2027 Budget tour must turn public feedback into policy, economists warn [WATCH]

KUALA LUMPUR: The government's nationwide tour for the 2027 Budget could mark a shift towards a more ground-up approach to fiscal policy, but economists say its success will hinge on whether feedback leads to concrete measures.

Universiti Kuala Lumpur Business School economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said direct engagement with businesses, non-governmental organisations (NGOs) and the public could move budget-making away from its traditionally top-down approach.

"For years, the budget felt top-down. This tour makes it bottom-up," he told Business Times.

He said hearing directly from different groups could give policymakers a clearer picture of challenges that might not be captured by macroeconomic data and official reports.

"For example, feedback from small and medium enterprises in Shah Alam, fishermen in Terengganu and startups in Penang can give policymakers a clearer picture of the specific challenges faced by different groups."

Such engagements could also help the government avoid broad-based measures with unintended consequences, while improving public acceptance of policies such as targeted subsidies.

"When people feel heard, compliance increases. When the government says we need to target subsidies, people understand better because they themselves have provided the input."

The Finance Ministry is conducting the nationwide tour to gather views from industry players, NGOs and the public ahead of the tabling of the 2027 Budget.

Finance Minister II Datuk Seri Amir Hamzah Azizan said feedback from focus groups and stakeholder meetings would be studied for possible inclusion in the budget, while other proposals would be referred to ministries and agencies.

Aimi said industry input could help the government identify potential problems with proposed measures before implementation.

"For example, if a new carbon tax is proposed, manufacturers can suggest a phase-in period so they can adapt."

He cautioned against allowing the exercise to become a roadshow without meaningful follow-through.

"Publish what was said and show which suggestions made it into the 2027 Budget."

Universiti Teknologi Mara senior lecturer Dr Mohamad Idham Md Razak said the consultation was useful as budget-making should reflect the experiences of businesses and households, including pressures involving finances, employment and access to economic opportunities.

"The consultation is particularly useful if the feedback is translated into practical and targeted measures rather than simply becoming a listening exercise."

He said this could strengthen public confidence by ensuring the budget reflected the needs of different sectors and communities.

On fiscal space, both economists said the government had room to introduce new measures, but constraints meant spending would have to be carefully prioritised.

Aimi said the focus should be on reprioritising resources rather than making large new spending commitments.

"Scope is tight, but not zero. It's about 'reprioritising', not 'big new spending'."

He said fiscal consolidation, debt-servicing costs and revenue uncertainty amid high oil prices and ringgit volatility would continue to constrain the government.

Savings from better-targeted subsidies, for example, could be channelled into technical and vocational education and training, automation grants and other higher-impact areas.

He called for efforts to raise tax revenue through better compliance and a broader tax base without increasing tax rates.

Idham cautioned against creating large permanent spending commitments, saying support should be directed to investments that raise productivity, create better-paying jobs and generate future economic returns.

"This could include incentives for high-value industries, SMEs, digitalisation, skills development and technology adoption.

"The key principle should be quality of spending rather than simply the size of spending, with every additional ringgit delivering measurable economic value."

Aimi said the government needs to balance household purchasing power with longer-term efforts to strengthen productivity and resilience amid global uncertainty.

Targeted aid should continue, but be complemented by measures to help recipients develop skills and raise earnings, he said.

He called for greater emphasis on SME upgrading via automation and digitalisation grants, TVET and research and development incentives, as well as stronger energy and food security through investment in smart farming, solar energy and grid upgrades.

Idham said the budget should prepare Malaysia for emerging growth areas, including the Low Altitude Economy.

He said Malaysia could position itself in drones, autonomous aerial systems, logistics, precision agriculture, surveillance and mapping, but this would require investment in talent, research and development, testing facilities, digital infrastructure and a clear regulatory framework.

He said the sector could create high-skilled jobs, new businesses and productivity gains.