Last Friday (August 29, 2008), the Prime Minister as Finance Minister tabled his 2009 Budget totalling RM207.9 billion (development expenditure: RM53.7 billion and operating expenditure for running UMNO-led Barisan Nasional Government: RM154.2 billion).
The New Straits Times(August 30, 2008) says the budget “enhances the purchasing power of the people with tax cuts and a variety of other measures to stimulate the economy”. The Star calls it “Right track”and Utusan Malaysia, the UMNO controlled newspaper, describe it as “Bajet Prihatin”.
I will have my take on it on Monday (September 1, 2008) after I have read the Treasury Report and the entire Budget speech. In the meantime, here is a report by Beh Lih Yi from http://www.malaysiakini.com (below):
| Anwar: Fundamental flaws remain |
| Beh Lih Yi | August 29, 2008 9 |
| The Budget 2009 unveiled by Prime Minister Abdullah Ahmad Badawi today has failed to address‘fundamental flaws’, according to new Opposition Leader Anwar Ibrahim.
He said these sweeteners do not commensurate with the vast increases in inflation and living cost. Hence, he added, the largely disappointing budget will not alleviate the problems and suffering of the poor. The Budget 2009 was the first time for Anwar – who was newly sworn in as the Permatang Pauh MP yesterday – to be present in the House since 1997. In 1997, Anwar who was then the deputy premier tabled Budget 1998 in his capacity as the finance minister. He was sacked from government the following year after an acrimonious fallout with then premier Dr Mahathir Mohamad. ‘We’re stuck in the old policy’ Elaborating on the Budget 2009, Anwar said the issue of competitiveness was not addressed. “We continue to be in a state of denial. We are not able to shift from the obsolete economic policy, the rampant corruption and the failure to become more competitive because we are stuck in old policies. “I see no way how we can attract foreign investment. Without foreign investment, Malaysia can’t propel its economy and unfortunately this is not addressed,” he said.
He explained that it was an ‘exceptional case’ for Malaysia to continue to record a expansionary and deficit budget since the country is an oil producing country. “Malaysia is the only country that continues to register a major deficit. It is understandable for a country that does not have resources (but we are not),” he said. Meanwhile, Anwar rebutted Abdullah’s criticism towards the end of his speech where the premier hit out at the opposition for trying to seize power through “illegitimate means.” The PKR supremo has consistently claimed that the opposition alliance Pakatan Rakyat which he leads will obtain an extra 30 seats through defections from BN MPs – and then take over the federal government. Anwar said the premier made these remarks because he was worried about the possible crossovers. “They still have the audacity to talk about democracy and to preach about democratic process. Mind you, democracy means in terms of governance, an independent judiciary and free media which they don’t have. “To my mind, it is really disappointing they have not seen the demand and the vast calls for reforms,” stressed the opposition leader. What other Pakatan leaders say Lim Guan Eng (DAP-Bagan), Penang chief minister:
We are also disappointed there is nothing about the Mengkuang dam (in Penang) being mentioned. This is very critical for Penang’s water needs. We were hoping that (Abdullah) will announce the construction of the RM1 billion dam so that we can ensure Penang’s water supply, otherwise we may have critical water shortages in 2012. In that respect, we are disappointed that Penang has not been given its due attention. We will continue to be hopeful and continue to ask the prime minister to reconsider. The pump priming of mega projects were still announced. We are concerned with that as we believe most of them have been awarded through direct negotiations and therefore yet again, inefficiency creeps in. The public is not getting their money’s value. This is a post-Permatang Pauh (by-election) budget.
This is an election budget at the wrong time. However, we can see the prime minister has taken a cue from Pakatan, such as the electricity fee waiver which is similar to the water tariff waiver implemented by the (Pakatan-led) Selangor state government. However it is a good thing – a learning process for (the BN-controlled) government and now there is competition for better policies. Another interesting thing to note is the development allocation for the Prime Minister’s Department has increased tremendously from RM3.6 billion last year to RM10.22 billion this year. This is a fund to buy over the MPs and to do politically linked works. |
“There are some sweeteners here and there but it fails to address some fundamental flaws in the economic policy, issues of efficiency, governance and endemic corruption,” he told reporters at the Parliament lobby after the PM’s budget speech this afternoon.
Other than foreign investment, Anwar also regretted that the “endemic corruption, the tenders awarded to cronies and their families, failure to cut cost and be more efficient” were not addressed.
(Our hope for a) RM200 million soft loan for heritage conservation has not been met. Instead, there is a RM15 million allocation for both Malacca and Georgetown. It’s a good start but I think it is still insufficient. Heritage conservation is quite an expensive business, it’s national pride. The Penang state government feels that much more resources should be put into this.
The high deficit this time shows inefficiency in the government system. We are also surprised that the premier did not take the opportunity to announce anything about petroleum prices because if his idea is to counter inflation, the fastest and most effective means would be to cut back petrol prices at the kiosk level – but they have not chosen to do that today.
This is the biggest ever budget. Anwar’s last budget, Budget 1998 was only RM68 billion. Budget 2009 costing RM207 billion is a huge jump from last year.
Din Merican: the Malaysian DJ Blogger 
They can have best budget in the world but what is the use of it if there is no integrity in the implementation process.
Development expenditure is a mere RM 54b. Minus inflation, rising costs, leakages and corruption, how much of this sum will reach the people.
How much of it will end up in the son and son-in law’s bank accounts?
Anwar Ibrahim – the most influential Malaysian son.
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A country engulfed in 51 years of suspicion and distrust among the races. A country where one race proclaimed itself Supreme and the others as Inferiors. A county heading towards perdition and oblivion. A country being plundered.
Just then came the ‘Saviour’, Anwar Ibrahim to do the undoable – to unify the races into one people.
History is replete with examples how one man could altar the course of a nation or redeem it from destruction.
Malaysia needed just that one man who would be accepted by all as the ‘Unifier’ to bring all the races to accept one another as brothers of The Malaysian Race.
“India anak aku, Cina anak aku, Melayu, Khadazan, Iban anak aku”, he thundered as he spoke to them. And the people applauded in agreement.
They believe him and the people of Permatang Pauh locked their arms and marched forth to the polling stations on August 26 2008 as one people to chose that one man who could save this divided nation.
No, they did not vote for an MP. They voted for the nation. They voted for their children’s future. They voted against an Evil regime!
Anwar has removed the racial blinkers, shackles and chains of the oppressed.
And they have entrusted their entire future and their children’s future in the hands of Anwar Ibrahim.
And now I call upon all Malaysians who love this country to back him all the way. Set aside your personal agendas, ideologies, preferences, differences and work for the common good of the nation.
And we shall prevail!
http://mrsmith2.blogspot.com
Many among us look at the Budget for ‘goodies’ like bonuses for government servants, reduction in the road tax, sales tax etc and their interest in the national budget would have been exhausted by the time they see them. In fact it should only be the beginning.
The Budget Speech is keenly awaited by the private sector every year, and is about how our government finances its budget. There is nothing inherently good about a balance budget at a time when the government should act to provide the stimulus needed, make public spending the engine of growth etc. Deficit financing is needed during such times. How the government finances that deficit is the key question. Should the government rely on the private sector to be the engine of growth? Would that be enough?
Is it to be by way of massive government borrowing and if so how? A heavy reliance on local institutional borrowing is not good because of the inflationary pressures such borrowing exerts, the effect it has on local interest rates and the cost of borrowing.
It could tap on the local capital market by inter alia issuing Treasury Bills. It could increase the ratio between ‘liquid assets’ and other assets, in the form of Treasury Bills held by banks – forcing them to increase the banks’ total holdings of T/Bs. The banks resent this of course since forcing them to hold more liquid assets than necessary would deflate their overall rate of return.
Government corporations could tap on international capital markets by floating bonds. What rate does Malaysia attract in such bond markets? That would solve the inflationary pressures exerted by local borrowing. But what impact will such borrowing on the international capital market have on the exchange rate between the USDLS and the ringgit? That too is a very important which would have to be addressed.
In short it has to consider the conflicting objectives and try to balance the nation’s needs – both in terms of funding and economic development. Let’s not forget there is a cost to everything!
Massive long term borrowing be it locally or offshore would carry costs long after we are gone. Should we be mortgaging the future of our children and our children’s children in such an irresponsible manner. This is a moral question which would have to be answered.
Having said that, I have yet to read the Budget Speech or look at the Treasury Report : )
He will definitely be, Mr Smith. Especially now he has taken the “sumpah” in Parliament!
Bean,
You’re a better financial man than a lawyer. But it speaks volumes of the need to get real in politics. There’s so much world credit problem right now. But Singapore still has plenty money even after the UBS loss and a couple bad American investments.
Credit is still there from sovereign funds. Brunei has some, if that naughty younger prince has not spent it all.
I’m just apprehensive at the prospect of world credit crisis. Housing bubble debacle is known. Is Bush legacy going to leave some other time bombs?
For the next decade or so, I think we need citizen activism in managing the value system. Trouble is we need to convince the rakyat totally to send the BN Gomen on holiday! 😀 So we can optimize social capital to start partly self-managing the value chain as in the L E T S way. Ultimately, the way of government is less of the present way of government. But activism needs a better or enlightened social capital. But that’s the only, it seems presently, the way to go.
How to deal with sovereign funds’ strings, that we have to grope along! But credit has an ironic twist for sovereign funds as it might go in future. Just imagine the ultimate collateral! There goes imperialism again! But we can’t really tell if there’ll ultimately be another WWWIII. But we do have www3 of virtual reality now! 😀
“You’re a better financial man than a lawyer. ” Salak
I was in finance before becoming a loyar burok 🙂
How do you think I got Din Merican to buy me lunch at The Chalet?
Year in year out, everyone bising on the BN budget.
When is it the bizness of Parliament to explain to us, how they used up all the money, before they can spend further!
The MSM are BN’s approved licensees while other applicants for Media licences are denied. How on earth can we ever expect to get better accounting of our money? The Auditor General is as silent as a Tunggul. The BN Gomen just shits on AG’s adives. This is not Mamak Mohammad or Badawi punye resources. But they’ve been spending on their children!
Other than Anwar’s brief comments there has not been any meaningful statements from PR on how our resources were spent and how they will be spent and how we spend them in anticipation of future scenarios be they crisis laden or attractive gains potential.
I’m beginning to feel there’s a big let down!