Budget 2024: Ambitious promises and scrutiny over mixed signals

14 Oct 2023 04:40pm
Wan Ahmad Fayhsal (left), Wan Agyl Wan Hassan (right)
Wan Ahmad Fayhsal (left), Wan Agyl Wan Hassan (right)

SHAH ALAM - The Budget 2024 is garnering attention for its ambitious promises but faces scrutiny due to mixed signals and a lack of clarity regarding subsidy reallocation.

Parti Pribumi Bersatu Malaysia (Bersatu) Youth Chief Wan Ahmad Fayhsal said that the budget presented a blend of bold promises and fiscal prudence, yet it sent conflicting signals to the Rakyat.

"There is an unclear mechanism for reallocating subsidies to target groups, which the Finance Minister did not address during the budget presentation," he told Sinar Daily when contacted.

Wan Ahmad Fayhsal raised questions about luxury goods taxation, specifically what items fall under the category of luxury goods.

He also pondered whether Tesla Electric Vehicles (EVs) should be considered luxury goods, given their high pricing, which makes them unaffordable for the masses.

“Changing government vehicles to EVs, is this prudent?

“So despite the positive vibes, there are many lingering questions not being addressed during the budget speech.

“We want to probe this during the debate,” he said.

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Meanwhile, Umno youth permanent chairman Wan Agyl Wan Hassan said that while Budget 2024 includes various measures aimed at economic development and social welfare, it appears to prioritise short-term relief over long-term reform.

“In that vein, it might miss opportunities for structural reform that could position Malaysia for sustained economic growth.

“For instance, the Organisation for Economic Co-operation and Development (OECD) often recommends using economic downturns as opportunities to implement structural reforms for long-term benefits.

“Allocating RM303.8 billion for operating expenses raises questions about long-term fiscal prudence.

“How much of this allocation will go into capacity-building, innovation, and productivity improvement, all of which are crucial for long-term competitiveness?” he questioned.

Wan Agyl who is also the Agyl and Partners managing partner, stressed that the sufficiency of RM393.8 billion is a complex question, contingent on the efficient utilisation of funds.

He highlighted that the concern about Malaysia's ongoing budget deficit extends beyond the absolute number and encompasses the allocation of funds.

"High allocation for operating expenses and short-term relief measures may not necessarily yield long-term economic gains," he said.

Wan Agyl suggested considering targeted investments in emerging sectors, citing the example of Israel, which has successfully focused government investment in technology and innovation to foster a conducive environment for start-ups and high-tech industry growth.

He also noted a need for clear strategies for long-term fiscal sustainability and pointed out that countries like Sweden have implemented Fiscal Policy Councils to independently assess government policies' alignment with fiscal objectives.

“The budget could benefit from more detailed narratives and breakdowns, outlining why specific allocations were made and what the expected returns or outcomes are.

“The budget could also focus on specific policy mechanisms to ensure that economic growth is more equitable,” he said.

Commenting further, he added that incentives like targeted subsidies and Rahmah Cash Aid seem to be aimed at providing immediate relief.

"It is essential to evaluate whether these measures are merely palliative or if they will stimulate long-term economic activity and societal improvement," he added.

He stressed the need to determine whether these incentives encourage productivity or foster dependency.