Latest news with #GovernmentProcurementAct
The Sun
18 hours ago
- Business
- The Sun
Budget 2026 to focus on longer term reform agenda
PETALING JAYA: Against a global backdrop driven by uncertainties and intensifying competition, Budget 2026 will remain focused on delivering Malaysia's longer term economic reform agenda, while addressing short term challenges to maintain the momentum of growth and safeguard the resilience of the economy. At the same time, efforts will be undertaken to enhance the well-being of the rakyat through more targeted and outcome-driven assistance towards improving quality of life. According to the pre-Budget statement 2026 by the Ministry of Finance (MoF) , Budget 2026 aspires to advance the public sector reform agenda – enhancing governance, strengthening service delivery, and safeguarding fiscal sustainability. To this end, the Government will prioritise the modernisation of public service delivery, introduce frameworks and legislation to strengthen civil service performance, and reinforce the principles of integrity and ethical governance. MoF said these reforms will be underpinned by a commitment to optimise public resources, minimise leakages, and ensure that assistance is effectively targeted to those most in need. To elevate national governance standards, Budget 2026 is said to build upon ongoing reforms under the FRA and National Anti-Corruption Strategy 2024–2028. These efforts are now being complemented by a suite of upcoming legislation — including the Government Procurement Act, State-Owned Enterprises Act, Ombudsman Act and Freedom of Information Act — aimed at reinforcing transparency, curbing leakages and restoring public trust. The Malaysian Anti-Corruption Commission (MACC) continues to lead enforcement and cross-border asset recovery efforts, including in cybercrime and digital asset flows. Starting 2025, reforms in corporate governance — such as new audit exemption criteria for selected private companies — will further balance business compliance and good governance. MoF said the Government is accelerating digitalisation across the public sector to optimise revenue collection, minimise leakages and improve programme delivery. This includes leveraging AI, big data analytics and automation to detect tax non-compliance — with agencies like LHDN using AI for more effective enforcement. The Government is also accelerating efforts to enhance service efficiency and accessibility through nationwide GovTech initiatives. Applications such as MyVisa 2.0 and MyJPJ, alongside digital one-stop centres, are reducing bureaucratic burden and enabling more seamless public transactions. These are underpinned by investments in digital infrastructure, data integration, and capacity building. While certain services and areas still require physical visits due to infrastructural or procedural constraints, the Government remains committed to overcoming these challenges through continued innovation and the expansion of GovTech solutions, ensuring that all Malaysians benefit from faster, more inclusive and citizen-centric services. Budget 2026 will drive performance-based evaluations, capacity-building and accountability measures under the Public Service Efficiency Commitment Act 2025 (Act 867). These efforts aim to create a civil service that is agile, digitally fluent and equipped to implement Ekonomi Madani with integrity and speed. The Government also remains steadfast in improving the ease of doing business by streamlining regulations, simplifying business processes, and accelerating the digitalisation of government services to reduce red tape and enhance complete service delivery. 'Raising the Ceiling' is one of the three central pillars of Ekonomi Madani, aimed at propelling Malaysia towards a high-income, competitive and sustainable economy grounded in humanistic values and social justice. This pillar focuses on breaking through long-standing structural constraints — particularly the nation's over-reliance on low- and medium-cost economic models. With Ekonomi MADANI setting the ambition for Malaysia to become one of the world's top 12 most competitive economies, a fundamental transformation of our industrial base is indispensable. This includes elevating Malaysia's position in global value chains and shifting towards higher productivity and innovation-driven growth. At the heart of the 'Raising the Ceiling' pillar is the imperative for Malaysia to capitalise on the next wave of industrial transformation. To kickstart this transition, the Government is prioritising investments in HGHV areas — covering new opportunities in frontier technologies and pathways anchored in sustainability. These include digital technology, advanced manufacturing, semiconductors, renewable energy and AIdriven services — sectors with strong long-term growth potential, the ability to buoy Malaysia's export growth and the capacity to create high-skilled employment. This economic repositioning is compassed by a suite of policy levers designed to liberalise key sectors and attract quality investments. To complement the nation's industrial transformation, MoF said the Government will continue refining its suite of strategic investment incentives — with the New Investment Incentive Framework, slated for launch in the third quarter of 2025, to lead the way. The goal is to tailor incentives to the economic returns of each sector, fostering a mutually beneficial dynamic that attracts quality investments while ensuring meaningful national gains. MoF said Budget 2026 will sharpen this approach by further streamlining approval processes, dismantling bureaucratic hurdles and realigning incentives to better reflect the complexity, value-add and technological intensity of targeted industries. These reforms aim to transform Malaysia into a facilitative, competitive investment destination that rewards innovation, prioritises long-term sustainability and positions the country at the forefront of economic value creation. The strategic policy levers are designed to generate economic multipliers that cascade through the entire supply chain, building ecosystems that support HGHV sectors. These efforts aim to drive inclusive, broad-based growth and catalyse development across all economic corridors. Budget 2026 will continue cultivating these downstream ecosystems and accelerating regional development through the following focus areas: • MSMEs and Digital Adoption: Supporting small businesses by easing access to export markets and financing their digital transition to improve productivity and competitiveness. • Tourism and Services Growth: Leveraging Visit Malaysia 2026 to revitalise tourism and adjacent service sectors. • Islamic Finance and Economy: Strengthening premium halal supply chains and cementing Malaysia's global leadership by leveraging Islamic finance as a key enabler. • Regional Development: Diversifying economic growth beyond established urban centres by developing catalytic nodes across states — replicating models such as the Johor-Singapore Special Economic Zone (JS-SEZ), Kulim Hi-Tech Park and Penang Silicon Island.
The Sun
3 days ago
- Business
- The Sun
Budget 2026 to boost public sector reforms and governance in Malaysia
KUALA LUMPUR: Budget 2026 will prioritise public sector reforms to strengthen governance and improve service delivery, according to the Ministry of Finance. The reforms include modernising public services and introducing new frameworks to enhance performance and ethical governance. 'These reforms aim to optimise public resources, minimise leakages, and ensure aid reaches those in need effectively,' the ministry stated. Budget 2026 builds on existing reforms under the Public Finance and Fiscal Responsibility Act and the National Anti-Corruption Strategy 2024-2028. Key bills like the Government Procurement Act and Ombudsman Act will enhance transparency and restore public trust in institutions. The Malaysian Anti-Corruption Commission will intensify enforcement, including cybercrime and digital asset recovery efforts. Digitalisation efforts will use AI and big data to improve tax compliance and revenue collection. GovTech initiatives like MyVisa 2.0 and MyJPJ will streamline public services and reduce bureaucracy. 'The government remains committed to expanding digital services despite infrastructure challenges,' the statement added. Budget 2026 will also introduce performance-based evaluations under the Government Service Efficiency Commitment Act 2025. The reforms aim to create an agile, digitally skilled public sector aligned with the MADANI Economy. 'Regulatory coordination and digitalisation will improve business processes and service delivery,' the ministry said. - Bernama
The Star
03-08-2025
- Business
- The Star
Broader economic drivers crucial
PETALING JAYA: While the imposition of a lower US reciprocal tariff is good news for corporate Malaysia, economists say the country needs to focus on other vital areas instead of relying solely on strong domestic demand to drive the economy. The United States has reduced tariffs on Malaysian imports to 19% from 25% previously. The new rate took effect last Friday. MARC Ratings Bhd chief economist Ray Choy MARC Ratings Bhd chief economist Ray Choy told StarBiz that over-reliance on domestic demand, particularly if supported by sustained debt or deficit-financed spending, carries inherent risks. In this context, he said preserving open regional and global trade, deepening external linkages, and pursuing a constructive foreign policy remain vital, even as global discourse shifts toward trade protectionism and economic nationalism. Choy noted that Malaysia's economy remains highly dependent on trade, with a trade-to-gross domestic product (GDP) ratio of close to 137% as of 2024, well above the global average of around 95%. This underscores the importance of tariff negotiations, whether with the United States or other major trading partners. He added that greater progress is needed in areas such as human capital development and resource allocation. While the importance of these areas is likely recognised, the gap lies in the intensity and consistency of execution, he said. Choy said frameworks such as the Public Finance and Fiscal Responsibility Act and the proposed Government Procurement Act contain sound principles, but delayed implementation and unmet targets risk undermining progress. 'The challenge lies in building sufficient policy focus and societal buy-in for these institutional reforms, which are less visible than traditional growth drivers like physical investment or infrastructure. 'Ultimately, strong institutions are designed to minimise economic leaks and correct misallocations – persistent issues that have historically imposed significant costs on Malaysia's economy and development,' Choy said. While the private sector has traditionally received much of the attention in economic discourse, he said it is equally important to recognise the government's substantial role in generating economic value through institutional improvements. A core function of the government, he said, is to enhance allocative efficiency, particularly in areas where market mechanisms are insufficient. This includes tighter oversight of contingent liabilities and public-private partnerships, accompanied by transparent reporting of both economic and social returns – recognising that private-sector metrics alone may not fully capture public value, he noted. 'Enhancing allocative efficiency also entails exploring calibrated forms of fiscal decentralisation, not as a move toward full autonomy but as a mean of granting states greater spending discretion in line with local needs, essential infrastructure, and institutional capacity. 'Such granularity in resource allocation can improve policy responsiveness and overall public sector effectiveness. 'Another example of the government's allocative function is in interventions where supply-demand imbalances are apparent, such as aligning educational outcomes with industry needs, or managing supply-demand imbalances in the housing sector,' Choy said. RAM Rating Services Bhd senior economist and head of economic research Woon Khai Jhek Meanwhile, RAM Rating Services Bhd senior economist Woon Khai Jhek said while Malaysia's economy is highly diversified and driven largely by domestic demand, external demand is still a major pillar. 'Fully insulating ourselves and completely offsetting negative (external) pressures is neither feasible nor cost‑effective. Instead, our focus should be on mitigation and diversification,' he said. Woon noted that the recent 'goodies' package announced by the government is a form of fiscal stimulus. Together with Bank Negara's pre-emptive 25 basis points (bps) overnight policy rate (OPR) cut in July, these measures will give a short-term boost to domestic consumption and demand. These 'goodies' include a one-off RM100 payment to all Malaysian adults and a reduction in the RON95 petrol price. 'Furthermore, immediate outreach to new markets (such as Asean, South Asia and the Gulf Cooperation Council) for existing firms, supported by accelerated trade missions, can soften the blow while longer‑term trade deals are negotiated,' Woon said. He said the upcoming Budget 2026 would be a good platform to expand upon some of these mitigating measures. 'We might see more measures being announced to help ensure the country is on a stronger footing, given the prevailing global weakness.' Woon, however, said the 13th Malaysia Plan (13MP) would not directly address the immediate impact arising from US tariffs. 'Reforms that can lift medium-term growth prospects are the only sustainable way to recoup the economic losses incurred from the current US protectionist measures. 'Enduring structural reforms like diversifying import and export bases, embedding productivity‑boosting changes in labour and education policies, as well as doubling down on digitalisation and artificial intelligence adoption, can enhance Malaysia's long-term productivity and potential growth. 'Over time, this will shift Malaysia toward higher‑value activities and increase the overall income levels. Learning from the current headwinds, we should also adjust the 13MP to include reforms that will help us be even more resilient when faced with future shocks,' Woon said. On the sectors that Malaysia needs to focus on to drive the economy forward, Woon highlighted the electrical and electronics (E&E) sector. This sector has long been one of the key pillar sectors for the country, accounting for around 40% of gross exports and about 30% of overall manufacturing output. He said the E&E sector has the potential to move up the value chain, which, if successfully developed, could unlock new and valuable growth areas for Malaysia. Malaysia has long been a key global hub for the back-end manufacturing process of the semiconductor supply chain and currently commands roughly 13% of global assembly, testing, and packaging activity, he said. 'Given the well-established existing ecosystem in Malaysia, appropriate incentives for research and development and localisation of higher‑value processes (for example. semiconductor design, advanced packaging) can help local firms capture a larger share of global margins and move up the value chain. 'There could also be spillover effects as advanced E&E activities drive skills development, attract quality foreign direct investment and stimulate upstream services (such as logistics, professional services). 'This will aid Malaysia's economic development and (help the country) move up the income ladder,' Woon said. Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid Commenting on Bank Negara's downward revision of projected GDP growth for 2025 to between 4% and 4.8%, Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said Malaysia should be able to grow within the new target range. 'We have seen front-loading activities quite apparent with Malaysia's export growth to the United States in the (first) six months of this year, which grew by a double-digit pace of 28% from 12.4% in the same period last year. 'Along with full employment status, as well as rising investment growth, domestic demand is likely to grow at a fairly decent (pace),' he said, especially in light of the pre-emptive measures by the central bank to reduce the OPR by 25 bps and the small scale fiscal stimulus announced recently. Mohd Afzanizam said key sectors driving growth would be construction, tourism, semiconductor and service-oriented industries. 'My sense is that 2026 would be much more critical as the effect of the US tariff would be fully accounted for and assuming that there is not much development on the tariff, the global economic outlook would be more challenging,' he added.
