A more spirited look at the 2011 Budget

 

I promised my friends I will try not be a trenchant critic of the budget. Really I do. Why are you so critical, they asked. You were his ADUN before and he is your MP.

Unfortunately I can't guarantee it. Because so early in the speech, the PM contradicts his promise to make this budget a people's budget. He lays out a red carpet for the big players. Probably they are identified before hand.

You remember some of the things PM said when talking about revising some aspects of NEPish policies and referring to some vague notions of a NEM? About NEPNEMing our economy?

Something of needs based? The 2011 budget have many things that flout this lofty claim. Many things will be done not in accordance to needs based. Do we need for example a 100 storey tower of Babel? Do we need a maddening increase in real property sector of the economy?

If you were a stock picker, you will see things in a different light. You would be recommending buyers about the stocks of those companies rumored to be getting those mega deals. You will be interested only on 'positive' economics issues. Remember your courses in positive and normative economics?

That is not a wrong thing. But busybodies of the world, don't see things that way. They see things in the 'normative' economics way- how things should and ought to be instead of how things are. This I believe is in line with our desire to change things. I am sure many have heard the famous phrase: " The philosophers have only interpreted the world in various ways—the point however is to change it"

If the PM can invite anyone who cares to submit suggestions over the internet and have his people at the MOF incorporate these into a coherent and relevant part of the budget, it only proves by inference, that the big players have a bigger access in putting their views across.

So we won't begrudge those good and god fearing people who get wet dreams imagining their humble views make their way to some shadowy webmasters manning the PM's blog. We will not ridicule them for thinking their views matter in this budget.

Therefore we are intrigued for example, when the PM says 3 stock-broking licenses will be given to locals, foreigners or JVs. I am pretty sure, this idea was forwarded or even intimated to the PM by some well placed Mr. fix it. Maybe some people Jholowed them to him.

This is becoming the usual suspect under the PM's way of managing the economy. Basically therefore, the business ideas in the budget are representations of the ideas of some businessmen behind the scenes.

So how can I restraint myself from being a trenchant critic? Certainly I take comfort that luckily, this budget was prepared by those hardworking people at MOF and others. Since the budget is as good as those people working on it, I stand a good chance in debating with them. I mean, they are not Nobel prize winners in economics or something to that effect. If they are, I would have to be more circumspect and avoid being made to look an idiot.

Since they are just people like us, we can engage them freely and without fear of intellectual censure. So here goes.

Transparency is the basic building block.

Transparency will continue to remain a sine qua non to underline the government's resolve to promote economic growth. I hope the MOF which is supervising the venture capital fund will not be selective or pre-selective. Have clear guidelines published so as to give as wide access to businesses as possible. Otherwise the strategy will the same as before- picking winners among the stable.

Likewise, we want to know details of the BPTF- where will be the funds be channel through? This is the Bumiputera Property Trust Fund- a fund set up to help Bumiputeras own strategic properties in the cities. Again, lets wish the Fund is administered and operated with transparency in mind. Let's have the fund accessible by as many who can provide sound proposals.

One question that has been nagging me is this. So many times we hear the government wants to take us out of the middle income trap. We are not poor enough to qualify as a poor country but not yet rich enough to qualify as a developed country.

Metaphorically speaking, we are like the man wearing a short sarong. Roll it up, you expose the extremities. Roll it down, you expose your torso.

Intuitively the main cause for that entrapment is the inability of our economy to break through. That is caused perhaps by low productivity. Low productivity is dependent on knowledge internalized and technology applied. It is also caused by management. The country is not properly managed such that we don't have that elusive ecosystem that promotes rapid transition. Witness the slide in competitiveness that our country suffers.

We lack also perceptive leadership that does not know how to get us there.

At a more fundamental level, I have often asked, if we want to get out from the middle income trap, shouldn't we devote the bulk of our resources to the middle income players? This means the SMEs- which formed 75 % of the country's production machine.

Let's look at the 2011 budget. The PM says it's a people's budget. He is correct if he means by people, those big players who are already awarded plum projects. He uses the fashionable term- PPP- not the decrepit political party but Public-Private Partnership. The PM has shown a proclivity of acronyms and high sounding terms of late.

Experience has shown us, big sounding names usually don't have the substance. But we hope they do.

This 2011 budget begins by laying out a red carpet for the big boys. It contradicts its own commitment to give priority in building the middle income sector.

The construction of the RM 5,000,000,000 Warisan Merdeka tower, the 43 billion MRT, the RM 10 billion development of the Sungai Buloh land, the so many billions beatification programs etc etc. these are all non SME projects.

So the PM is banking on the big boys to push his agenda to make our country a high income economy.

How will the PM increase the liquidity market? By asking the GLCs to divest its business interests. This is basically a good move to liberalize the market. The GLCs have long crowded out genuine private investments and discriminate against many. I hope this idea of divesting will be applied across the country. This will break up unnatural monopolies that came into existence because of non market legislations. This move will free the market for increased participation.

Not all investments and businesses in which GLCs are involved are done efficiently and competitively. In the plantations sector for example, those GLCs operating under the protection of policies are often operated less efficiently than do private companies. And in certain sectors, private participation is closed altogether. In that sense, the GLCs operate under a closed system where it is often impossible to measure their competitive.

But again, the divestiture should be done transparently. Thus far, we only hear of things after they happened. The Plus highways which are cash cows are all of a sudden bought over by EPF and Khazanah. Hence Khazanah and EPF play the role of sellers and buyers at the same time. What happened to the proposals by Syed Mokhtar AlBukhary and that of Asas Serba? How do we reconcile the price of RM 23 billion which the Khazanah-EPF partnership is buying with the RM15 billion and RM 50 billion offered by competitors?

The money that the budget wants to spend is ours. Its procured by moving a motion in parliament to appropriate a certain amount from the consolidated fund for the purposes outlined by the mover of the motion.

Let us speak out because that is the people's money that is going to be applied for the purposes outlined.