There is little to indicate in the PM's Budget 2010 speech on how the government intends to finance the RM50 billion deficit. Until and unless this government comes to its senses, the country's financial position is going to be worsening.
Malaysia is set to register a straight 12 years of budget deficit and a record external debt of RM450 billion or more. This is a staggering figure. Over the last 6 years, the national petroleum company, Petronas, has contributed more than RM260 billion to the government's coffer.
The amount does not commensurate with the level of development enjoyed by this country. I had written about a lack of urban renewal projects, public transport system enhancement, new public amenities and others.
The Prime Minister has outlined the creation of a knowledge economy and a high income workforce by 2020. This objective cannot be achieved if there is not accountability and a proper ROI for the funds used.
There are several major obstacles for the government:
1) There is a lack of a proper mechanism to evaluate public spending in the country. For example, the 2010 Budget has an allocation of RM22 million for a study on the implementation of a nationwide GST. It has received a protest from opposition MPs in the parliament. The amount is absurd. Being a consultant with some of the top consulting firms in the country, I find this sum difficult to digest. Similarly, more than RM200 million was billed by the consultants of PKFZ. When the government starts to be more accountable?
2) Despite mounting criticisms and abuses reported in the Auditor's General Report, the government has yet to budge on the implementation of a full open tender system. States such as Penang has shown that an open tender system can help the government to save a lot of money. It makes the private sector more competition and helps to weed out corruption in the public procurement process.
3) The government revenue streams have not grown very much since the last decade. The private sector is not doing that well. Individuals who are paying taxes have not grown beyond the 11% of total workforce. In a developed country, more than 60% of workforce pay an income tax. A low level of those eligible to pay tax does not help the government to fully adopt the GST. It means that the lower income group will be worse hit if a full GST is implemented. Without its implementation, the World Bank has warned Malaysia of a worsening government's revenue. Its dependency on oil revenue is not very positive either.
4) Malaysia has yet to realize its investments in various mega projects. Despite the claim by Mahathir that mega projects are good for the economy. It appears that a non-productive infrastructure development or a new industrial park gives only a short term stimulus to the economy. The budget continues to neglect other important industries such as manufacturing, innovative and creative services, tourism and hospitality services and others. Malaysia spends without a good ROI. The PKFZ is a prime example. Next the Cyberjaya and soon the Nusajaya and other regional corridors.
5) The government is facing its own political and policy bottlenecks. The race-based coalition cannot move beyond its race affirmative policies. Hence, it does not have a post-NEP policy or is reluctant to introduce any policy which can help to promote meritocracy which is sorely needed by the country.
Hence, I agree with a few observers that the 1Malaysia slogan is just but another empty slogan. Very little has changed since the leadership transition from Abdullah Badawi to Najib Razak. Complacency, racial politics, corruption and abuse of power by certain public institutions are still rampant.
We deserve better than this.