Finance Minister Lim Guan Eng has announced the formation of a Public Finance Committee (PFC) as part of the government's fiscal consolidation agenda to reduce the budget deficit to 2.8 percent of the GDP this year.
The committee, which Lim will chair, will also comprise Economic Affairs Minister Mohamed Azmin Ali and Bank Negara governor Nor Shamsiah Mohd Yunus.
“(The PFC) will be the platform to balance out the needs for fiscal consolidation and the need for the government to spend in order to raise the living standards of the rakyat while contributing to future economic growth," he said in a statement today.
Lim also announced the formation of a second committee, the Tax Reform Committee (TRC), tasked with reviewing the entire national taxation system.
"The TRC will assess the Malaysian taxation system holistically with the intention of making it more efficient, more neutral and more progressive without burdening the rakyat while promoting the long-term productivity of the economy," his statement read.
The TRC is also tasked with studying means to halt economic decline by reducing tax leakages and evasion.
He did not further elaborate on the composition of both committees nor the terms or duration of their service.
The finance minister added that Putrajaya would also be monetising some of its holdings in "non-critical, non-strategic companies" while also conducting public auctions of state land.
"Previously, these land assets were often sold at steep discounts to politically-connected entities under opaque arrangements which had deprived the federal government of additional revenue," he claimed.
Lim warned, however, that as much as the government would work to ensure the domestic environment was stable, the performance of the capital market and the ringgit would also be affected by global events, such as the trade war between the US and China.
"This is evident from the rise in sentiment among various economies after the US and Mexico reached a trade deal.
"Bursa Malaysia and the Kuala Lumpur Composite Index rose 0.8 percent or 15.3 points yesterday after the US and Mexico reached a trade deal. Year to date, the KLCI has risen 1.7 percent.
"If the US and China could agree to resolve their trade disputes, then the Malaysian capital market and the value of the ringgit would rise. If no deal is reached, the reverse will happen."
Lim assured the government was monitoring China-US trade developments intently and was "prepared to act accordingly."
Preparing for Budget 2019
On a related matter, the finance minister also stated that his ministry was engaging with the relevant stakeholders to garner input on Budget 2019, which is to be tabled in Parliament on Nov 2.
A series of focus group meetings have been scheduled from August to September with industry players, professional bodies, NGOs and government agencies.
These meetings will "gather views and recommendations on specific issues including on domestic workforce, the quality of the education system, sustainable development and living costs among the urban poor."
Lim added members of the public were invited to contribute ideas and suggestions through a dedicated website from Aug 28 until Sept 30.
"Alternatively, I would like to invite everybody to share your views on Facebook, Instagram and Twitter by using the hashtag #belanjawan2019," he said.