‘Unhealthy to overspend’
By Teoh El Sen, FMT
KUALA LUMPUR: An economist has expressed worry over the country’s spending in Budget 2012, describing the huge increase of 9.4% to total RM232billion budget, from RM212 billion last year, as “not so healthy”.
“This is the largest budget in the whole history of Malaysia, though of course we are expecting it to increase every year…but this is a huge increase and that’s not so healthy,” said Federation of Chinese Assocation Malaysia (Huazhong) deputy secretary-general Dr Chin Yew Sin.
“The government should be more prudent in the face of the expected economic slowdown next year and cut down on operating expenses,” said Chin.
Chin said it was also an unhealthy trend to continue to increase spending in operational expenses(RM181.6 billion, up 11.5%) as opposed to development expenditure(RM51.2 billion, up 4.1%).
“If we look at the spending proportion, this year we’ve actually increased spending on operations from 77 to 78%(compared to 23-22% development expenses). During Pak Lah’s(former Prime Minister Abdullah Ahmad Badawi) time it was 75%,” said Chin.
Chin said it was better for the country to spend more on development–such as having more construction of transportation services, roads,and so on– as that would bring about more positive effects on the economy.
“I suggest we should spend 70% on operations and 30% on developments. More development would only be good for the country,” he said.
Commenting on the country’s bloated civil service, Chin said the government has yet to cut down on operating expenses,especially the RM52billion in salaries for civil servants.
“The sum of RM52billion is about 1/3 of the entire operational costs. That’s a big sum, and its still increasing, and that’s not healthy.” He noted that the numbers of civil servants is increasing , from 1.2million to 1.3 million.
Chin commented that the government was attempting to pump more cash into the civil service to spur domestic consumption, and in turn, encourage economic growth.
“I think the increase in government salaries and one-off bonuses would spur the economic growth of the country, as (those) would lead to more domestic consumption,” said Chin, who added that Malaysia’s current domestic consumption takes up 55% of the GDP.
“Once they get the increment they would spend more, and we know that’s a very large group. So once money is spent it was then would lead to higher economic growth,” said Chin.
Chin, who last year had expressed worry over the country’s continually increasing debt, said it was a pleasant surprise that the government has projected a cut in deficit to 4.6% of the GDP.
“The government has shown its determination to cut down 5.4% fiscal deficit, in this year, they are going to cut to 4.7% is considered a very good projection. Even my own prediction was 4.8%, market analysts had put it at 5%. It’s out of our expectations and this is good,” said Chin.
He said the deficit was so high last year due to the initiation and implementation of so many government transformational problems.
“ETP, KPI, NKRA, they needed to spend. Now after the second year, the economy is more under control,” he said, adding that the rate of smaller deficit this year gives greater promise that the nation can reach the targetted 3% deficit by 2015.
