Economists praise shift to boosting income, purchasing power in 2025 budget

 

Economist Abu Sufian Yaacob said a higher income would see people spend more, which would spur the economy.

PETALING JAYA: 

Economists have praised the government’s focus on initiatives to help the people boost their income and purchasing power in the 2025 budget, saying such an approach makes sense in the long run, compared to concentrating on mega projects.

Abu Sufian Yaacob of Universiti Malaysia Kelantan said there was no necessity for new mega projects for the time being as similar ones were currently being constructed and needed a year or two to complete.

It would be better for the government to focus on improving the economy and the well-being of the people, he said, adding that this would lead to a “win-win” situation for all.

Abu Sufian said the net income of Malaysians had been static due to inflation and the increase in cost of goods.

“So it is pragmatic for the government to focus on increasing the income of the people, especially the B40.

“A higher income would see people spend more, and this would spur the economy. All sectors would benefit,” he told FMT.

Ida Yassin of Putra Business School agreed with Abu Sufian in terms of the focus on mega projects.

He said unlike previous budgets, the budget for 2025 did not prioritise mega projects. Instead, it focused on the management of subsidies and welfare aid as well as development.

“But maybe in the coming years, the government could reconsider increasing the country’s gross fixed capital formation (GFCF).

“This would help generate the country’s economy in the future and should be seen as a long-term investment,” he said.

In July, it was reported that Malaysia’s GFCF had recorded a value of RM314.5 billion at constant prices in 2023 compared to RM298.2 billion in 2022.

When tabling the national budget in October, Prime Minister Anwar Ibrahim said the government would focus on financing projects that were people-centric and facilities that supported industrial areas according to state priorities.

Anwar, who is also the finance minister, said that now was not the time to implement mega projects. - FMT