BUDGET 2020 will be tabled in Parliament on October 11. This will be the second budget of the Pakatan Harapan government, after 60 years of Barisan National rule.

Last year, there was too little time to properly plan and introduce proposals that would clearly define PH policies and direction.

Hence, this budget must show the difference, and reflect more of the government’s socio-economic thinking, plans and proposals for the 12th Malaysia Plan.

Budget 2020 Strategy?

So, what could be the strategy for Budget 2020?

In devising the strategy, the Treasury would have to take into account the global economic environment and outlook.

All the international agencies have highlighted economic slowdowns for all major nations.

With the continuing trade war between giants, the US and China, the trade outlook seems poor.

The persistent turmoil in the Middle East, the unpredictable petroleum prices and the growing uncertainties of global climate changes all over the world, including the damaging smoke in our country and our region, the prospects for economic and financial declines are becoming real.

Consequently, the Malaysian economy is expected to suffer from a slowdown that could cause the growth to fall to 4.0-4.5% next year.

It may even be less in the years ahead, but who can say for sure?

Then, unemployment – especially for graduates – will rise, incomes are likely to fall, inflation is unlikely to lessen and life, especially for the B40 and B20 groups, can become very difficult.

Budget revenues will also decline, while government salaries, debt and pensions will have to be nevertheless serviced.

Hence, Budget 2020 will face severe constraints.

The budget deficit will be under greater pressure to rise instead of falling, as the government plans to achieve.

In the meantime, the global ratings agencies are watching our budget closely.

Hopefully, they will have to be more realistic and allow our budget deficit to rise slightly, to face global economic challenges, and to enable Malaysians and particularly the poor to live more comfortably, despite the slowdown.

Budget 2020: theme of shared prosperity

So, what would Malaysians rightly expect from Budget 2020?

The majority of us will expect it to reveal new proposals to better reflect the theme: Shared Prosperity Vision 2030, as follows:

1. The poverty line is currently too low as indicated by the recent UN report.

The budget has to come clear on this vital issue, as the new poverty line will provide the basis for the budget’s expenditure policies and funding to fight poverty.

The budget should have a special package of anti-poverty proposals for the lowest 20% of the Malaysian population, regardless of race or religion.

This will be a new bottom-up approach, which will be widely accepted as just and fair, in accordance with our national values.

2. Our minimum wage is low, and could be raised appropriately and gradually to a decent living wage. The basic initial adjustments could be announced in the budget speech.

3. Inflation has been rising and should be contained. Here, again, there should be different cost-of-living indices for the poor.

This would help more specific policies, projects and programmes to alleviate poverty, and to reduce the widening income gaps.

The unequal income gaps between the rich and the poor have to be bridged , if we believe in implementing the UN inspired Sustainable Development Goals (SDGs), especially pertaining to no poverty.  

4. The digital economy is catching up quicker than we expected. Hence, Budget 2020 has to introduce new incentives to encourage small and medium enterprises (SMEs) to innovate more and adopt new technologies of the digital age.

If SMEs in China can do it, why can’t we? Maybe we should invite Chinese experts to help us here?

5. Environmental challenges are threatening our future growth, income distribution and progress.

This is evident from the way we treat our own rubbish disposal and the rubbish from foreigners, who dump their rubbish for us to clean up, or worse still: we silently ignore and endure.

We even tolerate toxic industries that others reject.

Surely, Budget 2020 has to come out with new proposals from the government, which should be different from previous corrupt governments?

6. Technical and vocational training, and science and technology should receive more funding.

We cannot urge the Ministry of Education to do more when we give it less than its basic financial requirements.

Equally important is the need to choose trainers on the basis of merit and real skills, rather than to employ underqualified teachers, who can’t perform satisfactorily.

Then, we will have more unemployed graduates – and more public frustration.

7. Health and other social services should also be reviewed and revised under the PH government.

The long-awaited Health Insurance Scheme could be introduced in Budget 2020 or as soon as possible thereafter.

Low hospital charges could be adjusted to gain more revenue. The poor need not pay higher charges, but the better off could be charged more and be encouraged to go private.

This important principle could be applied across the board, to be fair to all. After all this could be shared prosperity?

8. Taxes should be slightly and gradually increased, under shared prosperity policies.

The wealthy could be taxed more. How else do we share prosperity? The Nordic and other developed countries have superior welfare services, but this is because their tax rates are much higher than ours and their services are more efficiently provided.

They don’t have the wastage and corruption that we have today. Yet we ask for more and want it all for paying far less taxes?

Budget 2020 should therefore raise some taxes, even slightly.

Foreign investors will not be deterred from investing more in Malaysia, due to higher taxes.

They are attracted to Malaysia for its natural resources, quality of life, security and safety, and future prospects, but we cannot take foreign investment for granted.

9. Like all Malaysians, foreign and domestic investors look to our national unity, racial harmony, religious appreciation and wellbeing have to be maintained and sustained, if business confidence is to expand in the future and to be able to compete with our neighbours.

This means genuine inclusiveness that should include just treatment to all state governments and particularly to Sabah and Sarawak, as promised in the 1963 Malaysia Agreements.

Too much politicking, racism and religious bigotry will not be tolerated by investors and moderates anywhere and everywhere.

10. In conclusion, Budget 2020 should encourage and provide incentives to the best talent among us, while attracting some of the best brains from abroad to come home and stay to contribute to a better, more fair, stable, prosperous and sustainable Malaysia, for all Malaysians and for our posterity.

Finally, most of us Malaysians would expect a realistic and mild growth Budget 2020 that will give more priority to the poor, in the interests of protecting the integrity of the budget, as well as our social stability and real progress for all Malaysians.

* Ramon Navaratnam is chairman of the Asli Center of Public Policy Studies

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.