ON Oct 27, Prime Minister-cum-Finance Minister Datuk Seri Najib Razak will unveil the 2018 Budget. This will be the penultimate budget before Malaysia gains developed nation status in 2020. Hopes are aplenty.
Regardless, it is first important to put our expectations in proper perspective. Budgets are designed for the management of what the government is going to earn and spend in a financial year. Hence, budgets should not be seen as a silver bullet to solve all problems in society. There are two reasons for this: One is resources, and the other is human behaviour. The problem arises when limited resources meet unlimited wants.
The government’s role here is to arrive at optimal trade-offs.
What choices and trade-offs will the 2018 Budget make? I expect the coming budget to have three crucial thrusts. They are boosting economic fundamentals, improving people’s quality of life and wellbeing, and preparing for post-2020 challenges of Transformasi Nasional 2050 (TN50).
Loosely speaking, economic fundamentals refer to gross domestic product (GDP), gross national income (GNI) per capita, inflation and unemployment rates, exports, international reserves, and financial resilience. While Malaysia’s economic fundamentals are strong, measures to sustain them in the future must be emphasised.
As for improving the quality of life, wellbeing and happiness of Malaysians at large, I feel that in the coming budget, the government should focus more on reducing income and wealth inequality. Like the last budget, the priority to the Bottom 40 (B40) and Middle 40 (M40) population groups must continue to be enhanced.
Perhaps this time, priorities should be given to the agricultural sector, with small and medium enterprises (SMEs) being transformed into specialised commercial farms that engage in high-productivity, high-technology agriculture. For a start, incentives, especially for SME farmers to sell their produce at market prices, should be initiated.
Incentives are needed for SME farmers to go digital, especially in marketing and promotion. And, more importantly, measures to stimulate smart farming must be boosted, perhaps through the application of drones and data analytics. Perhaps, the time is now to consider the role of blockchain and bitcoin in the agricultural sector.
As for improving the people’s quality of life and wellbeing, I expect Najib to continue boosting affordable housing as he has done since his first budget in 2010. Perhaps some mention must be made of 1Malaysia People’s Aid (BR1M). Under the 2017 Budget, the government enabled BR1M recipients to be Uber drivers to improve their income levels to between RM4,000 and RM7,000.
Now, the government needs to provide some form of mechanisms to tie BR1M to education and healthcare. This will go a long way in boosting the government’s capacity building, and productivity enhancement agenda. One such tie-up is to provide healthcare insurance and a coupon-for-nutritious food scheme.
It is vital for BR1M to manifest elements that will induce capacity building, otherwise a culture of reliance will take hold. In this way BR1M can promote upward social mobility for B40 to move some notches to the M40 category and eventually have a better quality of life and standard of living.
While we address the 2018 Budget, we must not forget its impact on our efforts in preparing the country for the post-2020 challenges of TN50. For starters, the government may want to spell out details of its five-year Malaysia Productivity Blueprint as outlined under the Eleventh Malaysia Plan. I am also hopeful that the 2018 Budget will address the issue of productivity enlargement.
High dependence on low-skilled foreign workers needs to be addressed. A way out is greater automation and mechanisation. And finally, the education system. My wish is for the government to allocate funds to build our first Artificial Intelligence lab.
All in all, while there is need for this budget to be mildly expansionary, I hope that it will still be prudent and responsible, especially in continuing the fiscal consolidation agenda by reducing the budget deficit further in the near future.
The writer is Director, Asian Research Institute of Banking & Finance (ARIBF), Universiti Utara Malaysia