Budget to help ease pains
BUDGET 2009 will be one that prepares Malaysia for a potential crisis, given the looming prospect of a global recession.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said it will be a budget that provides flexibility to economic management, financial prudence and improvement to the quality of life.

"Depending on what is going to happen in terms of geopolitic and oil price, it could be a bad reces-sion," he said in an interview in Putrajaya on Wednesday.

Nor Mohamed said the US has so far been skirting the recession, but it is a prospect that is looming.

"We have to prepare for a crisis and we need more flexibility. We have to strengthen our position to survive the crisis," he said.

He said Malaysia needs to ensure that it has the resources to pump-prime the economy in a big way a few years from now in case the global economy heads into a tailspin.

Although Nor Mohamed did not say whether pump-priming measures would start from next year, some stock analysts are already predicting an expansionary budget for 2009.

"Looking at the current situation, you'll need a good budget next year," Citigroup head of Malaysia research Choong Wai Kee said yesterday.

Nor Mohamed said it was more crucial for the government to practise the financial discipline that it has adhered to in the past 50 years when it prepares Budget 2009.

The country's strong financial footing will provide it with options in more difficult times. Malaysia has US$125 billion (RM409 billion) in foreign reserves at present, more than twice its overseas debts of US$50 billion (RM164 billion), the minister said.

"We have to be disciplined now because, if a crisis hits, we may need to borrow more and utilise a little more of Petronas (Petroliam Nasional Bhd) profits in the challenging times. We'll need all the flexibility," he said.

He added, however, that Malaysia may not be able to achieve the 3.1 per cent budget deficit target this year because of the increasing external challenges. The government plans to revise that figure when it tables Budget 2009 in Parliament next month.

The country has trimmed its budget deficit to 3.2 per cent last year from 5.5 per cent in 2000.

Nor Mohamed said that compared to just about 10 months ago, when the government was preparing this year's budget, the clear blue sky has turned cloudy from the mounting external pressures.

The unprecedented rise in food and energy prices coupled with domestic political issues has added to the challenges.

To help Malaysians cope with the rising prices, the government will improve the social safety net.

Nor Mohamed gave the assurance that Budget 2009 will be aimed at reducing the burdens of the people while maintaining business-friendly policies.

"Special focus will be given to lessen the burden on the citizens with various assistance.

"The budget will also target to make our economy more efficient and reduce subsidy for those who don't deserve or need it," he said.

Major spending to improve public transport is also on the cards.

"This is what we'll do in this budget, to provide as much support for public transport," he said.

To achieve its goal of becoming a developed nation by 2020, Malaysia will need to encourage more people to commute to work and school using public transport, he said.

One aspect that defines a developed nation is that at least half of the population uses public transport daily.

Currently, only 20 per cent of Malaysians do so.