BY DR MAHATHIR BIN MOHAMAD
COMMENT: For 2½ hours I sat down in my seat at the Dewan Rakyat listening to the Minister of Finance’s budget speech.
It was amazing. It was the biggest ever. For operation and development the Government will spend 322.5 billion altogether.I am not a financier. These big figures are mind-boggling.
It seems that the Government will be putting money in the poc3.ket of everyone, rich and poor, employed and unemployed.
The question that I would like to ask is where the money will come from. The deficit is said to be about 85 billion Ringgit. It is bigger than the development budget of 69 billion.
We know that the COVID-19 pandemic has affected the economy badly. Although the glove industry has done well but Petronas and Tourism, the two biggest contributors to Government revenue, have done very badly.
All other industries have suffered badly. I don’t think income and corporate tax would amount to even 2/3 of the normal figures during normal times.
It is expected that vaccines would put an end to the pandemic. The industries, trade and business will recover. But can they recover fully so as to achieve a Gross Domestic Product (GDP) growth of 7.5%. Just think. From a shrinkage of 4% to growth of 7.5%, the recovery would be 11.5% – fantastic.
From the complaints I hear from the business community mere approvals would take more than a year. That means there would be practically no inflow of investment funds in 2021. Certainly, there would be no profits made, or taxes paid to the Government. Even local investors will meet with these delays.
Policies don’t grow economies. Only implementation will do so. I know of cases where multi-billion Ringgit projects have been delayed for years. If the investor pushed, he is likely to face even longer delays.
So don’t expect restarting or launching new industries to begin on the 1st of January. The rosy picture of immediate recovery once the COVID-19 pandemic is overcome is not going to happen. The pandemic would not end on new year’s day.
I suppose the Government will have to borrow to implement the budget. This is estimated to increase Government debt to 1.3 trillion. That is a lot of money. If you fail to service loans, you may be bankrupted.
I can understand the need but we can still prune the operation and development costs. In the last 15 years salaries had been increased at very high rates – as much as 25% each time. Ministers and members of parliament had been given numerous allowances. Such is the increase that everyone is keen to be members of Parliament and Ministers. Nothing will make them part with their position. Even when their leaders commit crimes, they will support them. Giving up their posts would deprive them of so much money. Principles don’t count anymore.
It is perhaps better to make these posts less lucrative.
This pandemic is affecting the poor the most. Those who have lost their jobs and the small traders have no income at all. They earn today for today. If they don’t then they will have no money to buy food even. They will starve.
On the other hand those who are paid high salaries continue to earn more than their daily needs. Of course, those who are paid high salaries, such as airline staff and business executives may also lose their jobs.
Dato Seri Shafie Apdal had suggested that Ministers should have their pay cut by 30%. That is a big figure. I think people earning high salaries in the Government or private sector should forgo 10% of their salaries. It is a sacrifice but I don’t think it would hurt them if there is a reasonable cut off point, say RM 20,000 p.m.
The money should be used to provide food to the unemployed and those without income.
Back to the budget. While the economic situation requires more money to be spent by the Government, the pandemic also affects the revenue for the Government.
When business do not do well, they would pay less tax to the Government. Indeed, when they fail to make profits, they would pay no taxes to the Government.
Government revenue must shrink during this pandemic. But the Government needs to offer stimulus packages. That cost a lot of money.
Additionally, Government has to service loans and also reduce the principals. For this RM35 billion would be needed. Total charge expenditure is RM72.3 billion or 30.6% of Operating Expenditure of RM236.5 billion.
I must admit to being frightened. It is a behemoth of a budget but can we raise the money to finance it. Government debt will be RM1.3 trillion. How do we pay.
The budget is for the Year 2021. The expectation of economic recovery is too optimistic. I can think of lots of other things which can be done to lower cost and increase income. But I suppose the Minister of Finance has considered all of them.
What is a fact is that most people are not happy. That is shown by their reaction.
I hope this budget would be modified in order to become more realistic. Then we can support it. We need not be bribed for our support. We do not want to precipitate a crisis.
- Dr Mahathir Bin Mohamad is the Member of Parliament for Langkawi