Malaysia's government forecasts slower growth in 2016
Kuala Lumpur - AFP
Malaysia's government on Friday forecast slower growth in 2016 and announced measures to spur demand in an economy bedevilled by slumping oil prices and corruption allegations aimed at the prime minister.
Prime Minister Najib Razak offered increased handouts to the poor, tax breaks, stepped-up investment, and accelerated public infrastructure projects to help stimulate the economy and ease living costs.
Hitting back at critics of his leadership, Najib declared that Malaysia was "not a failed state or bankrupt nation", as he presented the country’s 2016 budget in parliament on Friday.
He forecast economic growth of 4.0 to 5.0 percent in 2016, down from an expected 4.5-5.5 percent this year.
Although growth remains relatively strong -- 4.9 percent in the second quarter -- global economic uncertainty and depressed oil prices have clouded the future.
The uncertainty has caused the ringgit to plummet, making it the worst-performing Asian currency this year.
"In reality, Malaysia is not a failed or bankrupt nation, but one which is stable with strong economic fundamentals and remains competitive," Najib said.
Najib also defended an unpopular consumption tax introduced earlier this year, which he said had helped cushion a reduction in government revenue caused by slower oil-related earnings.
"Overall, this is a budget that is designed to show that the government is keen to be seen to be helping the poor and the neglected, perhaps driven at least in part by political considerations," said OCBC Bank economist Wellian Wiranto.
The economy has also been hit by the uncertainty posed by a huge financial scandal implicating Najib, which has rocked his long-ruling party.
Critics have for months demanded he explain allegations of massive sums missing from state-owned company 1Malaysia Development Berhad (1MDB), and the revelation that nearly $700 million in mysterious deposits were made to his personal bank accounts.
Najib and 1MDB have fiercely denied any wrongdoing.
After Najib’s budget speech, opposition MPs held up small placards in parliament with the words, "Where is the 2.6 billion ringgit?" in Malay, referring to the alleged amount involved in the scandal.
Rafizi Ramli, vice president of the opposition People's Justice Party criticised Najib for not addressing the scandal.
"The biggest question of the economy is the confidence in the leadership of the country," he was quoted as saying by The Malaysian Insider news website.
"You can work out whatever numbers you want for next year... but, without credible leadership, the economy is going to tumble."
Malaysia's opposition leader on Thursday had submitted a motion for a parliamentary vote of no confidence in Najib, but it is unexpected to make headway due to the sway that Najib's powerful ruling coalition holds over parliament.