00:00Hello and good evening, I'm Melissa Idris. Welcome to Consider This. This is the show
00:22where we want you to consider and then reconsider what you know of the news of the day. It's
00:26the 10th of October at 10pm, so 10.10 at 10 and we're talking Budget 2026, tabled just hours ago
00:34in the day one right yet. Now the numbers are out and the real test begins. What did this budget get
00:40right and where did it fall short? And what exactly does it reveal about the Madani government's
00:45priorities? Joining me on the line now is Intan Nadia Jalil, Regional Head of Group Economic and
00:52Marker Analysis at CIMB Perhad. Nadia, thank you so much for joining me on a Friday evening post-budget.
00:59So let's talk about Budget 2026. It's full of goodies galore. What are some of your initial reactions to
01:07the allocations in Budget 2026? Is there anything specific that stood out to you?
01:13Hi Melissa, thanks so much for having me. I think with regards to the budget, there's always
01:24for me two things that we need to consider, right? The budget always has to be contextualized within
01:30the general or the overall institutional policy framework for the government itself. I mean,
01:37it's just one tool. And sometimes I think we tend to overestimate its importance. I'm always
01:45sort of amused but also encouraged by the interest that the budget holds for everyone. Every single
01:51nation will always be excited over the budget. I mean, compare that with our counterparts in the
01:57oligarchics for the United States of America where, you know, the fact that the budget fails to get
02:03any Congress approval means that the government has effectively stopped. You know, but in comparison,
02:10their reactions are sort of very muted and their interest in their own budget is actually very
02:14muted compared to ours. But also, like I said, we have to remember that the budget is just one tool
02:22in an arsenal of tools that the government has to employ. And it basically, you know, very speaking,
02:29outlines the annual allocation, the yearly allocation for the government. And it needs to be supported
02:38within a strong and robust institutional governance framework. As Prime Minister Datuk Sri Anwar Ibrahim
02:45has always emphasized with the Madani economy, it's about raising the ceiling, raising the floor,
02:50but also it has to be on the foundation of good governance. I think that's where we have to look,
02:54that's how we have to look at the budget. So with regard to your questions in terms of what stood out,
02:58I think there are several things to do. I'd like to bucket it in terms of, well, the welcomed,
03:04the needs more details, and needs more work, and slightly bemusing. I think in terms of the welcomed
03:14measures, apart from the continuing focus on ensuring the continuation of the social welfare
03:22programs, as well as the cash transfers on the FTR and SARA, that actually takes a sense of
03:27of, you know, the impact of a challenging external environment, chief of which is possibly,
03:31kind of when it comes to hitting the right-yard pockets and mitigating the impact of rising prices.
03:37That's one. Two is really, I think the sin taxes were quite welcome. I think the commitment to actually
03:43use the additional revenue to the sin taxes directly for MOH initiatives, which were a welcome measure.
03:53I think the 10% allocation, the 10% imposition of all tax. I do wonder, though, whether the imposition of
04:02the tax on cigarettes also includes a taxation on vape. That would be interesting to see, right? And
04:09again, when it comes to the budget, we have to look beyond the headline numbers themselves. And
04:14speaking of the headline numbers, there are questions with regards to what is the actual
04:22government expenditure allocation. Because in the budget speech, Prime Minister and Minister of
04:28Finance, Dr. Sianna Ibrahim mentioned that it was RM470 billion. But upon further perusal of the budget
04:37speech that also includes items beyond what we traditionally define as government expenditure,
04:44i.e. operational expansion and development expansion, because the $470 billion includes
04:51investments from GLCs as well as public-private investments, which are traditionally not really
04:57included when you want to calculate the government deficit. So I think perhaps this is
05:04another signal that the government is trying to signal its commitment to continued fiscal
05:10responsibility, whilst not sacrificing welfare and social welfare concerns.
05:16Nadia, could you explain, sorry, if I may interrupt, could you explain the difference? So we have,
05:21as you said, the headline number of RM470 billion. It will, using that headline number is an expansionary
05:29budget. But if we were to drill down to the details of RM419.2 billion, talk to me a little bit about,
05:36as you mentioned, the government's fiscal responsibility in keeping the level of spending
05:42in check. Is it appropriate for Malaysia's current fiscal position? Is this a fiscally responsible budget?
05:48I think taken into, if you're looking at RM419 billion as compared to RM450 billion last year,
05:59against a projected revenue of, I think it was RM390 billion compared to RM380 billion. I'm not sure,
06:09but I think there was a 10 billion increase in projected revenue against a projected increase of
06:15of 20 billion in terms of, if you're just comparing between the RM470 billion against the RM452 billion last
06:21year. But if you're talking about, if you're just looking at definitions and looking at the RM419 billion,
06:27then it would seem as if it is actually a more, I would say on balance, it looks like a more fiscally
06:33responsible budget. But it's still expansionary because expansionary is, remember, means that the budget
06:39is in deficit. So every deficit means it's an expansionary budget as opposed to contractionary,
06:44right? But in terms of total amounts, strictly speaking, it does estimate a reduction in terms of
06:54direct, I would say, government expenditure in terms of operational and development expansions.
06:58I think what the government is trying to do here is trying to explore additional sources of funds that
07:03may be utilized for public use. But then this, of course, implies that there's going to be,
07:11or rather, this, of course, means that there's supposed there's going to be good governance
07:16involved in the implementation of those programs. I did say just now, I left out. When using item
07:24within the budget itself, I think some of us were looking at the addition of the airport,
07:30I believe in UHCM, which is the Maritime University. I think that we would like to see
07:38better details on that, I would say.
07:40Okay, well, keep an eye out. But can I just look at, so this budget really indicates what the
07:47government's economic priorities are for the next year. But what does this budget indicate to you about
07:52the government's view of the economy and the wider economy for the following year? Because I'm looking at
07:57the projections for Petronas dividends, it looks like the government appears to be anticipating a
08:04tougher year ahead for Petronas with lower oil prices. The dividends are significantly lower, 37% drop,
08:13if I'm not mistaken. What do you make of this, Nadia, in terms of how the government sees the temperature
08:19for the economy next year? I think that's a perfectly realistic view of the, particularly the external
08:28challenges that the Malaysian economy faces. Really, we're looking at a highly unpredictable global
08:34economy because it's still being led by an unpredictable government, it's being led by an
08:38unpredictable person. And really, I think markets and business as a whole are still in waiting mode to
08:50see what further changes and what further dramatic changes will happen before they commit more
08:56investments. So it's really taking into account that we're going to see a more muted economic growth
09:04globally next year. We might see delayed supply side challenges when it comes to the effects of
09:12these tariffs, because I really believe that the full impact of these tariffs have yet to come online,
09:16because we don't quite know what the full impact on supply chains are because of the lags in
09:20production and planning, right? So I think it's quite realistic to expect there to be a reduction in all
09:29dividends, given that all prices are driven highly by demand. And OPEC so far has been committed to
09:39stabilising supply. I think in that sense, yes, it's quite realistic. I do, however, would like to know
09:47where the government sees the other economic drivers are going to be next year, given the 4.5%
09:53projected GDP growth, because, you know, our markets still see growth next year, given all the challenges
10:01to be between 4.1% to about 4.5%. I mean, there is only, you would see a 20 basis point difference,
10:09but we're talking about hundreds of billions here. Yeah, there seems to be an optimistic projection for
10:17economic growth momentum for next year. Can I ask you, based on this budget 2026, how do you think
10:25the business community might react to it? You talked a little bit about the uncertain
10:32investment environment at the moment, the investment climate at the moment, but has this budget 2026 gone
10:39far enough to temper some of those anxieties? We will have to see how Bursa opens on Monday morning.
10:47But in general, I would say that the budget has not contained any drastic surprises for the business
10:52and investment credit of the government itself that, you know, they've managed to communicate
11:01an adherence to fiscal reforms that shows in the budget. And I guess we'd like to see more details in
11:07terms of what line items are actually going to be reduced going forward. But on the whole,
11:14the signal really is that this is a fiscally responsible government that still tries to
11:19maintain the well-being of its people, but also taking into account a more challenging external
11:24environment and they need to be fiscally responsible given, you know, a situation or environment of
11:31higher interest rates perhaps and higher debt service charges.
11:34All right. Nader, thank you so much for joining me on the show late on your Friday evening. I know it's
11:41been a long day for economists everywhere, but thank you for your time and your insights there.
11:47Intan Nader Jalil from CIMB Berhad, we're going to take a quick break here on Consider This, but more on
11:53Budget 2026 in just a couple of minutes. Stay tuned to Consider This.
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