Look into these 5 areas first

Publication: NST

Date of publication: Jun 6, 2013

Section heading: Main Section

Page number: 018

Byline / Author: By Tan Sri Ramon Navaratnam

IT is gratifying that the government has called for budget proposals from the public and also well before budget day this year. It's an open invitation that we should all try to at least think about and communicate to the government.

The 2014 Budget is particularly important because it is the first budget after the 13th General Election when all the government's election promises will have to be addressed. It needs to include new policies and programmes that are transformational and responsive to the needs of the public.

It could pave the way for a new mid-year five-year plan, based on the election promises and feedback from voters who have sent powerful signals to the political leaders from all sides.

What do we want from the 2014 Budget?

FIRST, our economic structure has to be improved. The budget provides the best instrument and occasion to promote higher competitiveness. For this, we have to remove the worst elements of the New Economic Policy (NEP) and move onto the New Economic Model (NEM).

There should not be policies or programmes based on race. The economy has gained much in terms of poverty reduction and Bumiputera restructuring of equity and ownership, thanks to success of the NEP. Many would argue that the 30 per cent Bumiputera equity has already been achieved. An independent review would help to clear the doubts.

Nevertheless, a proper adoption and application of the NEM will strengthen the socio-economic structure of the economy. It will build sustainable growth and equitable income distribution in our economic system. This review should also reject new requests for more than 30 per cent equity for investment and ownership, and for contracts, licences, permits and quotas.

The economy needs structural review and transformation so that we may be able to break out of the middle-income trap that we are now caught in. The 2014 Budget should, therefore, be based on the NEM.

SECOND, the budget's integrity that was compromised through extraordinary expenditures will also have to be restored and strengthened. The first priority will be to aim for greater reduction of the national deficit and national debt.

These two fiscal pillars will need to be reinforced to ensure sustainable growth and fairer income distribution to give a better deal to the poor. We must remind ourselves that even a relatively strong economy like ours can slip pretty fast if we are lax in our fiscal discipline.

THIRD, the goods and services tax will have to be introduced after so many false starts. We can't wait for an ideal political timing. The best time will be the next budget, now that the elections are over.

Lower-income groups can be spared any additional burden if the GST is imposed on higher-priced consumer goods and services.

As in many other countries, goods and services that are considered basic needs could be exempted from taxes or suitable methods devised to reduce the tax burden, through vouchers or 1Malaysia People's Aid.

Similarly, the wide range of subsidies could be kept at a reduced rate for the poor but denied to the higher-income consumers.

FOURTH, the budget should make proposals to slash expenditure waste and corruption.

All government and private sector contracts should be made open, transparent, competitive and accountable so that cronyism can be stamped out.

FIFTH, institutions have to be strengthened further through higher expenditure allocation and greater efficiency. The civil service, judiciary, police and Customs and, particularly, the education sector, have to be made more accountable for the delivery of better service and productivity to society.

The Performance Management Delivery Unit and Special Task Force to Facilitate Business can be given more authority to monitor performance. They can provide advice to the Treasury to cut down or raise expenditure allocations to these institutions, depending on their performance.

Tan Sri Ramon Navaratnam,

chairman, Asian Strategy and Leadership Institute's Centre for Public Policy Studies