Federation will ‘break’ if states demand allocations based on GDP, says Rafizi

 

Economy minister Rafizi Ramli at the 13th Malaysia Plan stakeholders engagement session in George Town, Penang, today. (File pic)

GEORGE TOWN: 

The federation will break if Putrajaya starts giving funding to states based on their GDP contribution, says economy minister Rafizi Ramli.

Speaking at a 13th Malaysia Plan (13MP) stakeholder engagement session here, Rafizi said the federal government worked to balance state and national development when deciding how much funds each state should be allocated.

Rafizi said while better performing states claimed their economic engines deserved greater financial support, less-developed states argued that they needed more investment to catch up after years of being left behind.

“If we were to go by a hard and fast rule… meaning, if states expect allocations based on GDP, I think the federation will break,” he said.

He was answering a question from a civil servant about whether Penang would be allocated more funds due to its higher contribution to the country’s GDP.

The civil servant pointed out that Penang was the leader in national manufacturing exports and was one of largest contributors to Putrajaya’s coffers.

Penang is the fifth largest economy, contributing 7.6% to the country’s GDP in 2023.

Rafizi said the government wanted to avoid widening the gap between states by giving fair and equitable funding to all states.

He said failing to do so would see more people migrate to the Klang Valley and Penang in search of income opportunities, putting undue pressure on infrastructure and resources in these areas.

“We need to make sure there are enough economic opportunities in all states. Growth comes with a strain on resources.”

Rafizi said federal investments were guided by practical considerations. Some states, such as Penang, Johor and the Selangor-KL-Melaka corridor, were prioritised because of their high potential to drive economic growth, he added.

However, Rafizi said this did not mean less-developed states would be ignored, citing the example of East Coast states where food industries and heavy industries were being developed due to land availability.

Equal development funds

Separately, Rafizi said opposition states were being taken care of through the numerous development projects in their states.

He said states such as Selangor and Penang were even complaining that opposition-held states were getting better funding.

He asked “forward states” such as Selangor and Penang to be patient with their wish lists on funds under the 13MP as the government had more pressing infrastructure projects that needed to be carried out in other parts of the country.

Rafizi also poured scorn on opposition MPs wanting equal funds. He said it was a disingenuous way of asking “one to two million ringgit” to spend for themselves under the guise of constituency development funds (CDFs).

The Pandan MP said during his time as an opposition MP, he was forced to dig into his own pockets for funds to develop his constituency.

Rafizi also said CDFs were not really needed under the current government as Putrajaya was rolling out many projects in opposition constituencies.

“We have never denied funding to opposition-held areas. If they (opposition MPs) want one or two million to spend for themselves, they can ask me,” he said. - FMT