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Budget recalibration must boost investor, consumer confidence: analyst

KUALA LUMPUR, Jan 26 (Bernama) -- The government needs to take measures to boost investor and consumer confidence in the 2016 Budget recalibration, an analyst said.

Affin Hwang Investment Bank Bhd Senior Associate Director and Head of Retail Research Datuk Dr Nazri Khan Adam Khan said he was optimistic that the government will come out with measures that appealed to investors while at the same time preserved private consumption.

Prime Minister Datuk Seri Najib Tun Razak is expected to announce the 2016 Budget recalibration this Thursday.

"We have to ensure private consumption remains 70 per cent of gross domestic product (GDP) and investment remains at 25 per cent of GDP," Nazri Khan told reporters on the sidelines of the 18th Malaysia Strategic Outlook Conference 2016 here, today.

He was one of the panellists at the conference.

Nazri Khan said the government should move towards the investment measures via investing in the stock market, which is relatively attractive at the moment.

"As we have seen in the past, the market is a cycle of greed and fear. What happens now is an opportunity for the government to rebalance its investment since most of its assets are cheap," he said.

He also urged the government to be more progressive in the divestment of government-linked companies (GLCs) as well as human capital development.

"We want to see more concrete progress in the divestment of GLCs, which is going to help the government's coffers at this point of time," he said.

He said by reducing the dependency on GLCs, the government should provide more fiscal incentives to the private sector especially the small and medium enterprises (SMEs), which provided more employment.

Nazri Khan said the government must also maintained its focus on human capital development under the budget recalibration to ensure the country had sufficient talents in pursuing developed nation status by 2020.

On the Trans-Pacific Partnership (TPP), he said the trade pact, as well as the Asean Economic Community, would become the biggest catalysts in offsetting the slowdown in China's economy and boosting the ringgit.

"With the TPP, we hope our trade openness could be increased," he said.

However, he said while the TPP would be positive for economic development, the government must also ensure that it would benefit the country in the long run by enhancing the country's export products in the value chain.

"We have to ensure the products that we export under the TPP are high value-added and high-end services," he said.

He suggested the government to leverage on Malaysia's advantage in the electrical and electronics industry, the country's biggest export industry, to develop more innovation.

Meanwhile, World Bank Senior Country Economist Rafael Munoz Moreno said Malaysia must deepen its structural reforms to enhance medium-term development prospects.

Among the structural reforms, he said were improvement in public sector performance, accelerating human capital development and re-engineering economic growth.

He said to improve public sector performance, the government should enhance expenditure efficiency by consolidating administration and improve targeting of social assistance programme.

The government should also improve value-for-money from public procurement, integrate better current and capital expenditures and enforce establishment control and improve wage bill management, he added.

On the budget recalibration, Moreno said such a move was seen as important and not unusual due to the current situation.

However, he said high-impact projects such as mass rapid transit must be maintained for future growth.

Themed "Coping with Uncertainty-The Way Forward in Difficult Times", the one-day conference assesses the key trends, strategic challenges and critical issues facing the nation in the coming years.

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