PETALING JAYA: The allocation for Budget 2023 may not be significantly different than the massive RM332.1bil allocated under the previous year’s Supply Bill, economists say as they expect election goodies to be part of the spending plan.
The election year Budget could see more cash aids and grants being dished out.
Malaysian Institute of Economic Research (MIER) head of research Dr Shankaran Nambiar said it was unlikely that the next Budget allocation would be higher than the last spending plan, as the economy is picking up and there is really no good reason to justify a larger sum.
“While the Budget will want to address the needs of the B40 and the disadvantaged, it may not be as extensive as it was last year. This is simply because the conditions are not as dire,” he pointed out.
Nambiar is also of the view that the government is in no position to raise allocations due to limited fiscal space.
But he feels that there will not be a significant difference from last year’s allocation.
“Perhaps it may be lower than it was last year. Having said that, I don’t think it’ll be much reduced because we have to consider the erosion of purchasing power.
“And the objectives of the 12th Malaysia Plan will not be served if we have a tight Budget,” he added.
Nambiar said more cash aid could be expected but not more subsidies.
“The assistance will be directed at specific groups, rather than broad-based subsidies. I expect the Budget will reflect the upcoming election.
“In that respect, it will be very rakyat-centric, with special emphasis for the disadvantaged,” he said.
On the big beneficiaries of Budget 2023, which will be tabled on Oct 7, Nambiar said there were already indications that automation and digitalisation would be on the list.
“This implies that the whole chain of supporting activities will have to receive some incentives.
“That includes human capital, R&D and technology,” he said.
Imran Yusof, head of MIDF Research, said Budget 2023 was likely to be an expansionary Budget, given that support was probably still needed when the economy was continuing to recover from the effects of the pandemic and high food inflation.
“We expect that support for the B40 and lower M40 segment of the rakyat will continue due to this.
“Also, we believe that support will continue to be given to SMEs to ensure the economy remains on the recovery path,” he said.
As for Prof Geoffrey Williams of Malaysia University of Science and Technology, he said: “We expect an election Budget with higher overall spending and a laundry list of projects aimed at key voter groups. The excuse will be the narrative of slower growth due to external factors.
“They will say they have to spend more to support the economy. This is predictable but unfortunate.”
He expects a list of grants, soft loans, special support for ethnic groups and projects, which may not yield the best results for the economy through multiplier effects, job creation and benefits to the wider community, to be part of the spending plan as election goodies.
Prof Williams noted that the government should focus on introducing a cash transfer scheme or Universal Basic Income by reforming the aid scheme and the tax system, which could also include regular monthly payments for low-income groups.
“This would replace the current complex welfare payments with one simpler system,” he said.
He also said that issues related to pensions and Employees Provident Fund must be addressed to help people build retirement incomes.
For instance, he suggested that a new Malaysian Superfund for pensions be started now.