The Malaysian Insight

PUTRAJAYA has to address the declining revenue affecting the country’s gross domestic product (GDP) now before it turns into a crisis in the years to come, said Damansara MP Tony Pua.

“What was not addressed in Budget 2022 was how we could resolve this impending crisis in three to five years’ time,” he said during the UOB Kay Hian Wealth Advisors’ public policy economy webinar today.

“What we see today is declining revenue as a percentage of GDP for our budget,” he added.

He said that in 2018, the revenue percentage was at 15%-16% and it was expected to decline to less than 14% by 2025.

“That creates a problem because the declining revenue percentage means the government will not have enough money to influence the economic direction or to help the people in need of assistance in the future,” Pua said.

He said the government also has little room to manoeuvre as the amount available for discretionary spending is limited with fixed expenditure such as emoluments for civil service taking up a chunk of the operating expenditure.

This means the government has less than 30% of the operating expenditure for spending on other needs such as supplies, he added.

“That is a major crisis for the government and it has to be addressed today so that we can prepare for a crisis in three to five years’ time.

“This has not been resolved and I am not sure if the government has the political will to do it. That is actually what I am particularly concerned about over the longer term,” Pua said.

Touching on development expenditure allocations, he raised the alarm on the government’s practice of spending all revenue for operating expenses which has been the case since the mid-2000s.

“As a result, we ended up with a distorted operating versus development expenditure structure. We are still suffering from it today,” he said.

“It is a bad idea to put all revenue into operating expenditure when some of this revenue could have been allocated into development expenditure thus reducing our debt burden. But that is something that we have to live with.

“The increasing debt repayment level is eating significantly into the operating budget. Even the previous Pakatan Harapan government suffered from this problem.”

On Budget 2022, Pua said the spending plan is sufficient for many of the policies that the government has implemented in its attempts to address and  bring recovery back in the short and medium term.

The Opposition fully supports many of the initiatives, he said, adding that some of the programmes mooted by Pakatan Harapan were also revived.

However, implementation is key, Pua said.

“In terms of the overall budget strategy and allocation specifically for immediate economic recovery, I think it fulfils the agenda. However, in Malaysia, implementation often fall short.”
 
Many businesses, for instance, have complained of difficulty in getting loans and aid, he said.

To ensure proper implementation, Pua said the Opposition will monitor the progress and strengthen Parliamentary check and balances. – November 2, 2021.