September 29, 2012
Budget 2013: It is an Election Budget
by Aidila Razak (09-28-2012)@http://www.malaysiakini.com
BUDGET 2013: The array of goodies dished out in Budget 2013 is seen as a clear move of the BN government in reaching out to its vote banks in different sectors in the run-up to the 13th general election.
However, analysts feel that the Najib administration has, yet again, left out the middle class, despite a slight one percent cut in the income tax, which is seen as little relief. Here are some of their observations:
Ibrahim Suffian, Director of Merdeka Centre:
It’s an election budget, mainly due to the sheer size of dash payments to different sections of the population, including the focus on agriculture, where the BN has its support base.
It might make some people unhappy, especially the tax-paying middle class who are not getting much from the budget. The tax reduction does not cover many people, who will continue to pay tax without getting much relief.
However, the government did address key issues such as transportation in major cities. But it’s surprising that Johor Baru was not mentioned for this, given its size. Maybe the BN feels it’s a safe area (in terms of votes) – or it is a strategy to make people vote for them.
No doubt the focus on crime reduction and the expansion of the home owner scheme is a positive development, but it will take time for the policy to have a political impact. It’s also spotty, for there are only a few places earmarked for this programme.
I am also not sure if providing grants to residents’ associations for crime prevention is the way to go. It is admitting that the crime rate is up and the Police are not able to handle it.
Dr (h.c) Ramon Navaratnam, Economist:
The projected growth rate of 4.5 to five percent is too optimistic, given the world economic situation, and so the projection of revenue is also optimistic. I am concerned that the target on deficit and debt cannot be met.
In terms of revenue, there are no new taxes, such as the GST, so there is nothing to raise the tax base. We are also not cutting subsidies, except for sugar, so it is almost like business as usual, with a greater spread of goodies.
If the world economy slows down further, we will be hopeful in getting the growth projected. Our exports will be down, forex will be down and earnings will go down.
We have to really monitor the budget to make sure that it hits the estimates, or else we have to be prepared for a mini budget after the election to adjust for shortages.
Dr. Yeah Kim Leng, Chief Economist, Ratings Agency Malaysia:
We were initially concerned that the budget will be expansionary, given the impending election, but our fears were allayed as the spending has been kept at about the same rate.
However, there is uncertainty on the fiscal deficit side because it will depend on world demand and oil prices, which will affect GDP growth.
Overall, it’s a responsible, responsive and realistic budget, but the middle class has been left out, just as in the previous budgets.
The cash handouts are targeted at consumers, but importantly, there is a need to ensure business is well supported because this is (the government’s) main source of revenue. The spending on small and medium enterprises is well targeted.
Dr.Lim Teck Ghee, CEO, Centre for Policy Initiatives:
I am dismayed by the budget. The BN government is scraping the bottom of the barrel. It tries to use cash handouts to influence the voters, but I feel it might backfire as people will realise that it was given purely for the elections and this may even make people more anti-establishment.
The government missed an opportunity to show the people that it is a
prudent, responsible and reformist government. By my calculations, the government can cut operating expenditure by 20 to 25 percent without harming efficiency.
There is no clear policy direction, except that each ministry is wanting to spend as much as possible. It’s the same old story, leaving little left for subsidies. Subsidies should not go without proper analyses.
There is also greater spending on crime prevention, but what actually needs to happen is for the police to be better managed and focus less on political matters. They are throwing money in the wrong direction.
Funny perspectives, especially from TS Ramon and Dr Lim.
My revenue projection for next year, based on the rate of corporate profits this year, is in excess of RM230 billion, so the government’s being real conservative with their revenue forecast. By the same token, expenditure should be in the region of RM265 billion, because I don’t see oil prices coming down and car use is still growing.
And based on income quartiles, the “middle” class don’t pay taxes. If you’re paying taxes, you’re already in the top 15% of income earners. That’s not middle class in my book.
As expected, Najib’s Budget 2013 contains vote catching candies. No thought is being given of the impact of massive cash handouts to civil servants and other giveaways on the state of our national finance. It will be interesting to see what impact the Najib 2013 budget proposals has on the KLSE and the ringgit.
BTW it is not unexpected that the Prime Minister has chosen to attack the Opposition and its alternative budget. To me that is a minor issue.–Din Merican
Dr.Ramon.fully agree with your assessment.
Din.On Monday foreign fund managers will started selling our shares.Ringgit will be weaken and rating agencies will downgrade our country.
Good luck.
____________
No worry. EPF, Socso, and PNB and other state support fund managers will prop up the KLSE!! It is time to buy if you have the cash to invest. Choose those counters with good dividend yield. –Din Merican
Look, let’s keep simple.
We already have half the population dependent of manna from heaven. All this drip and drab stuff really works – ask the mat rempits-minah kancils-ahbengs-ahlian-machas-minachees and what have you! The feel good lasts only as long as these semi-comatose zombies take to spend whatever paltry voucher they’re entitled to. And who came up with the stupendously brilliant idea for a RM200 rebate for a smart phone for kids? Dey, thats the hardware – who’s gonna pay for the software and service? Total lunacy. Spotty? Yeah, like a menopause.
But i’ll try not to be petty and just say there ain’t nothing substantive for blokes like me – but hey, i’m the Other, so don’t mind flakes. The only thing that i’m grateful for is that didn’t raise my cancer inducing smokes.
Crime? Haha.. that’s a good one! A lot of that coming soon, when the goons start intimidating the Opposition, besides the host of other white-collar irregularities that happen during elections.
Btw, didn’t i tell you that Jibs ain’t got class? What’s with the ranting and railing against ‘unnamed’ fellas during a budget presentation? Statesmanship of a drunken prawn.
Whoever wins the GE-13, expect a revision of this useless piece of snake-oil enticement.
One thing that strike me about this year budget presentation was the amount of time Najib spend bashing the opposition. It sounded more like an UMNO/BN ceramah with a crowd cheering him on. Merdeka Day and now the national budget presentation have been hijacked for narrow political interest.
Najib since taking over from Pak Lah has been and is the Rt Hon Prime Minister of BN instead of being the Rt Hon PM of Malaysia.
and as expected, the middle class, who forms the bulk in both terms as tax payer and voter, are left standing with the mop. all rhem tax monies are to improve the infra of the country as well as help the OKU etc – well,middle class people, lifting the middle just wont do – u gotta do what u gotta come GE13.
Where is the analysis? This is all bull.
This is a bankrupt budget:
1. Old tired formula of dishing out goodies in an election year mistreating the lower income group who should benefit from enlightened policies every day instead of every 5 years. Jib and Co overriding priority is getting re-elected over fiscal and monetary prudence. The score 1 for Jib and 0 for the country.
2.Leakages and corruption enjoyed by the cronies are left untouched as Jibby has no guts to address this structural issue. He knows he can kiss goodbye if he does. Thus 2 for Jib and 0 for the country.
3. Jib and Co are trying to deceit average citizens by seperating official budget with the real budget since significant billions of RM expenditures are treated as off-budget. On top of this, how about Government gurantees of loans, aren’t this an accounting liability as well. Our debt ration is much higher than publicly acknowledged of 53.7% of GDP. Never mind Malaysia Boleh! So 3 for Jib and 0 for the country.
4. Jib and Co are doing a magical trick of ignoring the real threat of worsening of world economy on average Joes purchasing power parity given the massive and repeated QEs by several powerful Central Bankers. Remember no man is an island in this financial tsunami. Again 4 for Jib and 0 for the country.
In short many average citizens can see through this insincerity and will not support the ruling party this coming GE13.
Well, we had the ant and grasshopper story. Now, it looks like it going to be the farmer and the rabbit. Learned from my primary school days. This story was in my Chinese reading text book.
One day, on his way to his farm a farmer rest under a tree, fell asleep awake and found a rabbit beside him. He was so happy. He returned home without tilling his farm. The next day, again he napped under the same tree hoping to find another rabbit. He continued this daily without caring for his farm. Finally, he lost the produce from his farm and have to go hungry that winter.
The moral of the story is the farmer becomes lazy after he found the rabbit and grew a habit of receiving freebies that he does not deserved.
And this budget, like many before produces the “rabbit” without the people actually working for it. Finally, nobody works. Everyone awaits the “rabbit”. When crisis knocks, everyone goes hungry. But in today’s situation everyone will run amok, robbing and killing to survive leading to Chaos. Hopefully we will not get there.
Just a thought.
If the government just dole out RM1 million largesse to each man, woman and child in this country, he shouldn’t have any problems getting their votes.
And it would just cost around RM30 million instead of the billions being dished out as it is now.
What’s your take on this?
Damocles, I think your calculator needs batteries, one made by UMNO Batteries not made by Eveready Black Cat.
1 million largesse to each man (you mean each UMNO man)?
Hyper-Inflation, Damocles.
Hemorrhoidectomies would cost RM 40k per pile.
Damocles, you can claim tax deduction for going for adult classes in basic arithmetics… LOL! 27 million people x RM1 million is not RM27 million dollars…. you are short by 6 more zeros at the back! Its RM27,000,000,000,000
Hey Najib, Penangites pay income taxes too ok…
Hishamh,
As I have mentioned in another article, better to be conservative in revenue especially when it comes to governmental budgeting. If you are not carefully, we may end up like barring bank collapse
Looes74,
I’m not sure where that analogy comes in. Barings collapsed because Nick Leeson took unauthorised uncovered long positions when he was supposed to be doing arbitrage (simultaneous long and short positions), and the market went against him. Barings wasn’t a case of over-spending or over-leverage, but a one-way bet that went wrong.