Rakyat Deserves A Budget 2019 Report Card From The Govt, Says Economist
Budget 2020 will be tabled by Finance Minister YB Lim Guan Eng on Oct 11 and expectations are soaring high among Malaysians. But before we move on, let us look at how the Pakatan Harapan government delivered Budget 2019.
During the tabling of Budget 2019 last year, Finance Minister YB Lim Guan Eng said:
“To restore our fiscal health, the Prime Minister has asked Malaysians to be prepared for sacrifices for the nation. Therefore, while we are committed towards fiscal consolidation, we will equally prioritise economic growth to improve the socio-economic well-being of the rakyat.”
Is the PH government on track to restore Malaysia back to its fiscal health by 2022? Is Malaysia roaring yet?
For this review of Budget 2019, we reached out to experts for a detailed perspective on how well Budget 2019 has done in fulfilling its theme of ‘A Resurgent Malaysia, A Dynamic Economy, A Prosperous Society’.
Before we go further…
Some interesting facts about Budget 2019:
- The first budget tabled by the Pakatan Harapan government on 2 November 2018 after winning the general elections in 9 May 2018.
- The theme of the budget was ‘A Resurgent Malaysia, A Dynamic Economy, A Prosperous Society’.
- The Finance Minister warned that it would be a sacrificial, ‘belt-tightening’ budget as the government must reduce its RM1 trillion national debt.
- The aim of the budget was to map out a path to restore the Malaysian economy as an Asian Tiger.
Focus areas and strategies of Budget 2019:
Three focus areas:
- To implement institutional reforms
- To ensure the socio-economic well-being of Malaysians
- To foster an entrepreneurial state
- Strengthening fiscal administration
- Restructuring and rationalising government debt
- Raising government revenue
- Improving the rakyat’s welfare and quality of life
- Improving employment and employability
- Enhancing health & social welfare protection
- Raising real disposable income
- Education for a better future
- Unleashing the power of the new economy
- Seizing opportunities in the face of global challenges
- Redefining the role of government in business
- Ensuring equitable and sustainable economic growth
What the experts say
“In the past, excessive and irresponsible borrowing on unsound projects has done a great damage to both fiscal health and credibility of Malaysia.”
As Finance Minister YB Lim Guan Eng highlighted during the tabling of Budget 2019 the institutional reforms planned would be able to restore Malaysia back to its fiscal health in three years. While there are two more years left to evaluate the outcome, questions arise to whether we are on track.
Ali Salman, Institute for Democracy and Economic Affairs (IDEAS) Chief Executive Officer said that, “It is encouraging to see greater emphasis on the part of the government to strengthen the institutions as means to restore fiscal health. It is also encouraging to note the MoF commitment to budget transparency and openness.
In the past, excessive and irresponsible borrowing on unsound projects has done a great damage to both fiscal health and credibility of Malaysia, which the present leadership should give a top priority to restore.”
Ali hopes, moving forward the MoF would announce a target to achieve balanced budget and end budget deficit within the current PH government term that the MoF has the capacity and resources to achieve.
“If we stop to drink coffee along the way, we will be beaten by others.”
-Tan Sri Ramon Navaratnam
Meanwhile, former Deputy Secretary-General of the Ministry of Finance, Tan Sri Ramon Navaratnam said that, “Institutional reforms are not going to benefit the B40 in the near future”.
The economist who is also Chairperson of the Asian Strategy & Leadership Institute (ASLI) Centre of Public Policy Studies further explained that we are almost on the right track. However, we are moving too slowly. Overall, the tabling of budget 2019 was good but the implementation needs close monitoring and further improvement.
Tan Sri Ramon also strongly urges for a Budget 2019 report card from the Pakatan Harapan government. The report card should detail the achievements and accomplishments of Budget 2019 before moving on to Budget 2020. It is a question of credibility and rakyat deserve to know the extent of delivery by the government.
Asked about the efficiency of the three main focus areas in covering the needs of the rakyat, he opines that the increment of minimum wage to RM1,100 could have been more to serve as a living wage to the B40 group.
“Tax measures in Budget 2019 would have been better off if they had been implemented fully.
Zooming out, there is also need for a structural change to budget tabling. Otherwise, the budget will become superficial and result in minimum impact. For instance, NEP must be slowly phased out and a new economic model should be adapted. A new economic structure is a crucial change in this time and era,” he commented.
According to Ali Salman, “These focus areas have the potential to bring about broad enhancement to the Malaysian economy.
Another focus area will be to stimulate investment, innovation and growth in the economy through the gradual divestment of government’s holdings of publicly listed companies as well as the relatively huge presence of government-linked corporations (GLC) in the private sector.”
Looking forward …
Tan Sri Ramon shared that Budget 2020 should emphasise more on Prosperity Sharing instead of Development Expenditure. The focus should be on less wastage, reduction of corruption and more efficiency. It is also crucial to shift towards meritocracy, competition and needs-based economics instead of race-based.
Ali added that, “It is also important to consider policy options to incentivise the private economy to improve the socio-economic well-being of working Malaysians. For instance, private employees can be incentivised – but not required – to adopt a new Living Wage that is beyond minimum wage for the low-income group.”
To read more about the expectations for Budget 2020, visit: bit.ly/budget2020expectations
To know more about IDEAS proposal on making shared prosperity a reality, read: bit.ly/IDEASsharedprosperity
You can also tell the government your expectations in the upcoming Budget 2020. Visit http://belanjawan2020.treasury.gov.my/index.php/my/ and key in your expectations by October 6.