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Malaysia expected to stick to original budget plan

KUALA LUMPUR: Malaysia will present a fresh budget for 2000 this week but most analysts expect Finance Minister Daim Zainuddin to stick to his promise of springing no surprises and presenting a carbon copy of the old one.

Lim Kit Siang, leader of the opposition Democratic Action Party (DAP), urged Daim not to parrot the old 2000 budget on February 25.

The original budget unveiled in parliament in October fell in abeyance as it could not be approved by parliament which was dissolved to pave way for snap polls in November.

"I think Daim will stick to what he has said," said an economist with a local investment firm. "He has to fulfil the promises made in the budget before the elections".

Earlier this month, Daim said the new budget would contain no changes or surprises.

Daim had proposed, in the old budget, to cut personal income tax by one percentage point across the board and unveiled plans to pour five billion ringgit into infrastructure sectors.

In the pre-election budget the government also doled out a generous hike in salaries and bonus to government employees.

"The finance ministry must not been seen as slothful and intellectually irresponsible in refusing to present an updated version of budget 2000 in parliament on February 25 which takes into account of developments in the past four months," Lim said.

He said the nation was entitled to know about the new expenditures committed by the government in the last four months, especially after the new cabinet was formed in December.

In December the nation's parliament approved a stop-gap budget of 30.7 billion ringgit to run the country until the full 2000 budget is presented.

Most analysts backed Daim's view and said there was no radical change in the economic climate which warranted any significant policy shift.

"There has not been much of a change in the situation on the ground. So, I think he can keep the same budget," said Nizam Idris, an analyst at IDEAglobal.com.

But some analysts said the budget must reflect government's long-term economic policy framework, including its updated views on controversial capital controls and reform programme.

Malaysia fixed the exchange rate as part of a package of currency controls to stem the outflow of capital and stabilise the economy in the midst of Asia's financial crisis.

Analysts say higher inflation and an increased inflow of portfolio funds this year could put upward pressure on the ringgit and force authorities to adjust the peg.

Some analysts said the government has to take a fresh look at its corporate restructuring programme and development of its information technology sector to speed up growth.

"I would say perhaps there is lot to be done in terms of deregulation of the economy," said Eddie Lee, regional economist at Vickers Ballas in Singapore.

Lee said Malaysia's neighbours, mainly Singapore and Thailand, were ahead in liberalising their economies in key areas of information technology and the financial sector.

"Malaysia has to step up its pace," he said.-Reuters