Malaysia Must Balance Populist Policies and Fiscal Policies

Malaysians need to take a step back. 10 years of corruption and mismanagement will not be solved in 100 days.

I fear Pakatan is being pressured into populist policies that may have long term implications on our country’s economy.

Yes, removing the bloat in the civil service will reduce operational expenditure and zeroing in on corruption will plug leakages.

However, this will be entirely offset by the removal of the GST which in turn brings us back to square one.

Now, rumours of tolls being abolished are surfacing. I hope it is not an abolishment but a review of the concession. If the tolls are abolished, the Government loses income generated from tax of these companies. Further, the entire burden of maintaining these roads will fall on the Government.

Tolls help with breaking traffic, congestion pricing is an effective way of ensuring less cars enter high density areas. To achieve a truly developed status, we need to move towards lower green house emission and have world class public transport.

Tun Mahathir yesterday mentioned that the Budget 2018 was prepared on a forecast of the price of crude oil at $52/barell and that we have seen an increase in revenue because oil prices are trading at nearly $80/barell.

We have extra money, but we also have a large amount of debt. The money recovered from the 1MDB scandal alone will not be enough. Tan Sri Zeti Aziz has promised the world that Malaysia will honor our debts. This includes pre-signed mega projects like the ECRL and no amount of negotiation is going to wipe out billions of the books.

This is dangerous thinking as Malaysia can ill afford to rely on petroleum again. The world is changing, this is no longer the economics of the 1990s. We need new revenue channels to diversify into.

Failure to prudently manage Malaysia’s fiscal policy may see our economy crumble under election promises that were not necessary in the first place.

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