Tuesday, October 27, 2015

Budget 2016: Whither Are We Bound?

Malaysians have described Budget 2016 as a Robin Hood budget; others have called it a populist budget.

Those labels are partially true but looking at it overall, I prefer to call it an election budget – there are enough sweeteners to appease targeted constituents who form the critical vote banks for Najib Razak (left). The budget, in my opinion, is designed as if an election is on the horizon. 
One of the biggest beneficiaries are the East Malaysian states of Sabah and Sarawak.
Budget 2016 proposed to allocate RM29.2 billion for development in Sarawak and Sabah. This represents 10.96 % of the total budget. Deputy Prime Minister Ahmad Zahid Hamidi in an immediate reaction to Najib’s budget speech on Friday had said the Sarawak allocation was meant to win over the electorate in the state polls, expected to be called next year. You cannot be more honest than that!
Please don’t get me wrong. I do not begrudge Sarawak and Sabah getting more money – they should have received the said funds all along. Why only now?
Another beneficiary is the Prime Minister Department which is taking a larger proportion from national coffers, from RM19 billion this year to RM20.3 billion in 2016. It just keeps getting bigger and bigger. Unbelievable.
It is interesting to note that prior to Najib becoming prime minister, the said department only took up very modest federal resources. In 2006, it was 2.67 % of the total budgeted expenditure; in 2007, it was 3.81 %; and in 2008, it was 3.40 %.
But when Najib assumed office on April 03, 2009, the PM’s Department began to throw its Rosmah’s weight around and began receiving allocations of nearly 7% of the annual federal budget – a figure that has continued to climb over the years until now (with only a dip for two years in 2012 and 2013).
In 2009, the percentage ballooned to 6.71 %; in 2010, it was 6.37%; in 2011, it was 6.74 %; before it retreated a little in 2012 and 2013 with allocations of only 5.38% and 5.24 % respectively; and then it shot up again – 6.23 % in 2014; and 6.96 % in 2015.
Budget 2016's allocation for the Prime Minister's Department is 7.6% of total expenditure, the highest ever for the department. What this means is that even more resources are being diverted to the Prime Minister’s Department for Najib to consolidate his power base within UMNO and also to counter the nasty opposition. As Kluang MP Liew Chin Tong correctly said it is indeed a budget of Najib, by Najib and for Najib! I couldn’t have put it better.
Of course, there are small goodies for very many groups – and they are bound to generate goodwill amongst these recipients. Friday’s budget included cash handouts for 7.4 million households and individuals, higher pay and bonuses for 1.6 million civil servants, and a one-time payment to 700,000 pensioners, not to mention bigger subsidies for rubber planters and rice farmers.

Undoubtedly, there is also pain. Hefty trimmings on education, welfare and social spending only show that the prime minister has got his priorities wrong. But Najib doesn't care, does he? 
Najib had opted for a budget that is going to resonate with his primary core supporters – the lower-income Malays. When you really scrutinize Budget 2016, you realize that it is not addressing the challenging environment that we have now. He has missed the opportunity for broader economic and fiscal reforms.
Budget 2016 allocates a total RM267.2 billion, an increase from a revised allocation of 260.7 billion for 2015. [Note: The initial allocation for 2015 was 273.9 billion]. And the figures below speak for themselves.
Current account surplus in 2016 to be down more than half to RM11.3 billion from RM23.4 billion this year and RM47.3 billion in 2014. Economic growth forecasts at 4.0-5.0 % for 2016, compared with 4.5-5.0 % this year. Fiscal deficit for 2016 reduced slightly to 3.1 % of gross domestic product, down from 3.2 % in 2015 and 3.4 % last year. Government debt limit to remain at 55 % of GDP in 2016, forecasting a ratio of 54.0 % but it is still higher than the 52.7 % in 2014. Inflation seen at 2.0-3.0 % in 2016, against 2.0-2.5 % this year.
Budget 2016 is nothing more than endless disappointments. Therefore, I must expect Malaysia’s current malaise to persist. The country is already standing on the precipice. 

Yesterday, I participated in the University Malaya Toastmasters meeting – the venue was the Chemical Engineering Department in Block V of the Engineering Faculty. I did an Advanced speech from Specialty Speeches – "Speak Off the Cuff". 
But there was a twist to this. Based on the manual, I was to provide my Evaluator 5 possible topics and he was to pick one at random – after which, I will then speak on that selected topic. However, the club president Jacky Wong decided to get his (non-Toastmaster) lecturer Dr. Jega, who had come to the meeting, to suggest a topic out of the blue. The title given was “The Economic Crisis and Its Impact on Malaysians”.
Thankfully, I believe I did justice to the topic. Anyway, I was evaluated by Mathew Philippose from Money Mastery Toastmasters Club, who was also the General Evaluator at the said meeting.
It had been a good meeting in all respects and I enjoyed myself. An 8 over 10 score for this meeting.
And thanks to Jacky for the Coke!

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