BUDGET REVIEW MUST REFLECT LONG TERM MALAYSIAN ECONOMIC HARDSHIP

The Malay Economic Action Council (MTEM) believes that the budget restructuring announcement is both good and timely with the international drop of oil prices. Among what we believe are effective are listed below.

The government has allocated 30% of annual expenditure to government agencies and government linked companies (GLCs) to be invested locally. We believe this will stimulate the growth in the local economy and market.

The allocation of funds – as much as RM800 million – to fix and rebuild basic infrastructure such as schools, hospitals, bridges and roads, as well as additional RM100 million allocated through TEKUN and RM100 million through Amanah Ikhtiar Malaysia (AIM) is well appreciated and should be made available immediately.

But at the same time, there must be transparent mechanisms to ensure there is no wastage and corruption in the delivery and implementation of the projects involved.

Furthermore, we applaud the prime minister’s call for the private sector to take part in the ASEAN Economic Community (AEC) to market their goods. However, the government must take the initiative to set up a proper platform and clear mechanisms to encourage the penetration of our entrepreneurs to the regional market especially for the SMEs.

MTEM also observes our drop in currency value requires to be thoroughly examined. From our side, we are expecting a continued devaluation of our ringgit to the equivalent of RM3.72 compared to one American Dollar. This will affect international trade, especially involving the foreign exchange rate whenever involving Malaysian currency.

In addition to this, the national debt will also see an increase due to the same factor.

We also believe there is a need to revisit the levy on foreign workers. There is a need for the government to increase the levy and to tighten the regulations on intake of foreign workers to ensure priority is given to Malaysians instead.

This is in line with the recently published Khazanah Research Institute report which shows that for every 10 foreign workers allowed in, 2 Malaysians will lose job opportunities in this country.

We are also concerned that the government made no mention of any measure to combat inequality. In fact, there was not a single mention of any signs or steps to combat the inequality in Malaysia.

MTEM is of the view that the government should put more focus on instruments which will encourage local economic growth. Initiatives such agri markets (pasar tani) and other initiatives by the Ministry of Agriculture should be increased and encouraged by other ministries instead of encouraging mega sales. Point of examples is the agri market (pasr tani) introduce in Kelantan post 2014 flood. This is a better measure which would decrease wastage in consumerism.

Also, the awarding of contracts directly to small and micro contractors is welcomed by MTEM, especially in the development after the floods as well as development projects in general. Subsequently, we believe the government must review its policies involving direct negotiating practices to large contractors to ensure a more equal distribution of opportunity. As an example, this practice is already being done by the Public Works Department (JKR) before this.

The steps towards fiscal reform and consolidation are also good measures, in which dividends from GLCs, GLICs and government agencies will increase payment of dividends in an effort to bolster national income. However, MTEM believes that the awarding of grants must also be reviewed thoroughly to take into account critical programmes for Malaysians as a whole.

The government must ensure that the austerity measures in the budget review will not have negative implications to critical sectors such as health, public services, welfare, education, poverty eradication, rural development and also entrepreneur development.

We would also recommend the implementation of proper measures and policies thoroughly in dealing in unprecedented large scale natural disasters. MTEM suggests that temporary housing and permanent housing, taking account factors of design, geography and structure, are properly considered in the building of new homes to cope with disaster situations.

Also, preventive measures such as nature conservation, sustainability of water catchment areas and logging and tree farming policies need reviewing to avoid continued long term loss.

The government also announced maintaining the 2015 development expenditure of RM48.5 billion allocated involving high impact projects such as MRT Line 2, the Kuala Lumpur – Singapore High Speed Rail and also RAPID Pangerang. This is understandable because the gross domestic value (GDV) of the projects can propel the nation to achieve high income status. However, MTEM believes that the focus of development funds should instead should focus on more short and long term projects that will benefit society better such as affordable housing, public transportation such as buses, sanitation and irrigation works as well as more facilitation infrastructure for rural areas and expanding inter-city public transportation such as “feeders” in the city.

We feel that the restructuring of the budget is required and more emphasis must be in place to deal with long term measures as well as precautionary measures when it comes to government spending. This is needed as a stop gap measure to control the devaluing of the ringgit, impact on the lower international oil prices and the probability of an economic crisis that may happen in the near future.

The reviewed budget must furthermore be followed by proper, effective and continued measures to deal with corruption and wastage. Other than this, overlapping delivery and implementation of projects must be cleaned up, attention to mega projects must be lowered by ensuring the national development policies addresses equal opportunities to contractors and fundamental amenity projects such as housing, irrigation and access as well as basic infrastructure is the utmost priority.

These will assuredly assist Malaysians as a whole.

The government must also ensure that all capital available in the country stays in the country in case we do fall into an economic crisis. As such, the government’s stand on moving away from capital controls as an instrument to manage the outflow of funds must be maintained. This is because such controls are still a relevant instrument to stop those of the high income group, large scale companies and even foreign investors to not withdraw their capital currently in Malaysia.

Furthermore, the recent budget review also shows that in any such cases ie economic crisis, there is a need for measures such as a quota in government as well as GLC procurement specifically for local companies, the promoting of buying Malaysian made goods and priority being given to local contractors; all of which are contrary to the Trans Pacific Partnership Agreement’s (TPPA) terms. This clearly shows that the government must reconsider joining the trade pact as these preferential measures involving local companies, government procurement and even the purchase of local goods are in direct violation of the conditions of the TPPA.