BUDGET BOOSTS COMPETITIVENESS

But the proof is in the execution

COMPETITIVENESS is about the ability of our businesses to compete successfully in international markets. It is also about our capability to attract quality investments and talent. Combined, improved trade and investment expand employment, wages and the prosperity of the nation.

Competitiveness has two sets of determinants — macro-economic factors and micro-economic conditions. How does the 2021 Budget impact these factors to enhance our nation’s competitiveness?

At the macro level, monetary and fiscal policies play a crucial role in ensuring the economic stability to keep businesses afloat amid the pandemic. Economic stability will also be a weighty source of confidence for foreign investments.

With an outlay of over RM322 billion, the budget promises to stem the downward spiral of the economy and help it recover handsomely by 7.5 per cent next year. At 1.75 per cent, the benchmark interest rate is among the lowest in our monetary history. That, too, should augur well for spurring private consumption and investment.

The generous pay-outs in the form of employment subsidies and living aid, one per cent cut to income tax and reduction in employee contribution to the Employees Provident Fund plus its withdrawal, and loan moratorium should augment private spending and drive economic growth.

As it enhances productivity growth — the fount of competitiveness — human development represents another façade of the macro-economic factors promoting competitiveness. The increased allocations for health services (RM32 billion) and education (RM50 billion, or 16 per cent of the total budget) testify to the budget’s commitment to human development and competitiveness.

The Powell Doctrine, promulgated by Colin Powell, a former United States secretary of state and armed forces chief, advocates that to wipe out the enemy, we would need to expend an extraordinary amount of resources. In keeping with this doctrine, the budget has raised the Covid-19 fund by about RM20 billion to RM65 billion. It has also allocated RM1 billion to fight the third wave of the pandemic.

Such disproportionate amount of funds shunted to flatten the infection rate should save lives and quickly restore the economy fully.

Environmental sustainability is so much an integral part of human development that the first time the budget has adopted it as its development agenda. It has allocated over half a billion ringgit to clean up rivers, manage waste and protect biodiversity and forests. The government will also study the adequacy of environmental legislation and enforcement including raising awareness of the monstrous cost to people’s wellbeing from unmitigated development.

At the macro level too, institutions and values play a vital role in promoting competitiveness. The budget strengthens good governance and integrity. It will reward whistle blowers who alert authorities on any violation of the law as, for example, p olluting river s and water-catchment areas.

At the micro - economic l evel, the quality of the business environment is a key factor in driving competitiveness. This ecosystem must necessarily include advanced infrastructure. Accordingly, the budget allocates RM15 billion to fund massive infrastructure projects to build and upgrade roads, rail and bridges. Further, capacity-building development allocation comes close to RM70 billion — the highest in history.

The 2021 Budget also earmarks funds for digital infrastructure and digital inclusiveness, including digitalising small- and medium-sized enterprises. The varied tax breaks should attract investments to transform Malaysia into a digital economy. And the RM1 billion allocation to upskill talent would meet the skilled humanresource demands of the digital industry.

However, the RM8 billion allocated for the national digital network initiative and for upgrading broadband services does not commensurate with the mammoth aspiration of the country to become a digital hub in this part of the world.

Overall, the 2021 Budget should have a salutary impact on the nation’s productivity growth and its ability to export and attract quality investments. The proof is in the execution.

The budget should be implemented expeditiously without waste and mismanagement. The public service will now have to demonstrate that it can rise up to that challenge.

Combined, improved trade and investment expand employment, wages and the prosperity of the nation.