Well, Budget 2023 was tabled, and a few days later Parliament was dissolved for GE15, which will most likely be held in mid or late November? So, this BUDGET is useless, as new PM and government may have different ideas
Will the new PM and government elected in GE15 now have the needed time to prepare and table a NEW Budget, which they have to and get it passed by the end of the year. A failure to do so will put Malaysia in a most precarious position..., would it not?
IRRESPONSIBLE - tabling of Budget, and then dissolving Parliament?
That Budget tabled fails to address a major problem - excessive spending and growing DEBTs.. Continue to spend as though all is well and good - let Malaysians suffer the consequence in coming years, so long as the Budget now paints a GOOD PICTURE of current government?
The serious problem facing Malaysia is the growing debt > which means a large amount of government revenue goes to servicing national debts..
Looking at the Budget - the amount of our Federal debt(not including State Debts) has increased to RM979.814 billion.
Nik Azman[Auditor General] also said that the gross loans amounting to RM217.201 billion resulted in an increase in federal debt to RM979.814 billion or 63.4% of the gross domestic product (GDP) last year.
“In addition, RM113.764 billion or 52.4% of the total gross loans obtained in 2021 were used for the principal payment of maturing loans,” he said and explained that the Emphasis of Matter highlights a fundamental matter that, in the auditor’s opinion, needs to be paid attention to, without affecting the auditor’s opinion.
Noting that our federal debt which was maintained at about RM40billion during Dr.M's earlier premiership, we saw a drastic increase in debt during the reign of PM Badawi and thereafter PM Najib Razak.
Now, Malaysia seem to be borrowing to pay off debt obligations - 'RM113.764 billion or 52.4% of the total gross loans obtained in 2021 were used for the principal payment of maturing loans,..'
It is sad, when PMs and governments of the day seem to not worry about the future, and continue borrowing to promote a false perception of the well-being of Malaysia. And Malaysia borrowed and borrowed...
Is it a Malaysian culture? Borrow and do not pay back loans...or do not worry about the future loan obligations as we will no longer be in power... PH Plus government came in and tried to address the problem ...but then...
Anyway, what came out during PH Plus rule was the extend of corruption, money laundering, abuse of power ...being committed by Prime Minister, Ministers and politicians > something every one suspected, but sadly law enforcement and prosecution was not forthcoming...
Malaysia knows that our REVENUE will not always be constant - it is affected by drop in Ringgit, drop in prices of Malaysian products, etc > we URGENTLY need to reduce of government debts....
PTPTN - well, these were low interest loans given to student pursuing higher education, and repayment obligations were very small monthly payments after these graduates return and start working. But then, why did these Malaysians who most of them earned good pay, but did not even make their monthly payments. Worse, is that the past governments allowed it, and even wanted to reduce loan repayment obligations > and now a DISCOUNT >>> It is things like this that make many a Malaysian believe it is OK to borrow and not pay back > Is this the Malaysian culture, reflected in Malaysia's increased borrowing. If we did not have to pay so much for debt repayments, Malaysia will have so much more monies to 'subsidize basic food items', implement fast 'flood prevention' programs, etc
Many Bumiputra company also get government loans - and most assume they do not have to pay back. So, Directors get their cars and houses - and at the end of the day these loans and/or 'allocations' fail to fulfill the reason for which they were first granted, and the those who borrowed cannot pay back. Writing off FELDA/FELCRA participants debts is a bad practice that promotes a bad culture.
As a result, the projected revenue collection of RM272.6 billion is almost entirely spent on operational expenditure (RM272.3 billion), leaving the development expenditure in the budget to be fully funded by debt.
Malaysian PM and leaders must accept the reality of our almost one trillion debts - and would that also be a reason why the Ringgit is falling? Remember Malaysian Ringgit is falling not just in reference to US Dollar but also Thai Baht, and many of our Asian neighbors. Should we not reduce spending and prioritize debt reduction - stop pretending all is OK >>> 52.4% of the total gross loans obtained in 2021 were used for the principal payment of maturing loans,..
Operational expenses > should we not reduce the size of public servants or suspend new recruitment?
Should we stop having many Ministers and Deputy Ministers - a small efficient cabinet is best? Maybe, we should limit Cabinet size to 12 Ministries.
Should we cut the allowances of MPs - RM16,000 may be too much, so reduce the allowance to RM10,000, and provide allocations for MP supporting staff and maintenance of service centers.
PENSION - should we set a maximum monthly pension entitlement > How much PENSION does Najib get from Pahang for being MB and ADUN? How much pension will he get for being MP and Prime Minister until he dies, and thereafter his spouse dies...??? Much more on this but we will not deal with it here...Fix the maximum monthly pension at RM5,000...
WELL MALAYSIAN SHOULD NOT SEE THE BUDGET 2023 TABLED AS A MANIFESTO OF THE BN-PN Plus government...see it as an irresponsible act.. So, maybe we ought to punish BN, PN and others that were part of that coalition government?
Talking about GEs > it is time to maybe FIX the dates of GEs in the future, maybe 3 months before the MPs term of 5 years end. Ismail Sabri should have got the Budget passed, and only then dissolved Parliament... Now, so much time and resources were WASTED preparing that BUDGET ---and after GE15, a new PM and government may simply have to go through the whole process of preparing the Budget again...
Budget 2023 is responsive, but what about responsible reforms?
From Benedict Weerasena and Abel Benjamin Lim
Amidst talk of Parliament dissolution, Budget 2023 was tabled with a record-breaking RM372.3 billion allocation. This budget is certainly a crucial one in setting the foundations right to face a looming global recession, in addition to a potential new government post-general election (GE15).
As an overview, Budget 2023 upholds inclusivity in promoting economic well-being through a comprehensive range of short-term cash assistance, tax breaks, incentives and grants.
This aligns well with the first of the 3R cornerstones: “Responsive” to the challenges faced by every segment of society.
However, Budget 2023 falls short of the other two cornerstones: “Responsible” to uphold fiscal reform and financial sustainability, and “Reformist” in transforming the country’s development landscape.
The pre-budget statement offered high hopes for fiscal reform including “improving fiscal governance, broadening the revenue base and optimising expenditure”. Yet, when push comes to shove, Budget 2023 clearly lacks comprehensive strategies to rationalise operational expenditure.
As a result, the projected revenue collection of RM272.6 billion is almost entirely spent on operational expenditure (RM272.3 billion), leaving the development expenditure in the budget to be fully funded by debt.
How sustainable is this in the long run?
After nearly 25 years of expansionary fiscal policy, Malaysia recorded a fiscal deficit of 6.5% in 2021 and 5.8% in 2022, with a projection of 5.5% in 2023.
With such a minimal decrease, how will we realistically achieve the targeted 3.5% under the 12th Malaysia Plan (12MP)?
Also, Budget 2023 is a missed opportunity to broaden the tax base.
With such a large budget which is a substantial 12% increment from a year before, one crucial question on everyone’s mind is “How are we going to raise the money to fund this?”
Realistically speaking, how much longer can we depend on petroleum-related revenue, considering the volatility of global prices and decreasing reserves?
When GST was implemented, our dependency on petroleum-related revenue dropped to 14.6% and 15.7% of total revenue in 2016 and 2017, respectively.
In 2023, petroleum-related revenue is projected to contribute to 21.6% of total revenue.
However, will we see a repeat of the year 2022, where the initial projection of 18.8% in petroleum-related revenue skyrocketed to 27.3% due to additional dividends from Petronas? Indeed, Budget 2023 falls short of greater fiscal reform.
Besides that, several exceptional and exciting initiatives are worth highlighting, while several others magnify missed opportunities for significant reforms.
Cash aid only a stop-gap measure
First, we understand the significance and impact of the Bantuan Keluarga Malaysia (BKM) cash aid with its enhanced coverage for larger families.
However, one-off direct cash aid is only a temporary stop-gap measure, without a clear plan or policy for these families to break out of the poverty trap.
In our recently published book “Assessing and Addressing Urban Poverty in Malaysia – Social Mobility Through Entrepreneurship”, we highlighted the importance of promoting upward social mobility through empowerment.
It’s about promoting reforms that can place the poor in conditions to earn the resources they believe they need, instead of only providing the urban poor with the resources they do not have.
Next, in the spirit of an inclusive Keluarga Malaysia, we regret that there was a total absence of targeted initiatives in Budget 2023 for the stateless community in Malaysia.
This is certainly disappointing considering that the stateless community was most recently recognised by the prime minister as a vulnerable population, who will be protected against manipulation, neglect and abuse.
Women in the workforce
On the other hand, initiatives to promote Gender Inclusion through gender-responsive budgeting are a step in the right direction.
For instance, the establishment of Gender Focal Teams in each ministry and agency to pursue gender-conscious national programmes.
For women returning to work after a career break, the tax exemptions given for income received between 2023 to 2028 are significant, in addition to the three-month wage subsidies of between RM600 and RM750 under Sosco in encouraging employers to hire them.
This is crucial because the Covid-19 pandemic set the participation of women in the workforce back by three years.
Also, increasing the participation of women in the workforce would boost total factor productivity gains and generate overall economic growth for the nation.
However, the absence of initiatives to overcome the lack of childcare or elderly support at home might serve as a stumbling block.
Skills development needs proper tools
Next, sustainable development was a key focus in Budget 2023, in line with our country’s sustainability agenda from reporting to engagement sessions to sustainable development goals (SDG) related programmes.
Budget 2023 provides further allocation to the United Nations Development Programme (UNDP) and All-Party Parliamentary Groups (APPG) to increase programmes pertaining to SDGs.
The pressing concern lies not only in conducting programmes which are SDG related but also in how we can create a global citizenship mindset among Malaysians.
Increasing global instability, coupled with the current economic downturn and changing climate conditions, has called for more resilient growth, stability, implementation and strong governance.
This call must place emphasis on involving the whole of government, engaging all sectors of society, obtaining buy-in from financial institutions and making stakeholders accountable.
Besides that, skills development was given priority in Budget 2023.
In the past, heavy investments have been placed in infrastructure and funds to accelerate skills development in the country.
As evidence, Malaysia has 662 public training institutions up to December 2020.
Following on, Budget 2023 reiterated its endeavour to continue providing Malaysians with opportunities to participate in diverse skill improvement and retaining programmes – through initiatives such as Jamin Kerja, Socso Employment Incentive, MyStep, skills training by HRD Corp, Digital Innovation Fund (Digid) and Graduate Entrepreneur Programme (PUSh).
On the other hand, such initiatives should also be accompanied by proper tools to support and facilitate workers’ ability to identify training that best suit their needs and preferences.
They also need to have career guidance and advice to plan a suitable career pathway prior to enrolling in any training programmes.
Another noteworthy initiative is the expansion of social security to cover other self-employed workers, especially those in high-risk sectors.
Under the Self-Employment Social Security Scheme (SKSPS), the government will bear 80% of Socso contributions, while the self-employed such as e-hailing drivers, food delivery riders, farmers, fishermen, Finas art practitioners, and hawkers have to pay only 20%.
This move is essential and timely to prevent more individuals and households from falling through the cracks, especially evident during the Covid-19 pandemic.
Yet, other medium to long-term reforms in social protection are still crucial to overcome overlapping programmes, fragmentation, insufficient coverage and adequacy of benefits.
Early school aid good but why for all?
In terms of education, the rise in the allocation of Early Schooling Aid (BAP) from RM100 to RM150 for all pupils is a noble move.
However, one can’t help but question why this aid will be distributed to all regardless of parents’ income level.
A better mechanism would be targeted aid which promotes equity instead of equality.
In addition, the additional expenditure saved would be better reallocated for providing remedial lessons for the “lost generation” during school closures and online lessons during the Covid-19 pandemic.
Our research has shown that Malaysia has the highest learning losses among Asian developing countries, with an alarming rate of loss of 0.95 years (11.4 months), in the pessimistic scenario.
All in all, Malaysia needs to place a greater emphasis on medium to long-term reform, instead of just stop-gap measures which generate benefits in the short term.
We need to pursue more budgetary initiatives and programmes which uphold the 3R of “Responsible” and “Reformist”, and not just “Responsive”.
Benedict Weerasena is research director and Abel Benjamin Lim is the head of development Economics of Bait Al Amanah. - FMT, 9/10/2022
Auditor-General’s Report 2021 tabled in Parliament on Thursday
(Photo by Zahid Izzani/The Edge)
KUALA LUMPUR (Oct 6): The Auditor-General’s Report (LKAN) on the financial statements of the federal government, state governments and state agencies for the year 2021 was tabled in Dewan Rakyat on Thursday (Oct 6).
Auditor-General Datuk Seri Nik Azman Nik Abdul Majid said the National Audit Department (NAD) improved the report by providing infographics on audit findings to summarise the audit result as a whole.
“The infographics are expected to help readers obtain important information from the audit, which was conducted quickly and accurately.
“On the tabling day, the department will also give a briefing on the main issues of the audit findings raised in the report to members of the Public Accounts Committee (PAC) in Parliament,” he said in a statement.
Nik Azman explained that the report contains several important matters, including the verification of the federal government’s financial statements for the year ending Dec 31, 2021, which shows an accurate and fair picture of the government’s financial position for the year in question.
“The accounting records were maintained in an orderly and up-to-date manner. However, the Auditor-General’s Certificate was with Emphasis of Matter paragraphs pertaining to matters such as gross loan receipts in 2021 amounting to RM217.201 billion (RM194.555 billion in 2020), an increase of RM22.646 billion or 11.6%.
“In addition, RM113.764 billion or 52.4% of the total gross loans obtained in 2021 were used for the principal payment of maturing loans,” he said and explained that the Emphasis of Matter highlights a fundamental matter that, in the auditor’s opinion, needs to be paid attention to, without affecting the auditor’s opinion.
Nik Azman also said that the gross loans amounting to RM217.201 billion resulted in an increase in federal debt to RM979.814 billion or 63.4% of the gross domestic product (GDP) last year.
Regarding the analysis of the federal government’s financial performance in 2021, he said the government revenue increased 3.9% to RM233.752 billion, from RM225.075 billion in the previous year.
“Operating expenditure amounted to RM231.516 billion, an increase of RM6.916 billion or 3.1% compared to 2020, which amounted to RM224.600 billion.
“Surplus revenue amounted to RM2.236 billion, an increase of RM1.761 billion compared to 2020, which amounted to RM0.475 billion. This surplus has been transferred to the Development Fund,” he said.
Meanwhile, Nik Azman said Covid-19 expenses had amounted to RM37.711 billion last year, which was a decrease of RM308.22 million or 0.8% compared to the previous year, which amounted to RM38.019 billion.
“Overall, the federal government recorded a deficit of RM98.740 billion with a ratio of 6.4% of GDP (RM87.645 billion or 6.2%of GDP in 2020), while the federal debt in 2021 amounted to RM979.814 billion with a ratio of 63.4% of GDP.
He said for the LKAN on the State Government and State Agency Financial Statements 2021, a total of 13 state government financial statements for the year ending Dec 31, 2021, had been submitted within the permitted period, which was between January and April this year.
“The audit conducted found that the financial statements for Kelantan, Negeri Sembilan, Pahang, Selangor and Terengganu were given an Audit Certificate Without Reprimand, while seven states (Johor, Melaka, Perak, Perlis, Penang, Sabah and Sarawak) were given Opinion Without Reprimand with Other Matter Paragraphs.
“Kedah was given an Opinion Without Reprimand with Other Matter Paragraphs and Emphasis of Matters,” he said, adding that the LKAN on the Federal Government’s Financial Statement would be uploaded on the NAD website after it is tabled in Dewan Rakyat.
Meanwhile, the LKAN for the 13 states will only be uploaded on the
NAD website after being tabled in the respective state legislative
assemblies. - Edge Markets, 6/10/2022
Up to 20% discount on full PTPTN settlement, more e-wallet credit for youth
KUALA LUMPUR (Oct 7): National Higher Education Fund Corporation (PTPTN) study loan borrowers get a 20% discount off their outstanding loan balance upon full settlement beginning Nov 1, 2022 until April 30, 2023.
Meanwhile, those who pay off at least 50% of their remaining debt in a single payment or opt for salary deduction or scheduled direct debit in the period will also get a 15% discount on their remaining debt.
This was announced by Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz during the Budget 2023 presentation in Parliament on Friday (Oct 7).
According to PTPTN’s Strategic Plan 2021-2025 report’s latest available data, the federal statutory body said as of end-December 2020, a total of 2.1 million borrowers should have repaid loans amounting to RM24.3 billion.
30.3% have fully settled their repayment, 10.3% are actively servicing loans based on the predetermined schedule, 41.3% are inconsistent paymasters, while 18.1% or 383,907 borrowers are categorised as defaulters amounting to a debt of RM4.6 billion.
Meanwhile, the government plans to extend individual income tax relief up to RM8,000 until 2024 for net annual savings in the National Education Savings Scheme (SSPN), Tengku Zafrul said.
Besides student debt reductions assistance, Tengku Zafrul also announced that youth aged 18 to 20 years and full-time students aged 21 years and above also get e-wallet credit amounting to RM200, with an allocation of RM400 million.
Additionally, the provision of a RM30 monthly prepaid package across three months for the youth with internet data plan subscription is extended until April 2023.
Get our comprehensive coverage of Budget 2023 here. Edge Markets, 7/10/2022
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