林德宜：2023预算案──同样的旧东西

high debt level

low quality of administration

global uncertainties

slow investment recovery 

rakyat economic woes.  

However little appears to be done with these challenges. Crafted with the looming state elections in mind, it is not surprising that the rhetoric of change and reform has largely remained rhetoric. 

It is clear that what has emerged is based on the original 2023 template  presented by former finance minister Tengku Zafrul last October before GE15 - that is mainly cosmetic reform geared towards the Malay and civil service constituency and with no evidence of political will to change. 

Anwar’s first full budget since 1997 is the largest budget presented in Malaysia’s history. But bigger is not necessarily better especially when it results in further bloat of the public service and  with little evidence of substantive institutional and governance reform measures.

Total forecast spending is RM 386.14 billion, of which RM 145.5 billion is spent on salaries and operating expenses, RM 58.6 billion in subsidies, while RM 97 billion is planned spending on development. The balance is on retirement charges (RM 30 billion), debt service charges (RM 45.94 billion), payments to states (RM 8.1 billion). 

This will be financed by RM 291.5 billion in revenue, made up of RM 218. 2 billion in tax revenue, and RM 73.3 billion in non-tax revenue, with a budget deficit made up from borrowings and payments from GLCs of RM 94.60 billion.

Disappointment with more of the status quo 

There are no reforms undertaken on the EPF system, only some token assistance where balances under RM10,000 will receive an RM 500 top up. This is even though there is a retirement crisis in Malaysia. Likewise, rather than any tax reform, there will be a 2 percent decrease in tax rates for the B40 group, and an up to a 2 percent tax rise in the T20 group. Taxation revenue will become a crucial issue for future governments, if reform is not undertaken.

The budget fell well short of the income safety net promised by both Pakatan Harapan and Barisan Nasional. The social assistance allocation of RM 8 billion to cover the needs of 8.7 million people will amount to RM 920 per person per annum.  THis has been dismissed as “paltry, one off handouts” by a senior trade union official. No change is forthcoming on a holistic approach to rectify the fundamental issue of low wages that continues to hold back the B40 and M40 income population. 

SMEs Again Neglected  

Assistance to SMEs will largely be in loans, with priority to developing automation. There will definitely be delivery and management problems. Government criteria may be too tight, making many SMEs ineligible. 

The funds allocated for automation and digitalization, may not all be taken up, due to most SMEs being only ‘hand to mouth’ operations and not able to match grants. “Know who” will decide who gets assistance.  Tax incentives will be of little use to SMEs which have not been able to make profits, Many SMEs are presently technically insolvent. There is a risk that the Khazanah Nasional and EPF innovative and high-growth start-up companies RM 1.5 billion investment scheme will benefit only wealthy and connected companies. Much of the money will also go towards consultancy services.

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