Budget 2012 fails to live up to the Prime Minister’s reform pledges in NEM, GTP and ETP

Media Statement by Tony Pua, DAP National Publicity Secretary and Member of Parliament for Petaling Jaya Utara in Kuala Lumpur

The expectations were high for a pre-election budget where Datuk Seri Najib Abdul Razak will stamp his “reformist” credentials. It is for the Prime Minister to put into action the various reform pledges made in his cornerstone policy blueprints – the New Economic Model (NEM), Government Transformation Programme (GTP) and the Economic Transformation Programme (ETP).

However, the announcement of the budget left much to be desired as little has changed beyond tweaking the budget of the previous financial year. Instead what is perhaps the most worrying is that Malaysians are like the proverbial frog in the hot soup – where the frog does not realise the soup is slowly but surely reaching the boiling point.

We may not yet be facing the crisis of Greek proportions, but Budget 2012 is doing very little to avert such eventuality, leaving the Malaysian economy nakedly exposed to the inevitability.

Federal Government Debt

Our Federal Government debt has increased rapidly from RM242 billion in 2004 to RM363 billion in 2009 and RM456 billion in 2011. That represents a marked 88.4% increase in debt over the past 7 years. It is also an increase of 25.6% or nearly RM100 billion over 2 years.

The increase in debt has increased the pressure on reigning in our budget deficit as our annual debt service commitments have increased to RM20.5 billion next year from only half the amount 5 years ago in 2007.

While our federal government debt to GDP ratio is still at a moderate 53.8%, a far cry from Greece’s 117%, we are not far from Spain’s 64% or Ireland’s 67%, both of whom are facing economic turbulence of their own.

Our debt levels will only worsen in the next few years as we embark on record levels of infrastructure spending such as the RM53 billion Klang Valley MRT project which is expected to be funded entirely on debt.

Wages and Pensions

At the same time, our public sector expenditure is increasingly mirroring that of the European countries with ballooning civil service obligations. The budgeted expenditure for wages and pensions for 2012 is a whopping RM64.1 billion, an increase of RM6.2 billion or 10.8% budgeted for 2011. The increase is even more worrying when contrasted against the budgeted RM36.9 billion 2007, a 73.7% increase in just 5 years.

The GTP had promised a more efficient and cost effective government and civil service. What we are seeing from the Budget is only on which is indebting our children, entrenching our structural problems and very weak expenditure controls.

Economic Growth

Despite the Governments efforts in the ETP, our manufacturing and export statistics paint a starkly different picture.

Our export sector grew a miserly 2.7% in 2011 against 13.2% in 2010. However, we should be further alarmed by the fact that the growth was a result of increased contributions from exports of rubber, paper, textiles, clothes and shoes which grew in excess of 15%, and the petroleum products by 9.3%. Our electrical and electronics sector, which constitutes 26.4% of our total exports industry shrunk by 4.9% in 2011.

From the above indicators, there appears to be a shift away from higher value-added export sectors to the primary products industry such as rubber, wood, textiles and crude oil. This is the exact reverse of what we are trying to achieve via the ETP.

Budget deficit

Based on the Economic Report, we are expected to meet our deficit target of 5.4% for this year only because our revenues had grown beyond the expected in the 2010 budget due to very strong commodity prices. The Government has managed to collect RM21.1 billion of extra revenue on top of the originally budget RM165.8 billion. If not for the unexpected increase in government revenue, our budget deficit would have been a shocking 7.9%.

The Government is planning a 4.7% deficit for 2012, a figure which doesn’t give hope that the 2.5% deficit target promised by Najib can be met by 2015. Even then, based on poor expenditure controls and the habitual ad hoc expenditure patterns of past BN governments, even meeting the 4.7% target will be a challenge, especially if commodity prices were to fall below expectations next year.

Optimistic projections

Finally, despite having achieved on 4.2% growth in the first half of 2011, and a slowing global economy in the face of another potential economic crisis, the Government has retained its unrealistic growth assumptions of 5.0 to 5.5%. To meet the target, Malaysia’s economy will have to grow by at least 5.7% in the 2nd half of the year, which is highly optimistic to say the least.

The Federal Government’s unrealistic expectations coupled with a budget which failed to demonstrate substantive reforms and political will for change makes the 2012 budget a highly disappointing and puts in serious doubt our ability to become a high income nation as aspired in Najib’s New Economic Model.

  1. #1 by All For The Road on Friday, 7 October 2011 - 6:59 pm

    A very disappointing budget indeed!

    The main bulk of the benefits go to the civil servants and pensioners. There’s nothing for those in the private sectors. What a big letdown!

    It’s indeed an election budget out to get mostly the Malay votes!

  2. #2 by Godfather on Friday, 7 October 2011 - 7:30 pm

    An election budget indeed, to ensure that one race is taken care of. The rest of you can stew in hot soup…

  3. #3 by Bigjoe on Friday, 7 October 2011 - 7:31 pm

    My biggest problem is that the budget was pre-hailed as ‘transformation’ budget. ‘Tranformation’ according to Najib’s real plan is basically spending on mega projects or by GLC or subsidising higher value FDI. There is almost nothing. Did Pemandu suddenly stop working and don’t have to pay for their projects?

    Actually this budget is rather modest for a freebie budget when Najib is facing heavy headwinds going into the GE. Expect supplemental budgets that will destroy all projections when the slowdown is definitely going to be worst than projected. The deficit projection is meaningless.

    This budget is meant to blunt the opposition not attack them. All the sneering and taunting shows nervousness but not fear of the opposition. The opposition should take this budget as a disrespect and insult. It appears they don’t think the opposition have any ammunition that need to be attacked with lots of money which is traditional part of their arsenal especially Najib’s S.O.P. of ‘buy-election’.

    The message to voters is don’t worry that RM500 payment is too small, when GE comes, they can ask for lots more..The budget shows they are preparing to do so for sure..

  4. #4 by sheriff singh on Friday, 7 October 2011 - 7:43 pm

    What a ‘wonderful’ budget. What we need now is a public holiday on Monday to get over it.

  5. #5 by Jong on Friday, 7 October 2011 - 8:11 pm

    Desperate Santa Claus came 2 months early! An Election Budget it is, windfall for Civil Servants and he’s doing it openly.

    Who cares if the figures are faked as long as Civil Servants are happy and they are prepared to kiss his feet and do anything he wants, no?


  6. #6 by monsterball on Friday, 7 October 2011 - 9:02 pm

    yes yes yes….it’s all good news.
    How not to vote for UMNO b and Najib?
    Najib say..go to hell with all who says country cannot afford that.
    Wage earners in Govt never had it so good.
    Like Anwar said…take the goodies and vote for change…to get rid of CORRUPTIONS..and double standards.
    I am sure a significant large portion of the civil servants are not impressed….as it is like ..robbing Peter and rewarding Peter ………making him happy…when Peter and Paul are brothers.
    They will know and understand.
    What do you expect a man to do with his power to avoid being defeated at 13th GE?
    Jolly good idea…Najib!!
    Peter is happy…Paul is not…both are brothers.
    Now declare 13th GE…and stop wasting time.

  7. #7 by monsterball on Friday, 7 October 2011 - 9:35 pm

    I meant to say….”robbing Peter and rewarding Paul”>>>>…..

  8. #8 by monsterball on Friday, 7 October 2011 - 9:55 pm

    It’s always buying votes…buying trusts…buying confidence…poisoning minds with empty slogans..but now …buying from civil servants only…with tax payers money…and civil servants and commercial firm wage earners..are related one way or another.
    We REJOICE over any good news for Malaysians.
    Take the good news with tax payers blessings…but remember it is unrealistic and it is making your brothers and sisters paying taxes to suffer more in the end.
    But it is the coming 13th GE that Najib need to win badly..not really loving civil servants that much.
    If so…what about other Malaysians?
    So rich…why not cut electricity bills…reduce toll fees…give free water and RM2000 for death expenses…like Selangor…for ALL Malaysians???

  9. #9 by limkamput on Friday, 7 October 2011 - 10:06 pm

    I think both BN and PR are appeasing the government servants because of votes. How can we keep rewarding and paying undeservingly 1.3 million unproductive government servants at the expense of private sector employees. What do government servants do? If you retire half of them today, the productivity of the public service would have doubled. The current salary of pubic servants is NOT low when compared with those in the private sector. If they cannot make ends meet, it is because they choose to live beyond their means. Excessive payments to unproductive government servants cause inflation which the private sector employees have no recourse. I think we have totally neglected those who work in SMEs, small trading companies and the self employed. They don’t have the security of employment, their pay rise has been minimal (because of foreign workers and exploitative labour laws), and their bonuses are not assured.

  10. #10 by tak tahan on Friday, 7 October 2011 - 10:09 pm

    This budget is more like vote buying pre-campaign to GE13.This so-called no.1 man sucks awfully in every of his actions and words.He has no PM quality as well as his cabinet nut ministers;they should be dumped if earlier the better.We do not need this incompetent and racist leaders to lead us anymore..ENOUGH!!!

  11. #11 by Cinapek on Friday, 7 October 2011 - 11:40 pm

    Retirees who are not ex Govt servants and do not enjoy pensions are hardest hit. Prices of basic food items and basic services such as electricity charges have risen significantly but there is nothing in the budget to help alleviate their very much increased cost of living.

    Those still working and paying taxes are given assistance in the form of tax breaks or rebates for children’s books etc. But retirees with no income and do not pay taxes do not enjoy these perks. And with children already out of school, all those study assistance is of no assistance to them.

  12. #12 by sheriff singh on Saturday, 8 October 2011 - 12:08 am

    A lot of congee but where’s the beef?

  13. #13 by HJ Angus on Saturday, 8 October 2011 - 1:05 am

    the beef is reserved for Najib on his frequent plane joy-rides

  14. #14 by Jong on Saturday, 8 October 2011 - 1:07 am

    Beef? …that will be Act II.

  15. #15 by yhsiew on Saturday, 8 October 2011 - 6:19 am

    It is bad for Najib to churn out such an “election budget” without considering the future of the country – its ballooning debt arising from over-spending.

    Maybe Najib thinks even if this is an impractical budget, it will do BN no harm since the effect of the budget on the national economy can only be realized months AFTER the 13th general election. Win election first, country’s well being last – this is what Najib’s budget will do.

  16. #16 by HJ Angus on Saturday, 8 October 2011 - 7:05 am

    It’s the “same old, same old” budget.
    The BN regime cannot do anything different as it is trying to win the NEXT elections.
    In other words, its so-called VISION only extends to 2013 or shorter.

  17. #17 by yhsiew on Saturday, 8 October 2011 - 7:18 am

  18. #18 by chengho on Saturday, 8 October 2011 - 7:28 am

    Budget for Rakyat not for politiciam
    Gan eng peng should join politic , what the Singaporean doin here

  19. #19 by k1980 on Saturday, 8 October 2011 - 9:34 am

    “Admiral” chengho has managed to sail back to Bolehsia, after having lost his way in the Congo for over a year…

    Fat black bucks in a wine-barrel room,
    Barrel-house kings, with feet unstable,

    Sagged and reeled and pounded on the table,
    Pounded on the table,
    Beat an empty barrel with the handle of a broom,
    Hard as they were able,
    Boom, boom, BOOM,
    With a silk umbrella and the handle of a broom,
    Boomlay, boomlay, boomlay, BOOM.

    THEN I had religion, THEN I had a vision.
    I could not turn from their revel in derision.


    Then along that riverbank
    A thousand miles
    Tattooed cannibals danced in files;
    Then I heard the boom of the blood-lust song

    And a thigh-bone beating on a tin-pan gong.
    And “BLOOD” screamed the whistles and the fifes of the warriors,
    “BLOOD” screamed the skull-faced, lean witch-doctors,

  20. #20 by Jong on Saturday, 8 October 2011 - 11:04 am

    Comment by Limkamput 10.06 pm – Spot on!
    It’s so obvious, BN is buying loyalty and keeping its ‘Fxed Deposit’ of the 1.3 million civil servants, and how many contribute to nation’s coffer?

  21. #21 by Jong on Saturday, 8 October 2011 - 11:12 am

    Is it fair for us – the 1.7 million taxpayers to continue work our butts out, pay income-tax to contribute to nation’s coffer when we have always been and are still being treated like ‘step-kids’ ?!!

    What do we benefit from Bajet 2012 as we continue to pay high taxes?

  22. #22 by dagen on Saturday, 8 October 2011 - 11:58 am

    Oh what the heck. Chengho, you are back. The last I saw your you-know-what – errm bola2 – was when a car ran over them. I did attempt to – well sort of try to – pick them up nonetheless. They no longer … look … quite like … before. But I can assure you that its yours alright. And. And. Then I put errrm them in a small jar. Not your own jar. You see your .. jar – the most priced personal jar – the one that holds your you-know-what. That jar was crushed beyond salvage. Sorry about that. Truly am. Did try my best but it was just plain impossible. Tiny bits of broken glass. Cant fixed them together. Well actually this is not the worst yet. Your partner in BTN. Cintanegara. Yeah. Bumped into him one day. He flexed his ketuanan power and demanded from me a cup ice blended rambutan with grounded peanut and choco chips. He was awesome. Well much too awesome. Much far too awesome. The point is .. my meaning … well … your err. It was a mistake alright. An innocent mistake. Honest. I gave him a jar of iced minced bola2 with grounded peanut and choco chips topping.

    …. arrrrrrrggggghhh ….

  23. #23 by dagen on Saturday, 8 October 2011 - 12:29 pm

    The 10 yr race to high-income nation. Yes. Already we have lost one yr – the year of 2010 – without much progress. Now, indications are 2011 will be another yr lost with little progress. Yup. the 10yr race will be intensified into a 8-yr race. In which case we would need to record wot? 8.x – 9.x% annual growth. And jib is only talking of 5.something % for this year. Come on jib.

  24. #24 by monsterball on Sunday, 9 October 2011 - 9:49 am

    Chengho ..Chengho….whenever you open our mouth….you smell like that ….sound like that and is that.
    What is that?
    Put your nose at the longkangs and smell it.
    Did you follow Najib to FEEL GOOD at Ijok?
    Welcome back…long time no hear you talk longkang stuffs.

  25. #25 by ktteokt on Sunday, 9 October 2011 - 10:15 am

    Najis should consult the Producer, Playwright, Director and Executive Producer of the film, TRANSFORMERS to learn how to TRANSFORM!!!!

  26. #26 by dagen on Sunday, 9 October 2011 - 10:58 am


    Speaking of transformer the movie, the third series, hv you seen it. I hv. It began, as is usual with the previous two, with a little narration by optimus of some past events. In this recent one optimus prime said this of their planet cyberton. It was once a peaceful planet. Then war broke out between the autobots who wanted freedom and the decepticons who wanted (think it was) control. The decepticons drove the autobots out. And cybereton subsequently was destroyed, pressumably by the decepticons.

    It was a well liked movie by young people. Perhaps pakatan could borrow something from the movie to communicate with them.

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