Must Sabah show gratefulness – S’gor’s budget
Published on: Sunday, November 10, 2019
By: Datuk John Lo
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https://www.freemalaysiatoday.com/category/nation/2019/11/01/selangor-tables-rm2-3-bil-budget-to-stimulate-growth/
For as long as I can remember, Selangor’s budget has always been about 50pc of Sabah’s. The Menteri Besar of Selangor tabled a RM2.33 billion budget for 2020, RM1.2 billion for operating expenditure and RM1.33 billion for development. Sabah’s budget will be tabled later this month and is expected to be about RM5 billion. I do not wish to begrudge Selangor for having become the most advance state in Malaysia on a shoestring budget each year. I wish to praise it for having done exceedingly well with state budgets that have always been smaller than Sabah’s. The question uppermost in mind is – why has Selangor done so well with such a small state budget? Why is Sabah lagging behind so much with a larger budget consistently?
The answers to these questions are in the persistently lopsided Federal Budget allocations, Federal expenditure contained in the recurrent expenditure and bias policies which have placed Sabah at a great disadvantage. Before proceeding to expand of these adverse factors, let me highlight on these facts – [a] Selangor’s GDP per capita RM51,528 – Sabah’s-RM25,861 [2017]. Sabah’s could be much lower if the revenues from oil/gas and oil palm are excluded for they don’t come to Sabah. [b] Selangor’s population is 6.53 million compared to Sabah’s 3.9 million. I now wish to go into the built-in harsh/adverse financial realities that Sabah has been facing.
Federal Allocations. Let us forget about the direct grant to Sabah which is a tiny fraction of the total budget for which Ngeh has reminded Sabahans to show gratefulness. The real financial and economic actions are in the Federal allocations for mega projects that have been funded by Federal Government within Selangor in 2020 Budget and previous years, like the highways, KLIA, Port Klang, power plants, high speed 5G, public transport especially MRT, so on and so on. For example, budget for tourism promotion has benefitted Selangor first of all because most tourists coming into Malaysia land in KLIA. Selangor does not have to budget much in tourism promotion. Over past 50 years, Selangor has benefited hundreds of billions. How much has Sabah benefited from Federal funded projects in the last 50 years? It does not require brainwork to conclude how Selangor has become the most developed state with a small budget. Also, it does not require any thinking to conclude Sabah, being so greatly disadvantaged, can never catch up with Selangor, no matter if Sabah can slap-up RM10 or RM20 billion budgets. The reality of Sabah’s receiving very little recurrent expenditure is simply a reflection of past poor Federal allocations for longer term projects.
Federal Recurrent Expenditures. Like I have pointed out previously, it is not just development budget allocations that is important. I would venture to say that in the case of Malaysia whose recurrent expenditure is always larger than development budget, where and how these recurrent expenditures are spent is even more important. Reasons being these recurrent expenditures can generate a huge cash flow, business and employment opportunities. It is therefore not surprising that Selangor’s GDP per capita is much higher than Sabah’s. Has any Sabahan political leader noticed that the Federal Government has never said all the highways in Selangor are for Selangor like Pan Borneo is for Sabah and Sarawak?
Unfavourable Policies and Implementation against Sabah [a]Cabotage policy with block-monopoly exemption given to ship owners against Sabah, [b] low priority of domestic/foreign investment promotions. [c] No siting of government and financial institution Headquarters in Sabah. [d] Very low priority in promotion of downstream industry like oil palm and oil/gas. Sabah’s gas being piped to Bintulu for processing. Sabahans, being owner of Malaysia’s largest gas deposits, should be entitled for first priority on downstream/power generation. Sabahans should not have to pay high price for gas. But we pay the highest price for cooking gas in tank. [e] PH government’s broken promises of 20pc oil royalty and 40pc of revenue share. They don’t even bother to apologise for these broken promises. [f] Snail pace approvals. [g] Extremely poor conditions of rural schools. [e] Federal government has never assisted Sabah to diversify our economy.
High cost disadvantages for Sabah. Consequent upon unfavourable Federal policies and implementation for years, Sabah suffers from higher cost and therefore our competitiveness and our standard of living suffer [a] Higher production cost has made industrialisation all but impossible. [b] Chasing for payment by contractors means having to incur cost of flight, hotel, land transport and above all, time in Putrajaya. More expenses if a Sabahan has to return again and again. W Malaysians just only have to jumped into their cars to reach Putrajaya. [c] Higher staple food cost because fertilisers are more expensive, transport is more costly. [d] Sabah’s GDP per capita is very low but minimum wage is higher.
Low cost advantages to Selangor.
Looking at the Selangor population of 6.53 million and budget of only 2.33 billion means that each Selangorian has only to bear tax of RM358. For Sabah, basing on 2019 budget of RM4.16 billion and population of 3.9 million each Sabahan has to bear RM1,067 tax – almost 3 times more. By the same logic, Selangor’s number of business establishments and factories must be many more times than Sabah’s. Yet their tax liabilities/assessment are miniscule compared to Sabah companies. By same token, Selangor’s property value is very much higher and number of high-end properties much bigger but their property tax must be much lower than in Sabah. Still on lower cost being enjoyed by Selangor, all Federal Government offices are within driving distances, cost of flights a lot cheaper, supplies can be sourced both locally and overseas at much cheaper rates. The list can go on ad nauseam. Now you know the reason for Sabahans’ financial plights. The reality is simple this, they enjoy much, much more facilities and pay much less tax. Selangor’s GDP per capita is 2 times larger than Sabah’s but pay a lot less tax as is reflected in the resectpve state budgets. Is It any wonder that investors are avoiding Sabah and making a beeline to Selangor?
Under the present system of budget allocation, Sabah can never catch up for there are just too much built-in factors against us. There is no way Sabah can receive equitable budget allocations and equitable economic development. PH’s Shared prosperity 2030 will remain a distant dream. Sabah’s resources get shared away but Federal Government has failed to give us equity in the budget. Time for Sabahan political leaders to open their eyes, analyse the Federal Budget from all angles and fight for a radical review of the whole budget system in the federation. Their attention must go beyond just direct budget allocation. Special attention must be given to indirect economic benefits of the recurrent expenditures [70pc] of Federal Budget which, generates much more benefits than direct allocations. The inequitableness of the Federal Budget must be addressed. Or else, Sabah which has the best resources, can only have 1 position– always the economic laggard, slow coach of Malaysia.
I congratulate Selangor leaders for playing their cards right. It has gotten the best deal out of Federal Budget – Minimum tax and maximum benefits. My tears are for our Sabah – maximum tax and minimum benefits.
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