Budget 2023: Engage vulnerable, minority groups, think tank says

 

The Institute for Democracy and Economic Affairs (Ideas) welcomes the publication of the 2023 Pre Budget Statement (PBS) on June 3 as it is an important tool for fiscal transparency and governance.

The think tank said in a statement that it has been a key proponent of the publication of a pre-budget statement, as it has been assessing the transparency of Malaysia’s budget via the Open Budget Survey since 2015.

"Ideas recommends engagement with targeted stakeholder groups, particularly with vulnerable or minority groups, to provide feedback on key budget policies, more so in these times of uncertainty where quick, responsive policymaking may have unintended consequences on these groups,'' said its Public Finance Unit manager Alissa Rode.

She said a consultative approach to the national budget is essential to ensure policies are relevant and inclusive.

Rode anticipates the PBS being followed up by a comprehensive effort in getting public participation.

Meanwhile, on subsidy rationalisation plans for targeted and vulnerable groups, Rode indicated that petroleum and cooking oil subsidies alone are projected to balloon to RM30 billion from the budgeted RM4 billion.

She said subsidy plans need to proceed in a more predictable and manageable way.

“Subsidy rationalisation combined with more effective distribution would ensure the government channels public resources to groups that are most in need," she said.

Deeping country’s talent pool

On the Finance Ministry’s commitment to mitigate tax base erosion and profit shifting of global taxpayers, Rode said this should be complemented by deeper thinking on the non-fiscal incentives that bring value to investors in Malaysia.

This includes deepening the country’s talent pool in global services management, electrical and electronics (E&E), and digitalisation.

Other incentives for foreign investors are policies that encourage the environmental, social, and governance (ESG) agenda, she said.

“As a developing country aiming to digitise and automate its sectors, it is important that the local sectors are supported by foreign direct investments (FDIs) with specific know-how and expertise.

“This is where non-fiscal incentives need to be investor-friendly, especially in a post-pandemic setting,” said Ideas research director Juita Mohamad.

Ideas further called for the government to publish a Mid-year Review to enable oversight of the nation’s fiscal position.

- Bernama