This year is the year of the Goat, a symbol of meek and timid animal. It is often associated with harmony, peace and tranquility. However, what we have observed of late is a series of unexpected events and tragedies with casualties. Hence, 2015 looks like a year that will not be lacking of surprises with financial instability and even the possibility of economic turmoil.
The dramatic drop in oil prices from US$115 to less than US$60 a barrel will be the biggest financial challenge that the Malaysian Government has to confront. Oil accounts for one third of the government coffers. The dramatic drop of revenue and the decrease in dividend from Petronas will be a major negative impact on the Government’s revenue. While the Government may save from oil subsidies, this will not be enough to cover the shortfall from the oil revenue. Hence, will the 2015 development budget be reduced or we may have to trim the expenditure budget. Trimming the development budget will affect growth and reducing the operating expenditure will be a tough call as it is not easy to trim the fat of the Government’s machinery.
China, Europe and Japan slowdown will negatively impact our trade and export. Commodity and oil palm prices will drop because of lack of demand. Depreciation of the Malaysian Ringgit against the US currency will benefit some export sectors that receive their payment in US currency. However, some of the import goods may become more expensive.
While the GST is supported by the majority of rakyat and is a positive development in financial taxation system, it will however lead to increase of inflation of 1-2 percent. Technical glitches will appear in the early stages and it is our fervent hope that our government agencies, especially customs will really exercise caution in their hand holding exercise during the early stages of GST implementation.
The politics of race and religion will continue to rear its ugly head. While the voice of moderation is heard loud and clear, political leadership and management are urgently required to manage these voices of moderation against the minority of extremists. We should not let the minority of extremists hold us to ransom. Hopefully sanity, rationality and moderation will prevail.
PAS will not give up on its implementation of Hudud. Rakyat will be waiting to witness how DAP and PKR will implement its agreed to disagree with PAS on Hudud.