KUALA LUMPUR: The 12th Malaysia Plan (12MP) is a sensible one, detailing a vision of pushing for growth through a massive pick-up in development spending, OCBC Bank economist Wellian Wiranto said.
Wellian said the massive development spending also involved the shift from building basic infrastructure such as roads and rails to ramping up high-tech industries such as aerospace and electrical and electronic manufacturing.
However, he said a good plan would remain just that without a concomitant solid execution.
"And, to boost the chances of success, the government will have its work cut out in what remains an uncertain global and domestic economic situation.
"Moreover, balancing the need for a large increase in expenditure even as it aims to lower budget deficit would require an uptick in revenue that might see the re-introduction of the necessary-but-unpopular GST (goods and services tax)," he said in a note today.
Wellian said the growth gross domestic product (GDP) target of 4.5-5.5 per cent for the new plan could be arithmetically achievable if things returned to normal.
However, he said how the year 2021 had been playing out – with Covid-19 resurgence pushing growth expectation low to 3.6 per cent on its end – it would take a much more rapid growth of 5.35 per cent for the remainder of the 2021-2025 period for the target to be reached.
"Not unachievable, but it will require a lot of stars to be aligned," he added.
Wellian said while some of these "stars" were well outside the government's direct control, not least the potential re-occurrence of Covid-19 waves, the 12MP appeared to lean a lot more on things that the government can affect.
"Indeed, one feature of the 12MP that stands out to us is the marked uptick in development spending.
"Compared to the RM248 billion that was spent for development in the 11MP, the new plan calls for as much as RM400 billion, a whopping 53.8 per cent increase.
"Now, given that the 2021 development expenditure is targeted to be at RM68.2 billion, that leaves the rest of the years to see an average of RM83 billion per annum of spending – an even higher annual uptick," he added.