THE government is formulating the 2020 Budget, which is set to be unveiled next month.
Three areas should be the main priorities of the government — boosting economic resilience, addressing the issue of cost of living, and charting the next course of an economic and development agenda.
Even with the strong and better than expected economic data in the second quarter of this year, the engine of growth appears to be skewed towards consumer spending rather than growth in investments or trade.
This trend is worrisome as it may not be sustainable in the near future.
Hence, in the budget, more measures should be focused on balancing the growth contribution of the Malaysian economy as a whole.
The main enablers towards this end have to be anchored on three important pillars: productivity, innovation and entrepreneurship.
Boosting economic resilience also means broadening the sources of revenue, investing in new sources of economic growth and diversifying export markets.
Affin Hwang Capital chief economist Alan Tan said there might be a global recession as early as next year. Bank Negara Malaysia said this was overplayed.
The truth may be somewhere in the middle and it would be wise for the government to prepare for the worst case scenario.
Towards this end, imposing Keynesian economic policies of countercyclical macroeconomic policies may be a good idea as a buffer to cushion the possible impact on our economy before it’s too late.
The second priority should be on tackling the rise in the cost of living.
This subject should emanate throughout the 2020 Budget as it relates to other aspects of economic issues, namely poverty and income inequality.
Perhaps we should look at poverty not just in a relative term, but also in a holistic and multidimensional manner. This must be addressed in the budget.
What constitutes poor, and how we measure it is crucial in making sure that whatever policy measures put forth can achieve their intended effect in an optimal way.
I believe that whatever measurement the government will use to quantify poverty, it should be clear from the start that income and wealth alone are not ends in themselves.
And the third crucial matter which the 2020 Budget should address is to give a sense of direction as to where the economy is headed.
This is important because next year, the government will unveil the 12th Malaysia Plan (2021-2025) and just a few months back, the 10-year vision of the Shared Prosperity of Malaysia was announced.
But for now, the Shared Prosperity 2030 agenda seems more of a statement of aspirations rather than a concrete socio-economic plan.
This is where the 2020 Budget should play its part in providing clarification and pointers in understanding the new vision for Malaysia.
DR IRWAN SHAH ZAINAL ABIDIN
Associate Professor of Economics, School of Economics, Finance and Banking, Universiti Utara Malaysia