Let's see what we have here. Succinctly put a budget which is best
described as "more of the same", without new directions in managing the
country's economy or creating new wealth including equitable
distribution.
It is a budget that is designed to buy and secure another five years
for the BN. It's designed to help the regime tide over what has been
described as the country's most fiercely fought polls by throwing money
at poor households, civil servants and young people - all who are key in
bolstering BN's vote bank and if possible give prime minister Najib
Razak a larger mandate.
In the quest to stay in power, the government has forgotten the
welfare of the people. Malaysian families are facing a cost of living
crisis but the budget does not provide sustainable solutions to this
pertinent problem.
Instead it offers a one-off solution through BRIM 2.0 or RM 500 in
cash handouts to households earning RM3,000 and below. And throwing in
RM 200 to youths to buy smart-phones is not going to solve the problem.
The government needs to explain how giving RM 200 for purchasing smart
phones is going to cushion society from spiraling prices. This shows
that this budget is about buying and securing BN's interest given a
large number of the 2.2 million newly registered voters are likely to
vote against the government.
The RM3-4 billion could have been used to increase food production
and provide affordable transportation. Increase in food production could
lead to lower food prices, greater income for rural and suburban
farmers while saving money from foreign imports. And affordable
transportation linking the periphery to the core city centers would help
to decrease transportation costs.
Increase in food production and affordable transportation would have
gone a long way to help manage the increase in the cost of living. But
we have missed yet another chance.
However the puzzling ways of the government do not stop here. For
example, the Malaysian Anti-Corruption Commission (MACC) is getting a
RM276 million-allocation to fight graft. No this has nothing to do with
looking at restructuring the body which has come under severe criticism
for lopsided investigations and targeting only opposition politicians.
Instead, the government will make available an additional 150 posts
annually to reach a target of 5,000 personnel in the MACC.
And that's still not the end of the horror for it has made available
RM300 million for 1.5 million young people to buy smartphones from an
authorized dealer. While this deal smacks of cronyism, it also shows
Najib's priority or shall we say the lack of it, given the case.
While a desperate Najib slammed the opposition and took pot shots at
Anwar Ibrahim during the last half hour of his budget speech last
Friday, without mentioning names of course, he chose to give a rosy
economic projection for the country. But growth rate projections of 4.5 %
- 5% are highly optimistic. Malaysia is an open economy and thus
highly vulnerable to external shocks.
The Ministry of Finance's Economic Report (2012-2013) notes that the
country has experienced a 35-percent drop in FDI in the first 6 months
of 2012. In fact, the International Monetary Fund's (IMF) most recent
World Economic Outlook warns developing nations to brace for further
risks from uncertainties in Europe and the USA.
This together with the contagion impact on the Indian and Chinese
economies will bite into Malaysia's growth for the coming year. A
further problem for the Malaysian economy would be the impact of the
euro-zone crisis on demand for palm oil and other commodities. Industry
sources note that palm oil prices would drop further in the coming
months impacting on the country's revenue stream.
Let's not forget that 40% of Malaysia's revenue comes from the oil
and gas sector which is very vulnerable to oil price fluctuations and
production.
Deficits and debts have become BN's preferred policy norm or option
in economic management. The government's attempts in reducing its
15-year budget deficit to 4%, from about 4.7 per cent of GDP in 2012, is
largely prompted by pressure from global fund managers and rating
agencies.
In the recent months, agencies such as Fitch and S&P warned of
credit rating downgrades if the government did not reign in its fiscal
deficit and ballooning debt of RM502.4 billion or 53.7% of GDP this
year, with federal debt level at 55% of GDP being the legislated debt
ceiling.
The government argues that deficit would be reduced with efficient
tax collection and higher economic growth projected at 4.5% - 5.5% for
2013. This is also unlikely given the euro-zone crisis and its contagion
impact on China and India. Thus projected increase in taxes and growth
rates might not materialize.
And no where in Najib's two-hour budget speech did we hear anything
about reducing wasteful spending like reducing the country's civil
service, a move which is necessary but will create a backlash for his
government come the next general election.
So one can expect a supplementary budget in 2013 just like the RM
13.8 billion a few months ago. What is clear is that the long term
strategy in managing public finances in a sustainable fashion is
missing.
Crime is another pressing problem in the country. While we commend
the government for responding to the crime-issues faced by the rakyat,
the present strategy of buying hardware and increasing manpower in the
police force are not going to solve the problem. What is urgently
required is a strategy change and re-allocation of resources.
The purchase of 1000 motor bikes is not going to decrease crime nor
create confidence in the police force. The installation of 496 CCTV in
25 local councils is not going to create an iota of confidence in the
police force either, especially if the nexus between the police and
criminals and corruption are not addressed.
Instead the crucial action which needs to be taken immediately is
the re-deployment of police personnel from non-crime related departments
to crime related departments of the force.
At present about only 14% of the uniformed police force is in
crime-related departments (criminal investigation department, narcotics
and commercial crime investigation). In direct contrast, 86% of police
personnel belong to the non-crime related sectors (management, internal
security and public order, logistics, special branch, and special task
force). And more financial resources should be allocated to the criminal
investigation department which receives about 8% over the last three
years.
Malaysia aims to become a high income, fully developed country by
2020. And yet, the prime minister and his government are reluctant to
make the shift from race-based policies to merit and need and rights
based policies. The has caused a massive brain drain and proved
deterrent in luring foreign talent.
In all, it's clear that Najib's budget is tailored to ensure the
survival of a regime. While the premier has been generous in dishing out
cash handouts, he has been silent on structural reforms.
Najib is focused on winning the next election and has used the
budget to try and make this happen. But the long term benefits of his
budget to the country and his people could be written at the back of a
match box.
And Najib is not serious about reigning in the ballooning federal
debt, reducing deficit, ensuring a healthy economy, weeding out graft,
breaking the monopoly of cronies close to the ruling elite and looking
seriously into issues confronted by the rakyat, for he has certainly
failed to do these in his budget.
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