budget 2017

Many questions for the Budget 2017

Malaysiakini gave a headline on “Budget 2017 – bouquets and brickbats” on a vision of the Prime Minister /Finance Minister called National Transformation 2050 and a speech theme of "Accelerating Growth, Ensuring Fiscal Prudence, Enhancing Well-being of the Rakyat".

Bernama’s headline read like “Inclusive, prudent, people-centric”  Star’s headline “A balanced deal during trying times”; New Straits Time called it “Najib unveils pragmatic, caring 2017 Budget”; Daily Express, Sabah is “Budget ensures sustainability: CM”;  New Sabah Times is “2017 Budget ensures nation’s economic fundamentals remain strong – Musa”

So who would get the prize for the best title to Budget 2017?  Maybe it is Malaysiakini as spot on.

Lets go into some of the important points namely the main figures like the 2017 Budget stood at RM260.8 billion, up 3.4 per cent from the recalibrated 2016 budget. Out of that, RM214.8 billion will be for management. The balance of RM46 billion will be for development. Revenue collection will grow around 3 per cent to RM219.7 billion. The fiscal deficit will drop slightly to 3.0 per cent of GDP for 2017 from 3.1 per cent in 2016. Najib said almost RM30 billion has been collected through GST as of Oct. 19, which has help offset the loss of petroleum revenues due to the 50 per cent drop in crude oil prices. He said the GST rate of six per cent would not be raised.

The Federal revenue is dependent on income tax (43.1%) and indirect tax (22.9%) namely largely GST making up 66% of the national revenue when both taxes can be “brickbats” in the ways of collecting such taxes with many grey areas and teething issues especially for GST but “bouquets” to the Government as the substantial adverse lopsided proportion which can tip the balance in difficult economic scenario.

The bulk of the expenditure would be going to management (82.4%) and 40.8% of that to items of emolument (29.7%) and debt services charges (11.1%).  Of course, emolument and debt services charges are likely to increase indicating “brickbats” to the people especially the burdened taxpayers and “bouquets” to those who are recipients of the much bloated civil service.

The biggest “brickbats” unwritten in the budget and always denied by the authorities is the rising prices across the board living needs.  This budget does not address this although some mitigating factors are observed in BRIM and other similar slight reliefs for some groups only.  The other “brickbats” are that most people really cannot afford to pay for the GST almost in most items when once it was non-existent and the switch can be burdensome to many but “bouquets” to the Government which the PM claims is the saviour for Malaysia in 2015/2016.

GST has finally changed many patterns in the conduct of business causing bust or prosperity for some groups.

Is the budget real or realistic when several major items are not addressed?  Would the Finance Minister come out with a detailed list of likely debts bail outs in 2017 and 2018, before he tries to mislead the people of the failure of the Government in the Vision 2020 (perfect vision once) especially the foreign debts had risen sort of uncontrollable in recent decade as it is nearly there with a record RM1 trillions in the recorded debts clock.  Now he tried to carry us onto Vision 2050 even before we have even passed the hurdle of 2020 with sort of achieving the targets set thereof.  Can the PM now draw up a variance of the performance of his Government always blaming on global tempo rather than his own failings?  Please show us where are we now in the context of 2020.

Do we really see this possibility in the theme “"Accelerating Growth, Ensuring Fiscal Prudence, Enhancing Well-being of the Rakyat" in the recent decade going to 2020?

Have the 2017 budget considered the following recurrent or non-recurrent expenditure of substantial amounts such as for example, 1.  in the 2016 budget, a ‘one-off’ payment of RM593 million was allocated to compensate the toll concessionaires for deferred toll hikes under the Minister of Works. In budget 2017, no mention of this item. The federal government has paid RM4.072 billion in compensation to 28 highway concessionaires following the delay or restructuring of toll rates. This was revealed in an answer by the Works Ministry, to Sepang MP Mohamed Hanipa Maidin yesterday. 2. How much money possibly in the dimension of billions of Ringgit would be needed to bail out various national bodies and agencies such as MAS (uncertainty/loss making), Khazanah (unlimited financial commitment to fulfil?), EPF (now going for external bonds/loans), Petronas (selling Canadian project), Proton (now cars sales very down); PFI (over commitments?); PTPTN (reboot fund needed); MARA (funding needed?); 1MDB (debts settlement) and many more for others to enlighten.  3.  Cuts unjustified in certain expenditure could be devastating for the welfare of the people especially the aging demography.

Annual deficit apart, how would the loans be available from any sources to fill in the gaps mentioned in the preceding paragraph?  Would the Government sell more of the national assets to foreigners in 2017 to cover up for the rising deficits?

Now what is in the Budget 2017 for Sabah and Sarawak when Musa Aman said “Budget ensures sustainability: CM” (Daily Express); and 2017 Budget ensures nation’s economic fundamentals remain strong – (New Sabah Times)”

Musa Aman, please guide Sabah and Sabahans to benefit from whatever provisions – financial and otherwise- as most consumers including business people in Sabah do not really take advantage of the reliefs and incentives due to various factors like ignorance, red tape or bureaucracy, flying between KL/Putrajaya and Sabah, time/costs consuming, and most time such funds provided would run out soon missing Sabah as usual as I had attended many seminars on such events.  Sabah being the most backward state in term of industrialisation should be given special allocation and not open to competition with those States in West Malaysia.  Even with the Solar Power Voltaic’s quota, Sabah was left out in the earlier years.  When such quotas do come to Sabah for bidding, only limited amount was allowed for Sabah.  

Musa Aman, please also enlighten us what are the provisions of funds and incentives that can help people in Sabah and no more selective actions please.

The Budget speech mentioned the Pan Borneo Highway in Sabah and Sarawak but no allocation was given.  Would this mean fund had been allocated under 11 Malaysia Plan?

Furthermore, the long list of “goodies” can be constrained when much money is needed for the urgent cases of major bail outs and then such funds allocated for various incentives / reliefs could be diverted to that directions. 

So PM needs to elaborate how you would approach to stop the gaps of deficit budget which can only widen when more bail outs arise and loans not forthcoming.

Another question for the Finance Minister is that would he later raise the standard rate of GST to meet his deficit requirement in 2017?

Joshua Y. C. Kong 22 October, 2016.