In its response to the 2017 budget proposals, the Penang Institute said too much money was being allocated to the civil service.
A statement from the institute’s Economics Unit, while acknowledging the possibility of a small reduction in the 2017 budget deficit compared to last year’s figure, said it was nevertheless unlikely that a balanced budget could be achieved in the “foreseeable future” due to the large expenditure for the civil service.
It noted that the budget allotted RM 77.4 billion for emoluments and RM32 billion for supplies and services from an operating expenditure of RM214.8 billion.
“These collectively are 51% of the total operating budget or 42 per cent of the total budget,” it said.
In explaining what efficiency in the civil service would entail, it pointed to Singapore, where civil servants make up 1.4 per cent of the population.
Malaysia has 1.6 million civil servants. The figure accounts for 5.5 per cent of the country’s population.
The institute said Germany also had a large civil service base but pointed out that its 4.18 million public servants served an economy with a GDP of US$3.636 trillion.
“Using the same German ratio of GDP to civil servants, this means that Malaysia, which has a GDP of about US$375 billion, would need only about 430,000 civil servants,” it said.
It said Malaysia’s private sector would gain from a reduction of the civil service size because the unemployment rate in the country was low.
The institute also commented on a proposal to extend short-term loans to the public for the purchase of computers and motorcycles. It said its economists were not in favour of the idea because it might not be sustainable.
“Malaysian households require debt consolidation to reduce their debt burdens,” it said.