Public expect Pakatan’s second budget to reflect shared prosperity
Published on: Sunday, October 06, 2019

BUDGET 2020 will be tabled in Parliament on Oct 11. This will be the second budget presented by the Pakatan Harapan government, after more than 60 years of Barisan National rule.

Last year, there was too little time to properly plan and introduce budget proposals that would clearly define Pakatan’s budget policies and directions.

Hence Budget 2020 must show more of the new government’s socioeconomic thinking and plans and proposals under the 12th Malaysia Plan (2021-2025) as well.

In devising the strategy for Budget 2020, the Treasury would have to take into account the world’s economic environment and outlook. All the major international economic agencies have highlighted a slow down in all economies. With the continuing trade war between the two economic giants, the United States and China, trade outlook seems poor.

Add to that the persistent turmoil in the Middle East and unpredictable petroleum prices as well as the growing uncertainties of global climate change all over the world, including the damaging haze in this country and region, and the prospect of economic and financial decline is very real.

Consequently, the Malaysian economy is expected to suffer a slow down that could cause growth to fall to between 4.0pc and 4.5pc next year. And it could be worse in the future. Then unemployment, especially among graduates, will rise, incomes will likely fall, and inflation is unlikely to lessen.

Life, especially for the B40 (low income) group, could become very difficult. Revenue would also decline but government salaries, debt and pensions will still have to be serviced.

Hence, Budget 2020 will no doubt face severe constraints and the budget deficit will be under greater pressure to rise instead of fall, as the government had planned.

So what can Malaysians rightly expect from Budget 2020? I, for one, expect it to reflect its theme, “Shared Prosperity” in the following manner:

l The poverty line is currently too low, as indicated by a recent UN report. The 2020 Budget has to come clear on this vital issue, as a new poverty line will be the basis for expenditure policies and allocations to fight poverty.

The budget should have a special package of anti-poverty proposals for the lowest 20pc of the Malay-sian population – regardless of race and religion! This can be a new bottom-up approach that will surely be widely accepted as just and fair, in accordance with our national values.

l Malaysia’s minimum wage is low and could be raised appropriately and gradually to a decent living wage.

l Inflation has been rising and should be contained. Here, again, there should be different cost of living indices for the poor. This would help craft more specific policies to alleviate poverty and reduce the widening income gap.

The income inequality gap between rich and poor has to be bridged if we believe in implementing the UN-inspired Sustainable Development Goals, especially pertaining to “no poverty”.

l The digital economy is moving faster than we expected. Hence the budget must introduce new incentives to encourage industry – especially the small and medium-sized industries (SMEs) – to adopt the new technologies of the Fourth Industrial Revolution.

If SMEs in China can do it, why can’t we? Maybe we should invite China experts to help us here?

l Environmental challenges are threatening our future growth, income distribution, and progress.

This is evident from the way we treat our own rubbish disposal and the rubbish from foreigners that is brought in for us to clean up (or, worse still, that we silently ignore and simply endure). We even tolerate toxic industries that others reject.

Surely the budget has to come up with new proposals that are different from those that emerged from a corrupt government in this area?

l Technical and vocational training and science and technology education should be given more allocations in the 2020 Budget. We cannot urge the Education Ministry to do more when we allocate it less than its basic financial requirements.

But equally important is the need to choose trainers on the basis of merit and real skills rather than to employ underqualified teachers who can’t perform satisfactorily.

l The budget for healthcare and social services should be reviewed and revised. The long-awaited health insurance scheme could be introduced in Budget 2020.

The very low hospital charges could be adjusted to gain more revenue. The poor need not pay higher charges but the better-off could be charged more and be encouraged to use private sector medical services.

This important principle could be applied across the board to be fair to all. After all, this could be one aspect of the “Shared Prosperity” theme.

l Taxes should be slightly and gradually increased, under “Shared Prosperity” policies. The wealthy could be taxed more. How else do we share the prosperity?

The Nordic and many other developed countries have superior welfare services because their tax rates are much higher and their services are more efficiently provided.

They don’t have the wastage and corruption that we have in Malaysia. Yet we ask for more and want it all despite paying far less tax?

The 2020 Budget should therefore raise some taxes, even if slightly.

Higher taxes will not deter foreign investors. They are attracted to Malaysia for its natural resources, quality of life, security and safety, and future prospects. Having said that, we also cannot take foreign investment for granted.

l Foreign and domestic investors alike also look to our unity, racial harmony, religious freedom, and wellbeing to continue investing. These have to be maintained and sustained if business confidence is to expand in the future and enable us to compete with our neighbours.

This means genuine inclusiveness through a budget that metes out just treatment to all state governments – particularly to Sabah and Sarawak, as promised in the Malaysia Agreement 1963.

Too much politicking, racialism and religious bigotry will not be tolerated by investors or moderates!

l The 2020 Budget should provide incentives for the best talent among us and attract some of the best Malaysian brains from abroad to come back home and stay to contribute to a better, more fair, prosperous and sustainable Malaysia.

Finally, I think most Malaysians would expect a realistic and mildly growth positive Budget 2020 that will give priority to the poor in the interest of protecting our social stability and enabling real progress for all Malaysians.

 

Tan Sri Ramon Navaratnam

Chairman, Asli Centre of Public

 Policy Studies

 





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