Budget 2009: What the experts say

August 29, 2008
Several experts share their views with Malaysiakini regarding the Budget 2009 unveiled by Prime Minister Abdullah Ahmad Badawi.


David Cohen, director of Action Economics, Singapore:

It is a populist budget to deflect the growing popularity of Anwar (Ibrahim). (Prime Minister) Abdullah (Ahmad Badawi) is obviously under pressure as witnessed by the rollback in fuel prices last week.

Lee Heng Guie, chief economist at CIMB Bank:

I think most people already expected a budget that won’t have many negative points. So this is one factor that helped the market to rise and also because overseas markets were good last night. But the overall mood is still cautious because there is still uncertainty.

Given the tough macro situation, they may have little choice but to spend more now. Whether it’s the right choice depends on how they fine-tune the deficit going forward.

Khoo Kay Peng, political and economics analyst:

Anwar can, if he wishes, make any amendments he thinks are necessary. We don’t know what alterations he will make, but for example he has mentioned before the RM10 billion extra allocation for the growth corridor projects – which Abdullah asked for in the mid-term review.And Anwar has said that we do not need any new mega-projects at this point in time.

Whatever it is, there is uncertainty and this will keep the markets quiet. Even when Anwar comes into power as he says, investors will want to see how he performs, what sort of plan he’ll raise then.

For Abdullah, he needs to have a yardstick, a performance yardstick instead of just voicing hot air bubbles. He needs to stimulate local consumer demand, find concrete measures to increase wage-earners’ pockets, and look at transportation as he has promised. There must be more buses and other forms of public transportation put on the roads.

Also, on whether the government has enough money, nobody really knows because there is a lack of transparency. Abdullah must find concrete ways to cut down public administration, reduce bureaucracy, for example shift us more to e-government. We have one of the biggest bureaucracy in the region, we are too labour-centric and this is why we have the image of being not efficient. Yes, in the past the public administration is used as a political tool, a vote bank. But we must take politics out of the equation. Anyway, it hasn’t help them (Abdullah and his Umno party) in the elections anymore.

Dr Ramon Navaratnam, prominent economist and president of Transparency International :

On thee one percent reduction of income tax for the highest bracket, the rich can take care of themselves very well – therefore the tax cut was unnecessary.

The middle and lower income groups are the mainstay of Malaysia and the groups which will agitate for change. It would have been better to address their needs. The poor should always be the priority.

There seems to be a shift in budget strategy whereby it attempts to address basic needs and not on unnecessary mega projects.

However attempts to share wealth when inflation is not controlled, will still see the erosion of income for the low and middle income groups.

Tricia Yeoh, director Centre of Public Policy Research:

Such a record expansionary budget with huge funds is theoretically a good thing, given the urgent need to generate growth in the face of economic slowdown.

However, it can only be considered a thoroughly good thing if we can be assured that the money will be channelled in the right direction, without any unnecessary leakages.

Unfortunately, the past track record of government has been poor in this respect. With a rampant culture of corruption and weak institutional structures, this may lead to continued wastage and abuse. I would therefore emphasise strengthening the institutions of governance, so that the funds are actually optimised and maximised.


14 thoughts on “Budget 2009: What the experts say

  1. We can only hope that with such a huge budget, the government has the right mentality, mechanism and attitude in making good their claim. I’m sure there are questions to be answered in the next few weeks regarding the budget and thus the government must be ready to answer convincingly.

  2. If every year we have let say 4% deficit budgets, in 10 years time, such deficits will add up to 40% on straight line basis. (in compounded basis, it will be more than 40%).

    Such deficits, which financed by borrowings, if not controlled, will have very adverse effects on the financial position of our country as big chunk of our GDP are going to pay interest on borrowings.

    Such deficits can only be arrested by ‘prudence’ in spending, spend on productive means as what you described in your articles, and of course by elimination of corruptions, wastages.

    Managing finance of a country is more complex than a household like you and me, and yet such an important position is held by an ‘overworked’ PM who have no formal education in the field of finance or economics.

    One can argue that he is assisted by Finance Minister I & II, but the ultimate decision is still rest on PM.

    My opinion is, Finance Minister should be held by a ‘qualified’ economist or accountant rather than any Tom, Dick and Harry.

    Meritocracy, meritocracy and nothing else but meritocracy can make our country a better one.

  3. “On the one percent reduction of income tax for the highest bracket, the rich can take care of themselves very well…” Ramon Navaratnam

    This is what Barack Obama had to say about reducing income taxes on the very rich. The Bush Administration gave tax breaks to the very rich (the top 2%) and hope that somehow the effect would trickle down (reflecting the Republican belief that democracy has to be from the top down, instead of building it from the bottom up). To the country’s working class it says, “You’re on your own! You’ll need to pull yourself up by your boot straps.” But they don’t have boots to begin with!

  4. I wish to re-post what I commented in veonszu,


    I also personally hope that 916 will happen. But, realitically, this is tough to become a reality.

    If I can read Anwar’s mind correctly, 916 is just Anwar’s trick to test out BN’s MPs sincerity in wanting for a better Malaysia under multiracial ideology of PR. I used the word ’sincerity’ because Anwar clearly stated ‘no monetary’ perk will be offerred for these MPs.

    So, if 916 happen, then rakyat will know that these MPs are of credible, with conscience.

    If 916 not happen, then Anwar & PR have nothing to loose because they rather have MPs conscience rather than the ones only have ‘material’ perks in their minds. In a way, rakyat will also not loose out.

    For sure, either way, Umno and BN will walk into history if they still stick to their ‘outdated’ mentality in next GE.


    Din Merican,

    How you personally look at 916. May I have your view on this?

  5. I would therefore emphasise strengthening the institutions of governance, so that the funds are actually optimised and maximised.

    So, what should be the “cost for this”? If none, it is lip service. There are costs even to sack people not promoting good governance in the system in optimising funds. Of course when there is optimised funds there is addition in monetary value.

    If the shrinkheads can work out a product to optimise, guess what? Ada duit lah!!! 😦

    But of course we have to sack the present Gomen! It may not cost as much as another general election! But the gains from this will be real and substantial! Plus what, cost freedom? Or what gains, freedom? 😀

  6. Anonymous said…

    Candles now and but justice for all ISA detainees come the new Malaysia soon.

    Where is the justice & freedom of expression because all our MSM News are suppressed or spun, where have the Truth and Merdeka gone to, perhaps the Dogs under BN Government ok??? Malaysia is going backwards after 51 years instead of going forward under the Racist UMNO, calling the “Chinese Squatters” to leave and “Babi Cabinet” if Anwar wins Permantang Pauh and if he forms the Pakatan Rakyats’ Federal Government. Justice must be served for Altantuya and all the ISA detainees who have no avenue of appeals and fair trials.
    The UMNO Government is afraid that more cans of worms will be spilled by RPK and therefore they banned his blogsite which is a futile attempt to block information in this IT age, of course this is because of this Present Moronic Government is corrupted and dirty therefore on the pretext of helping the Rakyats, they could swindle and plunder more money from the Budget Deficit and with most of the Deficit Money coming from Petronas. Beware that the Money allocated is for their BN own Prime Minister’s and Cronies’ pockets expenditure and not for helping the Rakyats. Look for example at the Crystal Mosque’s and Mariner Club’s Fiasco in Terengganu’s Billions in Wang Ehsan, Billions had been lost as white elephants. The cancellation of the Johore Scenic Bridge, Penang Second Bridge and LRT Projects at the whims and fancies of the Flip Flop, Incompetent and Sleeping PeeM at the last minutes is wasting Multi Millions Ringgits in Public Funds had shown proof of the PeeM’s mismanagement of the Government and wastage of the Public Financial Resources and all these wasted funds could not be salvaged to aid and assist the Malaysian Poor Citizens of all races. If Malaysia still keep him in power will further damage and erode the Wealth of our Nation and our National Wealth could be decimated in no time.
    The same could happen to all the empty promises of aid and help to the Rakyats these could all be lip service only unless it is monitored by reputable NGOs. On the irreversible Food Prices inflation, the unnecessary Moronic previous price hike on Petrol & Diesel had caused great permanent damage to the Food Price Structure and even if the price cut to Petrol and Diesel revert to their original prices prior to their hike, it will not revert the Food prices back to their original state and only the PeeM is to be solely blamed for his unwarranted Fuel Price Hike. His 2009 budget did not help the Rakyats’ quelled their immediate hardship suffered nor did that help them solve their Transport Problems immediately with multiple schemes but none available immediately with all the empty rhoterics but nothing concrete that could solve their immediate problems after years of neglect from this incompetent sleeping PeeM. Come Sept 16, 2008 send him home to sleep forever he is no longer needed.

  7. The original 2008 Budget Revenue was $147 Billion.

    The equivalent 2009 Budget Revenue is $176 Billion.

    The original 2008 Expenditure was $129B Operating + $48B Developmental = $177 Billion.

    Was there a real need to run the 2009 Expenditure to $209 Billion?

    In theory, the Budget is expansionary only if the $209 Billion expenditure is spent wisely in Malaysia, to further generate a multiplier effect.

    However, if this is siphoned away by the cronies through non-transparent contracts by various Ministries to be ultimately deposited into overseas and Swiss Bank accounts, then, there is no beneficial economic multiplier effects to Malaysia.

    Who here believes that the $209 Billion proposed expenditure will be spent wisely by all Ministries?

    If corruption is cut by just a half, we could have a Budget Surplus (yes, not a Deficit) and still have a lot more money to be spent in Malaysia to generate a beneficial multiplier effect that would truly be an expansionary Budget.

    If in good times and high crude oil prices Malaysia as a net oil exporter nation cannot have a Budget Surplus, then, what will happen when our oil runs down and we become a net oil importer?

    Will a Budget Surplus now be relegated to just “dreams”?

    How much of the Future Revenues have we been spending / siphoned away?

  8. I reckon the focus on Sabah/Sarawak MPs is a red herring. A diversion. It’s a strategy.
    As the stupid MP looks across East to get them to sign the ‘akujanji’, the cross over may well take effect from right under his nose. Yes, from UMNO.

  9. Din,

    I understand your situation. Just wait for 916.

    In fact, many people, Malaysian or not, are keeping their fingers crossed for 916.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.