Industry observers and analysts do not expect the govt to abruptly halt all forms of subsidies, social assistances and handouts
By AZLAN JAAFAR / Pic By BERNAMA
The Budget 2019, which will be presented today, is expected to address the country’s mounting debts, implement efforts to recover lost funds, justify the rescinding of multibillion contracts and address socio-economic gaps.
The budget — the first to be tabled by the Pakatan Harapan government, the alliance that ended Barisan Nasional’s six decades’ rule of Malaysia in the May 9 general election (GE) — comes at a most unwelcome time.
The government faces a torrid time juggling between a RM1 trillion debt, maintaining economic growth, closing the widening deficits and satisfying voters who gave Pakatan Harapan a thumping victory in May.
Past budgets had been used by the government to please various ethnic groups with cash or incentives.
But Putrajaya’s tight revenue stream, as well as the urgent need to slash debts and balance social economic development, will not permit the administration to be remarkably generous.
Industry observers and analysts, however, do not expect the government to abruptly halt all forms of subsidies, including fuel subsidies, social assistances and handouts.
Insiders believe that the government will continue its election promise to assist deserving groups through targeted assistance, instead of an open-ended billions of ringgit giveaways like the 1Malaysia People’s Aid (BR1M).
The previous Barisan Nasional government had allocated RM6.8 billion for BR1M in Budget 2018.
The government’s main aims now are to reduce the huge debt and recover the money stolen from all the scandalous deals, said a source.
Putrajaya has started to reduce its debt commitment, cancelling multibillion projects like the East Coast Rail Link and three pipeline projects, and temporary shelved the Kuala Lumpur-Singapore bullet train link. These projects alone carry a price tag of over RM150 billion.
The government is also expected to push forward to recover lost funds including related to 1Malaysia Development Bhd (1MDB) — starting with the RM24.17 billion settlement with International Petroleum Investment Co, assets purchased with 1MDB money and other suspicious transactions — to compensate for the lost of revenues.
Budget 2019 is also expected to see a trimming of both development and operating expenditures. But segments like affordable homes, enhancing healthcare services and education will likely be given higher priority.
The government is also expected to focus on institutional reforms and provide a special attention to the nation’s food security.
Minimum wage, which had recently received wide criticism from various workers unions, could receive attention especially for certain targeted sectors and skillsets. These skilled labour are critical to push the economy.
The 2019 budget will gain global attention as it will be the first time in 44 years that the country’s financial blueprint will be presented by a Malaysian from the ethnic Chinese community.
Lim Guan Eng, 58, a chartered accountant, is the third ethnic Chinese to be appointed as the finance minister after Tun Henry Lee Hau Shik (1957-1959) and Tun Tan Siew Sin (1959-1974).
Lim, the former chief minister of Penang, had exposed various financial shortcomings of the previous administration, including the Good and Services Tax (GST) and income tax refunds shortfalls, and massive spending by the previous government prior to the GE.
Budget 2018 saw the previous government allocating RM280.25 billion for the country’s expenditure, higher than the RM260.8 billion allocated in the 2017 budget. Of the total, RM234.25 billion was allocated for operation expenditure and RM46 billion for development.
A large portion of the government’s 2019 budget will still be used on emoluments and administration, leaving little room for development expenses.
- Mohamad Azlan Jaafar is the deputy editor-in-chief of The Malaysian Reserve.