Pakatan Rakyat’s Belanjawan 2013 – A Commentary

Pakatan Rakyat announced its Belanjawan 2013 (Belanjawan sounds nicer, isn’t it?) this afternoon.  You can download the full document HERE.

The Belanjawan is a people-friendly budget as expected.  Whether the numbers believable or not are arguable though.  Going through the document, I feel that the Belanjawan is city-centric (PR’s existing voter base) with less emphasis on rural.  The only major proposal with direct impact to rural areas is Pan-Borneo Highway (targeting East Malaysian voters).  There is only 1 page titled “Increasing Incomes and Employment Opportunities for Malaysians in Rural Areas”.  Overall, I feel the Belanjawan succeed in providing possible answers to current “hot issues” such as transportation, cost of living and monopolies in industries.

I won’t be going into details of the Belanjawan but below are my ranting on some of the contents.

Thrust 1: Increasing Disposable Income, Alleviating Economic Hardship

One of the proposals in this Thrust is the implementation of universal minimum wage of RM1,100 for the public and private sector.  Generally, I support the implementation of minimum wage but to make it universal across the board is very simplistic.  Cost of living is different between locations and productivity level is different between industries.  Thus, not all private sectors can afford to pay the same amount of minimum wages.  More detail studies shall be made to ensure each industry deserves its own minimum wages.  The same can be applied in the public sector.

Another proposal under this Thrust is the popular one.. abolishment of PTPTN as PR believes that tertiary education shall be free to all Malaysians.  I was not in favour of PTPTN when it was first created but for opposite reason.  I don’t believe everybody shall get a loan for tertiary study.  Some of them deserved to be fully or partially subsidised (based on performance and socio-economic status) while the rest shall pay if their families can afford it.  Furthermore, with increasing education costs and population, free tertiary studies will be a big hole in government budget in the future.

Thrust 2: Building Entrepreneurial Class, Promoting Constructive Competition

One of the proposals in Thrust 2 is to refocus all government investments and ventures into business in Khazanah Nasional.  I am a believer that government shall not venture into business.  Revenues to the government shall come from taxes and not dividend.  But as a developing country, it is understandable that government have to venture into some business for strategic reasons.  PETRONAS is an example. 

I will therefore go one step further to make Khazanah focus only on strategic investment and not compete with the private sectors.  Because of its strategic investment, the KPI shall not be minimum dividend as proposed in the Belanjawan.  KPI can be designed to ensure Khazanah’s focus remain on strategic investment.

Thrust 3: A Just Society With Dignity and Pride

One of the proposals under Thrust 3 is the establishment of state-owned second-tier oil and gas companies for oil producing states to benefit from risk-sharing contracts in marginal fields.  I find this proposal unnecessary as the issue at hand here is the awarding of these contracts to alleged cronies.  More transparent award process shall eliminate the issue.  We do not need many PETRONAS.  I would suggest that some of the royalties paid to the states to be used for investment in alternative energy in anticipation of lesser oil production in the future.

Now, waiting for the government’s budget this Friday..

What I Want From Budget 2013 – A Preview..

Its time of the year again.. Budget 2013 to be presented by the PM this Friday.  Let’s be honest.. not many people really watch the Budget in its entirety.  I’m a trained economist and yet I find the Budget presentation a bore.. hehe.  It does have sentimental value though as my eldest son was born on Budget Day 2000. 

What presented during the Budget does affect our choices in life.  Civil servants hoping for a high bonus, wage-earners dreaming for no tax (yup.. you are allowed to dream) and the public in general hoping for free gifts such as continuous BR1M.  All these influence our choices in life.

OK.. let see what I want from the Budget this time around.  I DREAM of a holistic budget for a change.  This year will be the 3rd time in a row it is called ELECTION BUDGET.  So, I expect this Budget to be pleasing to the eyes of the voters without any ‘tough decisions’ made.  Lots of TRANSFORMASI under the government but I swear I haven’t seen a tough OPTIMUS PRIME in our Budget so far.

So.. what is my DREAM holistic budget? Below are some of them..

1)      Revamp of Tax System

A lot of hoo-ha on the GST but I just wonder whether the govt has take a look at the whole tax system.  The govt’s revenue still relies on direct revenue (a large chunk from Petronas’ generous dividend).  Therefore, the GST need to be introduced (but I doubt it will be in this Budget since it is not voters-friendly) although it must be accompanied by assistance to the poor and middle-income.  The govt should have introduced GST and BR1M simultaneously to balance out any negative impact of GST. 

2)      Focus on Implementation Rather Than Allocation

Every year certain amount is allocated for this and that.. I wonder whether those allocations reach the targeted people or not.  For example, every year huge allocations are made to SMEs but my clients and many other SMEs always complaining about difficulty in accessing these funds.  There is no point of making huge allocations but the implementation or distribution mechanism is still at “ice-age” level.

3)      Incentive for Private VCs and Angel Investors

Sources of funding for SMEs in Malaysia are limited to financial institutions, govt funds and VCs.  Unfortunately, existing VCs are largely funded by govt and thus, the process is sometimes tedious and not up-to-date (as I mentioned in number 2 above).  There are many individuals out there with plenty of cash who are willing to invest in new businesses provided that certain incentives are given to minimise their risk. 

4)      Allow Small Banks to Operate

There is lack of focus from existing banks on SMEs.  Partly it can be blame on banking mergers in the last decade, creating huge banks which directly lead to entertaining huge clients.  I believe allowing private small banks catering for specific niche market will allow easier access for SMEs via more creative products.

I am waiting for PR’s alternative Budget scheduled tomorrow.  PR’s Budget is always populist but in the past, it has shown some creativity in certain areas which the govt’s Budget is lacking.  Will review it once it is presented, Insha’Allah.

Before I end this RANTING.. don’t you think the BUDGET sounds nicer in Malay as BELANJAWAN instead of English-adopting BAJET?.. hmm..

WELCOME TO RANTING-NOMICS!!

Hello people!  Welcome to my blog.  This blog consists of my rants on anything and everything with economics spin to them.  I believe there are always economics aspects on everything in life.. which is why RANTING is not only for my rants but also means BRANCHES in Malay. 

So.. enjoy my RANTING.. and do post your comments regardless whether you choose to agree or disagree as choices are science of economics J.