KUALA LUMPUR: While the 2024 Budget may be more fiscally responsible than previous ones, the government still failed to address the progressive wage policy and lacked transparency on the initiatives announced to help support start-up businesses.
Professor of Economics, Geoffrey Williams from the Malaysian University of Science and Technology said that the overall fiscal framework was what he had hoped to see from the budget tabling today.
"The overall fiscal framework is what I had hoped to see with only a small increase in spending to cover inflation, higher revenues from better management and so (leading to) a smaller deficit.
"This still allows plenty of space for government spending without excessive borrowing," he explained.
"There is a list of extra spending commitments but these are rightly focused on areas where the government should be spending rather than a list of projects cascading to special interests.
"Again, this shows clearer focus and better fiscal responsibility, " he added.
Geoffrey's main criticism of the budget is that it did not appear to be fully focused on the seven Madani Economy targets and how the initiatives will help to achieve these targets.
He said that the details promised on the progressive wage system and on long-term subsidy rationalisation were absent. He remarked it as largely ignoring the biggest structural problems of pensions and social protection.
Touching on initiatives- especially funding from government-linked companies (GLCs) and government-linked investment companies (GLICs) worth RM1.5 billion- he said while helpful, lacked transparency.
"There are some helpful programmes to help start-ups and (funding of) RM1.5 billion from GLICs and GLCs for this, but the details must be transparent.
"The RM44 billion in finance and loans from micro-enterprises may not be useful because very small businesses resist taking on loans. I do not expect these schemes to be effective. They continue to look like schemes to channel funds to middlemen rather than to micro-enterprises," he added.
Geoffrey said that the main problem with the financial assistance to micro, small and medium-sized enterprises (MSMEs) is the list of conditions on the type of help for green projects; digitalisation, for example, and the same targets of youths, women and ethnic groups.
"These types of programmes have been available for a very long time and are not attractive. This is why the take up has been low. Lessons have not been learned.
"For venture capital (VC) incentives, only viable high value projects will be attractive but in return, equity stakes will be expected to be given to investors. This is a real barrier because it raises the risk of expropriation and is why many start-ups prefer to go overseas. Again lessons have not been learned," he continued.
He also cited the RM40 million Shop Malaysia Online programme that was announced in the budget. The programme is an initiative worth RM100 million in digital grants allocated for over 20,000 small and medium enterprises (SMEs) and micro-entrepreneurs to receive grants of up to RM5,000 for digital upgrades in sales, inventory and accounting systems.
"It looks like a pre-awarded project for a preferred web or app designer; it should be clarified.
"There are actually many local and international sharing economy platforms that already do this without cost to the government," he said.
Geoffrey also mentioned the 'Buy Malaysia Campaign'- an initiative that seeks to encourage consumers to buy and support locally manufactured goods- that has been allocated RM27 million in the 2024 Budget.
"That (Buy Malaysia Campaign) also looks like a pre-awarded fee to a marketing and branding agent and lacks transparency," he said.