Najib’s psy-war budget

The Budget 2013 is not about tackling the real outstanding national issues but instead aims to temporarily suppress the discomfort and pain that the people are enduring.

The salient traits of the budget unveiled on Sept 28 by Prime Minister Najib Tun Razak are a continuation of Budget 2012 as far as the politics of psychology is concerned.

This was essentially an announcement of a psy-war budget aimed at winning the hearts and minds of the people.

Najib expects the change of mindset to take place sometime early next year.

But he knows that the positive effects of such a tactic would not last long. Once the deception takes effect, he has to act quickly and will likely call for the polls in the first quarter of 2013.

The psychological effect of a psy-war budget then is akin to a pain-killer that only relieves the pain temporarily.

Najib’s approach is not about tackling the real outstanding national issues but instead to relieve or suppress the discomfort or pain that the people endure temporarily.

The Umno elite is not interested in cleaning up the big mess it has created because corruption and other acts of abuse of power are their lifeline.

Critical issues not addressed

For the last 15 years since the 1997 financial crisis, the budget has continuously been operating at a deficit. There are no concrete measures to close the gap.

For this reason, the national debt which amounts to RM437 billion at the end of 2011 has now ballooned to more than RM547 billion.

However, some sources have quoted much higher figures as the government is not telling the truth about the state of our debt problem.

The rate of economic growth since 2012 is expected to be around 4% to 5% of the GDP annually whereas the national debt jumps from RM437 billion to an estimated RM547 billion within a year.

The national debt is definitely now beyond control. Considering the big annual loan repayments and the interest charges for a total loan of more than RM547 billion vis-à-vis the expected revenue of about RM208 billion, Malaysia’s economy is on course to go bust albeit it is a resource-rich nation.

It is believed that the main source of the government borrowings is now running dry.

Umno is now “compressing” Petronas (no way Umno wants to give a higher oil royalty to Sarawak and Sabah) and Felda to get the “virgin oil”.

Will Malaysia join the club of debt-ridden and bankrupt nations soon?

Stagnant revenue

The estimated revenue for 2012 was RM207.2 billion while for 2013 it is RM208.6 billion.

Despite the GDP growing steadily, the revenue collection is stagnant. Furthermore, the rise in the government income must be in tandem with the rise in the cost of living too.

If not for the oil and gas revenues from Sarawak and Sabah, the Malaysian government will be in deep trouble.

The stagnant revenue is due to tax evasion by politicians and businessmen who do not report their real incomes to the Inland Revenue Board (IRB) and instead stash their wealth worth billions of ringgit overseas and the acts of government officers of the relevant departments such as the customs and forests who collude with importers, exporters, companies and businessmen by not imposing the full tax charges in return for bribes.

The kickbacks these officers received are meagre compared to the loss of duties on import and export of goods worth billions of ringgit. The national tax collection system is not addressed in the budget.

In the case of Sarawak, it is reported by the Bruno Manser Fund (BMF), a Swiss-based NGO, that the chief minister of Sarawak has allegedly amassed ill-gotten wealth worth more than RM45 billion.

Similarly other Umno elites and BN crony companies are believed to have evaded tax and stash their incomes overseas. If the IRB could be given the authority to go after these elite groups, the government can substantially increase its earnings.

The annual deficit development expenditure since 1997 can be reduced substantially if we have a clean and responsible government.

For 2013, the development cost of about RM50 billion can be reduced significantly if the award of public projects/supplies go through the proper open tender system to ensure these items are built/delivered with the lowest costs and of good quality but not overpriced by the BN crony companies.

For 2013, it is estimated that the government can save as much as 30% of the development expenditure if the corruption practices by those in power can be stopped, thereby reducing the deficit and borrowings.

Corrupt regime

The prime minister’s budget speech did not touch on the issue of development allocation for Sarawak and Sabah.

There is no significant allocation for infrastructure development for the two states albeit the duo have contributed tremendously to the federal coffers. The aspirations of the people of the two states to see more dual-carriage highways, rural roads, bridges, hospitals, clean water supply and electricity supply for the rural areas as promised, were dashed.

I suggest that Pakatan Rakyat make recommendation for a new oil agreement between the four oil- producing states and Petronas whereby Petronas’ role stays as a mere contractor and the status of the oil producers are spelt out accordingly, to ensure that Sarawak, Sabah,Terengganu and Kelantan get a fair share of the revenue from oil and gas.

For Sarawak, it is estimated that, based on the 2011 figures, after deducting the 5% state royalty, estimated 20% cost of production and the production share of sub-contractors like Shell, the net revenue taken by Petronas and the federal government for 2012 and 2013 are more than RM40 billion each.

How much of this amount is given back to the state?

Awang Abdillah is a political analyst, writer and FMT columnist.