Brace yourself, the mother of all budgets is coming
Budget 2018 which will be tabled in the Parliament on 27 October 2017 will no doubt be the mother of all budgets as this is the last budget before the mother of all general elections is called. Malaysians can expect many goodies from the government in this budget because, at least at the perception level, budgets are one of the political tools for Barisan Nasional to prepare them for general election. But at the same time, we can’t help but to ask “what’s next after all the sweets distribution”?
If we were to speak strictly from election strategy, we can almost tell what Budget 2018 will look like. There are basically few groups of voters that Barisan Nasional will never want to leave out: Felda settlers, civil servants, unemployed graduates and the B40 group.
There are 54 out of 222 parliamentary seats that contain Felda settlements and traditionally, vast majority of Felda voters voted in favour of Barisan Nasional. As it has already been done, several forms of incentives or aids are now on their ways to the Felda settlers, after rounds and rounds of complaints from the settlers that their debt owed to the government lack transparency and in some cases increased without notice. In July 2017, Prime Minister Dato' Sri Najib Razak announced RM1.4 billion aid to Felda settlers in the form of cash handouts and debt waivers.
The same goes for civil servants, unemployed graduates and B40 group. We can expect goodies like higher end-of-year bonus, BR1M, unemployment benefits, PR1MA etc. But what’s after the budget? What’s after the general election?
Aids and distributions are crucial to the economy now, especially when the ordinary Malaysians on the streets don’t seem to benefit at all from the alleged “strong GDP growth”. GDP growth did not answer the questions on rising living costs, unemployment, damage on purchasing power due to GST, stagnant wages increment for many Malaysians, rising household debt to GDP ratio or weakened Ringgit. It was also due to the series of economies difficulties we face today, more and more Malaysians are dependent on aids and distribution to put food on their table. However, at the time we agree that aids and distributions are necessary to Malaysians right now, what can we offer them in the future?
There are few areas of concern that Malaysians deserve to know:
20-year streak of budget deficit
Fiscal deficits are normal and commonly seen globally but not for 20 years consecutively. To solve the deficit, government basically has three ways: raise taxes, more borrowings or lower expenditure. Which way is the better option for Malaysia, if a plan to tackle deficit issue exists in the first place? Since GST was introduced to “save Malaysian economy”, will GST rate be raised to above 6%? Will the poor be taxed more in the future? Will the government borrow more? Will the government take away more subsidies after petrol and sugar? Will the government further lower government expenditure, which happened to healthcare and education sectors?
Unemployment among Malaysians
The Economic Planning Unit reported an increase in unemployment rate in Malaysia of 2.9% to 3.4% from 2014 to 2016. It is estimated to further increase to between 3.6% and 3.8% in 2017. The unemployment among youths in Malaysia has stayed stagnant at above 10% for few years now. The unemployment figures do not include those who have left Malaysia for jobs or those who opted to take up alternative or less-preferred jobs such as working part time or becoming Uber/Grab drivers. What is the government’s plan in creating more jobs to Malaysians? What’s the sustainability and prospects of employment and economic benefit created via government’s planning, as compared to the proven failure of “Low Yat 2” or more commonly known as Mara Digital Mall?
Combat against corruption
The cost of corruption in Malaysia is enormous and has crowned us the name of a “kleptocratic nation”. The debt unpaid for by 1MDB alone, which will now be paid by taxpayers’ money, is more than RM40 billion and will take at least 30 years to repay. What will the government do to combat corruption? Will the government take action to clear its name and recover the allegedly misappropriated US$4.5 billion funds in 1MDB as well as the US$1.7 billion worth of assets purportedly acquired using funds stolen from 1MDB, as reported in Department of Justice’s filing?
Long term economic plan
Investments seek good return but what matters more in a budget is allocation of resources. Those who argued that Prime Minister’s recent generous investment that aims at “strengthening US economy” makes commercial sense as the returns are good totally missed the point. The US$10 billion for airplanes and the additional US$4 billion from EPF investment, which translates into RM59 billion, is equivalent to 18 months of GST collection from 1 April 2015 to 31 October 2016. If GST has indeed “saved Malaysian economy”, why did our Prime Minister send our saviour to US? Wouldn’t it be better to spend it on, for instance, bringing back JPA scholarship that was cut in 2016 and provided a cost-saving of RM240 million to the government at the cost of more than 700 students being denied the opportunity to study overseas? Speaking about returns on investments, questions such as “what is the rate of return?”, “is the rate of return reasonable?” and “when will the return be generated?” remained unanswered.
As the mother of all budgets approaches, we should look beyond aids and distributions. If the resources in our nation are properly managed and allocated, there will be fewer Malaysians who need those aids and distributions so desperately. Let us remind ourselves to never overlook the opportunity costs of an attractive budget.