Ivanpal Grewal

Lawyer & political activist

 

 

THE budget, which was tabled on Oct 23, in my opinion, is one that is balanced and practicable given Malaysia’s fiscal constraints. It is also a budget which seeks to take concrete measures to address those affected by the economic slowdown.

The budget is a political document that charts the policy direction of the Government for any given year. However, the budget must never be seen as a panacea. It will not contain all the proposals one may expect and it is unfair to expect it to be able to do so. It also balances the competing needs of all sectors of society.

A budget that pleases everybody is a bad one because the duty of the Fnance Minister is to ensure that we live within our means, take on sustainable debt if there is a need to, ensure wise and prudent spending, and provide for the weakest members of society.

But beyond that, in the Malaysian context, there are other concerns that require the attention of policy makers and that include the middle class or the M40, and the low-income groups or B40. There are also specific measures needed to ensure Bumiputras are well cared for as, proportionately, a large portion remain in the low-income group.

So given the political, economic and social compulsions, one can reasonably ask, how does Finance Minister balance all of these factors and present a document that will ensure every group enjoys some degree of relief or support. It a Herculean task, but one, that I think Budget 2016 manages to do.

Moody’s has welcomed the steps taken by the Government to ensure fiscal consolidation and a budget deficit of 3.1% of gross domestic product (GDP). This will ensure Malaysia retains its positive credit rating and outlook and will ensure that our borrowing costs do not go up, thus burdening the Government’s finances.

Also, according to a report by Bloomberg, Malaysia’s bond market is improving as well because of the inherent strength and resilience of the Malaysian Economy. The measures taken in the budget to widen our revenue base and the introduction of the Goods and Services Tax (GST) is a step in the right direction.

I do not intend to run through again all the proposals in the budget. However, the one area I find most germane is the cost of living. Measures taken in Budget 2016 to address this include the increase in minimum wage and 1Malaysia’s People Aid (BR1M) payments, as well as, tax credits for middle income families.

Also, the measures taken to ameliorate concerns over home ownership, especially amongst younger Malaysians, are a relief. The construction of affordable homes, PR1MA and also the First Home Deposit Scheme with a RM200mil allocation that aims to help affordable home buyers with their down payments on their first house purchase are among the laudable efforts.

I also welcome the greater investment in vocational training and skills improvements programs to ensure that Malaysians increase their work productivity.

However, one crucial aspect I find wanting is the 11th Malaysia Plan’s aim to double up the income of the bottom 40% of Malaysians (B40) and I do hope in time to come there will be a concrete programme modelled on Singapore’s wage credit scheme, which was also proposed by Gerakan president Dauk Mah Siew Keong at the 44th National Delegates Conference.

However, as I said earlier, the budget cannot be seen as a panacea and we must employ other measures to ensure we achieve high-income status by the year 2020.

I have also been a proponent of the Trans Pacific Partnership Agreement (TPPA). I welcomed the news of the conclusion of the negotiations on the TPPA earlier this month with eager excitement but some trepidation as well.

I believe the TPPA deserves a fair assessment. The Trade and International Industry Minister Datuk Seri Mustapa Mohamed has worked assiduously to ensure Malaysia gets the best deal and has extensively engaged many sectors of society. I personally attended a number of dialogues with the minister and besides being a great listener he was also well versed with the subject providing very cogent answers to the queries raised.

Malaysia has and will always be a trading nation. From the Sultanate of Malacca to modern day Malaysia, we have thrived when we are open and connected to the global economy. According to a report by Credit Suisse, the TPPA will add 5% to Malaysia’s GDP. Also, Malaysia will have a market of 800 million people with almost no trade barriers.

Furthermore, with our major competitors in the region like Indonesia, Thailand and Philippines currently not part of the TPPA; we enjoy a competitive edge. So all these factors must be considered before we choose to accept or reject it.

Concerns have also been raised on the Bumiputra agenda because of the “carve-outs” currently enjoyed by Bumiputra companies when it comes to government procurement and concerns over Malaysia’s state owned enterprises.

We must appreciate that for Malaysia to thrive we must be market friendly and we cannot defy market trends and retreat into our own silos. Malaysia will enjoy the highest level of “carve-outs” when it comes to government procurement because there is a pressing need to ensure the continuation and protection of the Bumiputra agenda but at the same time there is also need for it to evolve away from purely protectionism and embrace a reasonable degree of competition to ensure long term sustainability and resilience. This will not only be in the interests of the Bumiputra community but will ensure that in times to come all Malaysians will be able to compete and succeed against our counterparts in the region and beyond.

The Government has also taken the bold move of tabling the TPPA before Parliament even though there is no legal proviso to do so and I believe an honest and rational debate and scrutiny of the agreement is needed because the last thing any of us would want is for Malaysia to be left behind.

I believe the tabling of the 11th Malaysian Plan, Budget 2016 and likely ascension to the TPPA will put Malaysia on the path of economic sustainability and prosperity because wealth is always generated when economies are open and connected to the world. At the same time, however, efforts must always be taken to ensure our national interests and priorities are protected.

Originally published on The Star on Thursday October 29, 2015 MYT 12:12:00 AM

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