Suara Sri Andalas

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Suara Sri Andalas

Fiscal Deficit Could Worsen

Posted: 24 Jul 2013 10:50 PM PDT

By Anna Taing - The Edge

MALAYSIA'S fiscal health is deteriorating and an improvement isn't likely to be on the cards any time soon, especially when the government has recently asked for RM12.2 billion in additional spending.

So what happened to the fiscal discipline that the government has said it is exercising to rein in its budget deficit? Requests for additional spending, it appears, have been happening on a regular basis over the years. Last year, the supplementary budget was even higher at RM13.8 billion.

Latest statistics from the Ministry of Finance have reinforced doubts about the government's ability to trim the fiscal deficit to 4% of gross domestic product (GDP - the sum of goods and services produced in a country) this year.

Here is why.

In the first quarter (1Q) of this year, Malaysia's fiscal deficit stood at RM14.9 billion or 6.4% of GDP, compared with RM21.1 billion in 4Q2012. In 1Q2012, it was RM5.8 billion or 2.6% of GDP.

For the first five months of this year, the fiscal deficit is already at RM19 billion, or 4.8% of GDP.

Total government spending rose 9.8% in 1Q2013 to RM58.4 billion, against RM78.8 billion in 2012's 4Q. Drilled down further, operating expenditure rose 9.4% to RM49.9 billion, due to higher spending on emoluments (RM14 billion) and transfers to statutory bodies (RM7.7 billion).

On the other side of the equation, revenue fell 8.6% in 1Q to RM43.8 billion. The Inland Revenue Board has targeted a tax collection of RM130 billion for 2013. In 1Q, the collection was RM27.4 billion.

The general view is that fiscal discipline has been lacking in recent years and populist programmes in the run-up to the 13th general election have been cited as one of the reasons for the widening fiscal gap. For example, cash handouts and other incentive payouts to households earning less than RM3,000 in 1Q2013 amounted to RM3.5 billion. There is also a sharp rise of 19% in emoluments and this is attributed to the generous increase in wages and bonuses for the civil service.

The government has stated its intention to bring down the deficit to 4% of GDP this year and 3% by 2015. This has led to the setting up of the Fiscal Policy Committee in June, which will be chaired by the prime minister. The objective of the committee is to trim the fiscal deficit without impacting growth.

The committee will face tough challenges, going by the deterioration in the statistics in 4Q2012 and 1Q2013 and amid an environment where economic growth is seen as weaker, at around 5% to 6% for this year and 2014.

The committee has a few options - to raise government revenue, cut spending or do both. But as things stand today, the government seems to be in no position to do either. Raising taxes and cutting spending are unpopular decisions and the question is whether there is political will to push both through.

On the revenue side, economists have noted that the numbers at the end of 1Q are already falling short of the RM208.6 billion projected in the 2013 Budget.

One way to raise taxes is through the Goods and Services Tax (GST) but this isn't likely to be implemented any time soon, although it has been debated for several years.

On the expenditure side, instead of contracting, additional spending is now required. Indeed, if the RM12.2 billion supplementary budget is approved, it would widen the fiscal gap to around 5% of GDP.

Insofar as cutting government spending is concerned, a low-hanging fruit, so to speak, is putting the subsidy rationalisation scheme back on track. For the first three months, spending on subsidies actually fell 14.6% quarter-on-quarter to RM7.9 billion, but this was not through any government efforts to cut subsidies. Instead, the contraction was due to lower crude oil prices.

Going forward, the government will need to relook the subsidy reduction scheme and tread cautiously when it comes to cash handouts. There is talk that the BR1M (Bantuan Rakyat I Malaysia) scheme could be an annual affair but the question is whether it is sustainable without worsening the fiscal situation.

Given the current weakness in the government's financial position, it will have to prioritise its spending.

If we look at past trends, fiscal deficits tend to be smaller in the early part of the year before touching a high by year's-end. For example, in 2012, the deficit in 1Q was RM5.8 billion but RM21.1 billion in 4Q. The same pattern is seen in 2011 (see table).

 The intention here is not to paint a picture of gloom and doom, but whichever way one looks at it, government finances aren't looking good. If the fiscal gap continues to widen, it will impact the overall investment climate of the country. For one, continued fiscal indiscipline is exposing Malaysia to a credit downgrade by international rating agencies. A downgrade means higher borrowing costs for Malaysian companies because of the higher risk premium.

Let's not forget that Malaysia's vulnerability to a rating downgrade is not caused by its fiscal deficit and rising public debt only. Its household debt has exceeded 80% of GDP and its current account surplus has narrowed significantly to 3.7% of GDP from 7.4% in the same period of 2012. The surplus was even bigger at 16.7% in 1Q2009.

Selangor Syaratkan 30% Wanita Sebagai Ahli Majlis Di Setiap PBT

Posted: 24 Jul 2013 10:06 PM PDT

SHAH ALAM 24 JULAI : Kerajaan Negeri mensyaratkan setiap Pihak Berkuasa Tempatan (PBT) mempunyai sekurang-kurangnya 30 peratus Ahli Majlis di kalangan wanita untuk penggal akan datang.

Ia merupakan salah satu kriteria yang diperlukan pada pemilihan Ahli Majlis PBT yang akan bermula pada 1 Januari 2014.

Selain itu, Exco Kerajaan Tempatan, Kajian dan Penyelidikan, Datuk Teng Chang Khim berkata, tempoh perkhidmatan Ahli Majlis juga tidak boleh melebihi daripada empat tahun atau dua penggal berturut-turut.

Katanya, antara syarat minimum adalah mesti berumur 21 tahun ke atas, dan memiliki kelayakan minimum akademik sekurang-kurangnya Sijil Pelajaran Malaysia (SPM), dan menetap sekurang-kurangnya lima tahun di bawah PBT berkenaan.

Pembahagian kuota juga hendaklah 75 peratus merupakan calon daripada parti politik, manakala 25 peratus daripada calon Badan Bukan Kerajaan (NGO).

"Calon NGO hendaklah daripada organisasi berdaftar dan namanya hendaklah dicadangkan oleh organisasi berkenaan," katanya dalam sidang media selepas mesyuarat Exco di Bangunan Setiausaha Kerajaan Negeri di sini.

Sumber: Selangorku

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