The 20-page statement titled ‘Facing economic challenges and rebuilding confidence’ was read out by Opposition Leader Anwar Ibrahim at a press conference in Parliament this morning.
Also present were several Pakatan MPs, including DAP supremo Lim Kit Siang and PAS secretary-general Kamaruddin Jaffar.
Anwar told reporters that the Budget 2009 tabled on Aug 29 by Prime Minister Abdullah Ahmad Badawi, in his capacity as finance minister then, was “deeply flawed”. Deputy Prime Minister Najib Abdul Razak took over the finance portfolio later.
The nation’s leaders seem to be on auto-pilot, unaware of the challenges which have already risen in the form of runaway inflation, rising unemployment and declining foreign investment.
“More troubling is their prolonged state of denial over the grim economic forecasts,” Anwar said.
Re-engineering the growth strategies
He explained that Pakatan’s various recommendations were therefore made in the light of the global economic and financial crisis, the sharp decline in commodities markets and the anticipated impact of these factors on the Malaysian economy.
To address this, Anwar said the broad thrust of the policy would be directed at re-engineering the growth strategies for the immediate and long term and to address the vulnerabilities in the economy.
He proposed the four main strategies to be ensuring the stability of financial markets; enhancing provisions for the social safety net; maintaining domestic price stability and enhancing national competitiveness.
Some of the key recommendations - such as the auction of approved permits and the reforms of public tender system - have been made by the opposition leader in a 11–page economic policy paper last month in response to Budget 2009.
Although the recommendations made by the opposition alliance was similar to its alternative budget in previous years, Anwar and Lim nevertheless denied the document released today was Pakatan’s alternative budget.
They said this when asked why Pakatan only chose to unveil the recommendations today - the last day for the debate on Budget 2009 in Parliament.
“We don’t call it alternative budget. This is our plan in order to meet the crisis of confidence on the economical front and we give various specific measures addressing specific problems facing the country,”explained Lim.
The salient points
The salient points from the measures proposed by Pakatan today include:
* Pakatan anticipates a decrease in government’s revenue by 11 percent to approximately RM157 billion as against the government’s projection of RM176 billion due to the drop in commodity prices as well as a decline in GDP.
* Suggestion for a 15.5 percent reduction in government’s operational expenditure to RM130 billion, as opposed to the government’s proposed amount of RM154 billion. In reducing operating expenditure, Pakatan assures it will however make no reduction in government salaries.
* Pakatan believes that a RM10 billion substantial savings is feasible simply by reducing corruption and mandating open-tenders for government procurement.
* Pakatan believes the budget deficit to be 3.0 percent, down from the estimated 3.6 percent for 2009, based on the revised calculation of revenue and allocation for expenditure.
* Education, public transportation, health and housing were chosen as the four areas to be benefit from substantial increases in development expenditure. The allocation for education to be increased from RM8.4 billion to RM11.8 billion in 2009, RM3 billion for housing development as opposed to the government’s RM1.4 billion and RM3.5 billion for improving security.
* Set up the Independent Police Complaints and Misconduct Commission (IPCMC) and re-allocate approximately 30 percent of the police officers from administrative departments to crime-fighting.
* The approved permits for imported vehicles are suggested to be auctioned to highest bidders in order to generate an estimated additional RM1.75 billion to government’s coffers.
* Renegotiation of “exploitative contracts” in toll concessionaires and the independent power producers for a lower cost of services to all Malaysians and savings for the government.
* A temporary reduction in employee contributions to the EPF from 11 percent to nine percent for a period of one year to increase disposable incomes. This would inject nearly RM2 billion of disposable income into the economy for domestic spending.
* Liberalising taxes and import duties on inputs used for the production of food, final goods and farming.
* The formation of a pricing mechanism which is more responsive to fluctuations in market price for crude oil.
* The enactment of a national competitiveness policy and take steps to reduce the “unfair market power” held by state-created monopolies”.
* To revitalise the SMEs sector, it is proposed that the tax rate for SMEs on their first RM500,000 chargeable income be reduced to 18 percent from the current 20 percent. A new partial tax exemption threshold is also proposed and to set at RM200,000 and taxed at 12 percent.
* A review for mega project costing more than RM1 billion to assess their socio-economic viability, affordability and intended impact on national development and employment.
* All government contracts to go through public tender. A saving of at least RM5 billion per annum is estimated to be achieved from this.
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