The way to go with Budget 2013

Teoh El Sen and G Vinod | September 28, 2012 (FMT)

Three Pakatan Rakyat's leaders share their vision on how Budget 2013 should address long-term issues plaguing the economy and rakyat.

PETALING JAYA: Even before Prime Minister Najib Tun Razak unveils Budget 2013 today, three Pakatan Rakyat leaders showed him how to steer the country in the right direction.

According to them, the country needs long-term measures to address challenges the economy and society would face in the long run.
PKR's Rafizi Ramli, PAS' Dzulkefly Ahmad, and DAP's Liew Chin Tong shared with FMT their thoughts on how the prime minister should handle the economy when asked, "what would you do if you were Najib?"

Rafizi took a swipe at how Najib "was good at giving away handouts to quell public anger", noting that such measures would not resolve long-term issues.
"I think Najib cannot run away from pressing issues such as house prices and the rising cost of living… these are systemic problems that Najib wants to hide," the PKR strategy director said.

Rafizi also said that corruption is a serious issue as it contributes to wastage in the budget, and the economy could not be tackled independently without anti-corruption measures.

"In Selangor, we saved 24% of our funds in the past nine months, just by doing open tender for public projects."
Rafizi argued that if such savings could be practised in the federal budget, the deficit can be brought down by about 3.2%, which is 1% lower than the government's target of between 4% from 4.5%.

"Let's say budget spending is RM250 billion. Of this, almost RM120 billion will be on procurement. If we can save 20% on these deals, we save RM24 billion, and our budget will be brought down to RM226 billion," he claimed.
'There's a lot of fat'

"There is a lot of fat we need to trim," he said, adding that without such anti-corruption measures in place, it was unfair to start cutting subsidies. "We shouldn't punish the people. We need to punish endemic corruption."

"I disagree with some of our analysts' views. They assume that the RM250-billion budget is already clean and corruption-free… but you know that the budget is bloated. Any good organisation will say that before you cut spending, you must cut out the rent-seekers, cronies, and middlemen."

Rafizi said he also disagreed with those, including economists, who say implementing goods and services tax (GST) is a good idea.
"In other countries, when you introduce GST, you usually reduce income tax too. That's not the case in this country, where income level has not improved and only 1.2 million people are able to pay tax, while the rest don't earn enough to pay tax.

"We need to grow at 6%, then we can start talking about GST."

On housing, Rafizi said that Pakatan has proposed in its shadow budget that a powerful government body similar to a housing development board be established. This could change the way public housing is built."

Rafizi said that currently private developers are not building the right affordable homes for the vulnerable groups.
"When private developers build houses, it's about making profit. Unless you address this problem, no matter what you do, developers will not provide enough numbers of affordable homes."

'Najib will face backlash'
Rafizi said the government body on housing should have full powers to talk to state governments and take over the land, adding that profit should be of secondary importance.
"In the long term, private developers will then bring down prices. In the mid-term, we can build houses at a much lower market rate, because the funding is done by the government."
Rafizi also said that Najib would have to announce something to reduce car prices due to public pressure.

"A lot of pressure is on Najib. I don't think he can get away without doing something to reduce excise duty. He will face a backlash," he said, adding that PKR has promised to slash excise duty if it comes to power.

On public transport, Rafizi said that Pakatan is proposing to inject some RM2 billion to add about 1,000 buses in the Klang Valley immediately.
"Will Najib commit to doing something like that? The MRT will take another four to five years, and the whole city can't depend on this alone. There is a huge under-investment on buses."

Rafizi also said that Najib should implement a "comprehensive social safety net", which would track everyone below a certain income level, and regularly uplift them, instead of giving one-off tidbits such as BR1M (Bantuan Rakyat 1Malaysia).
He said that under Pakatan's Caruman Wanita National, families will pay RM10 to RM100 a month and the government will pay a flat contribution of RM50 per month.

"It's like EPF. This is to help out; if anything happens to the husband, the housewife will get [financial] aid."

Ballooning debt

He said Najib should also not neglect development in Sabah and Sarawak but bring the two states at par with the Peninsula.

Meanwhile, PAS's Dzulkefly hoped Najib would address several issues, among others, reducing the national debt and increasing disposable income.
He said Budget 2013 should look into measures to promote prudent spending and curb corruption and leakages.
"We have been pump-priming the economy for many years, during good and bad times, creating a ballooning debt that is reaching 55% of our GDP. Najib should avoid pushing us further into debt," he said.
Dzulkefly, a PAS central working committee member, also called on Najib to find ways to reduce dependence on oil and gas revenue.
"Currently, 40% of our budget is financed by oil money," he said.
He also said that Budget 2013 should find ways to increase disposable income rather than offering piecemeal solutions like BR1M and Kedai Rakyat 1Malaysia programme.
One way to do this is to reduce the prices of essential things such as food and transport.
"As for transport, let's empower local councils to have their own bus system. We can also work on a hybrid transport system by integrating the bus system with the MRT project," he said.
Eliminate monopolies
Dzulkefly said that Malaysia needs policies to eliminate monopolies and promote healthy competition among industry players.

"A lot of private enterprises have to compete with government-linked companies, which naturally receive preferential treatment.
"Bear in mind that in the first quarter of this year alone, capital outflow reached RM9.7 billion as many companies are no longer keen to reinvest in Malaysia," he said.

Dzulkefy added that the situation is alarming as most of the companies that are leaving are from the services, financial and wholesale sectors.

"Even oil and gas players are taking their money elsewhere. Budget 2013 must address this matter," he said.

Crime reduction, Dzulkefly said, must also be tackled in Budget 2013 by conducting training to change the police mindset on crime busting.

"Police must change their mindset and understand that their job is to protect the rakyat. We can have the 'bobby' system like in the United Kingdom, where police patrol the streets regularly," he said.

Meanwhile, Lee, the Bukit Bendera MP and DAP strategist, said Malaysia cannot continue to do more of the same.
"My concern is that Budget 2013 is about doing more of the same. We have think long term whether it is BN or Pakatan leading the country," he said.
'We're facing a crisis'
Malaysia, he said, is traditionally an export-led economy, but should now look to increasing domestic consumption.
"We have to move more towards domestic consumption. And this shouldn't be based on government projects or generated through household debts.
"Pakatan is talking about increasing disposable income. We're facing a crisis and we need to make sure people at the bottom have more money in their pockets."

Liew said that to grow a strong domestic economy, wage reforms are needed.
"You have to reform the wage structure, you have to take away some of the monopolies. We need a systemic and structural reform."

Liew stressed that for Budget 2013 and beyond, the country needs to start reviving the manufacturing sector.
"At present, our manufacturing sector is somehow not performing, and not moving up to be innovation-based."

Liew also said more money should be put into small and medium industries.
"There is no political will to give incentives to the small and medium enterprises, to allow them to be more automated, and more skill-based. The focus is all on foreign direct investments (FDIs)."

The government cannot continue to favour FDIs at the expense of the local industry, he said.
"Under Najib, we're still trying to attract foreign investments, building the next financial hub… but it is pointless because the world financial market has collapsed."

Liew said another important step is to encourage women to enter the workforce.
He also said the government has to "think out of the box".

"What is needed now is an economy that can take us to the next level."

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