Kota Kinabalu, 29 August 2008
Trust is vital in fulfilling the budget ¡V can we believe that this government will implement the budget that the PM has tabled today? There are numerous promises in recent years that the PM has yet to fulfill.
There have been so many flip flops such as over the fuel prices, the indecisiveness over the double tracking rail project, uncertainty over the Penang bridge, cancellation of the Singapore bridge and the Port Klang Free Port controversy that the people have lost confidence in the PM. In Sabah, the suspense over the fate of the coal power plant in the East Coast of Sabah and the blur over whether to have a gas power plant in Kimanis or a RM 3 billion, 500-km gas pipeline to Bintulu have decimated the trustworthiness of the government leadership among the people.
Other examples that have made people to lose confidence abound. For instance, on 10 September 2004 the PM proclaimed a budgetary proposal in Parliament to implement a Goods and Services Tax (GST) on 1 January 2007. But because the PM did not realize the adverse consequences of a hasty GST, the Minister of Finance, who is also the PM, had to declare eighteen months later (in February 2006) an indefinite deferment of the GST proposal. Never before was a budgetary proposal (which was later approved by Parliament) failed to be implemented by the government due to ignorance of the implications of a GST in the country.
The 2005 budget too had declared its aim to raise RM 20 billion through PFI (Private Finance Initiative) for infrastructure projects as domestic investment in the economy. Hardly any of this RM 20 billion was raised up till last year. This budget 2009 is silent as to the future of PFI and did not address the difficulties faced by the construction sector due to increased construction costs in public infrastructure projects.
Economic and corporate management is still suspect. The sale of M.V. Augusta, which Proton Holdings Berhad had sold to a third party for one Euro (RM 5) who then resold the M.V. Augusta for RM 358 million (Euro 70m) last year.
At the same time, the Malaysian corporate sector is still reeling from efforts to mitigate losses over national icon Malayan Banking's purported purchase of PT Bank Internasional Indonesia (BII) for a total of RM 12.7 billion. This follows soon after Maybank share value lost sharply upon announcement to purchase 15% of a Pakistani bank (MCB Bank Ltd.) at RM 2.17 billion. The PM has yet to effectively explain how confidence can be restored among both domestic and foreign investors.
After the general elections of 8 March, investor confidence was so low that, in the 2nd quarter of 2008 (April to July), domestic investment dropped to RM 2.6 billion from RM6.7 billion (in the first quarter ending March 2008). Foreign Direct Investments (FDIs) was even more bleak, dropping from RM 16 billion to a mere RM 7.3 billion in the 2 quarter compared to the first quarter before the 12th general elections. The budget presented by the PM today did not address this loss of investor confidence.
There is also no sign of the so-called RM 1 billion each allocated to Sabah (and later Sarawak) as announced by the PM on May 30 in Kota Kinabalu. Neither did these RM 2 billions appear in the supplementary budgets of last July's Parliamentary sitting. It remains a mystery where the RM 1 billion for Sabah comes from or will go to.
The one and only sector where hard working people make money for the government is the oil palm sector. But the government jealously had chosen to punish this "golden egg goose" by imposing a wind fall tax of 15% in June 2008, something that oil palm industry is still reeling from and unable to recover. This budget 2009 did not deal with the issue of the damages caused to the oil palm industry. A form of damage control would be to reduce the foreign workers levies to a flat RM50.00 per worker so as to make it more feasible for employers to register their workers. Sadly, the budget missed out the subject of foreign workers levies.
This budget is obviously sugar-coated to pacify the people with many unprecedented goodies. But the source of funds has not been adequately explained.
As for inflation, something that affects most people, July saw a high rate of 8.5%, the highest in the last quarter of a century. For the poor people, the real effect is definitely much more than 8.5%. Pensioners and average persons with bank savings will find that their savings depreciate in value because inflation in wiping out the value of their savings. I find it disturbing that the PM has forgotten altogether to address inflation. The budget did not even forecast the inflation rate for 2009.
Issued by SAPP HQ
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