Malaysia to raise 2021 spending to counter virus impact

KUALA LUMPUR, Malaysia (AP) — Malaysia's government proposed a larger national budget in 2021 on Friday to help the coronavirus-hit economy rebound by up to 7.5% and provide increased handouts for the poor.

The budget is the first by the unelected government of Prime Minister Muhyiddin Yassin, who took power in March after initiating the collapse of the former reformist government.

It is a key test of support for Muhyiddin, who has a slim two-seat majority in Parliament and faces challenges from allies in his coalition and opposition parties.

Finance Minister Zafrul Aziz told Parliament that the expansionary budget has the people's welfare in mind during the pandemic and will raise spending to a record 322.5 billion ringgit ($78.1 billion), up 2.5% from this year.

That includes a sharp rise in development spending to 69 billion ringgit ($1.7 billion) as well as 17 billion ringgit ($4.1 billion) for a COVID-19 fund.

Zafrul said the economy could grow 6.5%- 7.5% in 2021, from a projected 4.5% contraction this year. The fiscal deficit is projected to narrow to 5.4% of gross domestic product, down from a projected 6% this year,

“We can argue and disagree on secondary issues but we should unite to agree on principle ... let this budget be the canon of our unity for the welfare of the people," Zafrul said as he appealed for support for the proposed spending.

The budget includes cash handouts for poor families and front-line workers in the coronavirus crisis, wage subsidies and funds to create new jobs and train workers. Various incentives and subsidies are also provided for farmers, fishermen and industries to boost productivity and woo investors.

A small income tax cut will benefit 1.4 million taxpayers, and Malaysians can withdraw some savings from the pension fund...