GE15: it’s all about the economy

 

As Malaysians finally vote, basic economic issues will be key.

Under the governments led by Perikatan Nasional (PN) and Barisan Nasional (BN), both with Tengku Zafrul Aziz as the finance minister, did your income fall? Did you lose your job? Did your company fail? Was your pension wiped out? Did you or anyone you know put up a white flag in desperation?

Under the economic management of the outgoing government and finance minister, Malaysia now faces huge structural issues: low-paid jobs, inadequate pensions for 96% of the population, high levels of under-employment, structural problems in higher education funding, a low-impact SME sector held back by ineffective policies and crowding out, an inadequate social protection system, low domestic private investment and foreign direct investment (FDI), a lack of agility and competitiveness, and cartels, monopolies, and corruption in major economic sectors and of course in foreign worker recruitment.

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These have not been acknowledged let alone tackled by the outgoing finance minister since 2020, and to address the problems created by the last government, the new finance minister must be someone with a good understanding of economics, not just a merchant banker. We need more than just a pretty face.

Based on the performance of the outgoing team, a new Pakatan Harapan (PH) economics team headed by Anwar Ibrahim would deal with the structural issues more effectively.

PH is stronger on economic reforms necessary to underpin growth and recovery. They pledge to eradicate cartels and promote competition, reduce bureaucracy in government agencies, create export tax incentives, and more free trade zones. This is a free enterprise spirit as part of the essential supply-side reforms.

PH pledges to support micro, small and medium-size enterprises (MSMEs) through digitalisation, productivity, and venture capital grants.

Their standout policy to establish a parliamentary budget office will allow independent scrutiny of economic policy and a layer of credibility in assessing the costs, benefits and overall impact of any economic proposal.

The first priority will be to revise Budget 2023, which was a vulgar pre-election budget, increasing spending by 12% for projects targeted at potential voter groups.

Many of these handouts are very small. Bantuan Keluarga Malaysia (BKM) is barely equivalent to RM74 per person per month, for example. The RM1,000 each for SMEs ignores 8.5 million business enterprises.

There was no justification for increasing spending because of the savings from the Covid-19 emergency packages. These could build a reserve against economic slowdown next year or could cut borrowing and debt. They could also be channelled back to the rakyat in a universal basic income programme.

There is also no real justification for increasing ministry spending until efficiency improvements have been made. In the health ministry, in particular, the serious management failures in the treatment of doctors and the corruption in the governance system all need to be fixed before more money is provided.

We need a full reform of the tax system, not just the goods and services tax (GST) and sales and services tax (SST), but all taxes and excise duties to create a more efficient low-tax environment to improve government finances, promote growth and attract foreign investors.

There is also the need to reform subsidies. Also, the proposed policy of targeting subsidies through e-wallets as touted by the old government is wholly wrong.

So, the overall trajectory of the economy will depend on who wins and this is why your vote is important.

If BN wins, we will have more of the same, higher inflation and higher interest rates.

If PH wins, we will have a new budget and better coordination in policy with independent scrutiny under the parliamentary budget office they support.

If we have a hung parliament and instability like we have seen before, then this will damage confidence and hit everyone’s wallets.

Whatever happens, whoever wins should adopt policies from other manifestos. The BN assistive basic income, the PH parliamentary budget office, and the PN incentives for flexible working are good ideas from all sides. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.