KUCHING: As the Dewan Rakyat sitting began on Monday (Feb 13) and the revised Budget 2023 is expected to be tabled in a week, there is growing anticipation for the federal spending plan to be unveiled by Prime Minister Datuk Seri Anwar Ibrahim.
According to Carlson Lester, a PhD candidate in economics, the upcoming revised Budget must bring about a substantial advancement in government revenue and expenditure.
He said that Anwar’s extensive experience and knowledge should be reflected in the Budget by incorporating his proposed reforms. Failure to do so would result in a continuation of the current narrative, ultimately leading to disappointment among the people.
His proposals included reinstating the goods and services tax (GST), eliminating subsidies that benefit the wealthy, and offering financial assistance and relief to the underprivileged.
“So, one proposal will be to break all the supply bottlenecks. This is not new as we have been dealing with inflation for a long time and Anwar can go through the data, speak to the relevant officials and come up with a good proposal to fight inflation,” Carlson added.
He concurred with Anwar regarding the necessity to restructure subsidies, particularly fuel subsidies.
He disclosed that more than half of the RM37.3bil allocated for subsidies on petrol, diesel, and liquefied petroleum gas (LPG) predominantly benefits the country’s top 20 per cent of earners (T20 – 53 per cent), instead of the bottom 40 per cent (B40 – 15 per cent) or the middle 40 per cent (M40 – 32 per cent).
UOB Malaysia senior economist Julia Goh told New Sarawak Tribune in an interview last month that a reduction of 20 sen in subsidies for RON95 petrol and diesel could generate yearly savings of RM5bil or RM416.7mil per month. This figure remains applicable today.
As acknowledged in the 2023 Economic Outlook report, blanket subsidies have “encouraged leakages and abuse of subsidised goods”, and “continuous inefficient allocation of subsidies will adversely affect the long term fiscal sustainability”.
Former Bank Negara deputy governor Tan Sri Lin See Yan emphasised the importance of creating a revised budget for 2023 that would serve as a long-term federal spending plan spanning the next 18 months.
He believed that such a plan would effectively attract foreign investors to Malaysia.
He stated that for investors to be willing to invest, they need to be able to perceive the future plan, emphasising that if there is no visible plan, investors will not invest.
“Political stability is crucial to ensuring the longevity of policies.
“The government must act as one. This means Anwar has to bring all ministers and supporters together and think beyond the 18 months,” he added.
Centre for Market Education chief executive officer Dr Carmelo Ferlito said in order to tackle inflation, the government must table a smaller federal Budget.
“Inflation is given by excess money in circulation,” added Ferlito, who advised the government to introduce a tax reform and to return to the GST mechanism.
Tax reforms require a considerable amount of time to be effective and cannot be rushed. He explained that identifying the areas of the tax system that require the most attention and determining which reforms would stimulate growth in a reasonable timeframe is crucial. Furthermore, he emphasised that there is no one-size-fits-all solution for tax reforms.
During the Prime Minister’s question time at the Dewan Rakyat on Thursday (Feb 16), Anwar announced that the government would not implement a Goods and Services Tax (GST) or any similar broad-based consumption tax.
Anwar, who is also Finance Minister, is scheduled to table the revised Budget 2023 in Parliament on Feb 24. The parliamentary session is set to run for 29 days until March 30.
