Posts Tagged ‘Budget


Where did RM7.2bil in consultancy fees go to?

What can RM7.2 billion buy?

Going by figures in the 2012 and 2014 Budget speeches, this could pay for Bantuan Rakyat 1Malaysia handouts to benefit a whopping 13.1 million people.

However, from 2009 till October 2013, the government spent exactly that amount to pay for private consultants, a written reply to Parliament has revealed.

The written reply to PKR’s Kelana Jaya MP Wong Chen (left) does not state who these consultants are and what they were paid for.

This action of the government in outsourcing policy work to consultants is not entirely new.

Top consultancy firm McKinsey said it has “advised the Malaysian govermment on public policy and economic development since the mid-1980s”, including on the Multimedia Super Corridor project.

“And today, we continue to advise the government on critical strategies for growth and competitiveness, for example high technology, logistics or education,” McKinsey says on its website.

At RM7.2 billion, however, it appears that the administration of Prime Minister Najib Abdul Razak is taking the outsourcing trend a notch higher.

One big winner under the Najib administration is Frost and Sullivan which, according to its website, is making Malaysia its biggest growth focus in the Asia Pacific region.

Where did RM7.2bil in consultancy fees go to?
Aidila Razak
Nov 15, 2013 – Malaysiakini


Govt wants extra RM14 billion to supplement Budget 2013

RM14b funds request sends wrong vibes on spending reforms, economists say

KUALA LUMPUR, Sept 24 – Putrajaya’s decision to seek an extra RM14 billion to supplement Budget 2013 yesterday puts into question its assurances of financial reforms and prudence at a time when it is being watched by global ratings firms, said economist.

The economists further added that tabling a Supplementary Supply Bill just one month before Budget 2014 could weaken the economy if it does not deliver the intended results and may prompt investors to react negatively, according to Singapore’s Business Times today.

“It comes at an inappropriate time as the government is trying to strengthen the fiscal position and to stop the public debt from rising,” Bank of America Merrill Lynch economist Chua Hak Bin told the BT.

Chua was also taken aback by amount requested, saying it represented approximately 1.5 per cent of the country’s gross domestic product (GDP).

Yesterday, Deputy Finance Minister Datuk Ahmad Maslan tabled the request for RM14 billion in additional funds to shore up Budget 2013.

If approved, the Bill will see the billions channelled to 16 ministries, government departments and agencies.

“The RM14 billion is disproportionate to the direction of what the government is trying to do with the fiscal trajectory,” Chua said further in the report.

Putrajaya has stated that it intends to trim its chronic budget deficit to 3.5 per cent next year and down to 3 per cent in 2015.

The yearly deficit that began during the Asian Financial Crisis has led to it amassing a national debt of over 53 per cent of GDP, which is straining against the legal debt ceiling of 55 per cent of GDP.

According to Chua, the sum of all the factors augurs poorly for Malaysia’s prospects.

“I do not see how with slowing growth, rising costs and an increase in the supplementary budget, the debt ceiling will not be breached,” the economist said.

RM14b funds request sends wrong vibes on spending reforms, economists say
September 24, 2013 – Malaya Mail Online


RM361 MILLION IN 3 YRS: Time to SCRAP Rosmah’s self-glorifying Permata project

KUALA LUMPUR – Member of Parliament for Kapar G Manivanan has called on Prime Minister Najib Razak to abolish the glitzy childcare program run by his wife Rosmah Mansor, and channel the funds for other more useful pre-school activities.

“Permata does not have specific program which can benefit our children in the future,” Manivanan, who is from Opposition Leader Anwar Ibrahim’s PKR party, told a press conference at the Parliament lobby on Tuesday.
Rosmah is the patron of the Permata Negara project, which has received chunky allocations from the government to the tune of RM150 million in 2013, RM111 million in 2012 and RM100 million in 2011. That would amount to a total of RM361 million.

According to Manivanan, the funds could be put to better use in upgrading the Kemas pre-schools run under the Rural and Regional Development Ministry.

This is not the first time that Rosmah has come under fire for being careless with public funds and reaping below-par results despite receiving huge allocations for her various projects due to her status as the PM’s wife.

The 62-year-old has been accused of abusing her power and is notorious for her lavish shopping sprees both at home and overseas.

Malaysia Chronicle

RM361 MILLION IN 3 YRS: Time to SCRAP Rosmah’s self-glorifying Permata project
24 September 2013 – Malaysia Chronicle


Putrajaya must cut waste, deficit to avoid “financial quicksand”, says Tony Pua

Putrajaya must cut wasteful expenditure, reduce the deficit and reform practising “off-balance sheet financing” to avoid Malaysia going into a “financial quicksand”, DAP’s Tony Pua said today.

The party publicity chief said Prime Minister Datuk Seri Najib Razak must already announce immediate measures to boost confidence that Putrajaya was serious about slashing extravagance and deficit.

“In addition, he must signal to the markets that in the 2014 Federal Government budget expected to be announced in October 2013, he will cut down on unnecessary expenditures such as in “Supplies and Services” which have increased drastically from RM23.8 billion in 2010 to RM33.7 billion in 2013,” Pua said in a statement in Kuala Lumpur.

The Petaling Jaya Utara MP made the call when commenting on global agency Fitch Ratings downgrading Malaysia’s credit rating outlook from “stable” to “negative” due to the country’s poor handling of its public finances.

“We call upon the Government to follow the reform of its outdated accounting practice of ‘off-balance sheet financing’ and recognise fully these hidden debts as the Federal Government debt commitments.

“Without proper accountability, the apparent abuse by the current government in circumventing the legislated 55 percent limit of Federal Government debt by recklessly issuing debt guarantees to wholly-owned government agencies or GLCs, will only lead to Malaysia finding itself trapped in financial quicksand sooner or later,” Pua said.

The DAP leader also said Najib, who is also the finance minister, must announce concrete plans to ensure that all privatisation projects are tendered competitively amd that all government procurement are open and transparent.

On Tuesday, Fitch Ratings cautioned that Malaysia’s credit ratings would not improve unless the government takes remedial measures and carry out reforms.

Pua pointed out that Fitch had already “stated the obvious” last December when it said that the country’s heavy dependence on off-balance sheet funding questions the “meaningfulness of the 55 percent of Gross Domestic Product (GDP) federal debt ceiling”.

Analysts from CIMB Equities Research had previously said that the Big 3 rating agencies – Fitch, S&P and Moody’s – would downgrade Malaysia’s credit rating outlook if the government made no indication after the election that it would conduct fiscal reforms on subsidies, taxes and spending.

While the official government statistics show that the country’s debt is only at 53.7 percent of its GDP, Pua argues that the true figure is much higher than that.

“The number does not include the sky-rocketing quasi-government debt or our contingent liabilities,” he said.

“In reality, if both official government debt and guaranteed debt are put together, our debt to GDP ratio will be a much higher and worrying 68.9%.”

Malaysia’s official debt figure has gone up 13% since 2009 and Pua noted that it did not include hidden debts from projects that have loans backed by the government such as the RM50 billion MRT project that is not listed in the country’s budget.

“By channeling development expenditure to off-budget measures, it enables the Najib administration to paint a false perception of financial prudence,” he said. – August 1, 2013.

Putrajaya must cut waste, deficit to avoid “financial quicksand”, says Tony Pua
August 01, 2013 – TMI


Fitch’s ‘negative’ is SERIOUS: Don’t try to pretend nothing happened

Dato’ Seri Najib Razak’s immediate response to Fitch Ratings revision of Malaysia’s outlook to negative does not give confidence that the Government views the matter seriously.

The Prime Minister tried to make light of the negative revision by pointing out that Fitch still “affirmed our rating”. He said negative element “is just the revision of our outlook but that depends on the move the government would make”.

While Dato’ Seri Najib Razak, who is also the Finance Minister, did highlight that “it is a concern that we share as a government and we would seek to address those concerns”, the lack of gravity of the response does not give Malaysians and investors any comfort that real concrete actions will be undertaken.

It should be emphasized that this isn’t the first “warning” by Fitch Ratings although it is the most serious action taken by the global ratings agency to date. In August 2012, Fitch has already warned that Malaysia’s “fiscal trends may eventually lead to some form of negative rating action”.

In November 2012, Fitch further reported that “Malaysia’s public finances are a weakness relative to rating peers and offer limited scope for counter-cyclical fiscal stimulus at the current rating level… While this has not hindered the public sector’s capacity to contribute to GDP, which grew 5.2% yoy in the third quarter according to Bank Negara Malaysia Friday, the growing is concerning.”

Of biggest concern to Fitch then was “the increasing reliance on off-balance sheet funding could potentially call into question the meaningfulness of the 55% of GDP federal debt ceiling.” The “off-balance-sheet funding refers to Malaysia’s penchance to provide of guarantees to government-linked borrowers which does not officially count as Federal Government debt. In reality, if both official government debt and government guaranteed debt are put together, our debt to GDP ratio will be a much higher and worrying 68.9%, as opposed to the official 53.7%.

Hence despite the warnings given a year earlier, the Najib administration hasn’t taken the necessary steps to correct the fiscal shortcomings in the federal government finances. Instead the reverse happened and As a result, Malaysia’s issuance of off-balance sheet debt accelerated to 15.2% of GDP by end-2012 from 9% at end-2008. This is a drastic increase to nearly RM150 billion in 2012 from RM96.9 billion in 2010.


The above actually points to the failure of Najib’s Economic Transformation Programme (ETP), where “Public Finance Reform” was one of the key “Strategic Reform Initiatives” launch in 2010. Among the key policies to be put in place are “Expenditure Control” and “Transparent Procurement”. The latter includes “eliminating incompetent suppliers/ service providers” and “value management”. The ultimate objective was to reduce the Government’s budget deficit to 3% in 2015.

The outcome of the above initiatives however was for the Government to channel development expenditure to off-budget measures, to paint a false perception of financial prudence. This is because the off balance sheet financing or contingent liabilities are not reflected as government debt and hence isn’t included in the budget deficit calculations.

As an example, despite the RM50 billion MRT project being financed entirely by the Government via debt instruments, not a single sen of the borrowings raised are considered official Federal Government debt despite the guarantees provided. Since such borrowings are excluded from deficit calculations, the official budget deficit figures give a false healthy picture of our public finances.

If the Prime Minister is really believes that the Fitch warning “is a concern that we share as a government and [the Government] would seek to address those concerns”, then the most important measure that he must agree to is to recognise all off-balance sheet loans and contingent liabilities as Federal Government debt in the upcoming Budget.

Only then Malaysians can see the true picture if the Najib administration has the political will to cut down our real budget deficit, instead of just providing a feel-good statistic that does not incorporate hidden debts. If Dato’ Seri Najib does not reform the budgetary process, then we fear the ultimate consequence of not just a “negative outlook” but an actual downgrade of our sovereign ratings.

Tony Pua is the MP for PJ Utara

Fitch’s ‘negative’ is SERIOUS: Don’t try to pretend nothing happened – Tony ticks off Najib
Written by Tony Pua
02 August 2013 – Malaysia Chronicle


Anwar dubs Najib an ‘ostrich’ over Fitch downgrade

Prime Minister Najib Abdul Razak has been accused of pretending that his administration had maintained a “healthy debt-GDP ratio” in view of the latest Fitch Rating’s downgrade of Malaysia’s economic outlook from “stable” to “negative”.

In a press release today, PKR de facto leader Anwar Ibrahim said that facts show that the federal government’s guaranteed debt under the Najib-administration had rose to nearly RM150 billion in 2012 from RM96.9 billion in 2010, which would definitely hurt the economy.

“How much longer does Najib want to be the proverbial ostrich in the sand by pretending that his administration’s mismanagement of public finances has no significant impact on the economic outlook?

“No amount of creative accounting practices can change our financial red to black,” said Anwar.

Fitch Ratings had noted that federal government debt had rose to 53.3 percent of GDP by end-2012, up from 51.6 percent a year before and 39.8 percent by end-2008.

A 19 percent rise in spending on civil servant wages due to the general election had also contributed to the widening budget deficit, it noted.

Hidden debt

Anwar said Pakatan Rakyat had consistently maintained that the federal government does not practice financial prudence, accountability and transparency, to which the Najib-administration responded by calling critics traitors.

“Instead of taking cognisance of the legitimate concerns and rectifying the situation, Najib has plunged the country into greater fiscal deficit, eating into our current account surplus and ignoring the clear signs of structural weaknesses,” he said.

Instead, he said the Najib administration had been sweeping “financial dirt” under the “off-balance sheet carpet”.

Anwar dubs Najib an ‘ostrich’ over Fitch downgrade
Aug 1, 2013 – Malaysiakini


It’s payback time as PM dishes out goodies to Umno loyalists

Senior Umno politicians are in for a windfall, possibly as early as next week, when Prime Minister Najib Razak rewards their loyalty with appointments as chairman and board members of Government-linked companies (GLCs) and government agencies.

Among the plum positions available are senior positions on the board of Tenaga Nasional, Telekom, Mara, Perbadanan Usahawan Nasional Berhad, Tabung Haji, PNB, government officials told The Malaysian Insider.

A list of vacancies currently available and positions soon to be available in GLCs and government agencies is being prepared for the PM.

Those in the running for chairman positions are former Federal Territories Minister Raja Nongchik, former Deputy Finance Minister Awang Adek as well as veterans Datuk Nur Jazlan Mohamed, Tan Sri Rais Yatim and Datuk Azeez Rahim.

The politicians to be rewarded are a mixed bag. Some, like Raja Nongchik were defeated in the general election but are still viewed by Najib as allies and likely candidates for the next general election.

Others, like Azeez of the Putera Umno wing were elected as Members of Parliament but could not be appointed to the Cabinet. And then there were a few who did not create a fuss when asked to make way for new talent and not contest the elections.

In the past, prime ministers were wary of putting too many politicians on the board of GLCs, upset that their inclusion could result in a clash of cultures and priorities with the professional management and ultimately lead to poor performance of those companies.

But Najib is having to embrace a new approach for two reasons – the long line of Umno politicians outside his office since the May 5th general election and his own party elections later this year.

In at least two occasions recently, the PM used his discretionary powers to recommend a chairman for two GLCs, overriding the list of choices offered by the incumbent GLC executives.

It’s payback time as PM dishes out goodies to Umno loyalists
June 29, 2013 – TMI


Education in Sarawak – Explain why no money, Muhyiddin?

Where’s the truth in BN’s ‘Janji Ditetapi’ when there’s no money to repair and maintain schools in Sarawak, asks parents in rural Sarawak.

KUCHING: The Education Ministry has no money to repair and maintain schools in Sarawak and that now appears to be a fact especially since the allocations for Sarawak and Sabah in Budget 2013 have been cut down to 20% of its previous amount.

In last October’s Budget 2013 announcement, education allocations for Sarawak and Sabah in 2013 stood at RM98 milllion. It was RM424 million in 2012.

If this sharp drop didn’t hit the folk here then, it has now.

SMK Bau, the oldest school in Bau, with 1,990 students and 550 borders, is in dire need of funds.

So adverse are the conditions in the school that poor rural parents worried about their children’s safety are doing their own repairs to the bunkers and lockers in the school.

How is Education Minister Muhyiddin Yassin going to deal with the startling disclosure that numerous submissions by the school to his ministry for funds had elicited a negative response?

“It’s meaningless to these parents… it is near impossible for the rakyat in Bau to find meaning and truthfulness in the BN government’s slogan ‘People First, Performance now’ and ‘Janji Ditetapi’,” said Mas Gading PKR division member Boniface Willy Tumek.

Tumek said it was imperative that Muhyiddin find the money to do the needful for schools in Sarawak, especially SMK Bau.

“We are deeply disappointed with the attitude of Muhyiddin, who is also Deputy Prime Minister, towards rural schools in Sarawak and in particular, their insensitive attitude towards SMK Bau.

“We call upon Muhyiddin to immediately allocate sufficient funds to enable SMK Bau and all other schools in Sarawak to carry out urgent and necessary repair and maintenance works.”

Sarawak still ‘backward’

According to Sarawak PKR chief Baru Bian, SMK Bau’s condition was was only a “tip of the iceberg”.

“Now we are talking about secondary schools. Last time we raised the conditions of primary schools in Sarawak. Despite getting to the 50th year in Malaysia, Sarawak has not gone very much up the ladder of development.

“Education is crucial for the development of the state. It is also crucial for the development of a community,” he said, adding that the state government should assist the federal government in education.

Explain why no money, Muhyiddin?
Joseph Tawie
January 4, 2013 – FMT


Think-tank: RM1 trillion debt by 2020 a possibility

Budget 2012

Continue reading ‘Think-tank: RM1 trillion debt by 2020 a possibility’


Guan Eng warns of debt aches from sweetened Budget

KUALA LUMPUR, Oct 12 — Putrajaya risks worsening the country’s public debt with its spendthrift “election budget” and will likely miss budget gap projections for 2012, DAP secretary-general Lim Guan Eng has said.
While welcoming federal aid to the poor, Lim, who is also Penang chief minister, questioned how the Barisan Nasional (BN) government would fund its “goodies”, given the weak global economy and lower Petronas dividends next year.

“For this reason, the federal government’s target of reducing the budget deficit from RM45.5 billion this year to RM43 billion in 2012… is unlikely to be reached.

“Revenue collection is overly optimistic and may result in higher federal government debt to fund the deficit spending,” he said in a statement today.

Lim said Malaysia’s debt-to-GDP ratio had steadily increased over the years, from 53.1 per cent in 2010 to an estimated 54.8 per cent next year, pointing out that this was “dangerously close” to the 55 per cent cap imposed by Putrajaya.

He added that, unlike BN’s alleged voter enticement through deficit spending, Pakatan Rakyat (PR) states only funded aid from budget surpluses accumulated through good governance.

“PR does not give money to the people from borrowed money, which ultimately has still to be paid by the people,” he said. “PR state governments give money from budget surpluses where the people… are not required to repay back in future.”

Guan Eng warns of debt aches from sweetened Budget
12 October 2011 – MI

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We cannot afford ridiculously expensive RM55 Billion ECRL!
All that is necessary
for the triumph of evil
is for good men
to do nothing.

- Edmund Burke
When the people
fears their government,
there is TYRANNY;
when the government
fears the people,
there is LIBERTY.

- Thomas Jefferson
Do you hear the people sing?