[UPDATE} The Budget 2023 is set to be re-tabled this Friday, 24th February 2023. The Prime Minister cum Finance Minister, YAB Dato’ Seri Anwar Ibrahim stated that the Budget 2023 will take into account the “current economic challenges, while at the same time driving the country’s growth and attracting investments”.
The Finance Minister acknowledged Malaysia’s competitiveness in terms of business and digitalisation is lagging behind its regional counterparts such as Indonesia, Thailand as well as Vietnam. He further added that the “biggest challenge in drafting Budget 2023 is coming up with well-balanced policies that would attract investors while protecting the people, especially the hard-core poor”.
Previously, Dato’ Seri Anwar Ibrahim revealed that the government will ensure that the rakyat as well as small businesses are protected, while reducing leakages that benefit giant corporations. The government also strives to improve national development and steer economic growth to encourage high value foreign direct investments (FDI) in Malaysia, which will indirectly influence the employment market.
Based on this article on the PMO website, the elements of Budget 2023 will be three-fold, namely,
- to avert current economic challenges,
- to drive the country’s growth, and
- to attract investments.
Previous Budget announcement: How the Budget 2023 Malaysia benefits businesses
Why is there a new Budget presentation?
With the recent government change following the Malaysian elections in November, Ministry of Economy, Mohd Rafizi Ramli stated that the new unity government Budget 2023 will be tabled soon. This is because the parliament was dissolved three days to make way for GE15 after the tabling of the budget 2023 – before it could be passed after a series of debates.
Current Economy in Malaysia
According to Bank Negara Malaysia, in the third quarter of 2022, the Malaysian economy registered a stronger growth of 14.2%. This was supported by improvements in the labour market, ongoing policy support, as well as tourism activities. The economy is expected to expand by 4.0 – 5.0% in 2023. However, the new Budget for 2023 will have to take into account the fact that the base rate (2021) is comparatively low (re: the Covid-19 pandemic recovery, as well as stimulus packages in 2021).
What do businesses need to look out for?
Here are some key areas that businesses can look out for in the soon-to-be-tabled Budget 2023:
- Taxation: Any changes in tax policies can have a big impact on businesses, especially SMEs. Businesses need to look out for any changes in tax rates, exemptions, or incentives.
- Infrastructure development: The government’s investment in infrastructure can create new business opportunities and improve logistics, transportation, and communication systems. Businesses need to look out for any plans for new infrastructure development or upgrades.
- Industry-specific policies: The government may introduce policies that target specific industries, such as technology, manufacturing, or agriculture. Businesses operating in these industries need to pay attention to any changes in policies that may affect their operations or competitiveness.
- Employment policies: The government may introduce policies that affect employment, such as changes in minimum wage or labor laws. Businesses need to be aware of these changes and their impact on their workforce.
- Trade policies: The government’s policies on trade can affect businesses that import or export goods. Businesses need to look out for any changes in trade agreements or tariffs that may affect their international operations.
By staying informed about these key areas, businesses can better anticipate and adapt to any changes introduced in the budget. This can help them make informed decisions about investments, hiring, and strategic planning, and stay competitive in the market. Look forward to the Budget 2023 with us. Stay tuned.