Budget 2013 – only good from the outside
At the end of the day, it’s not about expensive infrastructure that are likely to resonate with the majority of voters.
James Lim, FMT
All the anticipation building up over Budget 2013 has finally ended when Prime Minister Najib Tun Razak unveiled it last Friday.
Young, first-time voters will be treated to cash handouts, book vouchers (for university students) and even a discount on smartphone purchases.
Homebuyers will supposedly see a reduction in speculative activity in the housing market with the hike in the Real Property Gains Tax (RPGT).
There was no news on the goods and services tax (GST) which is meant to broaden the tax base in Malaysia as only a minority of Malaysians pay income tax. However, taxpayers below the RM50,000 bracket were entitled to a one percent reduction in payable tax.
Elsewhere there was good news for others too. Bonus (1½ months) for civil servants, insurance schemes for fishermen, subsidies and incentives for farmers, increase in minimum pension for pensioners and so on.
Tax and non-tax incentives were given to the oil and gas industry. Besides, the RM1 billion SME Development Scheme is welcome news to small and medium enterprises.
On a bigger scale, Najib, who also holds the finance portfolio, aims to reduce the budget deficit from 4.5% in the previous year to 4.0% in 2013. This is taking into account the estimated RM208.6 billion government revenue for 2013.
A Bloomberg article reported the strengthening of the ringgit, rising from “0.5% to 3.0620 against the dollar, the biggest gain in a week”.
“The benchmark FTSE Bursa Malaysia KLCI Index climbed 0.5%,” added the report.
Temporary sweeteners
One can also point to the success of our government-backed initial public offerings (IPOs) which achieved worldwide status. One can hear a loud chant of “Malaysia Boleh” in the stock markets.
However, the situation goes beyond our positive economic forecast.
Many have wanted the Auditor-General’s report to be released before the budget announcement, but that was not the case.
Cash handouts to the young are mere temporary sweeteners. Besides, the previous gifts of book vouchers were not carefully regulated, resulting in a portion of the students using them to buy anything in book stores ranging from comic books, expensive stationery to water bottles, wallets, and even music CD albums.
National House Buyers Association secretary-general Chang Kim Loong was sceptical on the RPGT revision. He says that the revision will allow speculators to purchase properties from developers upon launch and hike up the property price, while paying only the proposed 10% RPGT on the third year.
Orang Asli Concerns director Colin Nicholas said that the allocation of RM88 million to implement economic development programmes and water supply projects for the Orang Asli community does not address the issue as most of the time there is already a water gravity system in place. (A water gravity system is a system whereby water from a source high up and deep in the jungle is channelled through PVC pipes.)
“What is needed is proper delivery system with no leakages. Two years ago, a similar project was mooted but the project failed,” he said
Which brings me to my point that although things might look good from the outside, sometimes policies are ill-planned and may backfire.
Long-term love affair with subsidies
How about Malaysia’s long-term love affair with subsidies? Research for Social Advancement (Refsa) and IDEAS, two local think-thanks, have revealed that expenditure on subsidies has quadrupled since 2007.
Are we as a nation still heavily dependent on subsidies which give a false value on goods and services?
Then there’s also the issue of our development expenditure and operating expenditure. Malaysia’s operating expenditure has increased from RM182 billion to RM201.9 billion.
