Wednesday, September 3, 2008

Malaysia 2009 Budget Summary - Good and Bad

Here is the summary of Malaysia 2009 Budget which are mostly bad verdicts than good verdicts. The 2009 budget virtually coincided with Malaysia's 51st National Independence Day but any nationalist sentiments of solidarity in the face of global adversity and helping the poor failed to convince Malaysians about the budget. To me, it's a bitter sweet budget.

In the business sector, the 2009 Budget, whilst not penalizing business is going to do practically nothing to encourage business.

For the ICT industry, the five-year tax exemption offered to venture capitalists that fund local startups is good but the budget did not provide incentives to reduce infrastructure costs, including the removal of import duty and sales tax exemptions on broadband equipment and consumer-access devices.

For the common
rakyat, some of enhance tax benefit like additional RM50 or 1% reduction is so negligible and almost make no difference. Same as the gimmick of giving RM20 electricity exemption.

In the Health sector, the Government will continue to provide free health services for Malaysians. A sum of RM13.7 billion is allocated in 2009 to enhance health facilities and provide equipments, increase supply of medicines, develop human resources, intensify research and enforcement activities, as well as build more hospitals, clinics and quarters but some
hospital are still overcrowding and shortage of health staffs, and there is no plan to improve the situation.

For the farmers, promise of reduction (of control pricing) on fertilizers and weedkiller/pesticides is good but it's one year late. Farmers has been struggling due to skyrocketing cost of fertilizers and weedkiller and only now the government act. If the government can control the price, why didn't they do it months ago !

I completely failed to understand why the Deficit is now higher than last year, when Petronas should be contributing even higher. It's a complete absence of C.A.T. (Competency, Accountability and Transparency)and no doubt, the most caring budget the PM has come up .... for his croonies and son in law.

They are just continuing being a big spender of our rakyat's fund and out of ideas, what they know is to try to gain rakyat's heart by giving away little sweets and buy desperate votes

Anwar Ibrahim’s “
budget policy brief”:
“While the 2009 National Budget has been touted in the mainstream government press as a “business friendly budget”( Star, 30 Aug.), experts have already contradicted that notion. This can be seen in the two page coverage of responses by leading tax experts (from Ernst & Young, PricewaterhouseCoopers, Deloitte and KPMG) acting on behalf of the country’s top businesses and corporate clients. Their verdict was that this is a
budget that whilst not penalizing business is going to do practically nothing to encourage business . The plan has not substantive initiatives to encourage business big or small, and no compelling proposals to improve Malaysia’s competitiveness in the context of the global economic slowdown.”

Lim Kit Siang says it
2009 Budget - Abdullah fighting for his political life
“It is a populist budget to deflect the growing popularity of Anwar”

Never before in Malaysia’s 51-year history has a budget received so little national interest and public attention – as all focus is on how long the Barisan Nasional government can last or Abdullah survive as Prime Minister.

Budget 2009 - A Layman’s View


This budget appears to be a rojak of little bits and pieces for various segments of the economy, none good enough to address key indicators that can mitigate a fast weakening economy. These tax relief for consumer electrical items as well as fruit juice to name a few does not help Malaysians to weather the serious inflation impact caused by fuel price increases in June this year.

Personal Little Value

The BN Government allowed for a 1% decrease in tax for the high bracket makes little impact to alleviate inflationary impact. Tax breaks for transport allowance gives the impact to a small group of fortunate employees. Certainly, civil servants find another break but poor pensioners will hardly get a twitch of eyelid from the Budget.

Missed the Key Economic Challenges

Hugh spending on proposed transportation as well as road infrastructure does not address any economy and inflationary challenges. Fundamental energizing projects to spur the economy should be broadbase infrastructure which can cause a massive trickle down effect. Serious increase in Government’s own expenses will worsen the deficit and appears senseless, especially when the BN Government had hardly grew large internal systems that require maintenance of that magnitude. Maybe there were serious plans to set aside billions of Ringgit for future yet to be dreamed of projects next year. Instead of improving the standing of the country, Standard&Poor have found it needful to lower our standing because of the additional deficit proposed.

Paying for East Malaysian Loyalty?

Interestingly, a large part of the budget allocation was for East Malaysian states of Sabah and Sarawak. Much more so for Sarawak and both goes into the billions of Ringgit. Is it part of a sudden awareness that Sabah and Sarawak have long been forgotten and now is time to appeal to them? Is it part of a bargain to be struck with East Malaysian states in return for their undying support to the present BN Government? This allocation is definitely unusual as it has not been done in this magnitude before in any budgets. East Malaysia should not be forgotten and neither should the budget be lopsided until this glaring point.

Not Helping the Hardcore Poor

It is very sad that the rhetorics of eradicating the hardcore poor has yet to be translated into something substantial in the Budget. It is every Malaysian’s responsibility to ensure that fellow Malaysians must have at least a meal a day as well as roof over their heads. After 51 years of Merdeka, we still have substantial hard core poor especially in Sabah and Sarawak and this Budget has still nothing much for giving them hope. Higher prices of food have driven them to a far worse position and the Budget is not going to do anything to help improve their position. More roads is good for East Malaysia but not at the expense of the hard core poor.

Poor Assumptions

In a nutshell, there is no specific actions within the Budget to address key economic challenges and inflationary pressures. It assumes that a recovery in global economy will help propel Malaysia back into a good shape. Large scale projects remain a worry not in the projects themselves but in the abuse in awarding as well as potential leakages to the system. The serious billions of Ringgits in various large allocations for infrastructure and transportation may be wasted if the award of tenders remain questionable.

Will the global oil price keep dropping? Will the global economy recover? Don’t hold your breath, not so soon. We need serious key budget actions to prop up the economy and help all Malaysians fight inflation before it eats us dry. Giving breaks where it sounds preposterous like anyone with RM20 power bills can skip paying them. All the breaks are for very small target groups. Lots of words, no action. Another NATO budget?

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