Overdose: The Next Financial Crisis

Malaysia Budget 2013

The Malaysian Budget 2013 can be viewed/downloaded here.

 

Najib's administrator had been swift in updating the Najib Razak facebook page to announce the budget on Sep 28. And there were a torrential flood of grateful citizens flocking to thank the Prime Minister cum Finance Minister for the rakyat friendly budget and pro government politicians went all out to sing praises with their usual 'Ya! Betul!' attitude, gullible and oblivious to some outright illogicality in the budget and the after effect.

 

While many were jubilating upon the 'durian runtuh' budget 2013, I have some queries on few glaring issues and hoped that someone can enlighten me:

1. On the PR1MA, it's stated that RM500mil will be used to build 50,000 units of houses which will be sold between RM100k to RM400k. Ya! Betul! Affordable housing for the people!

 

If it only takes RM10,000 to build one house, why is it sold to the people for more than 10 times the cost?

2. On BR1M 2.0, RM30mil allocated for households earning less than RM3,000 per month and single Malaysian above 21 yrs old earning less than RM2,000. Estimated 4.3mil households and 2.7mil single Malaysians to benefit from BR1M. Ya! Betul! Cash for the needy to alleviate their burden!

If the 4.3 milion households consist of 4 family members (Assuming the parents with two kids, but based on our understanding of the privileged Earth Prince and Princesses who can't practice birth control due to the intervention of some Almighty mysterious power, this is a very conservative estimate.), we are talking about 19.9mil (17.2mil + 2.7mil) Malaysians, a whopping 71.1% of our population to benefit from BR1M 2.0! 

 

Now, some may think that RM3,000 monthly earning for a household or RM2,000 monthly salary for an unmarried individual above 21 year-old does not mean that these people are living in destitution. Then my question would be, if one can live comfortably with a household income of less than three grand, why does the government need to pay a 'one time' RM500 to ease their burdens? In addition, how, and to what extend can a 'one time' RM500 ease their burdens?

 

Yes, they may not be considered as extremely poor, I think, neither could they be labelled as the middle class. These people are sandwiched in between a band which may not die of hunger, yet will never be full. And if they are not careful financially, they can easily plunge into the abyss of poverty.

 

But it's really unimaginable that this group constitutes more than 70% of the 28 mil Malaysian population today after 55 years post independence. If the number is correct, apparently the NEP, NDP, NEM or whatever socio-economic restructuring in the past have failed miserably. Then, we may need a whole lot more of stimulus for these people and give them monthly BR1M instead. And if the number is exaggerated, then I fear that a huge portion of the RM30 mil may vapourize into thin air. 

 
3. I do not know if it is normal for a country to use only 20% of its budget for development whereas the other 80% for administrative expenses. If this scenario is present in the P&L of any public listed company, I think investors will question the corporate governance of the management. Why aren't we spending more on development to spur income growth? Is it because we have too many mouths to feed in the public sector? With government servants amounting 4.68% of the total Malaysian population, one of the highest ratio among Asian countries, it looks like we are joining the PIIGS in time to come with this kind of spending. By then any austerity measure will be futile. 
 

I as a commoner in Malaysia, really don't understand the logic behind Budget 2013 except that it is crafted merely for the sake of vote fishing. But for sure, this is going to exaggerate our deficit. And may I ask, who's going to pay the bills in the end? The 5% individual + 15% corporate taxpayers?

 

How is this going to be sustainable?

 

And yet with the prevalent herd mentality, some people are revelling in the 'feel good' sensation not knowing that the government can slip their hands into your own pockets and steal as easily as they doled out the goodies, i.e via GST, inflation due to subsidy cuts, cronyisme and corruption. In the end, we Malaysians, are the one who will be shouldering the debts, our children and grandchildren will pay dearly for the mismanagement of some douchebags, while they will be gloating at some foreign coast sipping Martini.
 

Does this still look like a coveted budget to you now?