Political Uncertainty May Derail Budget

Political uncertainty In Malaysia may derail the Budget 2022 and this poses risks for the country while investors adopt a wait-and-see attitude. Parliament is only reconvening in September and the uncertainty around PM Muhyiddin Yassin’s majority is of concern to investors. Suhaimi Ilias, Chief Economist at Maybank Investment Bank says the biggest risk right now from an economic perspective is what will happen to Budget 2022. “Failing to table Budget 2022 will be a dampener on the recovery process because fiscal policy would be supportive of growth. We won’t have things like tax incentives to spur investment and we may not get extensions on the current incentives to spur home-buying and auto purchases. There also won’t be spending on big ticket items or incentives to boost tourism as vaccination progress leads to opening of domestic travel,” Suhaimi says. The budget for the coming year must be tabled, debated and passed by Parliament before the end of the current year. If not passed due to insufficient time, Section 102(a) of the Federal Constitution allows for Parliament to approve a partial budget to ensure the obligations like pensions and servicing of Government debts are taken care of,”