Tuesday, October 29, 2013

An Unpropitious 2014 Budget

Prime Minister Najib Razak unveiled his government's budget for 2014 on Friday, purportedly to address a large fiscal deficit, shrinking current account surplus and growing debt pile that are sources of concern for investors and ratings agencies.

Nope, Najib didn't quite address these issues. He took the easy way out. Therefore, I didn't think it was a good budget. Going into the specifics, I shall only highlight three features of the 2014 Budget that stand out like a sore thumb. Two items will have wide ramifications on Malaysian income earners and the third will benefit me marginally – only because I am a taxpayer.

Firstly, the Goods and Services Tax (GST) will be implemented on April 01, 2015 – seventeen months from now at a fixed rate of six percent. It’s the same rate as the present sales tax – tell me, what's the diff? I didn't mention this previously when I said I supported GST but according to CIMB Research, given the poor enforcement culture in Malaysia, the implementation of GST is likely to contribute to a 5% increase in inflation – and this is bad news for many people.

Secondly, personal income tax rates are to be reduced by 1 to 3 percentage points for all tax payers. This is quite insignificant because it will only put back a couple of extra bucks back into my pocket.

Thirdly, the subsidy program is to be "gradually restructured" and the sugar subsidy of 34 sen was effectively abolished the following day itself. This means we can expect food and beverage prices to go up again in 2-3 months' time!

Yesterday, Opposition Leader Anwar Ibrahim claimed that sugar tycoons in the country, mainly the politically connected Syed Mokhtar Al Bukhary's Central Sugar Refinery, can chalk up profits of RM1 billion as a result of the government's cessation of the sugar subsidy in the 2014 Budget, [Central Sugar and Malaysian Sugar Manufacturing (owned by Felda Global Ventures) currently hold the monopoly over the sugar industry in the country].

Anwar said that the rise in profits would be caused by a strengthening in the two above-mentioned companies’ monopoly in the sugar industry. He asked for the government to remove the monopoly in order to allow a “free market mechanism” to take place.

Anwar is right. “What becomes the question here is why must corporations get so much profit due to the removal of sugar subsidy while the people are burdened with the increased sugar price, questioned Anwar.

The 2014 Budget is bad for the poor and the lower-middle class wage earners. But does Najib even care?

I was in Ampang to be part of the Youth Leadership Program (October 25-27, 2013) with other fellow Toastmasters from MIMKL (and also Satu Hati). This was organized for the teenage residents of Pusat Kebajikan Good Shepherd (PKGS) as part of the club’s CSR initiative and I am glad to have helped out on two of the three days.

Note: To safeguard the identities of the eighteen participants, we were not permitted to take photos – instead, I am putting up snapshots of some of the facilitators and other innocuous objects seen at the center.

PKGS is a not-for-profit organization – founded and operated by the Good Shepherd Sisters – a worldwide Congregation of women religious present in 73 countries in six continents – and since 1960, its focus is to reach out to “those who are marginalized and broken, especially women, girls and their families, restoring in them their worth and dignity”.

For this particular YLP that we conducted, the participants were girls between 13 to 18 years of age.

Below, I have uploaded “Aku Suka Dia” performed by Ainan Tasneem – this song was featured in Marcella Sweetie’s speech. She was one of the participants and she has a dream to be a singer.

Certainly, it was an enriching experience for all of us who were there. I found it personally rewarding.

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