2009 Budget

[pywong]

This is an important subject that will be treated separately in its own right.

Malaysia's Anwar seeks budget review after crisis
Sun Oct 12, 2008 3:46am EDT

KUALA LUMPUR, Oct 12 (Reuters) - Malaysian opposition leader Anwar
Ibrahim said he will call for a review of the country's 2009 budget when
parliament reconvenes on Monday, saying it had become "obsolete" in the face
of the global financial crisis.

http://www.reuters.com/article/marketsNews/idINKLR37229820081012?rpc=611

[Han2]

All asumptions in the 2009 Budget tabled more than a month ago have become obsolete in the face of the ongoing financial and economic turmoil the world over.

Do you think the unemployment rate at 3.2% forecasted is realistic? Soon some banks will reveal their NPL and soon some of our fellow neighbors who have been cosy working in banks and financial institutions (including insurance companies) going to be looking for jobs. I don't want to sound like a pessimist, I am merely laying down the realistic picture of what is going on.

[pywong]

Chicken? Or can't be bothered?

Anwar asked for an adjournment to debate the Budget as the minister in charge of the finance portfolio and other relevant government officials were absent during the session and therefore were unable to provide much-needed answers.

He also said that there was no point in debating an outdated Budget as it was presented over a month ago and called on the new finance minister to revise the facts and data.

The Permatang Pauh MP lashed out at Datuk Seri Najib Razak, calling him irresponsible and arrogant for failing to show up for the debate.

He added, rather snidely, that the latter’s failure was because he was too busy approving mega projects and getting involved in economic scandals such as the latest controversy over the purchase of the Euro-copter.

“In the present economic crisis, we have to handle this well. We have to work together to save the country,” Anwar said.

He hoped that Najib will show up for the continuation of the debate after lunch.

“Otherwise... he is sending a message that he is not serious and responsible," he added, referring to Najib.

http://www.themalaysianinsider.com/index.php/malaysia/10434-no-confidence-motion-not-on

[pywong]

Debate on history or budget?

Debating on the budget this morning, Anwar questioned at the beginning of his speech if MPs should continue with the debate since the statistics cited in the budget had become "unrealistic" as a result of the latest global economic situation.
Citing the example of the fiscal deficit estimated at 4.8 percent for this year, he said the figure would balloon higher with the worldwide economic woes.

Read on... http://malaysiakini.com/news/91150

[pywong]

This is very troubling. Badawi is in denial about the need to revise the budget and about the fact that Malaysia is in recession. His idea of financial stability is that there is no bank run.

Hello! If there are bank runs, it means that the financial system is going to crash. That's much worse than a recession.

http://www.straitstimes.com/Breaking%2BNews/SE%2BAsia/Story/STIStory_289246.html

2009 budget too weak: Anwar
He accused Malaysian govt of being in denial.
Oct 13, 2008

Mr Anwar noted that earnings from crude oil and palm oil, two of Malaysia's
top income earners, are sliding because of a fall in global commodities
prices.

KUALA LUMPUR - MALAYSIA'S opposition leader on Monday called for overhauling
the country's budget for next year, saying government leaders are 'sleeping
in broad daylight' while the global financial system is collapsing around
them.

In a speech in Parliament, Datuk Seri Anwar Ibrahim said even Singapore,
with a more robust economy, has fallen into a recession while Malaysia's
government remains in denial with claims that its economy is strong.

The government would be hard pressed to generate funds to make the budget
work, he said. 'They are not only dreaming but sleeping in broad daylight,'
Mr Anwar said.

Prime Minister Abdullah Ahmad Badawi, who was not in Parliament for the
debate, responded later by saying the Malaysian banking system is sound and
not facing a liquidity crunch like banks in other countries.

The RM208 billion (S$87 billion) budget announced by Datuk Seri Abdullah in
August promises higher development spending that is expected to boost the
fiscal deficit to 4.8 per cent of gross domestic product this year and 3.6
per cent in 2009, from 3.2 per cent in 2007.

The budget also has a raft of populist measures including a reduction in
personal income tax and higher pensions in addition to greater spending on
improving rural infrastructure.

Mr Anwar noted that earnings from crude oil and palm oil, two of Malaysia's
top income earners, are sliding because of a fall in global commodities
prices.

Demand for other goods also are expected to fall in the US and Europe, which
will hurt Malaysia's export-driven economy, he said.

'Enough is enough. Enough of this rot. Enough of this corruption,' he said.
'If the new finance minister is truly responsible, he must table a new
budget.'

Finance Minister Najib Razak also was not in Parliament during Mr Anwar's
speech.

Mr Anwar, who has vowed to overthrow the government with parliamentary
defections, says the opposition can produce a much better budget by wooing
foreign investment. He has also pledged to roll back multi-billion-dollar
projects proposed by Mr Abdullah's government to cut the budget deficit.

Mr Abdullah defended his government's policies, telling reporters outside
Parliament that Malaysia is 'not going into recession at the moment.'

'We have some very strong economic fundamentals. And we have very strong
reserves. Our trade surplus is still strong... Our savings are also very
high,' Mr Abdullah said.

'We have a currency that today is stable... Our banking system is still
strong,' he said.

While the Malaysian stock market has fallen 35 per cent this year, there has
been no panic run on banks.

Mr Abdullah recently handed over the Finance Ministry to Najib as part of a
power transition.

Mr Abdullah is scheduled to step down in March 2009 after facing a virtual
rebellion in his party for leading the government to heavy losses against Mr
Anwar's three-party coalition in general elections last March. -- AP

[pywong]

Anwar rejects Budget... again

KUALA LUMPUR, Oct 14 — Opposition leader Datuk Seri Anwar Ibrahim called on all lawmakers in the Dewan Rakyat to reject the 2009 Budget and press for a new one with its facts and figures revised to reflect the current global economic situation.

"We reject this Budget and urge for an immediate change," Anwar said in the House today. Basically, he was repeating what he said in a press conference yesterday in the House lobby.

http://www.themalaysianinsider.com/index.php/malaysia/10482-anwar-rejects-budget-again

[pywong]

Govt ‘in denial’: Anwar

By Anwar Ibrahim

Straits Times

By Hazlin Hassan, Malaysia Correspondent

KUALA LUMPUR: Opposition leader Anwar Ibrahim yesterday attacked the government’s budget for next year, saying it was ‘irrelevant’ in the wake of the current global meltdown.

Making his first speech in Parliament in more than 10 years, he said about 44 per cent of government revenue in the 2009 budget was based on crude oil prices being at US$125, whereas oil is now at US$80.

The former deputy prime minister and finance minister spoke from the opposition benches, claiming that there had been a capital flight of RM125 billion (S$53 billion) in the first half of the year.

Deputy Prime Minister Najib Razak, who is also the new finance minister, had announced foreign direct investments of only RM31 billion, he added.

The opposition leader slammed government leaders whom he accused of ’sleeping in broad daylight’ and of being in a ’state of denial’ as the world’s economy collapsed.

‘If the new finance minister is truly responsible, he must table a new budget,’ he said, adding that the government must review spending on mega-projects and roll out plans to handle any effects of the global turmoil.

Datuk Seri Najib took over the post of finance minister last month from Prime Minister Abdullah Badawi. Datuk Seri Abdullah had presented the 2009 budget at the end of August.

Datuk Seri Anwar said even neighbouring Singapore, with its robust economy, has fallen into a recession while Malaysia continues to insist it is able to weather the storm.

Both Mr Najib and Mr Abdullah were absent when Mr Anwar spoke.

Mr Abdullah told reporters elsewhere that the Malaysian banking system is not facing a liquidity crunch like banks in the United States and Europe.

He said Malaysia is ‘not going into recession at the moment’.

‘We have some very strong economic fundamentals. And we have very strong reserves. Our trade surplus is still strong…Our savings are also very high,’ he added.

The RM208 billion budget announced by Mr Abdullah in August outlined higher development spending that is expected to boost the fiscal deficit to 4.8 per cent of gross domestic product this year and 3.6 per cent in 2009.

Mr Anwar told a news conference during a Parliament break: ‘My concern is they are still in a state of denial. A responsible position would be to say, okay, we are having this crisis, it may come to recession, it may not come to recession, but we have to handle it.’

He claimed Mr Najib was preoccupied with approving projects worth billions of ringgit without tender instead of working to tackle the economic situation.

Mr Anwar pointed to ‘mega’ deals such as the RM11.3 billion high-speed broadband project, the controversial purchase of PT Bank Internasional Indonesia by Maybank, and the purchase of 12 new helicopters for the Defence Ministry worth RM1.5 billion.

He also slammed Mr Abdullah and Mr Najib for not being present during the debate, calling it a ’sheer arrogance of power’.

Mr Anwar was returned to Parliament after winning back his old seat in Penang in a by-election in August. He has been appointed by the opposition parties as Parliamentary Opposition Leader.

His targeting of Mr Najib is seen as a strategy to weaken the leader who has been anointed as the next prime minister when Mr Abdullah steps down next year.

Last week, the opposition said it may table a vote of no-confidence against the PM this week but yesterday Mr Anwar indicated it may abandon the plan in order to focus on the budget for now.
http://anwaribrahimblog.com/2008/10/14/govt-in-denial-anwar/

[pywong]

The oil price has dropped from USD 125 to USD 80/barrel.

Referring to Tony Pua's posting here
http://tonypua.blogspot.com/2008/10/budget-deficit-target-under-threat.html,
we can compute that a drop in oil price of such magnitude will translate into a drop of oil revenue by RM 18.7 B.
That is 10.6% of our revenue of RM 176.2B! See attached file.

If there is no revision in the 2009 budget, it means our budget deficit will jump from 3.6% to more than 14%!

That is not sustainable!

Our budget must be revised. It is pointless for the opposition to debate the budget submitted by the Government in Aug 08.

REVISE THE BUDGET!

[pywong]

How can the Government expect the opposition to debate a budget that is out by almost 10%! We are talking about a drop of revenue of RM 18.7 billion! That is not small potatoes.

Najib: No new Budget

KUALA LUMPUR, Oct 14 - The government will not table a new budget as requested by the opposition although revisions are possible.

"It is not a suitable suggestion to be considered in addressing the global financial crisis," said Finance Minister Datuk Seri Najib Razak.

"Some of the figures may have to be revised but it does not necessitate a retabling of a new budget," he added.

Read on..... http://www.themalaysianinsider.com/index.php/malaysia/10501-najib-no-new-budget

[pywong]

Strange bird. He should be in Parliament defending the budget and explaining how the Govt plans to prepare the country to face the financial crisis. Instead he flies off to Sabah to talk about it. Launching the opening of a mall in Sabah is more important than debating the budget.

Such arrogance. Old habits die hard. He still thinks he live in the world of UMNO hegemony.

Government must be ready to face challenges of global crisis, says Najib

KOTA KINABALU, Oct 15 - The government must be prepared for any eventualities in facing the current global financial crisis, Deputy Prime Minister Datuk Seri Najib Tun Razak said today.

He said though the crisis was expected to have an impact on the Malaysian economy, especially next year, it would not be as bad as other countries as Malaysia has made structural changes to its economy since the Asian financial crisis 10 years ago.

"We are monitoring the situation closely so that we can act accordingly when needed," he said in his speech at the opening ceremony of Sabah International Expo (SIE) 2008 at 1Borneo Hypermall here.

http://www.themalaysianinsider.com/index.php/malaysia/10552-government-must-be-ready-to-face-challenges-of-global-crisis-says-najib

[pywong]

There is a related posting here:

http://tindakmalaysia.com/tm_forums2008/index.php/topic,18.new.html#new, post #5

[pywong]

Anwar offers alternative budget
Posted by delster on October 23rd, 2008

KUALA LUMPUR - MALAYSIAN opposition leader Anwar Ibrahim on Thursday proposed an alternative budget plan to restore confidence in the country’s economy amid a global downturn and expected low growth rates.

Mr Anwar produced a 20-page document that proposes slashing government expenditure on mega-projects and opening up public tenders while spending more on areas that provide direct help to the people.

‘Our recommendations, if implemented properly, will steer the country through the turbulence ahead,’ Mr Anwar told reporters on the sidelines of the annual budget debate in parliament.

He said the Pakatan Rakyat alliance of opposition parties came up with the plan after the government unveiled its budget in August this year but refused to amend it despite a downturn in the global and local economies.

The proposals call for a 23.83 billion ringgit (S$10.01 billion) cut in the government’s proposed operating expenditure of 154.17 billion ringgit with additional savings by reducing corruption and mandating open tenders for government procurement.

‘The aborted 1.13 billion crooked scenic bridge, a nine billion ringgit undersea cable-tracking project and a 15.2 billion high speed broadband project, all this has got to be shelved,’ Mr Anwar said.

He said the money could then be put into improving education standards, strategic public transport initiatives, home ownership and fighting crime.

However, his budget proposals are unlikely to be accepted by the Barisan Nasional coalition government which control (almost) two-thirds of the house and does not normally work with the opposition in formulating laws and policies.

A resurgent opposition scored a big win in March 8 polls when it secured a third of parliamentary seats and control of five states.

http://www.straitstimes.com/Breaking%2BNews/SE%2BAsia/Story/STIStory_294006.html

[pywong]

The salient points from the measures proposed by Pakatan today include:

* Pakatan anticipates a decrease in government’s revenue by 11 percent to approximately RM157 billion as against the government’s projection of RM176 billion due to the drop in commodity prices as well as a decline in GDP.


* Suggestion for a 15.5 percent reduction in government’s operational expenditure to RM130 billion, as opposed to the government’s proposed amount of RM154 billion. In reducing operating expenditure, Pakatan assures it will however make no reduction in government salaries.


* Pakatan believes that a RM10 billion substantial savings is feasible simply by reducing corruption and mandating open-tenders for government procurement.


* Pakatan believes the budget deficit to be 3.0 percent, down from the estimated 3.6 percent for 2009, based on the revised calculation of revenue and allocation for expenditure.


* Education, public transportation, health and housing were chosen as the four areas to be benefit from substantial increases in development expenditure. The allocation for education to be increased from RM8.4 billion to RM11.8 billion in 2009, RM3 billion for housing development as opposed to the government’s RM1.4 billion and RM3.5 billion for improving security.


* Set up the Independent Police Complaints and Misconduct Commission (IPCMC) and re-allocate approximately 30 percent of the police officers from administrative departments to crime-fighting.


* The approved permits for imported vehicles are suggested to be auctioned to highest bidders in order to generate an estimated additional RM1.75 billion to government’s coffers.


* Renegotiation of “exploitative contracts” in toll concessionaires and the independent power producers for a lower cost of services to all Malaysians and savings for the government.


* A temporary reduction in employee contributions to the EPF from 11 percent to nine percent for a period of one year to increase disposable incomes. This would inject nearly RM2 billion of disposable income into the economy for domestic spending.


* Liberalising taxes and import duties on inputs used for the production of food, final goods and farming.


* The formation of a pricing mechanism which is more responsive to fluctuations in market price for crude oil.


* The enactment of a national competitiveness policy and take steps to reduce the “unfair market power” held by state-created monopolies”.


* To revitalise the SMEs sector, it is proposed that the tax rate for SMEs on their first RM500,000 chargeable income be reduced to 18 percent from the current 20 percent. A new partial tax exemption threshold is also proposed and to set at RM200,000 and taxed at 12 percent.


* A review for mega project costing more than RM1 billion to assess their socio-economic viability, affordability and intended impact on national development and employment.


* All government contracts to go through public tender. A saving of at least RM5 billion per annum is estimated to be achieved from this.

http://malaysiakini.com/news/91842

[pywong]

Pakatan wants to auction APs and shelve mega projects
Posted by Super Admin
Thursday, 23 October 2008 15:11

Shannon Teoh, The Malaysian Insider

Pakatan Rakyat today unveiled its “recommendations for the 2009 Malaysian Budget,” which include proposals to shelve a number of mega projects such as the undersea cable and high-speed broadband, as well as to auction off Approved Permits (APs) for cars to increase revenue and lower cost.

The 20-page document is meant to address a “pressing need for a meaningful exchange of ideas by lawmakers on both sides of the political divide,” said opposition leader Datuk Seri Anwar Ibrahim in a press conference at Parliament.

However, DAP parliamentary leader Lim Kit Siang insisted it was not an “alternative Budget” but “a plan to meet the crisis of confidence on the economic front.”

Asked why it was not being brought to the Dewan Rakyat, he explained that “various proposals have already been put forward by other PR MPs, and other major proposals will be raised in the Dewan Rakyat.”

It proposes that economic growth be revised to 3.4 per cent per annum, as projected by the Malaysian Institute for Economic Research, instead of the 5.4 per cent as tabled in the government’s Budget Bill and that the Budget, which will be the country’s 12th deficit Budget in succession, targets a 3 per cent deficit rather than 3.6 per cent.

http://mt.m2day.org/2008/content/view/14188/84/

[pywong]

Based on Aseambankers analysis, USD 1 drop in oil price will result in loss of RM 600 million in revenue. The Government prepared the budget assuming a base price of USD 125 per barrel. At USD 62 per barrel, there is a drop of RM 37.8 billion in revenue. And yet the government refuse to table a revised budget. This is gross incompetence and criminal negligence!

Even the PR alternative budget is too optimistic, assuming a reduction of RM 19 billion only.

How can the Government expect the budget to be passed when it is out by more than 19%!

Commodity price falls spell trouble for Malaysia

OCT 25 - The global economic turmoil is at Malaysia’s doorstep.

And the first severe challenge facing the government is its ability to collect revenue and push growth – a fact being drive home by the slump in crude oil and palm oil prices.

The price of crude oil is hovering around US$62 per barrel, a mere US$2 per barrel above Petronas production costs. If the price of crude drops further and reaches US$50 per barrel, Malaysia’s oil giant and the country will be in a lose-lose situation.

A sensitivity analysis by Aseambankers showed that a US$1 per barrel drop in crude oil prices will result in the Government losing RM600 million in petroleum-related income over a year. Some 40 per cent of the country’s
revenue is derived from the oil and gas sector.

http://www.themalaysianinsider.com/index.php/malaysia/11178-commodity-price-falls-spell-trouble-for-malaysia

[pywong]

RM7b injection in revised Budget 2009
By Shannon Teoh

KUALA LUMPUR, Nov 4 - Finance Minister Datuk Seri Najib Razak revised the 2009 Budget today, presenting additional steps such as a RM7 billion injection into the economy ...

Besides the RM7 billion injection, which is the savings from fuel subsidies, he also revised downwards the country's gross domestic product (GDP) growth forecast.

......The revision brings forecasted GDP growth down to 3.5 per cent from 5.4 per cent and the budget deficit upwards to 4.8 per cent from 3.6 per cent.

.... With this, the Deputy Prime Minister crushed the opposition's hope to have the budget retabled. Najib also insisted that the government was "not in denial."

... He backed this up by stating that the national reserve was still healthy at 37 per cent of GDP with only 2.5 per cent non-performing loans and a risk weighted capital-adequacy ratio of just 13.2 per cent, above the international standard of 8 per cent.

37% reserves. Does this include the provision of pensions for the civil servants? If not, where are they placed under?

Najib also said the government will proceed with the proposal to inject RM5 billion into ValueCap via a loan from the Employees Provident Fund (EPF) to purchase undervalued stocks.

He insisted that the funds would be guaranteed by the government and the returns from the loan would be higher than the prevailing interest rate but with minimum risk.
If the returns are so good, why don't the govt invest directly instead of putting the workers' money at risk. Leave the workers' money alone.

Read on... http://www.themalaysianinsider.com/index.php/malaysia/11776-rm7b-injection-in-revised-budget-2009

[pywong]

As Najib speaks Opposition MPs walk out

By Debra Chong

KUALA LUMPUR, Nov 4 - All Pakatan Rakyat lawmakers staged a walkabout of the Dewan Rakyat approximately an hour into Finance Minister Datuk Seri Najib Razak's speech when winding-up the debate on the 2009 Budget this evening.

Speaking to reporters outside the House while Najib continued with his speech on the federal government's economic stimulation package, Opposition Leader Datuk Seri Anwar Ibrahim said they protested against Najib's "arrogant manner" in prohibiting them from speaking up during his speech.

Read on.. http://www.themalaysianinsider.com/index.php/malaysia/11780-as-najib-speaks-opposition-mps-walk-out

[pywong]

Amendment to Supply Bill need to be circulated to MPs at least 2 days beforehand.

Proceedings suspended by Speaker until 2:30pm.

Is the Supply Bill passed on 4/11/08 constitutional?

Opposition says Najib is setting a dangerous precedence.

Budget protest: House suspended for 2 hours
Syed Jamal Zahiid | Nov 5, 08 1:40pm

The Dewan Rakyat proceedings was suspended for two hours following protests from the opposition bench over the additional figures tabled by Finance Minister Najib Abdul Razak to Budget 2009.

wan junaidiDeputy speaker Wan Junaidi Tuanku Jaafar suspended proceedings until 2.30pm after the opposition refused to allow the Bill to reach the committee stage.

Several Pakatan Rakyat MPs led by Opposition Leader Anwar Ibrahim (PKR-Permatang Pauh) had earlier told Wan Junaidi that under Section 66 (15) of the Standing Orders, the House must be informed two days before the tabling of any amendments made to a Supply Bill.

The motion must also be distributed to all MPs, they added.

.... http://malaysiakini.com/news/92484

[pywong]

Reject, Reject, Reject (Update): The Antics of Speaker Pandikar Amin Mulia
Comments:

I have been reliably informed that the Supply Bill (Budget 2009) that was approved yesterday by Dewan Rakyat was the one presented by the former Minister of Finance, Abdullah Ahmad Badawi on August 29, 2008. This was confirmed by the Deputy Minister of Finance No. 2, Dato Haji Ahmad Husni Hanadzllah in Dewan Rakyat.

The stimulus package totalling rm7 billion presented by his successor,Najib, yesterday is, therefore, not part of that Supply Bill but a fiscal amendment to it.

This in part explains why Najib was able with the help of Sabah’s Pandikar to avoid answering questions by the Leader of the Opposition, Dato Seri Anwar Ibrahim and other Parliamentarians from Pakatan Rakyat. It may be recalled that MP Tian Chua was suspended for one day by the Speaker for trying to question Najib on his package and verbal report on the state of the Malaysian economy. Furthermore, the statistics presented by Najib were obviously a figment of his imagination. The state of economy is worst than what the government would have us believe.

As usual, the mainstream newspapers like the New Straits Times, The Star and the Utusan Malaysia, TV3, TVI and TV2 and also the so-called economic pundits have again misled the Malaysian public.

Readers of my blog who feel that PR Parliamentarians led by former Deputy Prime Minister and Finance Minister, Dato Seri Anwar Ibrahim have been unnecessarily difficult over this matter should think again. They should not be misled by the mainstream media which is always trying to demonise members of the Opposition.

Need I remind the Speaker , Dewan Rakyat, the Sabah Pandikar, that his primary role is to facilitate debate according to the rules of the House and not to protect Ministers of the Government. We, members of the public, have a right to know what the government is, among other things, doing with our money. All monies can only expended on government activities, programmes and projects subject to formal sanction and oversight by parliament, which is the sole legislative body in our country.

As for Najib, he should be sent back to INTAN (Institut Tadbiran Nasional) to learn the basic rules of good governance and accepted practice. This is because what he tried to do in Dewan Rakyat yesterday (November 4) is “a clear indication of the sheer incompetence of our deputy prime minister.” (to quote Anwar Ibrahim).

I appeal to all Parliamentarians on both sides of the aisle, especially those of UMNO-BN coalition to seek formal clarification on the so-called stimulus package. They should know that it is irresponsible on their part if they fail to have this matter tabled and debated. It is incumbent on the Minister of Finance No. 1 to formally table his stimulus package for debate and formal adoption by Dewan Rakyat.

As both Dato Seri Anwar Ibrahim and Lim Kit Siang reiterated, making fiscal amendments to the original budget presented by Prime Minister Abdullah Ahmad Badawi was tantamount to a new budget and members of Dewan Rakyat must first be informed of the amendments before it is tabled for reading.—Din Merican

http://dinmerican.wordpress.com/2008/11/05/reject-reject-reject-update-the-antics-of-speaker-pandikar-amin-mulia/

[pywong]

UMNO still refuses to face reality that our economy is in trouble and the budget has to be revised to reflect the current situation. Din Merican advocates a bi-partisan committee to look into the economy and study how we can revive it.

Will UMNO do it? Judging from their current behaviour and fear-mongering, their priority is on how to protect their hold on power and to continue with their merry ways. Rome can burn. But the fiddling must go on. And that applies not only to musical instruments. It includes the Treasury as well.

http://dinmerican.wordpress.com/2008/11/22/time-to-get-serious-about-the-malaysian-economy-piecemeal-approaches-wont-work/

[pywong]

Populism at all cost
COMMENTARY

NOV 26 - Normally, when in a hole you stop digging. But not in Malaysia.

The Umno-led Barisan Nasional (BN) coalition government continues to ignore economic and political reality despite its recent worst-ever electoral defeat.

Its present state of affairs is due to keen campaigning in factionalised party elections scheduled for March 2009.

And since the electoral popularity of Umno is at a historical nadir, party politicians are using the levers of government in a grubby populist grab for votes.

Not only does this populism show up Umno as a party in decline, it also carries long-term negative repercussions for the whole economy.

Umno remains unsettled despite Prime Minister Datuk Seri Abdullah Ahmad Badawi's agreement to relinquish top party and government posts to his deputy, Finance Minister Datuk Seri Najib Razak in March 2009.

Except Najib, all other party warlords face long, drawn-out contests for Supreme Council positions. The campaign has already turned into a vicious little war that takes no prisoners.

Unlike before, Umno today has no culture of democratic contests premised on rational socio-economic and other policy arguments.

This culture was destroyed by former PM Tun Dr. Mahathir Mohamad during his 22-year presidency. Thus, Umno currently is a self-serving vehicle of grubby feudal-minded politicians persuaded largely by 'money politics'.

The on-going election campaign has already seen numerous allegations of vote-buying being aired in the press.

Dr. Mahathir recently lamented in his blog that if Umno is unable to eradicate 'money politics', it risks losing the next general election.

However, Dr. Mahathir is not a mere partisan observer. He too is campaigning for his own factional loyalists who are pitted against those aligned to outgoing PM Abdullah Badawi.

Consequently, both sides are now resorting to populist measures via the levers of government power to pump-prime their electoral chances, albeit in the name of pump-priming the economy in 2009 to offset the global downturn.

Except that, with the 2009 budget, Malaysia will see its 12th year of continuous budget deficits. And despite previous promises about balancing the budget, things somehow seem to have gotten out of control with total government debt rising inexorably.

What is disturbing is the insufficient information about how this Umno-led government is going to spend the 2009 budget. Foreign Minister Najib did not disclose much when he wound-up the parliamentary budget debate earlier this month.

Indeed, too many unknowns exist since the original budget figures assumed high global commodity prices (including petroleum exports) on the basis of a strong ringgit.

Since then, commodity prices have crashed, the ringgit has slumped against the dollar and FDI outflows have increased. This has up-ended the original budget estimates.

But the budget has not been revised. Instead, Mr. Najib added a further RM7 billion economic stimulus package to the already huge budget.

The 2009 deficit like in 2008 thus remains stuck at a jittery 4.8 percent of GDP.

But is this overall deficit figure even credible when the government won't come clean with realistic budget figures to parliament?

There seems to be a lot of fudging going on with the government preferring to remain obscure over financial and economic figures for reasons best known only to them.

Yet, despite being vague, Najib promised to disburse the entire 2009 economic stimulus package by March.

Does this not ring a loud bell in the light of all the vicious factional campaigning in Umno?

As well, domestic prices of petrol and diesel have come down significantly since two months ago. The government promptly announced - to everyone's surprise - that at current prices, the government is not subsidising fuel costs anymore.

Also announced was the adoption of a 'managed floating mechanism to fix petrol and diesel prices'.

This gives the impression that the government is financially prudent.

Unfortunately, no other details were divulged leaving all in the dark about what really is going to happen. Many also want fuel prices even lower, not least some Umno politicians on the die-hard campaign trail. But how helpful is this?

Yet, nobody knows how all this supposed fuel subsidy savings are going to be deployed within the budget. Will it now be used to target key value-added areas of the economy like upgrading the quality of healthcare, improving education and up-scaling industrial expertise to enhance economic competitiveness?

Or will it go straight into pork-barrel projects to assist the electoral chances of certain Umno loyalists or will it help bailout certain 'loyal' Umno cronies hit by the economic downturn?

Unfortunately, there is presently no policy debate within Umno about strategies to ensure the long-term health of the economy.

Instead, the dominant talk within Umno is the going price of a delegate's vote during the elections, currently estimated at RM20,000.

Consequently, this Umno-led government is suffering a severe confidence deficit. The government's inability (or unwillingness) to divulge accurate information about its finances and the economy is really a reflection of the dismal state of Umno politics.

After all, being vague allows for better political patronage, no?

Somewhere down the road, the economy is going to pay for all these political shenanigans. Reforms are needed. But will Umno face up to reality?

Najib only agrees partial reforms are needed. He acknowledged his hands will be full once he takes over.

But given his own political baggage and a 'change-resistant' Umno bent on preserving its ethnic supremacist ideology, is he being realistic? - IDEAGLOBAL

http://www.themalaysianinsider.com/index.php/malaysia/13219-populism-at-all-cost-

[pywong]

Is Najib honest with the national budget?

On 28 Aug 08, the Federal Government tabled a budget as follows:

http://tonypua.blogspot.com/2008/08/budget-2009.html

Government's 2009 Budget

Record government expenditure: RM 207.9 billion (2008: RM176.9b)
Operating Expenditure: RM 154.17 billion (74.1%)
Development Expenditure: RM 53.73 billion (25.9%)

With the drop in oil prices, the budget deficit can be as high as 65%!

(Budget deficit 2009 -3.6% = RM 7.2 billion. This doesn't make sense)

Government Revenue

Original 2008 Budget revenue: RM 147 billion
Revised 2008 Budget revenue: RM 161.6 billion (increased by 9.5% or RM14 billion)
Budget 2009 revenue: RM 176.2 billion (increase by 9.2% or RM10.6 billion)

If revenue is RM 176.2 billion and expenditure is RM 207.9 billion, there is a shortfall of RM 31.2 billion, which is a budget deficit of 17.7%!

The major source of revenue is:

Petroleum Sector Contribution to Government Revenue:

Direct Taxes: RM 35.826 billion
Indirect Taxes: RM 2.939 billion (Export Duties)
Non-Tax Revenue: RM 30.0 billion (Dividends) + RM6.272 billion (Royalty)
Total Revenue Contribution: RM 75.04 billion (46.4%)

(This revenue is based on a projected oil price of USD 125/barrel. Today, the price has dropped to USD 46/barrel. We should expect a drop in revenue of RM 50 billion!). See table in http://tonypua.blogspot.com/2008/10/budget-deficit-target-under-threat.html

With oil at USD 46/barrel, our 2009 revenue will drop by RM 50 billion from RM 176.2 billion to RM 126.2 billion. If we maintain our expenditure at RM 207.9 billion, we will suffer a deficit of RM 81.7 billion, which is a deficit of 64.7%!

Najib in an interview with The Edge on 29 Dec 2008 (page S4 column 2, or http://www.youtube.com/watch?v=olLsLzPHc58&feature=related) still claims that our deficit is only 4.8% and that funds will start flowing to the various ministries this week (Jan 09). How can this be done without a revision in the budget? At the projected rate of expenditure, money will run out by Jun 2009!

On top of that, he is talking about a budget stimulus of RM 7 billion! Where is that money coming from? He hasn't even trimmed the budget to account for the RM 50 billion shortfall from the oil revenue!

Is he being honest with us on the budget?

Or, have I missed out something in the above computations?

[lokgp]

That's a good analysis there by Tony Pua and Py. It looks like Najib is bringing us down the wrong road.
His maths is all confused. If the figures are not right, the real economy will be never be right too.
That would wipe out our reserves by mid-year, and more crying on the street with increased taxes on both corporate and taxpayers to finance borrowings.

Let's push for accountability. Let's ask Najib if he had made a mistake and correct it while we still can!

[pywong]

Is Najib honest with the national budget?

(This revenue is based on a projected oil price of USD 125/barrel. Today, the price has dropped to USD 46/barrel. We should expect a drop in revenue of RM 50 billion!). See table in http://tonypua.blogspot.com/2008/10/budget-deficit-target-under-threat.html

With oil at USD 46/barrel, our 2009 revenue will drop by RM 50 billion from RM 176.2 billion to RM 126.2 billion. If we maintain our expenditure at RM 207.9 billion, we will suffer a deficit of RM 81.7 billion, which is a deficit of 64.7%!

Tony Pua estimated a shortfall of RM 50 Billion in oil revenues. He was way off the mark. Petronas had a revenue shortfall of RM 58 Billion in just 6 months. How come Malaysia's growth rate can improve from -5.5% to - 3%+ given a shortfall that is 25% of the budget. Maybe CIMB is financing Najib.

Opposition wants policy statement on RM58b oil revenue drop

Tuesday, 15 December 2009 Super Admin

Written by Yong Min Wei & Chan Kok Leong, The Edge

Opposition lawmakers want a ministerial statement to be made on the whopping RM58 billion plunge in the national oil company’s revenue before the end of the current sitting of Dewan Rakyat, Ipoh Timur MP Lim Kit Siang said..........

Petronas reported a 37.5% fall in revenue to RM98.18 billion in the first half ended Sept 30 from RM157.2 billion the same period last year. It also posted a 47.5% decline in net profit to RM20.3 billion from RM38.65 billion previously due to overall drop in product prices and lower sales volume.

According Lim, PR lawmakers wanted to know whether the government had taken into account such a serious drop in oil revenue in its annual budget, adding that the government should reveal relevant facts and figures to be accountable as it depended some 40% revenue from Petronas tax and dividend in Budget 2010. Malaysiatoday.... (http://malaysia-today.net/index.php?option=com_content&view=article&id=29067:opposition-wants-policy-statement-on-rm58b-oil-revenue-drop&catid=19:newscommentaries&Itemid=100131)