Budget meant to prop up the economy, says economist
PETALING JAYA: Budget 2021 aims to prop up the economy and get it back on its feet next year, says economist Prof Yeah Kim Leng.
It is a much-needed expansionary budget for the country but it will not work if the government does not ensure it is followed through to the very minor details, said Yeah, a professor of economics at Sunway University Business School.
He also pointed out the first Perikatan Nasional Budget promises to restore the confidence of both local and foreign investors with growth prospects while allowing more cash into the people’s hands to spend on a waning economy.
“At first glance, Budget 2021 is an expansionary budget as expected and aims to work on the effectiveness of the fiscal stimulus.
“There is much growth prospect – what with the gross domestic product growth likelihood being projected at 6.5% to 7%.
“This will definitely boost investors’ confidence.
“There is also an increased allocation in terms of provisions to control the Covid-19 pandemic and this is reassuring as it shows the government knows it has to contain the pandemic to aid economic recovery.
“I feel there should be an increase in Covid-19 funds, although there are necessary provisions in the health sector.
“As for the Budget thrusts (such as for households and micro businesses), it’s a people-friendly budget with more cash aids,” said Yeah.
He said putting cash into the hands of the people and injections into micro businesses is not a long-term measure but helps them to tide over the worst of the pandemic.
“There is a question of access to this kind of assistance and the government should ensure it finds ways to those who may be falling through the gaps,” said Yeah.
He warned the government that as much as it successfully presented a broad-based budget with all the usual expansionary hallmarks, more effort is needed to ensure resources are not spread too thin.
“It is short-term relief and those who received the handouts might be able to sustain themselves a little longer, but after that the government needs to make sure these groups are pushed into upskilling and reskilling efforts so that the economy is not completely dependent on the government,” said Yeah.
He explained if the government only provides short-term relief and the economy rebounds, the danger remains of an economy completely dependent on government.
He stressed the need for government-linked firms and the private sector to come in and provide a conducive environment for the economy to grow past all the boosts of an expansionary budget.
“If the Perikatan government follows very much in plan and sticks to the fiscal consolidations in the budget, with minimal wastage and leakage, the economy should be able to recover in 2021.
“A Budget is crafted to meet the present challenges and not meant to provide full clarity of how the economy will recover next year.
“We can see that in the 12th Malaysia Plan which has yet to be presented next year,” said Yeah.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz yesterday presented Budget 2021 with a total allocation of RM322.5bil, an increase of 8.6% compared to the Pakatan Harapan administration’s 2020 Budget allocation.
“Of the total, RM236.5bil is for operating expenditure, RM69bil for development expenditure and the remaining RM17bil will be used for the Covid-19 Fund,” he said when tabling Budget 2021 in the Dewan Rakyat yesterday.
Expert Cited
