Kuala Lumpur, 02 November 2021 – The Institute for Democracy and Economic Affairs (IDEAS) welcomed the new budget presented by the Finance Minister last Friday for 2022, noting that it was comprehensive in terms of necessary distribution towards the sectors in need. IDEAS also appreciates that consultations took place between the Government and all stakeholders, including consultations with opposition MPs as well as via public participation mechanisms. While acknowledging that the largest ever budget of RM332.1b is necessary in the midst of a pandemic, IDEAS warns that the implementation of the budget over the coming year will require monitoring as well as effective action plans throughout all processes. 

CEO of IDEAS, Tricia Yeoh commented, “Our annual budgets would do well to have a report card documenting all achievements as announced in the previous budget cycle, where for instance the public deserves to know status updates of the 150,000 laptops committed for distribution as well as the 50,000 jobs that were to be provided for under Budget 2021. This would increase public trust in the administration.” IDEAS also welcomes the Fiscal Outlook Report’s inclusion of contingent and implicit liabilities of the government with respect to PPPs, PFIs and PBLT but calls for more disclosure on awards of BLMT (build, lease, maintain & transfer) concessions to favoured parties. Transparency and public accountability should be a permanent and ongoing feature of all government announcements, especially a document as crucial as the budget which sets the roadmap of government expenditure based on taxpayers’ contributions.

With regards to the fact that this budget includes the largest amount ever set aside for development-related purposes, constituting almost 23% of total expenditure, IDEAS queries after the capacity of the government to deliver all of the set-aside expenditure given that the Malaysian government had been unable to fully deliver all of their development-related expenditure over the past ten years. With regards to the Fiscal Responsibility Act slated for 2022, and efforts towards the Tax Expenditure Statement and Public Expenditure Review, IDEAS believed that all are good measures, and hoped that these documents would be made publicly available. There should also be public consultations conducted with the appropriate think tanks and research organisations towards these publications. 

Yeoh stated, “We welcome these plans and believe that they are necessary for fiscal consolidation and long term fiscal planning purposes. However, apart from these, a majority of the Budget’s announcements focus on short-term measures, and more could have been done to emphasise long-term economic recovery and growth, especially towards the private sector as an engine of growth. Measures towards sustainability are positively received, although a greater commitment to moving away from coal dependence towards renewables in our future energy mix would have been ideal. While the Prosperity Tax (Cukai Makmur) is a much-needed one-off measure in the short to medium term – since collections will only begin in 2023 – similarly implemented taxes in the future must be carefully balanced with the potential impact it may have on the private sector.” 

Despite the large expenditure of RM32.4b, IDEAS expresses concern about the relatively low increase in expenditure for the Health Ministry, given the need to continue strengthening the public healthcare system during this ongoing pandemic and to prepare for any unexpected future healthcare crises. 

With regards to the Jamin Kerja Keluarga Malaysia (JaminKerja) job guarantee scheme, while IDEAS welcomes the fact that 600,000 will be secured jobs, IDEAS stresses that this should only be a short term measure. Over the coming year, the government should ensure those employed contribute productivity to the national economy rather than serve as rent seekers. IDEAS welcomes a larger amount of cash assistance for the B40. As Malaysia heads towards recovery, however, the think tank stressed that there should be a shift away from merely providing cash assistance and towards job creation and helping those who lost their jobs to reenter the job market. “Job creation requires ensuring that an overall stimulating environment that encourages competition and reduces regulatory burden on businesses is achieved. This is the most natural way to create jobs, while simultaneously maintaining data-based policy decision-making in the event of future pandemics to avoid blanket economic lockdowns”, added Yeoh.  

While IDEAS also expresses approval that the education sector received the largest allocation under the new budget, we note that there is a lack of allocation and investment in digital education, especially for those who do not have access to it. With regards to efforts to promote digitalization of the Malaysian economy, IDEAS notes that the JENDELA initiative provides RM700 million for infrastructure and facilities development, including RM300 million earmarked for less-developed areas. However, IDEAS stressed that we must ensure that such provisions resonate with the residents’ aspirations towards economic development.

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For enquiries, please contact:
Zokhri Idris, Ph.D, Director, External Relations
T: +603 2070 8881/8882 | E: zokhri@ideas.org.my