2009 Budget: Bolder Measures Needed!

While the proposals of Budget 2009 seek to address the concerns of the people and help them to cope following the increase in fuel prices and goods and services, it lacks punch and most of the measures just trickles at the margin. For example, the reduction of the income tax from 28 percent to 27 percent works out to just RM150 a month. I feel that bolder measures at the micro and macro levels are needed to boost the economy and to pass the benefits of this growth to the people. In the medium term, more incentives are needed to encourage local investors as well as foreign direct investments. These measures should reflect the challenges of an increasingly open and competitive global economy.


At the macro level, the government should remove any hindrances or constraints to economic growth and investments – both domestic and foreign. The Deputy Prime Minister, YAB Dato Sri Najib Tun Razak mentioned at the Mid Term Review of the Ninth Malaysia Plan, that the guidelines under the Foreign Investment Committee needed to be reviewed to encourage investments, but the Budget fails to highlight this important aspect. The government should give serious thoughts to removing any hindrances to investments, especially when we are facing fierce competition from China, Vietnam, Cambodia, Thailand and Indonesia. Such hindrances and obstacles are also not consistent with globalization. The requirements for listing on the Kuala Lumpur Stock Exchange, Bursa Malaysia, also needs a relook. Companies are now free to list on regional bourses like Singapore and Hong Kong. If the government does not remove restrictions such as the 30 percent requirement on equity ownership, more and more companies will seek to list in these bourses. The local bourse used to be a major stock exchange in Asia after Tokyo and Hong Kong. Now, it has been overtaken by Singapore, Korea and China and Jakarta and Bangkok are fast catching up. Budget 2009 also does not have any comprehensive proposals to help the small and medium enterprises which are the most affected by rising materials and operations costs. What is needed to push the SMEs to the next level are advisory centres or incubators to help them. The government should not just pump in the funds per se but should assist the SMEs in areas such as upgrading of technology, human resource development and marketing. Killing the goose that lays the eggs! The windfall tax on oil palm estates needs a relook. The windfall tax was introduced about 10 years ago when the breakeven was RM600 per tonne. But this has increased to about RM1300 per tonne. If the government wants to maintain the windfall tax, they should consider moving the level to RM2500-RM2700 per tonne. On Human Resources, as a former Minister of Human Resources, I feel that the requirement of having to report ethnicity make-up in the workforce (as proposed in the Mid Term Review of the Ninth Malaysia Plan) is a step backwards. This will indeed be a constraint to companies, including multi-national corporations in Malaysia, to employ the best talents and will deter Malaysians from improving themselves to compete on a level playing field. At the people level, the people are still feeling the effects of the rise in prices following the increase in fuel prices. While the government has lowered fuel prices a little, the people are still affected by the increase in prices of commodities and goods and services following the initial increase in fuel prices. Now, the government should look into measures to pass down the reduction in fuel prices to the people. More important is the lack of emphasis on a Social Safety Net. One way is to set up a fund to help the unemployed by providing them with financial assistance over a period of 6 months until they get another job. The government can kick-start the Fund by providing an initial grant of RM200-RM300 million and contributions from both the employers and employees can sustain the Fund. The measures proposed to upgrade private transportation are not comprehensive enough. Assistance should not be confined to Rapid KL or Rapid Penang, but should be more nationwide as an efficient national private transportation system is important. The government should look into problems faced by commuters, including a more efficient feeder service, enough car parks at LRT/commuter stations, besides ensuring comfort and punctuality of services. I am sure that if such facilities are in place, more people will be encouraged to use these services. Toll charges should be reduced by half for all and not just for buses. The government should seek to renegotiate the compensation with Highway Concessionaires as revenue has increased with the increase in traffic volume from the time their compensation were first negotiated. Similarly, the estates should also pay their workers higher wages and provide better welfare services. This way, they will also encourage more Malaysians to work as estate workers and not have to rely on foreign workers. ends