Development expenditure reflects govt’s effort to tackle urban-rural divide

Putrajaya sets aside RM587m for rural water projects to achieve the target of 99% access to clean water

pic by TMR

THE government’s increased development expenditure allocation, under Budget 2020, by RM1.3 billion from last year shows its focus towards addressing the needs in rural areas, particularly in Sabah and Sarawak.

RM56 billion or 18.9% of the total RM297 billion budget, is allocated for development expenditure, while the remaining 81.1% or RM241 billion is for operating expenditure.

“It is clear that the rural-urban divide is given the utmost priority in the third thrust (of the budget). More than half a billion allocated for rural water projects, of which 80% are for Sabah and Sarawak. This is a very welcoming effort in ensuring more rural households get access to clean water,” DM-Analytics Sdn Bhd senior researcher Zouhair Mohd Rosli told The Malaysian Reserve (TMR).

For 2020, Putrajaya sets aside RM587 million for rural water projects, out of which RM470 million for Sabah and Sarawak to achieve the target of 99% access to clean water.

The government will also spend RM500 million on rural electrification, benefitting over 30,000 rural households and the major beneficiaries are those who live in the two states of East Malaysia.

RM1 billion is allocated for rural roads across the country, in which a total of RM326 million and RM224 million will be distributed to Sabah and Sarawak respectively. This is expected to benefit about 145,000 rural population.

Budget 2020 is in line with the Shared Prosperity Vision 2030 blueprint that was launched by the government recently.

“The budget is a commitment by the government to narrow the economic inequalities between income classes, ethnic groups and territories,” Economic Affairs Minister Datuk Seri Mohamed Azmin Ali (picture) said in a statement last Friday.

The 18.9% ceiling allocation for development expenditure is 1.6% higher against 17.3% or RM54.7 earmarked out of the RM314.6 billion budgeted for 2019.

Sabah and Sarawak are the largest recipients of development expenditure amounting to RM5.2 billion and RM4.4 billion respectively.

After the exclusion of RM37.1 billion one-off allocation for outstanding Good and Services Tax and income tax refunds, Budget 2020 (excluding contingency reserve of RM2 billion) saw an increase of RM19.5 billion compared to RM277.5 billion in 2019.

The government is expected to collect RM244.5 billion in revenue in 2020, an increase of RM11.2 billion from 2019, after excluding the one-off special dividend of RM30 billion paid by Petroliam Nasional Bhd.

On a related matter, Zouhair said the income tax reduction for small and medium enterprises (SMEs) would provide support for businesses to weather tough environment expected next year, as well as employments.

“Tax reduction of SMEs to 17% is welcoming as they might struggle to operate in a challenging situation next year. Two out of three workers are currently working in SMEs. It will hopefully boost the employment opportunities in the SMEs sector,” he added.

The government is also pushing for the SMEs, which include a RM550 million allocation to provide smart automation matching grants to 1,000 manufacturing and 1,000 services companies to automate their business processes. This grant will be given on a matching basis up to RM2 million per company.

The government also plans to provide a 50% matching grant of up to RM5,000 per company to subscribe among others, electronic point of sale systems, enterprise resource planning and electronic payroll system.

The grant will be worth RM500 million over five years, limited to the first 100,000 SMEs applying to upgrade their systems.

Meanwhile, MIDF Amanah Investment Bank Bhd head of research Mohd Redza Abdul Rahman said the measures on SMEs would align the businesses in line with the Industrial Revolution 4.0 (IR4.0).

“The focus on SMEs development is well lauded in reengineering our economic activities with a focus on resigning them to the current trends of digital economy and IR4.0. This will help us to mitigate concerns on slowing economic growth,” Mohd Rezda told TMR.

He also said Budget 2020 will provide safety for the people and promote inclusive developments through various allocations related to affordable housing, public infrastructure, Federal Land Development Authority, which is also in tandem with one of the pillars of the 11th Malaysia Plan.