This article first appeared in The Edge Financial Daily on November 14, 2018

KUALA LUMPUR: The government does not plan to sell its assets at fire sale rates, Finance Minister Lim Guan Eng said in a strategy note on Malaysia by CGS-CIMB yesterday. However, there are plans to beef up underperforming assets before selling them, he added. The government also revealed future land sales will be conducted via competitive open tenders.

CGS-CIMB said these are among the key takeaways from the post-Budget 2019 roadshows it had co-hosted with the finance minister in Singapore and Hong Kong recently, providing investors with the latest updates on the national budget.

Responding to questions concerning the space for fiscal manoeuvring, CGS-CIMB said Guan Eng had stated additional revenue from the tax measures announced in the budget speech on Nov 2 could yield RM4 billion to RM5 billion, including an estimated RM1.5 billion from the special voluntary disclosure programme, for the government’s coffers, providing buffers against slippages in macro assumptions, revenue collection or cost rationalisation. “The government is also exploring Japan’s offer of a ¥200 billion (RM7.4 billion) Samurai bond at an interest rate of 0.65% per year,” it added.

CGS-CIMB said despite an expanded fiscal deficit of 3.4% of gross domestic product, Budget 2019 is not expansionary once the one-off tax refunds of RM37 billion are excluded. “Neither is it an austerity budget as the government has opted against a ‘shock treatment’ to the economy to lower public debt but is instead spreading the adjustment over three years,” it added.

Other key takeaways from the roadshows: The government’s plan to step up enforcement to reduce illicit trade in the alcoholic beverage sector and is unlikely to reduce excise duties in this sector, as well as a higher casino tax imposed to help boost tax revenue, as the government opined that the higher tax will not affect the casino business’ long-term growth due to its monopoly status in the country. The government also revealed the assessment of foreign investments will be “company- and not country-specific” going forward.