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Of Sabah’s budget and financial prudence
Published on: Sunday, December 03, 2017

By Datuk John Lo
DO you know what is the most outstanding point about Sabah’s 2018 budget presented by Tan Sri Musa on 17 November 2017?

The budget’s size? Its inclusiveness? No doubt these are important. It is the surplus of RM64.89 million.

Musa has presented budget surplus in the last 4 consecutive years and in most of the years he has been CM since 2003 The result is he has accumulated more than RM4 billion in reserve for Sabah, which is a tidy sum and an excellent foundation to build a secured future for all Sabahans. Surplus of RM64.89m for 2018 budget may not be a large sum but running budget surplus for 4 consecutive years is not easy. To do that, there must be a long-term vision and goals for Sabah. Many past CMs/Finance Ministers have taken the easy way out in deficit budgets.

They can always push the financial problems to the next CM/Minister of Finance.

Accumulating and leaving a legacy of money in the treasury are not popular with financially imprudent politicians.

Only the exceptionally rare ones who have a genuine sense of concern and good conscience for the future generation would do it. The best example is like a caring and concerned father doing the same thing for his children.

The surplus of RM64.89 million should be looked at in the correct context of [a] Economic uncertainties within Malaysia and globally. [b] GE14 is coming. [c] Musa has budgeted a surplus and has, at the same time, increased spending, including more special allocations in 2018. To achieve this seemingly small RM64.89 surplus, Musa will have to keep an extremely sharp eye on cost control and a first-class effort in revenue collection.

Keep the economy churning smoothly, coax it to expand with new and value-added industries, generate employment, at the same time, maintain a healthy financial position and accumulate an impressive state reserve are complex, demanding tasks. Tan Sri Harris, when he was Chief Minister, has achieved this.

After that, Sabah’s economy went into a deep economic slam. Restoring economic confidence and self-respect for Sabah has taken more than 20 years until Musa took over as Chief Minister.

Leave politics aside. Sabah has the most number of Chief Ministers by far since joining Malaysia –to be precise 15 in total. Not wishing to be derisive and with due respect, Sabahans should retrospect why there are only two Chief Ministers who have been able to give us steady expansion in economic development, financial stability and accumulation of decent state reserves.

For Musa to consistently keep Sabah in a healthy financial position and at the same time, expand the economy is probably the hardest job as Chief Minister. This demands a realistic vision, sound economic strategy, firm and steady hands-on implementation, manage a fine balance between expenditure and revenue and yet after all these, still can put away money for state reserves. Only a leader with financial discipline and vision plus an exceptional passion for Sabah to forge ahead economically can do it.

To resist and desist tabling a deficit budget in an election year takes a humongous effort!

So easy to give in. A deficit budget is enormously and politically tempting in an election year.

So nice to dish out the goodies. So easy to be a generous hero. Why worry about it?

Why not spend more than revenue? There is always the next budget to take care of this deficit after the election.

The Selangor Chief Minister has budgeted a deficit for 2018. Lim Guan Eng has done it.

Even Abang Johari has done it. Most of the Chief Ministers in W Malaysia have done it.

A responsible man in the street will avoid spending to the point of incurring a deficit to protect his family from financial disasters. A successful business person will never want to incur expenditure over income for fear of bankruptcy. A responsible leader who has the long-term interest of his people and future generations in his heart, will not resort to deficit budget to gain popularity and fish for votes. Deficit, by any other name is a loan or future money to be spent in the present. Payback time will come. Deficit budget, when it has become habitual, is not easy to kick off. It’s like drug addiction. Why is Singapore doing so well? Because Lee Kuan Yew had maintained the highest level of financial prudence and discipline.

He has never used deficit budgets or spent the reserves, unless it is absolutely necessary, to please Singaporeans. Sabahan leaders should emulate Singapore which places great protection on its reserves.

The Singapore Government can only dig into its reserve with the approval of the President and the Presidential Council. Sabah should not allow any spendthrift leader to dip his hand into our reserve.

As far as possible I will not quote figures as these are available in Musa’s 2018 budget speech.

2018 budget, albeit with a modest budget can only come about because of many years of prudent management of Sabah’s economy and finances. Musa has diversified Sabah’s economy from commodity to value add manufacturing and service industries. Musa’s economic diversification has expanded our economy in depth as well as breadth. Concurrently, he has tightened the state administration, plugged the leakages and whipped all the GLCs into profitability.

Like a businessman who has already become successful with a good reserve, Musa has delivered a budget that is expansionary, with a decent increase in revenue and expenditure.

This he has done with no imposition of additional tax burden on the people. The only exception is the higher “sin tax” on 4 digits and gamblings which all decent men will support.

Musa’s 2018 budget is comprehensive, responsible, will consolidate Sabah’s economic achievements to date and opens up new and exciting opportunities. There is something for every section of Sabahans including single mothers, retirees, farmers fishermen independent schools, churches and temples.

The Chairman of the Council of Churches in Sabah has praised Musa for his inclusiveness by allocation funds for churches and temples.

I urge leaders, who think Sabah’s reserves are useless unless they are spent, to restrain from this sort of political shallow talks which will inflict Sabah with future financial troubles. Sabah will need savings/reserves to maintain economic stability and to provide financial protection for all Sabahans. All countries with proven long-term success have financially prudent leaders.

Last word – if a leader can make the people well off by simply spending savings/reserves, then there won’t be any poor people anymore or he can easily make everyone rich. To produce genuine economic progress is much more complex than dishing out money. It requires for the leader to have a good vision, a comprehensive set of sound policies and effective implementation. Of critical importance, is financial prudence which is lacking in many leaders.

That is why Lee Kuan Yew and Deng Xiao Ping are unique in this world. Then there are so many leaders who, because of their financial imprudence and recklessness, have over spent their countries into bankruptcy.

A strong reserve signifies economic strength.

That’s why the world admires China, Singapore, Switzerland and Norway and looks down on Venezuela and Nigeria. Their leaders are the best examples of having overspent their great wealth from oil and have made their countries bankrupt. Ultimately it is the people who have to endure great sufferings from the financial follies of their leaders.

Be forewarned that a squanderer leader can bankrupt Sabah. Be wise to entrust our economic present and economic future well-being with a financially prudent leader.

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