KUALA LUMPUR: Economists believe that while cash handouts will still be a key feature of the 2023 Budget, the authorities need to look beyond such measures to adequately help the people in the long term while ensuring that expenditure is kept at a manageable level.
This, they said, could be resolved by instituting a netting system, which could lead to a win-win situation for the government, the people, as well as industries.
Putra Business School economic analyst Associate Professor Dr Ahmed Razman Abdul Latiff said while cash handouts were necessary, other tools such as a netting system could provide a more viable long-term solution that would assist all quarters.
Netting is a method of reducing credit, settlement and other risks of financial contracts by aggregating two or more obligations to achieve a reduced net obligation.
He said such a system would see retailers working in tandem with the government to provide goods and services for the people in exchange for tax breaks and other corporate benefits.
A netting system, he said, had the additional benefit of not burdening the government with the fiscal measure.
"For example, food items can be exchanged with e-vouchers, and retailers can redeem the e-vouchers through tax credits.
"This year, the government needs to settle its annual debt commitment of RM43.3 billion on top of RM80 billion in subsidies and ongoing expenditures.
"The 2023 Budget needs to get approval for bigger allocations meant to help people, especially on cash handouts."
He said the people, especially those in the B40 category, would benefit most from cash or food vouchers on a monthly basis under the netting system as opposed to a one-off cash handout like the Bantuan Keluarga Malaysia (BKM) scheme.
BKM, introduced in the 2022 Budget and valued at RM8.2 billion, provides direct cash assistance to targeted groups comprising B40 households and singles, senior citizens and single parents.
The payout is dependent on categories ranging from households with children, single parents, senior citizens as well as unmarried people.
Razman said while previous handouts like BKM had eased the burden of some people, the situation remained dire for others.
"Salaries have remained stagnant and the cost of living keeps increasing, which widens the income and wealth gap.
"What is more important for the people is that the government of the day ensures that all initiatives under the 2023 Budget are implemented without delay."
The 2023 Budget, initially slated for tabling on Oct 28, has since been brought forward to Oct 7.
Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, who will be tabling the Budget, previously said that the budget would prioritise maintaining the current economic recovery momentum, continuing reforms to improve people's welfare, and building resilience to ensure the country's readiness for future challenges.
Meanwhile, economist Dr Nungsari Ahmad Radhi said the government must work within the operating expenditure or revenues to help the B40 and M40 groups.
"This would require reallocation of financial sources as well as changing the way the government works.
"For example, a more targeted subsidy programme can help the B40, but cost less. The savings then can be used to focus on things such as cash transfers or coupons to a target group.
"They can also try to keep micro, small and medium enterprises stay afloat so that they don't retrench and hire new people.
"This requires different priorities and even stopping some existing programmes," he said.
"New revenue needs to be raised to do so. However, I disagree with this approach as it must be accompanied by serious savings on the spending side and also optimising how the government spends its resources.
"The government should forgo growth targets like gross domestic product growth in the budget and prioritise supporting the household income.
"The median level of the household income needs to be protected to prevent it from going down as what happened during the pandemic," he said.
Emphasising reallocating the expenditure, Nungsari stated that it was inexplicable for the government to spend a bulk of subsidies on fuel prices while continuing with mega projects such as the Mass Rapid Transit or East Coast Rail Line.
"Targeted subsidies on selected food and essential items should still be available, and also focus on helping businesses stay afloat.
"The government needs to be bold and prioritise. This involves changing the way things are done."