Budget 2010: The broad strokes

Dipetik dari Malaysiakini

Hazlan Zakaria & Aidila Razak


Experts are expecting a populist budget from PM Najib Abdul Razak, based on his people friendly policies since he took power.

He needs to show that 1Malaysia can deliver, said PAS research director Zulkefly Ahmad.

NONEZulkefly, along with DAP national publicity secretary Tony Pua, Selangor DAP vice-chairman Charles Santiago and PKR Selayang MP Willam Leong spoke toMalaysiakini yesterday in an exclusive video interview about the upcoming budget.

This, he also said, coincides with rumours that the general election is just around the corner.

However civil society, especially those often overlooked in the national budget considerations, expect more than just the normal gifts and sweeteners.

As Petpositive president Anthony Thanasayan puts it, “We want PM Najib to really look into our needs rather than just the usual talk.”

Experts cautioned that this populist approach may cause a further widening of the budget deficit, which some studies have projected to reach up to 7.6 percent of the GDP in 2010.

But the growing deficit can also be attributed to the stimulus packages previously announced to pump prime the economy.

Bank Negara Governor Zeti Akhtar Aziz recently admitted in aBernama report that more stimuli are required to sustain our economic recovery.

Malaysia’s problems like cancer’

This the experts concede is a necessary evil in order to jumpstart our economy, especially to stimulate domestic demand.

We need to focus on disposable income and sustaining the domestic demand in the aftermath of the global recession where all countries, especially Asian countries, must reduce their reliance on the export sector, said Ratings Agency Malaysia (RAM) chief group economist Yeah Kim Leng.

But above and beyond Najib’s public relations campaign and measures to tackle the effects of the global economic crisis, experts warned that there is a more urgent underlying problem hobbling our economy, which must be addressed.

The global economic crisis is like H1N1, it comes and then it goes away. But Malaysia’s structural problems is a cancer which is eating away at our economy,said William Leong of PKR.

According to the experts, major structural issues faced by the Malaysian economy include:

  • The inability to maintain our competitiveness compared to other emerging nations, despite our head start during the Mahathir administration. The major causes of this include our lack of infrastructure such as our underdeveloped ICT sector, which has been classed as >below today=s application threshold.
  • Our lack of human capital to sustain growth in knowledge based sectors which are due to our inability to consistently produce quality graduates and retain local talents.
  • The government has created an artificial low income trap by maintaining a low wage structure, and this is forcing households to borrow more and sink deeper into debt to maintain their lifestyles in the face of escalating cost of living. High household debt leaves the economy vulnerable to external shocks.
  • A major portion of household debts is made up of housing and vehicle loans. A step toward reducing is to look at affordable housing and more efficient public transportation. This will also contribute to forming a low carbon economy.
  • NONEMalaysia is still basically an old commodity-based economy. In fact, our so-called manufacturing sector is too focused on assembly to drive innovation and move us up the value chain to a higher income economy. The manufacturing sector, as it is, is also attracting low skilled and cheap foreign workers, which contributes to the problem of depressed wages.

These issues are something that Najib will have to consider in his budget if it is to truly drive our economy towards a long term recovery rather than just a short term shot in the arm.

However, experts agree that measures to heal our economy will take time and an integrated approach to succeed. This is something that Najib should consider in planning the 10th Malaysia Plan which begins in 2011.

For an in depth look into the 2010 budget, tune into Malaysiakini.tvon Monday for a post-budget discussion with the four Pakatan economic experts.

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