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More initiatives to boost private sector participation [11-10-2012]  
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THE budget has been tabled and the macroeconomic prospects have been revealed. Given the international economic scenario, the economy is slated to achieve a growth of 4.5-5.5 per cent in 2013 with the budget deficit expected to be about four per cent of gross domestic product (GDP), slightly lower than the estimated 4.5 per cent for 2012.

As mentioned by many analysts, the recent economic growth has been largely induced by domestic demand, especially by consumption and investments.

In the longer run, these need to be supported by exports which in the past have been instrumental in giving us additional mileage in GDP performance.

For the next two quarters the export sector remains uncertain as a source of economic growth and employment creation, hence the efforts in the budget to further support the domestic demand.

It is therefore understandable that the authority has to push for many public sector development projects in key National Key Result Areas (NKRA) which in turn will give the confidence for future private investments to follow and to strengthen the initial impetus of these NKRA initiatives.

The country's past experience indicates that the government has to lead in many key areas such as in building infrastructure, hospitals and universities and colleges, before private investments come in big numbers to take advantage of the good facilities already available.

In a way, this budget further amplifies this aspect.

These infrastructure and social projects are capital-intensive, with long gestation period, and are funded through long-term public borrowings. Thus, the major cause of our deficit is the implementation of these large development projects which will generate goods and services for a long period.

The projects will also generate a return to the society directly and indirectly through the many direct and indirect benefits to the economy. Of course more resort to public-private partnership in delivering these projects would be good as private sector funds would be mobilised and government borrowings reduced.

Although stating the obvious to a few, the borrowings have never been utilised to finance operating expenditures. It has been used largely to develop the productive capacity of the nation, a point often taken for granted by many of us.

Indeed, the fiscal policy of this country has been used to assist the private sector through tax holidays as well as grants for R&D and training and subsidies for energy.

In addition, it is also deployed to ameliorate families and individuals from the full blast of world energy prices and inflation by having subsidies for public transport, energy, health and education.

The impact of this policy must surely be upon government finance which has been under pressure for many years.

The 2013 Budget therefore cannot do much more for the industry over and above what it has enjoyed till now.

On the contrary, the industry should be more forthcoming in transferring technology and in bringing new technology to Malaysia to take advantage of our good infrastructure, low energy prices and political stability.

Still, the proposed budget has new initiatives to promote greater private sector efforts in the areas of capital market, small businesses, R&D, creation of business trusts, corporate wakaf, and the intention to develop Malaysia as a trading centre for oil and gas.

These are additions to the many direct development assistance given to various sectors such as education, agriculture, finance, tourism and health, to sustain vibrant and diversified economic activities in the economy.

However, two efforts are commendable. First, is the measure to reduce house price speculation with the reinstatement of the Real Property Gains tax (RPGT) on properties disposed of within five years of the date of purchase. This will reduce speculative demand and help stabilise housing prices in many urban areas.

New employees are grumbling of the high prices of houses in major urban centres. Certainly, this measure alone is not enough; the government has to further facilitate the construction of affordable houses to many in the working class and those in the low income group.

The second is the measure to enhance safety and security of neighbourhoods by giving financial assistance for the establishment of residential associations so as to step up neighbourhood surveillance. This will enhance greater interaction and neighbourliness in residential areas in urban centres, which is much to be desired.

The sense of security is close to our hearts and therefore this step is quite right when many cases of crimes have been committed in many residential areas.

Given the many giveaways proposed in the budget, it is hoped that the assistance is well administered to ensure no abuses of the facility and that they are used rightfully for the purpose they are designed.

While many have to thank the Minister of Finance for these facilities, the onus is upon them to use such facilities for the benefit of society through enhancing their productivity, human capital and efficiency.

Yes, there are measures that might be construed as inducements for votes. Can't we appraise them as helpful amid the need to support private consumption, access by youths to information technology (smartphone subsidy), protecting the lives of farmers and fishermen (through insurance), assisting students by reducing student loan repayments, at a time of uncertain economic, income, and employment prospects, and of potential inflation?

Having regard for all these, I think that the budget is, on balance, a people's budget, and a caring one. It could not be a much better description.

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