THE main trouble with our budget is that 73 % of it goes to pay government operating expenditure (OE). This includes debt servicing (paying debts of previous years), which is 12.1% of the total budget. 

The cost of paying salaries and emoluments for the government machinery and apparatus is getting more and more expensive as the burden to employ them all, rests entirely with the government rather than being outsourced. 

That being the case, it also means that the basic budget templates have not changed much over the years. Unless this government is willing to reduce this OE, change its policies, reduce the number of civil servants and bring in the private sector to play a greater role in providing some of the services rendered to the public, nothing new will happen. 

With Covid-19 used as the main excuse, this is the best chance for the government to move away from the traditional templates and invent a new one. But this budget is far from being revolutionary.

The second part of the budget refers to the development expenditure (DE) which in this case represents only 27% of the budget total, of which 5.3% is allocated to Covid19 expenses. The balance, 21.7% is meant for the actual DE.

This is the portion, which in my opinion, the finance minister appears to be struggling with. 

Although DE is often pointed out as a means to drive the economy forward and address the financial difficulties faced by many Malaysians, especially the B40 group, it often

 doesn’t reflect those objectives at all. To many people, businessmen and politicians alike, this is the portion that makes or breaks a government. 

There are many items listed within this 21.7%, or over RM67 billion of DE. Some are quite relevant to boost our fledgling economy while some are totally irrelevant and should not be considered at all. 

Several large-scale and expensive transport projects are included in the allocation. High Speed Rail (HSR) and MRT3 projects are listed in there 

too.

In my opinion, it is far-fetched and overly luxurious to include HSR and MRT3 in this deficit budget as it may not have the necessary prerequisites to reverse the nation’s negative economic climate and trend. 

In fact, HSR and MRT3 projects will have the opposite effect as both are very expensive for a deficit budget to bear for many years to come. 

HSR, for instance, have become utterly superfluous, unnecessary and wrongly conceived at a time when travel demand between KL and Singapore is at the lowest level ever. 

Covid19 pandemic has not only caused travel demand for this city pair to drop but many suppliers (read; transport companies) such as express coach, airlines and train operators are facing financial difficulties and will close shop. 

Government budget should only be allocated once the economic benefits can clearly be defined, quantified and stated. 

How could we be so naive to allocate a budget for a new transport system when issues and problems faced by the existing operators, who are in dire financial straits, have not been addressed and resolved satisfactorily?

Why are we allocating our hard-earned taxes and limited income to a project that we do not really need at this moment in time?

Worse still, I read that our tax collection and other government revenues represent only about 73.5% of the total budget for 2021. 

Deficit budget

When combined with development expenditure, it means that we are presenting another deficit budget. 

For more than 10 years since 2010, we have had budget deficits and this trend will likely continue for many years to come.

That means, all these years, we have been covering the shortfalls through borrowings which now stood at 60.7% of our GDP. 

In fact, in next year’s budget, 12.1% of the expenditure is to pay the previous year’s borrowings.

For 2021, the shortfall in the budget, about 26.5% will be funded through yet more borrowings.

The finance minister should not pretend or use the simple excuse that these high tickets projects are necessary to spearhead our battered economy. This is not true at all. 

In fact, it does not make any sense financially, as the high speed train technology, from its track, locomotives, passenger coaches, electrical components and signalling systems are fully imported and to be supplied by foreign companies. 

Paying billions of dollars to foreign companies and suppliers will not help the local economy at all.

For sure, we do not have homegrown

companies involved in the manufacturing of any of these components, both for HSR or MRT. Therefore, we have no companies to protect and no employees to support during this difficult economic and Covid19 period. 

Local content

Just take a look at the ECRL contracts. How much of the RM40 billion price tag, the contract of which had been awarded to foreign companies, actually trickled down to Malaysian companies? 

How many local consultants are involved in this mammoth project?

How many local equipment suppliers have benefited financially?

How many jobs were created for local people?

So, all in all, where is the local content that the government has been harping on about that have helped to rejuvenate the local economy and resolved the high unemployment problems?

Perhaps the Finance and Transport Ministries or MR Link, the agency that is supposed to manage this ECRL project, should come clean and publish all these data and information on a regular basis. 

Let the public be the judge, to see if the argument for economic benefits and job creation hold any water at all. Make these data as your standard KPIs.

There are other high-cost projects included in the budget. 

These include the Klang Valley Double Tracking 2 (KVDT2), Gemas-JB double tracking, Pan Borneo Highway and Rapid Transit System between JB-Woodlands. 

For the sake of clarity and transparency, publish the data and information related to these projects and show us the local contents and the number of local employees.

While the KVDT2 was previously awarded to a Malaysian company, with high local content, this contract was cancelled. Why?

Going by the same reasons and principles, MoT ought to be consistent and cancel other big contracts, too. Why the double standard?

I very much hope that our MPs are sufficiently literate to read deeper into the numbers, especially the 27% DE allocation.

Hopefully, they could and would be willing to take appropriate action, debate and review this most expensive budget proposal in Malaysian history. – November 9, 2020.

* Rosli Khan reads The Malaysian Insight.

* 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.