An Election Budget (2022) – The Good, The Bad and The Ugly!

There are several positive points on Budget 2022. A total of RM332.1 billion has been allocated, while revenue is anticipated to increase to RM234 billion in 2022 (The gap is funded by borrowings). Operating expenditure is seen at RM233.5 billion with development expenditure at RM75.6 billion. Petronas dividend will remain at RM25 billion.

Source: https://www.thestar.com.my

GDP growth is expected to rise to 5.5-6.5% in 2022 from 3-4% in 2021 (A more likely scenario is 4-5% in 2022 with covid variants still appearing). Domestic demand is expected to improve to 6.6% in 2022 from 3.1% in 2021.

There is a lack of clarity on the prosperity tax of 33%; fund injection into companies facing gearing or leverage problems; and allocation (RM14.2 billion) for SMEs. The biggest beneficiaries of the budget are the education and health ministries.

The positive take covers a whole spectrum of society but leaves some with a poor taste. These may include the huge allocation for Bumiputera initiatives or empowerment (RM11.4 billion) compared with paltry sum for the Nons; the “bonus” for civil servants (RM1.3 billion) whose contributions were limited during the MCO; the disparity between funding Peninsular states vis-a-vis Sarawak and Sabah; and, the lack of sector assistance like tourism, aviation and services. Former Minister Zaid Ibrahim points out that it is “nice” to be a Bumiputera or a civil servant under the Budget allocation.

The new initiatives in electric vehicles (EV), R&D allocation (for universities) and job creation (of 600,000) are welcome steps. But “infrastructure” for these has to be thought through – charging stations have to be numerous for EVs (and that’s not in place); R&D require quality researchers and a hub or cluster for different areas – that’s difficult if it is on race-based; and, job creation in the private sector require skills that many graduates sorely lack.

The fundamental problem is not addressed – are we still in a race/religion mindset or a truly “Keluarga Malaysia” concept? If recovery is to be at full speed then “old” ways will only hinder growth. So, is this budget for the next election?

References:

Snippets from Malaysia’s Budget 2022 as its tabling unravels, Cheah Chor Sooi, Focus Malaysia (29 Oct 2021)

How nice to be Bumiputera or civil servant, remarks Zahid, FMT Reporters, Oct 29, 2021

Malaysia Budget 22 – tax snapshots, Ernst & Young, 29 Oct 2021