Budget 2019: Malaysia is Going All Out to Drive Digital Economy Growth
The 2019 federal budget that carries the theme of ‘Credible Malaysia, Dynamic Economy, Prosperous Rakyat’, was announced by Finance Minister Lim Guan Eng in Parliament on Friday. The first budget will be the key test of government run by Malaysian Prime Minister Tun Dr Mahathir Mohamad. In Malaysia, federal budgets are presented annually by the Government of Malaysia to identify proposed government revenues and spending and forecast economic conditions for the upcoming year, and its fiscal policy for the forward years. The federal budget includes the government's estimates of revenue and spending and may outline new policy initiatives.
In his 130 minutes speech, Lim shared that the new government has inherited a worrying state of financial affairs which was in dire straits.
“Our actual debt and liabilities as at end June 2018 stand at RM1,065 billion, a debt burden that is nearly RM350 billion higher than that officially disclosed by the previous government. The breakdown constitutes 3 RM725.2 billion in direct federal government debt, RM155.8 billion in committed contingent liabilities and RM184.9 billion in other liabilities including leased payments for Public-Private Partnership (PPP) projects,” he said.
Here are the key highlights from the budget 2019 that indicates the government’s clear vision of letting entrepreneurs take advantage of the digital economy.
To foster an entrepreneurial economy, Lim emphasized that the government needs to create an environment for the human talent to fullfil their potential.
“Strong and dynamic economic growth can be found especially by promoting an entrepreneurial state relying on innovation and creativity, and by embracing the new economy and digital economy,” he said.
The entrepreneurial state model will also adopt a collaborative approach by relying on the 4P partnership involving the Public, Private, Professionals and the People to manage and steer the project. There will be co-financing by the four principal partners but the project will be managed by the private sector or professionals and accountable to both the government and the people.
Lim further stressed the importance embracing the digital economy. To support new technology developments and ensure sufficient funding for entrepreneurs via conventional and alternative financing sources, the government has proposed also proposed few initiatives:
The many venture capital funds managed by Government agencies – Malaysia Technology Development Corporation, Malaysia Debt Ventures Bhd, Malaysia Venture Capital Management Bhd, Kumpulan Modal Perdana Sdn Bhd and Cradle Fund Sdn.Bhd, will be streamlined and made more efficient in delivering capital to companies in various stages of financing needs. Therefore, to ensure that the funds are accessible to those who are most likely to succeed, the funding disbursements will be tied to the companies’ ability to secure matching funds from the private sector.
Government-Linked Investment Funds will similarly allocate RM2 billion in matching funds to co-invest with the private equity and venture capital funds. This Fund will focus on strategic sectors and new growth areas for Malaysia.
The Government will allocate RM50 million to set up a Co-Investment Fund (CIF) to invest alongside private investors via new alternative financing platforms via Equity Crowdfunding and Peer-to-Peer Financing.