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<\/a><\/p>\nWhile providing a critique of 72 pages of policy requires more time and space than one article can afford, here are the three major policy proposals that deserve some attention:<\/p>\n
<\/span>The good: Raising expenditure for health and education<\/strong><\/span><\/h2>\nOne of the major selling points of the alternative budget is: more spending on higher education and health ministries.<\/p>\n
Prioritising both ministries, the coalition said it needed to check the decline in the standard of healthcare and public universities.<\/p>\n
This year\u2019s federal budget however injected more funds into both ministries. The health ministry received RM26.58 billion which is 9.5% or a RM1.7 billion increase compared to what it received in the 2017 budget.<\/p>\n
Both education and higher education received more next year. The former is allocated some RM46 billion<\/a>, a RM3 billion increase, while the latter receives RM1.61 billion more at RM13.89 billion from the previous RM12.28 billion.<\/p>\nStrangely, Pakatan did not explicitly state how much will be funnelled towards education or health, so it gives of the impression that the coalition doesn\u2019t actually realise the gravity of their proposals.<\/p>\n
Some of Pakatan\u2019s policies are laudable such as placing greater emphasis on Technical and Vocational Education and Training (TVET with the goal of strengthening apprenticeship programmes.<\/p>\n
Pakatan Harapan also wants to expand its German Dual Vocational Training (GDVT) programme launched by the Penang state government in 2015 to a national level.<\/p>\n
So under this programme, host companies are given funding to conduct on-the-job training for selected TVET students who can then go on to obtain jobs in the same companies in the same sector.<\/p>\n
As for health, the coalition said it was necessary to deal with all complaints from the public on the shortage of medicine and inability to carry out much-needed health tests.<\/p>\n
Kelana Jaya MP Wong Chen, who was also part of the policy team behind the budget, said that much needs to be pumped into health and education by way of a higher allocation for development expenditure.<\/p>\n
According to the federal budget, the Prime Minister\u2019s Office received RM12 billion, or the lion\u2019s share of the development expenditure, while health and education only received RM1.8 billion and 1.4 billion respectively.<\/p>\n
While the raising of health and education expenditure is great, the only caveat in the Pakatan budget document on these areas is that there is no proper breakdown on how much the coalition needs to spend in the long run.<\/p>\n
Healthcare costs are expected to skyrocket due to a list of factors, from medical tourism to the spike in non-communicable diseases. Education on the other hand needs serious policy considerations, given that our quality of education is already questionable if we were to consider the\u00a0disqualification from the Programme for International Student Assessment (Pisa) two years ago<\/a>.<\/p>\n<\/span>The Bad: Abolishing GST<\/span><\/h2>\nSorry folks, abolishing the goods and services tax (GST) is not going to solve your financial woes. What\u2019s confusing is the opposition coalition\u2019s plan to abolish the tax but still keep its reporting system.<\/p>\n
Despite being regressive in nature, the GST is a more transparent form of tax as opposed to its predecessor, the sales and services tax.<\/p>\n
One of the reasons for removing the SST is that the system encouraged leakages and the taxation of exports.<\/p>\n
For example, studies have shown that Malaysia has large capital outflows which can\u2019t be reconciled in the national accounts. As much as 80% is said to be from transfer pricing<\/a> where firms transfer costs to various centres around the world to minimise tax.<\/p>\nWith the GST, it makes the process more difficult because complete records are kept at every stage of the value-adding process.<\/p>\n
There are records of who sells to you and at what price and the same for yourself, all along the supply chain. It\u2019s just a matter of working your way down the chain to see if people are playing around with the figures. So it\u2019s not just capital outflows but all manner of things, even those who are avoiding duties or evading taxes.<\/p>\n
Nurhisham Hussein of EPF observed that despite all the talk about GST being regressive, the tax incidence is actually highest on the upper middle income group. Removing the GST, he said, is actually a tax cut for the urban elite<\/a>. Which makes sense since with the GST system, it\u2019s harder to evade taxes.<\/p>\nThe coalition also states that there will be a 20% consumption boost from abolishing GST. The problem lies in this assumption that the coalition makes. For example, in the manifesto, it is assumed that this 20% boost will lead to higher transactions in the property and car markets.<\/p>\n
The property market is soft because of an unsustainable boom. The National Property Information Centre (NAPIC) recently revealed that completed but unsold residential units ballooned to RM12.26 billion<\/a> for the first half of this year from about RM8.56 billion a year ago. Malaysia is undergoing what\u2019s known as an \u201coverhang\u201d.<\/p>\nAlso getting Malaysians to buy property inadvertently go against another one of the coalition\u2019s policies which is to reduce household debt to 75% of GDP over the next five years. The current household debt stands at 85.6% to GDP.<\/p>\n
The car market is also depressed simply because of the available of public transport and ridesharing operators Grab and Uber. So how that 20% would translate by way of car and house purchases is a mystery.<\/p>\n
<\/span>The Ugly: Fuel subsidies<\/span><\/h2>\nThe coalition has expressed its intention to reduce fuel subsidies for low-income earners if it won federal power.
\nIt said it would bring back petrol subsidies which would be targeted at the B40 group by limiting the subsidies to motorcycles and small cars of 1,000cc and below.<\/p>\n
Pakatan also says it will use a targeting mechanism based on the IC of the consumer which would ensure that only Malaysian citizens benefitted from the subsidy.<\/p>\n
It is a well-known fact that the fuel subsidies mostly benefits the better off. While targeting the poor makes sense, administering such distributions will prove to be nightmarish.<\/p>\n
For example, who is going to check whether the car is 1,000cc and below, or even whether they have an IC or not. It\u2019s a system that attracts more problems than solutions.<\/p>\n
According to data from Bank Negara Malaysia, the richest, or T20, benefitted from fuel subsidies<\/a> receiving 42% while the bottom 20% of households only received 4%.<\/p>\nFuel subsidies were among the heated topics debated during our Pre-Budget Facebook Live session and two economists, namely Dr Muhammed Khalid and Dr Jomo Kwame Sundaram, argued that it was impractical and the worst thing to do for the country. They proposed that subsidies be channelled towards the public by way of public transportation.<\/p>\n
Muhammed in particular said it was the worst thing to do to help the poor<\/a>. He urged a review of the definition of poverty, saying that as a developing country, what needs to be looked at was the relative term of what being poor meant and not just merely looking at income.<\/p>\n
Strangely, Pakatan did not explicitly state how much will be funnelled towards education or health, so it gives of the impression that the coalition doesn\u2019t actually realise the gravity of their proposals.<\/p>\n
Some of Pakatan\u2019s policies are laudable such as placing greater emphasis on Technical and Vocational Education and Training (TVET with the goal of strengthening apprenticeship programmes.<\/p>\n
Pakatan Harapan also wants to expand its German Dual Vocational Training (GDVT) programme launched by the Penang state government in 2015 to a national level.<\/p>\n
So under this programme, host companies are given funding to conduct on-the-job training for selected TVET students who can then go on to obtain jobs in the same companies in the same sector.<\/p>\n
As for health, the coalition said it was necessary to deal with all complaints from the public on the shortage of medicine and inability to carry out much-needed health tests.<\/p>\n
Kelana Jaya MP Wong Chen, who was also part of the policy team behind the budget, said that much needs to be pumped into health and education by way of a higher allocation for development expenditure.<\/p>\n
According to the federal budget, the Prime Minister\u2019s Office received RM12 billion, or the lion\u2019s share of the development expenditure, while health and education only received RM1.8 billion and 1.4 billion respectively.<\/p>\n
While the raising of health and education expenditure is great, the only caveat in the Pakatan budget document on these areas is that there is no proper breakdown on how much the coalition needs to spend in the long run.<\/p>\n
Healthcare costs are expected to skyrocket due to a list of factors, from medical tourism to the spike in non-communicable diseases. Education on the other hand needs serious policy considerations, given that our quality of education is already questionable if we were to consider the\u00a0disqualification from the Programme for International Student Assessment (Pisa) two years ago<\/a>.<\/p>\n Sorry folks, abolishing the goods and services tax (GST) is not going to solve your financial woes. What\u2019s confusing is the opposition coalition\u2019s plan to abolish the tax but still keep its reporting system.<\/p>\n Despite being regressive in nature, the GST is a more transparent form of tax as opposed to its predecessor, the sales and services tax.<\/p>\n One of the reasons for removing the SST is that the system encouraged leakages and the taxation of exports.<\/p>\n For example, studies have shown that Malaysia has large capital outflows which can\u2019t be reconciled in the national accounts. As much as 80% is said to be from transfer pricing<\/a> where firms transfer costs to various centres around the world to minimise tax.<\/p>\n With the GST, it makes the process more difficult because complete records are kept at every stage of the value-adding process.<\/p>\n There are records of who sells to you and at what price and the same for yourself, all along the supply chain. It\u2019s just a matter of working your way down the chain to see if people are playing around with the figures. So it\u2019s not just capital outflows but all manner of things, even those who are avoiding duties or evading taxes.<\/p>\n Nurhisham Hussein of EPF observed that despite all the talk about GST being regressive, the tax incidence is actually highest on the upper middle income group. Removing the GST, he said, is actually a tax cut for the urban elite<\/a>. Which makes sense since with the GST system, it\u2019s harder to evade taxes.<\/p>\n The coalition also states that there will be a 20% consumption boost from abolishing GST. The problem lies in this assumption that the coalition makes. For example, in the manifesto, it is assumed that this 20% boost will lead to higher transactions in the property and car markets.<\/p>\n The property market is soft because of an unsustainable boom. The National Property Information Centre (NAPIC) recently revealed that completed but unsold residential units ballooned to RM12.26 billion<\/a> for the first half of this year from about RM8.56 billion a year ago. Malaysia is undergoing what\u2019s known as an \u201coverhang\u201d.<\/p>\n Also getting Malaysians to buy property inadvertently go against another one of the coalition\u2019s policies which is to reduce household debt to 75% of GDP over the next five years. The current household debt stands at 85.6% to GDP.<\/p>\n The car market is also depressed simply because of the available of public transport and ridesharing operators Grab and Uber. So how that 20% would translate by way of car and house purchases is a mystery.<\/p>\n The coalition has expressed its intention to reduce fuel subsidies for low-income earners if it won federal power. Pakatan also says it will use a targeting mechanism based on the IC of the consumer which would ensure that only Malaysian citizens benefitted from the subsidy.<\/p>\n It is a well-known fact that the fuel subsidies mostly benefits the better off. While targeting the poor makes sense, administering such distributions will prove to be nightmarish.<\/p>\n For example, who is going to check whether the car is 1,000cc and below, or even whether they have an IC or not. It\u2019s a system that attracts more problems than solutions.<\/p>\n According to data from Bank Negara Malaysia, the richest, or T20, benefitted from fuel subsidies<\/a> receiving 42% while the bottom 20% of households only received 4%.<\/p>\n Fuel subsidies were among the heated topics debated during our Pre-Budget Facebook Live session and two economists, namely Dr Muhammed Khalid and Dr Jomo Kwame Sundaram, argued that it was impractical and the worst thing to do for the country. They proposed that subsidies be channelled towards the public by way of public transportation.<\/p>\n Muhammed in particular said it was the worst thing to do to help the poor<\/a>. He urged a review of the definition of poverty, saying that as a developing country, what needs to be looked at was the relative term of what being poor meant and not just merely looking at income.<\/p>\n<\/span>The Bad: Abolishing GST<\/span><\/h2>\n
<\/span>The Ugly: Fuel subsidies<\/span><\/h2>\n
\nIt said it would bring back petrol subsidies which would be targeted at the B40 group by limiting the subsidies to motorcycles and small cars of 1,000cc and below.<\/p>\n