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Tuesday, October 27, 2015

Budget 2016: Ini Kerja Bodoh

Data sources: EPF's annual reports (KWSP), Ministry of Finance (MoF), Bank Negara Malaysia (BNM) and Auditor's General Report and Economic Planning Unit (EPU).

You may refer to my compiled sources here: Malaysian National Budget via Dropbox
Spending more than we earn for a new record of 17 years in a row.
Hence we have been running fiscal deficits since the financial crisis of 1999. *I do not know how Najib came with 3.1% deficit, my calc says 3.6%.
Operating expenditure has now hit another new record high of 82% of our national budget allocation. Development expenditure is being squeezed hard. During Dr.M's time it was 30s, Pak Lah's at 20s and now Jib Goh's a pathetic 10s.
The country's national debt (domestic debt + foreign debt) is just short of its self-imposed ceiling of 55%. Although it has improved to a gap of 1%, subsidies have been cut and cost raised across the board.

While the disturbing ratio of Operational versus Development Expenditure has already raised red flags, the budget is screaming troubles from whichever angle you look at it. For the first time, multiple ministries see their budget being cut although the fuel subsidies have been cut altogether. Even tax money from GST is insufficient to pay for Najib’s mismanagement. Proof : What happened to last year's billions?)

Najib has allocated for himself (PM's Dept) a huge budget of RM20.3 Billion - 7.6% of the total budget.  Banyak cantik. Inside this RM20 billion is a special allocation of RM1.6 Billion for 'special projects'? To pay for this, that and that. Thats RM20 billion up in smoke, with nothing to show for it.

A few things I would like to highlight, things that was promised but lied through his teeth.

[1] Housing – a whopping RM1.6 billion is allocated to build 175,000 PR1MA units, of which Najib administration claims to be 20% cheaper than market price. Last year during Budget 2015, Najib boasted about building 80,000 units of such affordable housing units with RM1.3 billion allocation. A year earlier in 2013, he promised to build 123,000 PR1MA with RM1.9 billion.

So, since the mouth watering project was launched in 2011 and established under the PR1MA Act 2012, PM Najib Razak was supposed to deliver at least 203,000 PR1MA homes under allocation of RM3.2 billion. However, based on Economic Report 2014/2015 released on Oct 2014, it had only built 7,336 units. So, where’re the rest of the houses?

So, how can Najib promise to build 175,000 houses with RM1.6 billion in his latest budget 2016? when he can't even build 203,000 with RM3.2 bil! The Maths doesn’t add up.

[2] Income tax - He said about lowering everybody’s personal income tax accordingly, in exchange to taxing people via new GST tax. Well he just increased from 25% to 26% for people earning between RM600,000 and RM1 million. Punishing the rich again for working hard. If you are lazier, you pay less tax. We should have one standard income tax rate for both corporate and individual - a flat rate.

[3] Investments - How many times you want to repeat bro? The Pan-Borneo Sarawak Highway, which is set to be completed in 2021, will be toll-free.  (I say I think this is the THIRD Budget where they are repeating this Borneo Highway project. Dah start ke belum?) Also about the so called RM137 billion of investment initiatives that were announced during the 2016 Budget Day. The number is huge and the money is sexy, provided they’re new investment and genuine. Unfortunately, only 3.1% of roughly RM4.2 billion can be considered “real” initiatives, if MP Dr Ong Kian Ming’s analysis is correct.

[4] Cost of Living - Sure, there’re some candies for the financial illiterates. Some items will be zero-rated GST. The tax relief for each child below 18 years of age is increased from RM1,000 to RM2,000. The tax relief for the individual taxpayer whose spouse has no income is increased from RM3,000 to RM4,000. Free money BR1M will be continued and the list goes on. But there’re many areas which suffer various cuts this time and let me tell you I'm 101% sure cost of living will go up, if this is proven untrue please email me I will give you my own version of BR1M. 

- A RM950 million cooking oil “subsidy” cut could probably mean a higher price for cooking oil.
- The Transport Ministry will see a budget reduction of RM648 million which means transportation cost is likely set to increase.
- The second largest cut was targeted at the Higher Education Ministry which saw its budget reduced by RM2.4 billion to RM13.378 billion. To make up for the shortfall, public universities will suffer the brunt of the cut as they will see their funding reduced by RM1.442 billion. Tuition fees will go up.
- The Transport Ministry will see a budget reduction of 14.1 percent, or RM648 million, to RM3.955 billion, the fourth largest cut among the ministries. Areas that will see cuts include subsidies for KTM trains and flights from rural regions. Habis, fares will have to go up to compensate.
- The Energy, Green Technology, and Water Ministry comes in at fifth place for the largest allocation cut under Budget 2016, with a reduction of RM605 million to RM2.262 million. Consumers who will suffer the most as the single largest slash is the electricity bill subsidy of RM150 million which will be completely defunded.

And I saved the best for last.
The worst part of the Budget is the RM1000 minimum wage. Why increase the Minimum Wage from RM900 to RM1000? Because the first round of Minimum Wage sent inflation sky rocketing.  

Whatever extra salary earned was eaten up in higher prices. Now they have to raise the minimum wage even more. The prices will go up again. Why? because employers sufffer higher salary costs and they must recoup the higher salaries. Prices will go up. People will suffer again.

Then the Minimum Wages will be raised up again and again. Prices will go up again. It is never ending.

Ini Kerja Bodoh. Yet Budget 2016 can deliver so little with every corner being cut....Najib Razak is such a pathetic finance minister.

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