Geoffrey Williams of the Malaysia University of Science and Technology noted that not much has been done to deal with the problem of low savings in the Employees’ Provident Fund (EPF) as a result of the Covid-19 period withdrawals, nor the retirement crisis looming in the country.
He said while there is one initiative to consolidate the database for monthly welfare recipients, there were no significant changes in welfare support.
For instance, he said, the social assistance allocation of RM8 billion for 8.7 million people would work out to less than RM920 each.
“This is hardly fiscally prudent nor populist in nature,” he said. He described it as more of an “expansionary” budget.
On the other hand, Williams said, the revised deficit ratio appears to be the result of gross domestic product (GDP) growth rather than fiscal prudence. “It is a credible estimate but it is not due to tighter fiscal policy,” he told FMT Business.
He pointed out that spending has been raised by RM15.8 billion in the new iteration of the budget over the plan presented by the previous government in October last year.
“This was a 19.8% increase over the RM332.1 billion allocated in the budget for 2022, so that makes it an expansionary budget,” he said.
Williams said the new allocations also do not appear to follow any particular rationale. For instance, he said, the assistance to micro, small and medium-sized enterprises is largely in the form of loans, which he described as “not particularly attractive”.
“Small tax changes are also very limited and will not have much impact either for the recipients or for government revenue,” he added.
UiTM Sabah lecturer Firdausi Suffian said the effort to break the concentration of wealth in the T20 group was a laudable move.
He said policies targeted to help the B40 and M40 through the reduction in income tax and the Inisiatif Pendapatan Rakyat (IPR) were steps in the right direction.
However, Firdausi also held the view that some initiatives were politically motivated.
He singled out the reduction in the salaries of MPs and the record RM12.1 billion development budget for Sabah and Sarawak as moves designed to send a political message.
On the issue of food security, Bait al-Amanah research director Benedict Weerasena said that supply-side strategies aimed at boosting food security were a good move.
“Such strategies are far more effective than price controls, which distort the market and result in reduced supply,” he told FMT Business.
“Raising productivity by encouraging private investments in agro-based industries through the provision of incentives, land, funding and technological grants delivers long term solutions to Malaysia’s food security needs,” he said.
However, Weerasena said, the government could have gone further in its attempt to reform the agro-food industry.
He said that in Budget 2023, the government missed the opportunity to include more food items in the list of agro-food commodities that do not require approved permits (AP).
“Furthermore, import duties and tariffs on consumable items and intermediate inputs used in agro-food production should be reduced to lower input costs,” he added.