This article first appeared in The Edge Financial Daily on October 9, 2018

KUALA LUMPUR: The government is “definitely not in an austerity mode”, said Finance Minister Lim Guan Eng, who is expected to table the upcoming National Budget 2019 on Nov 2.

“What we are calling for is not austerity, but smarter spending,” said Guan Eng in his luncheon address at the Khazanah Megatrends Forum 2018 themed “On Balance: Recalibrating Markets, Firms, Society and People” yesterday.

He stressed the government will not be solely pursuing fiscal consolidation at all costs. “Fiscal sustainability is but one of our aims to drive Malaysia’s long-term development,” he said.

Guan Eng also said the government will be supportive of a private sector-led economic growth. “We know which of these countries are right behind our backs; only a private sector-led growth [will] allow Malaysia to become a high-income economy,” he said, adding the government is hoping to recalibrate the roles of all stakeholders in Malaysia.

Meanwhile, Guan Eng noted the government is currently reviewing a large number of concessions and projects under the public-private partnership scheme. To-date, 48 of them have been approved to proceed on the condition of undergoing, among others, strict vetting procedures and an open tender benchmarked against international practices.

“So, while we are reviewing more public-private partnership projects, we do not intend to cancel them, but to change the format and the mechanism implemented, [where there will be] no more direct negotiations, but by competitive open tenders,” said Guan Eng.

On Sunday, the finance ministry announced the termination of the underground contract for the mass rapid transit line 2 with MMC-Gamuda KVMRT Sdn Bhd — a joint venture between Gamuda Bhd and MMC Corp Bhd. The government intends to retender the underground works, sparking a heavy selldown of Gamuda shares yesterday.

On the current account balance, Guan Eng said Malaysia would not suffer from a twin deficit, and its current account to remain in a surplus this year.

Last year, Malaysia recorded a current account surplus of 3% to gross domestic product (GDP) and in the first half of 2018, the balance stood at 2.7% to GDP or RM18.9 billion.

“There have been some concerns about the weak second-quarter 2018 current account surplus of only RM3.9 billion and the low August 2018 trade balance of RM1.6 billion.

“But we should not be overly concerned about the monthly fluctuations, especially when these short-term low surpluses, in large, were partly caused by the June to August tax holiday period, which pushed August’s import growth to a high of 11.2% year-on-year,” he said.