‘Back to the future’ with Budget 2018
In “Back to the Future,” Marty McFly was sent back 30 years in time to repair a damage to history, which may have pertinence to Budget 2018.
As with previous years, Prime Minister Najib Abdul Razak invited Malaysians to share ideas for the budget. I have always accepted the invitation, and have always given my suggestions and comments.
At the recent 2050 National Transformation (TN50) dialogue series, which attempts to engage young people who will shape the country’s future, Najib said Budget 2018 will cover the people’s aspirations.
Looking back at the themes of the budgets since 2015, it has always been centred on the rakyat, making it only appropriate for the views of the rakyat take centre stage.
However, there are only 14 different categories the public can submit their ideas on. There are many other major issues like migrant workers, weak ringgit, suppressed wages, changing competitive landscape, food scarcity, corruption, adherence to regulations, sustainability, etc., that need to be examined in a comprehensive and competent manner.
Be that as it may, I wish to depart in this article from the quantitative bits I have focused on for the last three years. Here, I will address areas that would make the budget more meaningful and acceptable to the over 31 million people in Malaysia.
A few days ago, an ex-deputy Bank Negara Malaysia (BNM) governor warned that our economy is showing signs of fatigue. We are still focusing on the model that helped build up our country in the 1980s, but we should be moving towards becoming more technically advanced, productive and innovative, and looking at more value-added initiatives.
We should avoid highlighting graduates selling nasi lemak, or encouraging the rakyat to be Uber drivers.
As for productivity and innovativeness, billions of ringgit have been budgeted and spent since 2011. The average annual productivity growth from 2010 to 2015 was only 1.8%. This is seriously short of the 11MP’s targeted level of 3.7% to be achieved by 2020.
For the public sector, the percentage share of the public sector to total employment was 8.4% in 2013, increasing to more than 9% in 2016. Civil servants need to continuously improve to enhance performances that will give the rakyat the services and comfort that is expected and which is still lacking.
Productivity has been identified as a crucial game-changer, especially against the backdrop of the “fourth industrial revolution.” Efficient and effective use of resources will help, while wastage or mismanagement will hinder.
On migrant workers, it has been stipulated under the Eleventh Malaysia Plan (11MP), the ratio of foreigners in the country's labour market to locals must not exceed 15%, or 2.1 million. But if we include illegals, the ratio would have reached more than 40%. Policies are not holistic, and there is little coordination and transparency among relevant ministries.
Last year, it was revealed in Parliament that foreign workers had sent back RM119 billion to their home countries from 2011 to 2015. Remittance volume increased 23.2% to around RM35 billion in 2015, which does not include funds that flowed out of the country illicitly. It must also be noted that they hardly pay any tax.
The migrant workers issue also has a bearing on the forex rate and the weak ringgit. The ringgit may have strengthened a little versus the US dollar, mainly due to the latter’s weakness, but we are still weak against our neighbour’s currencies.
Export growth will be a priority under Budget 2018, and we welcome foreign companies to enjoy low costs in production, but at the same time we are suppressing wages, which has a direct effect on locals.
We should learn from China, i.e., moving away from low-cost producer status. At present, industrial intensity in the country is still inadequate to create enough high-paying jobs. The changing competitive landscape, especially from low-cost producing countries, will have a direct impact on Malaysia, given our focus on encouraging exports of manufactured goods.
We are also short of skilled workers. Currently, less than 28% of the total workforce are considered skilled. In addition, there is a lack of creativity and innovation in the workforce. The 11MP target is well below the proportion of skilled workers compared to developed economies, which is at least half of the total workforce.
Unless we improve productivity as discussed above, we will be bypassed by foreign investors with high value-added contents.
Apart from clean water, food drives the world. Agricultural productivity is important for a country's balance of trade and also for the security and health of its population. Due to global warming and natural disasters, there has been a drop in world agricultural production. When this happens, the natural reaction is to suspend food exports.
Malaya faced a food crisis during the Japanese occupation due to the policy of turning agricultural land into rubber plantations. Many people died from the resultant famine. In the interests of food security, it is prudent to achieve self-sufficiency in food production, especially given the scarcity of land.
Over the last few years, corruption has been hogging the limelight. Just a few days ago, there was news of illegal logging. Illegal loggers and corrupt enforcement officials have short-changed the country to the tune of billions of ringgit. So does smuggling and illegal land usage. Lucrative government contracts with lopsided terms and conditions are all too familiar.
Is honesty not the best policy in Malaysia?
Another matter of grave concern is the adherence to laws and regulations or regulatory compliance. It was a few days ago that we were presented with news that the appointment of the chairman of Felda Global Ventures (FGV) was not in accordance with established procedures. The announcement was made, but FGV itself was left in the dark without any formal notification from the finance minister.
We can boast about splendid first two-quarters growth figures, but are they sustainable?
The abundance of natural resources has been indispensable to our growth, but it has come at significant human and environmental cost. We may have met all eight of the UN’s Millennium Development Goals (MDGs) before the 2015 deadline, but our PM has admitted that the goals “fell short” of achieving truly sustainable development.
There are many challenges that lie ahead to fulfil our goal of balanced, inclusive and sustainable development and realise our vision 2020. However, the indicators for long-term growth do not look very good and showing signs of fatigue.
Honestly, I have trouble distinguishing the urgency and importance between vision 2020 and TN50 for Budget 2018 since prominence is given to the latter. The former is only two budgets away. Should we not give priority to it and take stock of where we are? It was a promise the government of-the-day made close to 30 years ago, and I trust we should keep our promises.
Here, I wish to reiterate my previous suggestion on the government to hold itself accountable. I did suggest for the finance minister to provide comparisons between the budgeted and actual amounts spent for the previous year, and also comparisons between the budget and actual spent up-to-date for the current year. In addition, comments should be made publicly available on the achievements or miscues in the various thrusts or strategies in the previous year’s budget.
It is to be noted that Malaysia’s rankings have dropped in four global indexes - on the World Economic Forum’s Global Competitiveness Index, the World Bank’s Ease of Doing Business, the Global Innovation Index and the Corruption Perception Index. If we include FIFA rankings, it will make it five...
I am not suggesting that we have to suffer severe emotional distress as a result of the above, but to at least show some concern about where we are heading. Of course there will be gaps between plans and actual implementation, but we must step up our desire to put things right.
In the last two Budget speeches, Surah Yusuf verses 43 to 49 and Surah An-Nisa’ verse 58 were quoted. For the 2018 Budget, I would propose Surah Hud verse 85 be quoted instead: “And O my people, give full measure and weight in justice and do not deprive the people of their due and do not commit abuse on the earth, spreading corruption.”
I believe the youths that contributed ideas at the TN50 town hall sessions will be nearing retirement age in 2050. I am also pretty sure if they come “back to the present” they will acknowledge the above suggestions. And when they are going “back to the future,” they know we have left them a legacy of love, respect and professionalism that they can be proud of.
Even our first PM, Tunku Abdul Rahman, said, “My ambition is not Mighty Malaysia but Happy Malaysia.”
What say you…