Investors want clarity on subsidy plan, says Maybank IB

Investors want clarity on subsidy plan, says Maybank IB

The government needs to provide details on its plan to reduce the fiscal deficit.

Maybank Investment Bank said investors want greater clarity on how the government plans to manage subsidies and reduce fiscal deficit. (AP pic)
KUALA LUMPUR:
Investors hope Malaysia will have a clear timeline and better clarity on how it plans to manage subsidies in view of the administration’s target to halve the fiscal deficit to 3.5% by 2025 from the current level of about 6%.

Maybank Investment Bank Bhd’s (Maybank IB) head of equity research Anand Pathmakanthan said the government must also address subsidy leakages as well as embark on fiscal reforms.

“We need to see a lot of fiscal reforms. We also need more market-friendly measures,” he said at the “Maybank+Economist: Global Market Outlook and Market Shaping Trends” session at the Maybank Invest Asean 2023 conference today.

Prime Minister Anwar Ibrahim recently said the government intends to implement the targeted subsidy mechanism as soon as possible, but the formulation of such a mechanism, including those for diesel and RON95 petrol, is not easy and is quite complex.

As such, the prime minister said the government is mulling over several working papers and proposals regarding the mechanism to ensure more effective and timely implementation.

Besides fiscal reforms for the government, Anand said reforms are also required at the corporate levels, given that GLCs are a big part of the FTSE Bursa Malaysia KLCI index and the market.

According to him, the performance of GLCs in Malaysia is lagging behind their private sector counterparts, significantly dampening investors’ interest in the country.

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