Friday, 23 September 2016

Malaysia Budget 2017: Where do we stand

The Malaysia Budget 2017 announcement is now less than one month away. Feedback from institutions as well as the general public have been pouring in since the second quarter of the year. The official public submissions deadline for Budget 2017 through the official website ended on the 21st of September 2016, just two days ago. Credit to the public for making use of this opportunity and it’s encouraging to see more views and opinions to help the Government in the Budget 2017 preparation.

Looking at the submissions, some of the most popular comments from the public included calls for contract staff in the civil service to be absorbed and given permanent employment. Those include officers who are part of the price watch team, employed to monitor businesses for excessive pricing, which has seen significant activity with the implementation of the goods and services tax (GST). Although some of the comments appear to have been copied and pasted, there appears to be plenty of support by the public. According to one of the correspondents, there are about 1,300 of these officers at this point in time.

Speaking of GST...

There were also plenty of calls to reduce the (GST) to lower rates as well as the repeated calls of abolishing it altogether. Let's be realistic, in my personal opinion, there is no way that the GST will change in this manner. The only possible modification could be to increase the number of items that are zero-rated or exempted, and even then I expect that any change would be minimal. 

There has been too much invested in the infrastructure, both in the private sector and the Customs Department, for any drastic change to be done to the GST. What is more realistic is to hope that GST rules and guides are improved on and become much more clearer as processes become more routine, thus helping the overall experience to be more efficient and effective.

Bonuses anyone?
One of the contributors suggested a one month bonus for civil servants to help handle the cost of living. CUEPACS went even further by suggesting a two month bonus would be more appropriate, stating that it would help alleviate parents’ burden with regards to school expenses at the start of the year.

There were also calls to postpone such projects as the Taman Tugu project, saying that budgets allocated for these projects could be better spent on other more needed initiatives to help combat the increasing cost of living. Other projects suggested were those to improve the infrastructure of rural areas, such as better public transport and better roads.

Affordable housing and unemployment

In a letter to the Star newspaper on 23 September 2016, Tan Sri Ramon Navaratnam, the Chairman of the Asli Center of Public Policy Studies, highlighted his frustration with the insufficient supply of affordable housing. Followers of the industry will no doubt agree that this continues to be a huge problem, with increasing house prices showing no real signs of slowing down, driven to a significant extent by the foreign investment market.

Dr Mohd Yusof Saari of Universiti Putra Malaysia stressed the need for Budget 2017 to try and address the current employment mismatch in the market, with low-skilled jobs being held by people with high academic qualifications. According to Dr Yusof, the rising youth unemployment rate also correlates with the increasing skills mismatch in the labour market, based on a study released by Khazanah.

Nevertheless, despite the numerous pleas for help from various quarters on various issues, many analysts from various institutions have warned the public not to expect too much from this year's Budget. The Government may have managed to offset some of the revenue losses from the oil and gas industry thanks to the revenue gained from GST, but it still has a long way to go.

Government plans

One of the Government’s plans that caught my attention is to ensure that the digital economy is given plenty of attention for 2017, as mentioned by our Prime Minister at a Budget Consultation Council meeting held earlier in September. According to the Communications and Multimedia Minister Datuk Seri Dr Salleh Said Keruak, the digital economy has been targeted to contribute 20% to gross domestic product (GDP) by 2020. 

The Government has also indicated that it intends to continue with the BR1M programme. Not many of the correspondents are supportive of the idea, with many suggesting that programmes with long term improvement and benefits should be given more attention.

There's only so much speculation one can do 

I could go on and on with all the feedback, suggestions and government proposals that I’ve read, but what’s clear is that there is a lot more that can be done better with the resources we have. Whatever the case, we hope that the final Budget 2017 will be a good budget, with less allocated on questionable projects and more allocated on areas that will benefit the economy and community as a whole.

Wishing Malaysia all the best in preparing for 2017.

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