Malaysia Today - Your Source of Independent News
Malaysia Today - Your Source of Independent News |
| Posted: 26 Dec 2011 08:10 AM PST Since the 1998 Asian Financial Crisis, government expenditure has consistently exceeded its revenue by a considerable margin. For example, in 2011 the spending is estimated to be RM229 billion while the revenue will be only RM183 billion. So the shortfall of RM46 billion has to be met by borrowing. Subramaniam Pillay, The Malaysian Insider That the Budget that was tabled in the Dewan Rakyat on 7 October 2011 was an election budget is very clear. There have been numerous detailed comments on the Budget by politicians and analysts (since then). In this article, we are just going to focus on one of the long term issues from the Budget. It concerns the increasing debt burden of the federal government. How big is the government debt? The federal government's outstanding debt has been increasing since 1970. From the detailed data available from Bank Negara's website, in 1991, it reached a temporary peak of RM99 billion and then decreased to RM90 billion by 1997. From then, it has been virtually doubling every five years. By the end of 2011, we can expect the figure to reach RM450 billion. In other words, since the Asian crisis of 1998, we have been growing by borrowing heavily. In the 10 years since 1999, our debt has quadrupled. If we continue on this path, by 2020, our national debt will reach RM1.6 trillion. If our population is 40 million then, each Malaysian will have a debt burden of more than RM40,000 and this does not include our own personal borrowing. Assuming an interest rate of five per cent, paying the interest alone will cost the taxpayers RM80 billion per year! The government has been reassuring us by saying that our debt is manageable. It argues that the debt at the end of 2012 will be only 54 per cent of our GDP, which is relatively low compared to the current crisis nations like Greece and Italy. (GDP is a measure of the total value of all the goods and services produced in a year in the country.) While it may not reach the levels of Greece by 2012, at our current rate of borrowing it won't take long before we become another Greece. Just to put this in perspective, our giant neighbour, Indonesia has a debt of only 23 per cent of GDP! Singapore has no debts. The federal government debt alone does not tell the full story. Many government-owned enterprises also have borrowings. If these figures are included, then the total debt would be much higher. It is difficult to get the complete data on these borrowings. Why has the debt been growing so rapidly? Since the 1998 Asian Financial Crisis, government expenditure has consistently exceeded its revenue by a considerable margin. For example, in 2011 the spending is estimated to be RM229 billion while the revenue will be only RM183 billion. So the shortfall of RM46 billion has to be met by borrowing. Of course it is not expected that the government balances its books every year. Prudent economic management requires the government to balance its budget over an entire business cycle. So we can have deficits during bad years and budget surpluses during good years. Since 1998, we have had at least two business cycles; yet every year without fail we have had budget deficits! This is evidence of fiscal irresponsibility. Here is a government which does not know the meaning of saving for a rainy day. A good example is the situation in the current year. Actual revenue for 2011 is going to be higher than the budgeted figure by RM17.6 billion. This is mainly due to the increased income from the rise in oil prices in 2011. The federal government relies heavily on different forms of revenues (corporate tax, petroleum profit tax, royalties, Petronas dividends, etc) that originate from the production and export of oil and gas in Malaysia. The proportion can be 30-40 per cent of the total government revenue. Thus a rise in the world price of oil translates directly into higher income for the government. So essentially, we had a windfall income. What would a prudent government do with this windfall? It would reduce the planned borrowing. But that's not our BN government's way of financial management. Uncannily, the increase in the actual spending is going to be the same amount of RM17.6 billion! When asked about this at one of the post-budget forums, a Treasury official explained that it was mainly due to higher spending on salaries and increased subsidy for petrol and diesel. We can understand the increased subsidy but why the higher salary? Did we just increase the size of the bureaucracy? This is a clear case of a government that has no control on its spending.
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| Uitm Poll: Most Youths Not 'Anti-Establishment' Posted: 25 Dec 2011 11:00 AM PST (Bernama) - Initial findings of a just completed study show that 70 percent of youth feel more connected to the government now as a result of Prime Minister Najib Abdul Razak's moves to get closer to the group. The youth, who were surveyed since 2010, welcome Najib's use of interactive social media allowing them direct contact to share their opinions, ideas and criticisms on issues, with him. "The results of my study show 70 percent of youth support the government because they like being engaged through various programmes," said University Technology Mara (UiTM) Dungun political science lecturer Che Hamdan Mohamed Razali to Bernama recently. Apart from the connection through social media, he said the respondents, who were between 18 and 40 years old, from students and professionals to fishermen and farmers, felt Najib's government was now also more open. The respondents clearly acknowledged the Barisan Nasional government's initiative which involved more youths and their importance in outlining programmes such as affordable housing for young people who just joined the workforce, assistance for young entrepreneurs and higher education aid, he added. 'Youths like gov't attention' "It's typical for a handful of youth to rebel. My early findings show youth are not 'anti-establishment' as claimed by many parties. They just get upset when sidelined. When the government pays them attention, they'll give their support," he explained. However, Che Hamdan was not willing to provide further details on the findings of the study, saying it was still ongoing and would only be announced when it is finalised. His initial conclusion was that youths would not gamble their future for sweet promises but were prepared to join forces and work with the government which has proven it has better plans for them and has a proven track record. Meanwhile, when contacted by Bernama, Malaysian Youth Council vice-president Datuk Irmohizam Ibrahim said," The government has done its best by making various efforts to get closer to the youth. So claims saying the youth are anti-government are not true, it's only a handful." Youths more vocal Irmohizam, who is also (UiTM) Shah Alam law lecturer said," In my observation many youths, who are still undecided, are grateful to the government for their education, skills and employment opportunities. Maybe they just want a system which satisfies them better." "Voicing such a hope doesn't mean they're anti-government, they just want improvements," he added while noting there were an estimated 11.2 million youths in the country. Apart from recognising youths in the 2012 Budget, the government is also prepared to amend Section 15 of the University and University College Act in relation to the involvement of undergraduates in politics. The Prime Minister likened the youth as ideal heroes who had the power to turn the nation's transformation programme into a reality and admitting they were an established voice, on Dec 12 Najib said the government is always open to the views, ideas and criticisms from them so that each transformation programme would be successful with their involvement. Furthermore, he admitted that there were efforts by certain parties which tried to exhort university youths to hate the government for their own political agenda and in their quest to wrest power. "But youths nowadays who are exposed to a lot of information are not easily swayed and would not accept everything without checking the truth first. "It's the same with opposition promises, we're aware it's all only a gimmick to gain votes without any concrete plans for the youth such as the BN government has implemented now," he emphasised.
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