THE tabling of the 2018 Budget by Prime Minister Datuk Seri Najib Razak in his capacity as finance minister in the Dewan Rakyat last Friday is the easy part of the task.
For the “something for everyone” budget, the Najib government deserves cautious plaudits.
However, it is the more difficult task of delivering on several of the provisions and projections in the budget through prudent yet confidence enhancing economic management that lies ahead over the next year.
Judging by the stewardship of Putrajaya of the Malaysian economy since the financial crisis in 2008, aided and abetted by the three main economic policy management agencies — the Treasury, Bank Negara Malaysia and Securities Commission Malaysia — Malaysians of all backgrounds and sectors can rest assured that the future of the economy and, hence, the delivery of budget promises, are in relatively safe hands with a proven track record.
Barring major unexpected external shocks — such as a dramatic fall in commodity prices, especially crude oil, natural gas and palm oil; a serious deterioration in regional and global security; and, even malicious speculation on the Malaysian ringgit with the intention of boosting its volatility and, hence, its value against the country’s major trading currencies (US dollar, pound sterling, euro, Japanese yen and Chinese renminbi) — the indications are that Malaysia Inc is well on its way to achieving the economic and fiscal projections as outlined in the budget.
There might be a percentage point difference in the indicators either way here and there, but the major international economic gatekeepers, such as the International Monetary Fund, World Bank, Basel Committee and Islamic Development Bank, largely concur that the Malaysian economy is on the right track. Not surprisingly, Malaysia’s gross domestic product growth forecast has been upgraded to 5.7 per cent for this year compared with 4.2 per cent earlier this year.
The reaction to the budget provisions and handouts has been positively diverse given the comprehensive reach of its intended economic and societal impact. But Najib’s 2018 Budget transcends his own conviction that it is the “Mother of All Budgets”.
To me, it is a unique “Budget of Inclusion” that encompasses a spectrum of major socio-economic sectors — financial inclusion, social inclusion, gender inclusion, economic inclusion, SRI (socially responsible investment) inclusion, ethnic inclusion, and so on.
Take, for instance, financial inclusion. Putrajaya continues its support for SMEs (small- and medium-sized enterprises), the backbone of any self-respecting economy, which are expected to contribute 41 per cent of GDP by 2020. There are generous but justified grants, subsidies and tax incentives to support micro-entrepreneurs, especially in inner city and rural areas, and tax incentives to boost the venture capital sector, including angel investors.
Social and gender inclusion includes extending maternity leave to 90 days, RM200 to each child born between 2018 and 2022, and the compulsory provision of childcare facilities in all new office buildings in pursuit of the “work-life balance” objective of Najib’s flagship Transformasi Nasional 2050 (TN50) national development initiative.
These inclusions fit in very neatly with Najib’s national budget ethos, which he stressed are based on three priorities whose roots are steeped in Islamic governance principles and maqasid al-shariah (purpose and objectives of syariah), whose ultimate objective, according to the great 12th century Persian philosopher Al-Ghazali, is to promote human welfare and safeguard faith, life, lineage, intellect and property of the rakyat (nation) and citizens.
These priorities are dho’ruriyat — government’s responsibility of providing vital necessities to the citizenry that are essential for the establishment of welfare, and which, if ignored, could lead to fasaad (chaos and disorder); haajiyat — matters relating to easing the burden of the people and providing them a comfortable life through the provision of goods and services that facilitate life or remove hardship; and tahsiniyat — the policy of enrichment or beautification of life through the availability of luxurious needs (for instance, gourmet food), on the basis that syariah not only puts comfort into human life, but also beautifies it.
The Syariah Requirement Framework, (SRF) based on the above priorities, stressed Najib, is the new canvass on which the budget has been crafted and which “will chart the course of the Malaysian nation for the next 30 years… prospering an inclusive economy balancing between the worldly and hereafter, for the wellbeing of the rakyat, towards the TN50 aspiration”.
There is also the small matter of the 14th General Election, which has to be held before May 2018. The opposition is in disarray and the informal coalition, Pakatan Harapan, which puts together strange bedfellows — DAP, PKR, Parti Pribumi Bersatu Malaysia — is in serious danger of not living up to its sobriquet as the Alternative Front (Barisan Alternatif) and bickering over who would be prime minister in the highly unlikely event it wins GE14. Najib, leader of the ruling Barisan Nasional coalition, may be tempted to call an election sooner than later.
Najib’s Budget SRF is a masterstroke. It not only marginalises Pas’ perennial and uninformed claim that it is the gatekeeper of Islam in Malaysia and gives the rakyat a moral compass, but also reinforces Najib’s stated policy that Malaysia practises the principle of cooperation with all nations and conducts its affairs both at home and abroad “in the context of the wasatiyyah (moderation) principle”.
Not surprisingly, but perhaps coincidentally, Najib reiterated the government’s support for Malaysia’s growing Islamic finance industry, which, according to the budget documents, today accounts for a 28.8 per cent market share of the total banking sector in the country.
“Malaysia,” he confirmed in his budget speech, “is renowned as the leader in Islamic finance. As such, to strengthen Malaysia’s position as a comprehensive and competitive financial centre, the government will continue with (various) measures”.
These include a string of tax incentives and grants to further enhance the SRI market, including income tax exemption for recipients of the special Green SRI Sukuk grant, totalling RM6 million; an additional RM1 billion to the syariah-compliant SME financing scheme, increasing the fund size to RM2.5 billion, and a subsidy of two per cent on profit earned to ease the costs of financing; and, an allocation of RM82 million for the development of halal industries and products.
Furthermore, Putrajaya is keen on leveraging Malaysia’s leading role in the Sukuk market and as a pioneer in innovative Islamic capital market products. All this, according to Najib, means that Malaysia is well placed to remain ahead in Islamic finance.
The writer is an independent
London-based economist and writer