused on Productivity, Not Elections
  5. Singapore Budget 2010: All About Productivity
  6. India: Rail Budget for 2010; Announces Ambitious Vision Plan for the Decade
  7. Singapore: Not a Typical Pre-Election Budget
  8. India: What Do We Expect from Budget F2011?
  9. India Macroscope: Fiscal Consolidation…Expect Baby Steps (by Citi Research)
  10. Singapore Strategy – Budget Preview: More Negatives than Positives?

Tagged as: Fiscal Consolidation, Malaysia Economy, Malaysia Fiscal Stimulus, Malaysia Macro View