KUALA LUMPUR – Budget 2024 will help the country steer itself towards economic recovery despite drawing mixed reactions from the public, said economic and political observers.
Azmil Mohd Tayeb, a senior lecturer at the School of Social Science at Universiti Sains Malaysia, acknowledged that while the budget comprises elements of populism and pragmatism, its primary focus is on job creation and technology investment.
He noted that the budget places a substantial emphasis on ensuring higher-income individuals contribute their fair share in taxes and includes bonuses for civil servants, among other provisions.
He further explained that the budget allocation reflects an attempt by the unity government to balance populist measures for the upcoming elections with pragmatic efforts to boost the country’s economy.
On the other hand, Datuk Shamsul Amri Baharuddin from Universiti Kebangsaan Malaysia (UKM) expressed partial agreement, asserting that the budget aligns with the country’s current needs.
He said it is imperative to support economic growth as a prerequisite while ensuring the welfare of the people.
“The budget demonstrates a clear direction towards economic recovery, such as its focus on empowering the digital industry, including research and development (R&D).
“Additionally, the government has allocated funds to Universiti Teknologi Malaysia for the development of a faculty dedicated to artificial intelligence.”
On Friday, Prime Minister Datuk Seri Anwar Ibrahim unveiled Budget 2024, which allocates a total of RM393.8 billion, with a large chunk of the allocation going to three ministries – Finance, Education and Health – collectively accounting for 42.3% of the total.
Shamsul said that the budget reflects the unity government’s effort to empower the people through a substantial portion of the operational budget and a smaller part for developmental initiatives.
However, he acknowledged that the budget provides more funds to support the public during challenging times, with less emphasis on income generation and growth through investment incentives.
Nonetheless, he highlighted that Anwar is gauging public response to the potential reintroduction of the goods and services tax (GST) by proposing a 2% increase in the service and sales tax (SST).
Awang Azman Awang Pawi from Universiti Malaya agreed with the idea of testing the waters with the SST increase but suggested that if the response is positive, GST could be reintroduced under a different label, such as value-added tax (VAT).
“And if such an action does take place, the rakyat may not be ‘re-traumatised’ and may be more accepting – unlike when GST was first introduced many years ago,” Awang said.
Economic analyst Datuk Jalilah Baba said that while the budget is good for the country’s economic recovery, the 2% SST increase is not suitable to be implemented now, seeing that the rakyat is already struggling with rising costs of living.
“It will only add a burden to the rakyat and the consumers, and I do not agree that the government would use this to ‘test the water’.
“They (the government) are serious about fixing the economic situation and the country’s financial state.
“If we were to study the system and procedures of GST and SST, I am of the opinion that GST is a much better system for the rakyat.
“This is because the GST allows exemptions on costs of production or raw materials of finished goods, which would mean more savings in paying tax. But there’s no such exemption system in SST.” – October 16, 2023