On the last Friday of October every year, it has become a tradition in Malaysia for the finance minister to present the government's budget for the following calendar year. This year, the 2003 Budget will be presented earlier on Friday, Sept 20. Thus, the 2003 Budget will also contain development allocations for 2004. It will be the first time the budget will make fiscal commitments for the following two years.

According to Dr Mahathir Mohamad, he will step down as prime minister and finance minister in October 2003. This means that the 2004 Budget will also be announced by him, which will also affect spending in 2005. Thus, the future of the budget and the country will be determined by Mahathir for two years after he steps down in October 2003.

Thus far, most people do not closely follow the budget. For them, what is important are new taxes imposed on them, whether directly or indirectly. They also want to know if existing taxes are reduced or scrapped.

Less attention goes to government allocations for future spending. Part of this is current or operating expenditure which is generally difficult to avoid or reduce. Development expenditure referred to as capital expenditure elsewhere are one-time investments which are not recurrent or regular.

In reality, development expenditure does not necessarily advance development, for example, if spent on buying submarines or mega building or luxury projects which are not needed; instead, these burden the state, and ultimately, the people.

Bakun

For example, last month, it was announced that the Bakun Dam project had been awarded to a consortium led by a small company with a joint-venture with Sime Darby which has no experience in dam building and a foreign company.

In fact, the Bakun Dam project has been criticised in terms of its engineering as well as its environmental and economic implications. Recently, it was found that the Bakun Dam's water volume will be much greater than previously anticipated, perhaps due to logging in the dam's vicinity.

In fact, Mahathir previously cancelled it in 1990, citing environmental considerations. Then Deputy Minister and Finance Minister Anwar Ibrahim cancelled it for a second time for its economic impact besides other considerations. Now, this mega-project has been revived, imposing a huge, heavy and useless burden on the Malaysian economy and people who will have to bear this burden for years to come.

The electricity to be generated by the Bakun Dam will be too much to sell in Sarawak and Sabah. Hence, electricity will be sold at a price much cheaper than cost to a bauxite smelter a highly polluting industry rarely found in developed countries, and usually sited in backward countries desperate for industry regardless of its adverse consequences.

The people will bear all the costs and effects of this general Malaysian government attitude to cronies and foreign investors. The residents of the dam area have been relocated on 1.2ha per family, which they have to pay for miserable compensation even condemned by Human Rights Commission of Malaysia (Suhakam) recently. As the Malay saying goes, while the forest monkey is suckled, projects for the ordinary people cannot secure funding.

Pirates

The Terengganu public have lost billions because the previous state government invested in the Perwaja project which lost well over RM10 billion. First Silicon with Sarawak government investment of RM6 billion now only has 15 workers, down from 150 last year!

Previously, before the 1997-8 economic and political crisis, some large projects such as the Bakun Dam were supposedly privatised. However, now, it is clear that only profits and profitable assets are being privatised at discounted prices, especially to cronies. It cannot be denied that many more people were given some shares in privatised enterprises at discounted prices to disguise the favouritism taking place.

After the 1997-8 crisis began, public money has been used to finance Danaharta and Danamodal to the tune of almost RM50 billion in order to bail out the financial system, especially some banks and finance companies which had lent on dubious grounds as politically directed or due to corrupt bank managements.

Besides that, the recently closed CDRC Corporate Debt Restructuring Committee was abused in order to bail out several crony conglomerates using government and people's funds, not only at present, but also by reducing future government revenues. It is clear that pirates within and outside the government intend to privatise profits while asking the government to take over debts and losses to be borne by the government and public.

Government revenue includes both taxes and other income, mainly from state-owned enterprises such as Petronas, which is internationally acknowledged as having been well managed.

Petronas

Unfortunately, although Petronas' net income to date exceeds RM400 billion, it appears that Petronas now only has about RM50 billion in reserves. Part of the rest has been invested in projects within and outside the country which should provide a net income stream. However, a considerable amount has also been used to cover huge losses by other government owned enterprises, or to finance projects which no one else will finance by other means.

Several billion ringgit has been wasted to bail out Bank Bumiputera several times over, before it was sold at a discounted price to Bank of Commerce, owned by the Renong group controlled by Umno top leaders. Petronas has been directed to finance the building of Dayabumi, KLCC and Putrajaya (RM20 billion). Petronas also had to finance Malaysia's F1 track and the Sauber F1 team, besides taking over Konsortium Perkapalan (previously owned by Mirzan Mahathir) and Proton.

Currently, royalties due under the Petroleum Development Act of 1974 are not paid to the Terengganu state government since it was taken over by PAS, but have instead become a political instrument of the Umno leadership. Such abuse of power threatens the spirit of the federal constitution and the Petroleum Development Act, and has raised doubts about the authorities' real attitude to the rule of law. To reduce the further abuse of Petronas, it should be answerable to Parliament, and not just the Prime Minister.

The Prime Minister cum Finance Minister has announced his intention to abolish petrol and other fuel subsidies. It cannot be denied that such subsidies have been greatly abused. For example, the diesel subsidy was ostensibly introduced to help poor fishermen. However, most diesel was bought for factories, lorries, buses and taxis, while only big boats use diesel engines.

Energy conservation and environmental protection should be encouraged with appropriate public policies, but there are few serious indications that the current government has such intentions and priorities. Higher taxes on luxury cars, for example, can reduce the importation of expensive cars and the waste of petrol by large fuel-inefficient engines, besides reducing environmental pollution, which has reached dangerous levels, especially in the Klang Valley.