Let’s give Anwar some time and hopefully he will deliver a more inclusive government that will drive a sustainable economy, institutional reform and governance to restore confidence and social justice in reducing imbalance and urban-rural gap.

Prime Minister Anwar Ibrahim tabled the 2023 Budget at Dewan Rakyat on February 24, replacing the one tabled by the previous administration voided by the dissolution of parliament before its adoption.

Themed “Developing Malaysia Madani,” the Budget involves an allocation of RM388.1 billion or 20.4% of the country’s GDP, with a budgetary deficit of 5% of GDP.

Of the total, RM99 billion (25.5%) is set aside for development expenditure while the bulk of the allocation, RM289.1 billion (74.5%) is for operating expenditure.

The amount is 4.2% or RM15.8 billion higher than the “Keluarga Malaysia” budget tabled by the previous administration.

The “Developing Malaysia Madani” Budget 2023 focuses on 12 main initiatives based on three objectives, namely driving an inclusive and sustainable economy, institutional reform and governance to restore confidence, and social justice to reduce imbalance.

We would like to expound here several issues raised in the Budget.

Closing social and urban-rural gap

To this end, the Budget has increased the income tax rates for the T20 community by 0.5% to 2%, while reducing the rates for M40 by 2%. The B40 community, meanwhile, will get up to RM2,500 in government assistance.

Economic minister Rafizi Ramli says there are around 2.91 million B40 households in the country, of which more than 126,000 are entitled to the “Rahmah Cash Contribution.”

Rafrzi also says his ministry will pool the resources of the government, private sector and community to implement the “People’s Income Initiative” aimed at improving the grassroots economic structure to increase the income of the hardcore poor.

Government assistance alone will never be able to deliver the hardcore poor out of poverty. Rafizi said during the launch of the People’s Income Initiative that the initiative would involve three main segments: agro entrepreneur initiative, food entrepreneur initiative and services operator initiative.

In short, it aims at improving the income of hardcore poor through the efforts of organizations and the people’s consumption power. It is hoped that the initiative will help the hardcore poor stand on their own feet in order to break the shackles of poverty.

That said, the existing assistance programs will continue to run in order to maximize the effect of helping the poor.

Civil service and political reforms

The number of civil servants in this country has been rising steadily since 2003. As a result, we now have more than 1.7 million people on government payroll.

Unfortunately, all these years we have lacked a leader who is determined enough to seriously look into this issue, including Anwar Ibrahim and his unity government.

We would like to earnestly propose that the government freeze the hiring of civil servants while striving to boost the on-job efficiency of our civil servants, failing which we see no prospect of the government lowering the RM289.1 billion operating expenditure that makes up 74.5% of total allocation anytime in future.

Anwar said on Monday that Malaysia’s public debt has now topped RM1.5 trillion while budgetary deficit is at 5.6% of GDP. In view of this, the government is unable to raise the salaries of civil servants at this stage, or else the deficit will soar to 6.5%!

Equally important is corruption eradication and the implementation of open tendering of government procurement.

If the RM99 billion development expenditure continues to be disbursed through private negotiations between government officials and their cronies, much of this sum will end up unaccountable, especially procurement involving defense ministry’s military equipment and public infrastructure projects such as flood mitigation and traffic improvement schemes.

It was announced last week that the country is prepared to acquire 18 Korean FA-50 fighter jets for US$920 million (RM4.08 billion) at a unit cost of US$51 million.

This decision must have been made by the previous administration and it is imperative that Anwar look into the procurement process given that we have had the billions-ringgit LCS scandal as well as the French submarine scandal involving RM600 million in service contract. All these cases must be taken out of the drawers for fresh inspection.

Driving an inclusive and sustainable economy

The PM projects that the country’s economy will expand by 4.5% this year, remarkably slower than last year’s 8.7% but still well above the global average of 2.9% for 2023.

The thing is, we should be pursuing more sustainable growth. To achieve this, the unity government can consider adopting an expansionary policy on interest rates, tax revenue, finances and monetary policy to stimulate economic growth, even though each of these aspects does have its restrictiveness.

For much of last year, the US Federal Reserve was steadily increasing its benchmark rates from a mere 0.5% to 4.5% with the objective of taming the runaway inflation, downplaying the deflationary risk which will hamper consumerism and trigger recession.

As such, the government should consider lowering the interest rate to stimulate corporate borrowings and public consumption.

The increase in development expenditure will help create job opportunities and woo investments by investing in public infrastructure projects. Theoretically, the private sector can participate and invest in these projects to create the multiplier effect but unfortunately, increases in development expenditure have been pathetically slow over the years.

In December 2021, US President Joe Biden signed a US$1.2 trillion infrastructure bill to boost the country’s public infrastructure in hope of stimulating private investments and lowering unemployment. Meanwhile in China, tens of trillion yen in public investments have been instrumental in the country’s phenomenal economic growth in the past decade.

The 2023 Budget marks the start of Anwar Ibrahim’s governance. Let’s give the PM some time and hopefully he will deliver a more inclusive government that will drive a sustainable economy, institutional reform and governance to restore confidence and social justice in reducing imbalance and urban-rural gap.