BUSINESS leaders say the retabling of Budget 2023 on February 24 should be an austere one to tackle the ballooning national debt.

They also want the budget to reflect smart financial management and adopt good policies to stimulate economic growth coming out of a Covid-19 battered economy.

At the same time, they want the government to ensure the Malaysian economy is ready to handle the impact of the anticipated global recession this year.

The Federation of Chinese Associations Malaysia president Goh Tian Chuan told The Malaysian Insight that Malaysians expect a budget that would help in a “more comprehensive recovery” of the economy.

With a national debt of RM1.5 trillion that accounts for more than 80% of the country’s gross domestic production (GDP) looming large in most business people’s minds, Goh said a bold budget on ‘total austerity’ and the political will to match is key to trimming the debt.

He said for starters, Prime Minister Anwar Ibrahim and his unity government should cut the bloated federal civil service to size.

“The civil service has always been too large. The government should trim it without fear or favour.”

Goh said he also agreed with the prime minister that leakages from corruption and wasteful spending should be plugged.

Therefore the reports of the Auditor-General should be acted on and the culprits punished.

He said since the budget is akin to a company and even personal finances, what the government wants to spend must be matched by its income.

That, he said, is “smart financial management”.

On stimulating the economy, Goh said the budget should have incentives to lure more foreign investments and to encourage local enterprises and business people to pump more money into their businesses.

He also said the country’s main revenue earners, like its exports and the tourism industry, need to be better developed and managed.

Malaysia-China Chamber of Commerce vice-president Kerk Loong Sing said the budget should take into account the general outlook of the Malaysian and global economy.

He said even though the country had shown signs of an economic recovery in this post-pandemic period, the global economy, including Malaysia’s, is still being impacted by the war in Ukraine.

“This year will still be difficult for the global economy and many economists have been forecasting that at least 30% of countries in the world will go into recession.”

He said since many major economies in Europe and the United States will experience recession, that would put a lot of pressure on the Malaysian economy.

“We will be hit quite hard,” he said.

“In addition to increasing economic revenue, it is more important that the country’s money is not misspent and wasted. 

“I think that the government is determined to fight corruption all of which will enable the country to save on expenses, so despite the very difficult cost of living environment. We still have hope that there is room for the economy to grow.” he added.

Like Goh, Kerk also said the civil service needs trimming.

“The main reason why the budget deficit increases every year is because of expenses. Expenses are divided into two parts, development and operating expenses.

“The biggest part of operating expenses is the salaries and retirement benefits paid to civil servants,” he said.

“The only way to reduce this is to reduce the number of civil servants we have. If you look at the civil service in proportion to the population, we have one of the largest civil services in the world.

“The government must take measures quickly to save on unnecessary expenses.”

Automation and digitalisation

SME Association of Malaysia president Ding Hong Sing said there must be something in the budget for the government to assist small and medium enterprises (SMEs) to migrate to automation and digitalisation of production.

He said if production is increased and there is excess, then that could help the country’s exports.

“Micro enterprises are highly dependent on manual labour, particularly foreigners,” he said.

Heavy reliance on manpower makes it difficult for exports as the output would be low, he said.

Ding said although some SMEs are already exporting what they produce, the uncertainty and difficulties in securing workers always puts them in a bind.

Ding said “the approval process of grants offered to SMEs” is slow.

“They must be accelerated.”

Ding said it would be good if approvals could be done within “two to three months”, three at the most.

He also wished the budget had a provision in providing interest-free loans to SMEs to encourage more operators to buy machinery for automation of production.

Anwar, who is also the finance minister, had said the re-submitted budget will take into account the current economic challenges, while aiming to boost growth and attract investment.

He said the government is exploring the budget to improve competitiveness, speed of business approvals, digitalisation, and sustainable consumption and production of natural resources.

“No one should feel forgotten and neglected,” he said.

The news portal, Malaysiakini, has reported that economic and political observers have warned that the approval rating of the unity government could plummet if it fails to meet the people’s expectations with the budget. –  February 16, 2023.