Budget 2010 should outline the government's strategies to turn Malaysia into a high-income generating nation, says Asian Strategy and Leadership Institute (Asli) chief executive officer Michael Yeoh.

He said plans and strategies were crucial to further enhance competitiveness in the increasingly challenging and demanding global environment.

Also, the government should find ways to further reduce the cost of doing business in the country, said Yeoh.

cheras demo victims suhakam 260107 michael yeoh Prime Minister Najib Abdul Razak, who is also finance minister, will table next year's budget in Parliament on Friday.

On corporate and personal income tax, Yeoh ( left ), who is also Asli executive director, said though the government was facing a deficit budget, he expected a reduction in corporate tax and personal income tax.

He said the government should not be unduly concerned over the deficit size if it did not exceed the 6 percent or 6.5 percent limit.

"What is more important is to make sure the economic recovery is not stifled," added Yeoh, who is the Malaysia-China Business Council joint-secretary-general.

Bigger deficit

Former prime minister Dr Mahathir Mohamad was reported to have said a deficit budget should not be a problem provided "our budget is well structured."

He pointed out that the United States, the world's biggest economy, had a 100 percent deficit budget but they could still manage it.

The Malaysian Institute of Economic Research (MIER) had stated that next year's budget is expected to have a bigger deficit than the 7.6 per cent of the gross domestic product as projected by the government.

MIER executive director Mohammed Ariff Abdul Kareem said the deficit was likely to exceed the projection as "this year's tax collection would fall short of the government's target".

He said the government would have to adjust its expenditure rather than make

adjustments to revenue to contain the deficit.

"Having a government revenue that is barely enough to cover operating expenditure is a dangerous sign," said the economist.

On a hypothetical note, Mohammed Ariff said the deficit could swell up to 15.2 per cent in 2015 if the government did not do anything to curb expenditure.

Long term transformation

Meanwhile the National Economic Advisory Council (NEAC) hopes that its initial recommendations towards transforming Malaysia into a high income economy would be considered by the government for the Budget 2010.

"The Treasury budget is more a short-term, yearly revenue expenditure exercise for the government. But it does also give a signal towards the long term direction of the country's economy," NEAC chairperson Amirsham Abdul Aziz told reporters today.

"The NEAC's input is very much towards long term transformation. We hope that starting with this budget, the signal being sent out to the market is that, we are serious about the transformation in respect of ensuring Malaysia is competitive in doing business.

"We therefore hope, some of the initial recommendations, have been taken into account by the Treasury for the Budget 2010," he said.

The NEAC which has been tasked with mapping out Malaysia's "new national economic model" in two years, had its first meeting in August.

Its specific role and function is to identify and develop the changes needed to lift Malaysia from a medium-high income country to that of a high income status.

- Bernama