MALAYSIA'S government cut spending in its 2010 annual budget to rein in a ballooning deficit as it forecasts the economy will rebound to grow 2-3 per cent after a recession this year.
Prime Minister Najib Razak's speech to parliament on Friday will announce details of the budget, which is expected to include plans to revamp expensive fuel subsidies and measures to woo foreign investors including a 'second wave of privatization' of state run companies.
The Finance Ministry in a report said development spending will fall by 4.4 per cent to RM51.2 billion next year with spending to taper off following the completion of some major projects.
For the first time in years, the government's operating expenditure will be trimmed sharply by 13.7 per cent to RM138.3 billion following cuts to fuel subsidies, services spending and grants to statutory bodies, it said.
This will bring the federal government's budget to RM189.5 billion, down 11.3 per cent over 2009. With the reduced spending, it said the fiscal deficit is expected to narrow to 5.6 per cent of gross domestic product in 2010 from 7.4 per cent forecast for this year.
The government also narrowed its forecast for the contraction in the economy this year to 3 per cent following pump priming that included new spending of RM67 billion. It earlier expected the economy to shrink 4 to 5 per cent. – AP
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Yes, that is what was reported today. But what we should focus on is what it costs to run this country as opposed to what it costs to develop the country.
At the time of Merdeka, for every RM4 spent, RM1 went towards running cost and RM3 towards development. Today, for every RM4 spent, RM3 is for running cost and only RM1 goes towards development.
So, out of about RM200 billion spent, only about RM50 billion goes towards development as what the report above shows. In the past it would have been the other way around.
Tunku Abdul Rahman is said to be not that smart a leader compared to the leaders of today. Maybe. Maybe not. I am not too sure because I never interacted with him or worked for him. But at least he spent RM1 on the ‘machinery’ and RM3 on the people. Today, the ‘smarter’ leaders spend RM3 on the ‘machinery’ and only RM1 on the people.
So who is smarter?
Okay, you may argue that Malaysia did not see too much development in the early days of Merdeka so we are not quite comparing apples to apples. Again, that may be true. But imagine if this was a company and we spent RM150 billion on the running cost of the company and only RM50 on goods in trade? Would that not be lopsided?
We have a bloated civil service. More than a million civil servants (including the diplomatic service, security agencies, etc.) against a working population of 10 million people is just too much. That comes to about 13% or so.
I have in fact written about this many times before and even offered comparisons to other countries, which has a far lower ratio compared to Malaysia -- whether it is Indonesia or the United States.
Then there is the ‘evaporation rate’, which is again very high. From the Auditor-General’s report every year we know that there is a very high ‘evaporation rate’. So, from the RM200 billion we spend we only get about RM150 billion worth in return. RM50 billion just ‘evaporates’ into thin air.
This is the crux of the whole issue. RM200 billion means nothing if only RM30 billion goes to the people because of the high running cost and evaporation rate.
Petronas has earned an estimated RM1,000 billion over the last 35 years. The people in the oil industry say it is more like RM2,000 billion but I am prepared to give the government the benefit of the doubt and place it at RM1,000 billion.
What have we shown for that RM1,000 billion? Can we see RM1,000 billion worth of development? Add up everything the government has built over the last 35 years and see how much they all come to. You will be hard-pressed to account for even RM300 billion.
That should be what Malaysians talk about, not what AP reported above.
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