Managing the budget
Managing the budget The Finance Minister will table his first budget soon with a debt-laden balance sheet and demands for solutions to ease the pain of the bottom 40% of the people
The Finance Minister will table his first budget soon with a debt-laden balance sheet and demands for solutions to ease the pain of the bottom 40% of the people. Economists give their views at a recent roundtable discussion.
BUDGET 2019 is a week away, but already, the message is loud and clear to manage the expectations of the public.
A common theme that cut across the one-day “Malaysia: A New Dawn” investors’ conference and the mid-term review of the 11th Malaysia Plan (11MP) is not to expect miracles in Budget 2019.
Key leaders, including Prime Minister Tun Dr Mahathir Mohamad, spoke at the conference on tightening the belt while the 11MP came across as a document with increasing emphasis on institutional reforms that the country will take in the next two years.
The 11MP was devoid of any mega-projects, unlike past Malaysia plans.
Economists and political economic experts generally concur that the government has to take institutional reforms first before addressing the financial and economic reforms of the country.
“If you have dysfunctional public institutions, you will not be able to see the fullest potential of investments to follow through,” says Socio-Economic Research Centre executive director Lee Heng Guie at a roundtable discussion organised by StarBizWeek – moderated by specialist editor M. Shanmugam – this week ahead of Budget 2019 to be tabled on Nov 2.
Other members of the roundtable discussion are Nungsari Ahmad Radhi, who is an economist by training, and Prof Edmund Terence Gomez of Universiti Malaya.
Gomez says he only sees plans for institutional reforms in the midterm review of the 11MP.
“One of the reforms I would have expected to see was to debate the Bumiputra Economic Community (BEC). They (the new government) did not at any point debate the BEC... in fact they took it upon themselves to take ownership of the BEC,” he says.
Nungsari, who is the chairman of the Malaysian Aviation Commission but spoke at the roundtable on the basis of his economics training, confessed that he was generally not a fan of the five-year plans.
Nevertheless, he noted that the mid-term review was realistic as the government has moderated its economic numbers but has not come to terms with the political instruments to be used to reach the list of things to be done based on the manifesto.
“This is their first major economic statement and attempt at trying to convert a list of things to do into a framework.
“You need to have a forest view of things and the list constitutes the trees. But I think they (the new government) are also struggling with what sort of bullets they have for an economic plan,” says Nungsari.
Since taking over the helm five months ago, Finance Minister Lim Guan Eng has said the country’s debt stands at RM1.087 trillion, although rating agencies feel that a more appropriate number should be lower at about RM885.6bil.
He also revealed that the government owed companies and individuals refunds of taxes to the tune of RM35bil. Hence, there is little expectations of any mega-projects or extensive tax reliefs in the upcoming budget.
In the absence of such measures, the panel was looking at Budget 2019 emphasising on institutional reforms and addressing measures to alleviate the short-term pain of the bottom 40% of the population.
The government has the next two years to put in place the institutional reforms. After that, the runway will get shorter and institutional reforms would be harder. Nungsari Ahmad Radhi
I did not see fundamental economic reforms. One of the reforms I would have expected to see was a debate on the BEC in the mid-term review.
Terence Gomez
I hope we can go back to basics. Spending should be efficient and done within our means. Lee Heng Guie
Nungsari said the government has only the next two years to put in place the institutional reforms.
“After the next two years, the runway will get shorter and institutional reforms would be harder,” says Nungsari.
Gomez says that considering the Prime Minister is from the smallest party in the ruling coalition, he does not see the reform and dismantling of public institutions that were the source of the leakage in the public expenditure.
“Five months now, I don’t see the political will to reform the public sector, particularly the SOEs (stateowned enterprises) that are the source of the leakage,” he says.
Nungsari said that the problems are not the government-linked companies, but the Feldas and Felcras and the entities below them.
“This is where the problem lies... I hope those can be cleaned out,” he says.
In the 90-minute discussion moderated by specialist editor M. Shanmugam, the panellists touch on various other issues from the state of the government finances and its limitations to what can be expected, given the constraints.