KUALA LUMPUR (Aug 29): The federal government is establishing two new committees as part of plans to lower the country's fiscal deficit to 2.8% of gross domestic product (GDP) this year, Finance Minister Lim Guan Eng said today.

The Public Finance Committee (PFC) will outline the government’s medium-term fiscal plans, which will be chaired by Lim himself.

"I will be joined by the Economic Affairs Minister and the Governor of Bank Negara Malaysia. It will be the platform to balance out the needs for fiscal consolidation and the need for the government to spend in order to raise the living standards of the rakyat while contributing to future economic growth," he said in a statement today.

The second committee is the Tax Reform Committee (TRC), which will assess the Malaysian taxation system holistically with the intention of making it more efficient, more neutral and more progressive without burdening the rakyat, while promoting the long-term productivity of the economy, Lim said.

"The TRC will study measures to halt the decline by, among others, minimising tax leakages and tax evasion," he added.

Govt to monetise some of its holdings in non-critical, non-strategic firms

To augment these measures, Lim said the federal government would monetise some of its holdings in non-critical, non-strategic companies in an orderly fashion while engaging in planned and scheduled public auction of state land.

"Previously, these land assets were often sold at steep discounts to politically-connected entities under opaque arrangements, which had deprived the federal government of additional revenue," he said.

Meanwhile, Lim said a series of focus group meetings has been scheduled from August to September to gather views and recommendations on specific issues including on domestic workforce, quality of education system, sustainable development and living costs among the urban poor.

"Yesterday, I chaired the first focus group meeting to discuss ways to improve public finance. We shared views on means to strengthen the federal government’s fiscal position by diversifying its revenue sources, optimising its expenditure and rationalise its large RM1.087 trillion debt and liabilities that rose spectacularly after years of imprudent and opaque management of government finances," he said.

Despite various legacy challenges, he said the federal government is steadfast in lowering its fiscal deficit to 2.8% of GDP this year.

"We will proceed with our fiscal consolidation agenda gradually in a more sustainable manner without hurting economic growth and the well-being of the rakyat," the finance minister pledged.

From a macro perspective, the federal government will also ensure the domestic environment is stable to support further growth.

"However, just like other emerging markets, the performance of the domestic capital market, as well as the strength of the ringgit are affected by global events," noted Lim.

"This is evident from the rise in sentiment among various economies after the US and Mexico reached a trade deal. The FBM KLCI rose 0.8% or 15.3 points yesterday after the US and Mexico reach a trade deal. Year-to-date, the KLCI has risen 1.7%.

"If the US and China could agree to resolve their trade disputes, then the Malaysian capital market and the value of the ringgit would rise. If no deal could be reach, the reverse would happen," he said.

"The Malaysian government is monitoring this particular global development intently and is prepared to act accordingly if needed to protect the well-being of the rakyat," he added.

Meanwhile, Malaysians are invited to give their views and recommendations for Budget 2019, which will be tabled in Parliament on Nov 2, via website at belanjawan2019.treasury.gov.my from now until Sept 30.

Alternatively, they can give their inputs on Facebook, Instagram and Twitter by using the hashtag #belanjawan2019.