Perks aplenty in Budget 2023, but where will govt get revenue from, asks senior economist

Budget 2023, with an allocation of RM372.3 billion, lived up to expectations of being an election budget, with something for every Malaysian.

Renowned economist, Tan Sri Ramon Navaratnam, said the government had met its objectives in rolling out goodies to be politically popular.

“The government has done well to provide so much, for so many. There were lots of perks and goodies. But these are all short-term, and not long-term benefits,” said Navaratnam.

“It does not address the issue of financing. There was no mention of any tax changes, except for tax exemptions. Clearly, it is an expenditure budget, and not a revenue budget,” he said.

With a general election on the horizon, the former deputy secretary-general of the Treasury, who has been involved in the preparation of numerous national budgets, said he found it “unusual” for the Budget speech to not contain details on revenue.

“This means the public will not know how much the deficit is, or if the government is borrowing more. And this also means we also do not know the implications of Budget 2023.

“Both the expenditure and revenue must be explained in budget speeches. This is very important, especially when the issue at hand involves deficit and debt … It’s a matter of high policy.

“We want to know whether fiscally, it (the budget) is acceptable or not. It is a question of accountability,” he said, hoping that the matter will be debated in Parliament in the coming days.

Earlier today, Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, in the Dewan Rakyat, said RM272.3 billion had been set aside for operating expenditure, while RM95 billion had been allocated for development expenditure, and RM5 billion for the Covid-19 Fund.

Tengku Zafrul had also said that the government is projecting a GDP growth of between four and five per cent for 2023.

While Tengku Zafrul had said that Budget 2023 was driven by the 3Rs – Responsive, Responsible, Reformist – Navaratnam opined that there was “nothing reformist” about it.

“While a lot of goodies were allocated to civil servants, there appears to be a missed opportunity to get the private sector on board.

“Once again, we are missing the chance to introduce policy reforms that will encourage not just international, but domestic investors.”

While the government had announced yesterday that the Cabinet had agreed to ratify the Comprehensive And Progressive Agreement For Trans-Pacific Partnership, Navaratnam noted there was no mention of the matter in the Budget 2023 speech.

“This was a missed opportunity, and we are not demonstrating that we want to move forward with new policies,” he added.

Navaratnam also said that with “hundreds of goodies” being allocated, it will inevitably boil down to implementation.

“The government must ensure there is no wastage and that the allocated funds will reach the target groups. The government must give the people this assurance.”

Budget 2023 highlights:

  • Students will receive RM150 in education aid, regardless of their parent’s incomes.
  • RM777 million for supplementary food programmes, benefiting 800,000 students and over 7,000 canteen operators.
  • RM7.8 billion for Bantuan Keluarga Malaysia, which will benefit 8.7 million Malaysians.
  • RM431 million to procure new assets for the police.
  • A national scam response centre will be set up to help the large number of scam victims in the country.
  • RM36.1 billion for the Health Ministry.
  • RM11 million for subsidies for mammograms and cervical cancer screening.
  • RM100 increment for civil servants ranked between Grade 11 and Grade 56.
  • Aidilfitri aid for civil servants increased to RM600 with payouts in March next year.
  • A reduced interest rate from four to two per cent for the computer financing scheme for civil servants, which will now also include smartwatches.
  • RM15 billion for flood mitigation initiatives.
  • Personal income tax reduced by two per cent for those earning between RM50,001 and RM100,000 a year.
  • RM200 million to promote tourism recovery.
  • RM17.4 billion for the Defence Ministry, including RM4 billion for the purchase of new military assets.
  • RM50.2 billion for the MRT3 project.
  • Stamp duty discounts of up to 75 per cent for houses worth between RM500,000 and RM1 million.
  • RM145 million to repair, upgrade and maintain sports infrastructure nationwide.
  • Petronas will contribute RM2 billion to the National Trust Fund.
  • RM6.7 billion has been allocated to seven ministries to carry out various TVET initiatives. The allocation includes RM180 million for the TVET Training Fund in the form of loans that will benefit 12,000 trainees who undergo the Malaysia Skills Certification Programme.
  • RM1.2 billion has been dedicated to the disabled community through caring aid for patients with chronic illnesses, allowances for the disabled who can no longer work, and allowances for disabled workers.
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