COMMENT | Austerity drive, purge, systemic shrinking of the national debt – call it what you will, but Malaysia will always have a huge debt problem, with or without 1MDB hanging over the country like the Sword of Damocles. Why?
Some 1.6 million civil servants are on the government’s payroll. Even those who have retired will get their monthly emoluments, as indeed they should.
But the size of the previous government implies that the Malaysian public budget was top-heavy from the start. During the administration of former premier Najib Abdul Razak, some 84 percent of the budget was spent to keep the government running.
Of the paltry 16 percent dedicated to development expenditure, the Prime Minister’s Department alone still demanded a quarter of the amount.
Unless the government of Prime Minister Dr Mahathir Mohammad significantly reduces the lopsided nature of the fiscal budget, the Malaysian public sector will always be bloated.
However, the solution does not rest on retrenchment or voluntary separation schemes (VSS), which will cause Malaysia to enter a deflationary spiral.
Rather, the government should reinvent itself by looking at things creatively. Take the 108 Malaysian diplomatic missions strewn all across the world. These missions consume nearly...