MALAYSIA will cut back spending next year, including by gradually lowering the rate of welfare payments, while increasing its income from tourism receipts, among others, to pay its debts, said Prime Minister Dr Mahathir Mohamad.

He said a RM1 trillion debt left the country with very little to spend, but he was optimistic the cutbacks would soon yield positive results for the economy.

“The people must accept that we are not doing well,” Dr Mahathir told The Malaysian Insight.

It’s not all doom and gloom, however, even though it’s time to tighten the belt, he said.

“There are other means of earning money but more importantly we need to have a budget that is thin.”

Barisan Nasional had allocated RM280 billion to Budget 2018, which was more than RM20 million higher than Budget 2017. Both budgets set aside RM46 billion for development.

Pakatan Harapan will table its first national budget, for 2019, in November.

The new government is looking at tourism and palm oil production to stimulate the economy and  to fill the nation’s coffers.

Dr Mahathir said the government would be courting the tourists as well as foreign investors in the hospitality sector.

“And tourist business is cash business. In fact, at one time, tourism earned us (the most money) after Petronas.”

The tourism and hospitality industry brought in RM182.4 billion last year, making up 14.8% of the country’s economic output or gross domestic product (GDP) in 2016, and was the third largest contributor to the economy.

Meanwhile, Dr Mahathir said, the country’s oil palm plantations were still doing well and could be tapped for revenue.

“We have done well in (in the area) and we are very comfortable with that.

“Any land that you have, you plant oil palms, you get money”

This was unlike manufacturing, which was highly competitive, he said.

He said other domestic industries such as rubber and furniture were also thriving and had potential for expansion to increase exports.

Palm oil, rubber, cocoa, and timber exports amounted to RM121.99 billion in 2016 and made up 15.5%  of total exports. Oil palm plantations alone made up 7.4% of the GDP.

The prime minister said national oil company Petronas continued to contribute to the national income although it was not earning as much as it did when global oil prices were about US$120 (RM480) per barrel.

“Now it is US$70, so we earn less, but we still earn. But you cannot take all of it as profit because Petronas needs to invest continuously.”

The prime minister blasted the previous BN government for its open-door policy to allow foreign imports, especially cars.

He said the government must protect its infant industries, like other countries did via import taxes.

“But here we are open. Any make of cars in the world, we have.”

Dr Mahathir said it was this open policy that had killed off Proton, which used to have 80% share of the local car market. its market share is now 17%.

“Malaysians must change their mindset as consumers and start accepting local products to spur growth of the economy.”

Malaysians should make sacrifices like the Japanese, Koreans, and now, the Chinese did.

“The Chinese mentality is different, they want to produce the things they import, and they do it very well.”

The cars they made now were as good as other cars made elsewhere, he said.

As long as Malaysians continued to send money out of the country by buying foreign goods, he said, the country would never grow. – August 25, 2018.