THE reintroduction of the sales and services tax (SST) on September 1 and stabilisation of petrol prices are expected to save around RM20 billion for the rest of the year, said the finance minister.

Lim Guan Eng said the SST will “return” about RM17 billion while the stabilisation of the price of RON95 at RM2.20 per litre and diesel at RM2.18 per litre will save Malaysians RM3 billion.

“These measures will provide a significant boost to consumer spending in Malaysia to improve consumer optimism and business profits,” Lim said during a press conference at the Ministry of Finance today.

The third measure to boost domestic spending was the RM700 million Hari Raya special assistance for civil servants and pensioners.

The government will also reprioritise government expenditure and negotiate at least RM10 billion worth of projects, he said.

“These include projects awarded via direct negotiation or limited tender exercises, some which can be revoked. For example, a RM350 million contract that was awarded to renovate and rehabilitate Sultan Abdul Samad building in Kuala Lumpur,” said Lim.

Other items included non-essential operating expenditure for consulting services, refurbishments, events and promotional activities and selected ICT systems upgrading.

The mega-projects to be scrapped include MyHSR and MRT3 and special projects under the Implementation and Coordination Unit (ICU) of the Prime Minister’s Department.

The measures to cut costs and rationalise SST and petrol prices are expected to help the government meet the projected budget deficit of 2.8% for 2018, said Lim.

“The projected fiscal deficits will increase from RM39.8 billion to RM40.1 billion which would maintain the federal budget deficit at 2.8%,” said Lim. 

On the revenue end, the government hopes to collect an additional RM5.4 billion from the rise of oil prices. In Budget 2018, the oil price was projected to be around US$52 instead of US$70 per barrel now.

Malaysia stands to gain RM300 million for every US$1 increase in the price of oil per barrel.

“This additional revenue will come from the additional corporate and petroleum income taxes from oil companies operating in Malaysia.”

The government is also expecting to collect an additional RM5 billion in the form of higher dividends from government-linked companies, such as Khazanah, Bank Negara Malaysia and Petronas. 

The government also hopes to collect around RM4 billion from the SST. – May 31, 2018.