KUALA LUMPUR — Despite being the largest federal budget in the country’s history, the RM322.5 billion Budget 2021 may not be sustainable, especially if the Covid-19 pandemic persists throughout next year.
Asli Centre for Public Policy chairman Tan Sri Ramon Navaratnam pointed out that the budget announced by the government yesterday lacks any form of new revenue generator. It depends largely on existing sources of income,
This is in spite of the fact that 26.5% of the budget (or RM85.47 billion) will be funded through borrowings, compared to just 17.7% last year.
“Yes, the budget is very pragmatic in addressing the issue of Covid-19, poverty and economic slowdown. The question is how sustainable it is. It is too optimistic,” he said.
“How does the government hope to repay all these in the longer term, and what if the pandemic lasts longer? It’s not sustainable if Covid-19 carries on. That’s my concern.
“Do we borrow some more? Our deficit is already high. So how much higher can they allow it to go? The government shouldn’t have just thought about the short term, but consider the medium and long terms too,” he told The Vibes yesterday.
Ramon said that among other things the government should have seriously considered reintroducing the Goods and Services Tax (GST), which is a more foolproof taxation system, as well as raising the rate of taxes for the rich.
Additionally, he said the government should have also done more to encourage private investment, both among domestic and foreign investors, which he explained would help to increase revenue.
“I wish they have provided more in terms of relaxing some of restrictive policies and conditions, including in the New Economic Policy (NEP), to encourage more private investments,” he said.
Budget inadequate, billions more ringgit needed, says don
On a different angle, Universiti Tun Abdul Razak academician Prof Barjoyai Bardai believes that the RM322.5 billion allocated for 2021 is insufficient and that a more appropriate amount should be closer to RM500 billion.
Barjoyai said that more should have been given in financial cash aid to the lower-income group, particularly with the Covid-19 pandemic in mind.
He said the wage subsidy programme should have also been extended beyond just three months.
“They could have spent up to RM500 billion. We are especially short in terms of addressing the Covid-19 issue and helping the needy groups,” he said.
“For the cash assistance, in particular, the maximum of RM1,800 given to a family of four is certainly not enough. That’s essentially RM150 a month,” he pointed out.
Barjoyai added that the allocation meant for human capital development is paltry compared to the need for the country to move towards the fourth industrial revolution (IR4.0).
“It is projected that 70% of current employees may become redundant when we fully migrate to IR4.0. We need a massive budget for upskilling and reskilling of workers beginning from now,” he said. - The Vibes, November 6, 2020
