Opinions from Parties About Budget 2021

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The fledgeling Perikatan Nasional government tabled its Budget 2021 yesterday, drafted by former banker turned finance minister Tengku Zafrul Abdul Aziz.

There were a lot of high hopes and suggestions in view of the Covid-19 crisis from non-PN parties prior to the budget. This article focuses on some of those parties.

Their opinions, edited for brevity, are as follows:

Ahmad Maslan (BN-Pontian), Umno secretary-general, former deputy finance minister

I am satisfied with this budget, but I have to read it in detail after listening to it. A record-setting expansionary budget is correct because we want to see a V-shape recovery – from negative to positive growth.

Umno asked for a lot of things, and we got a bit here and there. We sought loan moratoriums. It came with conditions. We asked for EPF withdrawals. It came with conditions. We asked for job creation. We can’t say we are unsatisfied. We have to accept that economic growth is currently -4.5 percent.

For those who are qualified, they can withdraw up to RM12,000 from Account 1 and 2 from EPF. That’s RM1,000 a month for those who have lost their jobs. They also benefit from unemployment schemes and the employment insurance system (EIS). Hopefully, they qualify for the 500,000 jobs that the government hopes to create next year.

On the loan moratorium, the government said that 90 percent of those who sought extensions were approved. This means even the M40 are given extension. Those who have their income who are affected have to apply for an extension.

Ong Kian Ming (Harapan-Bangi), former deputy international trade and industry minister; former special officer to the finance minister

I don’t see any set of fresh ideas to help the country go through and emerge stronger after this Covid-19 crisis. The issue is not about borrowing too much, it’s what we are doing with the borrowing. The Covid-19 fund’s allocation for 2021 is only RM17 billion compared to RM38 billion for 2020. The budget deficit for 2021 is projected to be 5.4 percent compared to 6.0 percent for 2020.

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Given the economic uncertainty for 2021, there is a strong argument that we should have a larger budget deficit for 2021 and spend more to revive the economy, especially on the small-and-medium enterprises (SME) sector which has suffered the most under this Covid-19 crisis.

The FDI (foreign direct investment) incentives won’t be effective if the investors are not allowed to travel and enter Malaysia. This situation can only be rectified when the Covid-19 situation, especially in the Klang Valley, is under control.

But in the meantime, Malaysia should start preparing the groundwork for special business travel bubbles for countries where the Covid-19 situation is under control such as China, Taiwan, Korea and Japan so that when our situation has been addressed, we can quickly roll out the red carpet to welcome investors from these countries.

At the same time, we must not forget the incentives for domestic direct investment (DDI) which is also an important catalyst to economic activity in the country. Most of the incentives announced by the Perikatan Nasional government, including this budget, has been excessively geared towards FDI and not enough emphasis and incentives for DDI.

I agree with the subsidies given for job creation especially by the private sector, but I will wait for more details of this program to be announced so that I can compare it with the Malaysia@Work initiative announced by Pakatan Harapan in Budget 2020, which also subsidises job creation but in much more specific ways.

Will I support this budget? I will have to wait for a decision by the Harapan leadership.

Armin Baniaz Pahamin, Pejuang pro-tem committee member, automotive entrepreneur

Overall, it’s a populist budget. The main concern is the very high expenses despite the projected drop in revenue. There is no real attempt to cut cost. Emolument from all ministers is higher. Between 2018 and 2019, there was a 23 percent cost savings, but now it will increase.

I disagree with the decision to not expand the loan moratorium programme. There are 840,000 unemployed, of which 200,000 are unemployed only recently. There should be more than three months of loan moratorium before these people can recover and service their loans again.

Tourism is one of the worst-hit industries. Offering a three-month wage subsidy plan is like prescribing a quarter of a paracetamol tablet for a terrible headache. It does not solve the problem, nor would it ease the pain. This industry deserves more support.

The incentives for fresh graduate apprenticeship programmes are like a subsidy for the probation period. The danger is once the programme ends in three months, unemployment might happen again. It should last for six months for employers to truly assess their recruits, train them and employ them without incentives.

In terms of job creation, I believe the government will do better by nurturing the unemployed to become entrepreneurs through small grants to start a business. Cheap loans are tough to get because businesses are facing an economic downturn. It won’t help the SMEs. It won’t help the unemployed.

The EPF withdrawal scheme is proof that the government has failed to manage the crisis to the point that they are allowing people to dip into their pension savings just to survive. Personally, I don’t think the rakyat should touch their life savings.

Armin

If I’m an MP, I won’t support this budget. The government is spending above what they can afford without any real attempt to cut operation expenditure.

Shahril Suffian Hamdan, Umno information chief, CEO of an O&G company

A budget deficit is neither inherently good nor bad. During times of depressed economic activity, deficits are absolutely necessary. I don’t worry about the deficit per se.

The measures to tackle unemployment are okay, but I was hoping for a more aggressive strategy such as a job guarantee scheme where the government funds new jobs that are socially desirable.

FMT

I do acknowledge that some measures announced are hinting are bolder moves ahead, such as the MyStep (Short-term Employment Programme). Jobs are being created, albeit limited (to 50,000) and short term. The extension of wage subsidies is also welcomed.

EPF contributors can now withdraw RM500 a month, but that’s obviously not enough. It was never meant to be the main source of help. It only supplements the actual fiscal injection which allowed for other assistance such as wage subsidies and other sector-specific subsidies.

In terms of government allocations for bumiputera entrepreneurs, it has to specifically address weaknesses, such as procurement strategy or supply chain management. In terms of bumiputera employability, it should address things like soft skills. The end goal must be capacity building.

In terms of loan moratorium, targeting the B40 makes sense. A blanket moratorium for too long has its hazards.

Sim Tze Tzin (PKR-Bayan Baru), former agriculture and agro-based industry deputy minister

There is “nothing inspiring” about Budget 2021, with no fresh idea or aggressive efforts to revive the ailing economy.

Many of the initiatives were a continuation of the Pakatan Harapan government.

But the allocations in many of the ministries have decreased. While projects are focused on PN strongholds and areas under its warlords. For instance, bridge (project) in Marang.

The budget showed that there is no determination to improve food security.

In fact, the subsidy for paddy prices to farmers had gone down to eight percent in the budget for the agriculture ministry.

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In terms of welfare, Prime Minister Muhyiddin Yassin has broken his promise to give RM1,000 to all aid recipients.

For instance, the aid for Persons with Disability would be increased from RM300 to only RM450, not RM1,000. – Malaysiakini