• Madani Sahari

FEDERAL SPENDING - Vital to continue funding long-term development goals

The government's attitude towards federal spending has changed significantly over last few years.

Firstly, there was transformation in the way government revenue was generated through the implementation of the Goods and Services Tax in 2015.

Despite numerous polemics, it is one of the lowest rates for value-added tax in the world, with a high number of zero-rated essential goods and services.

Compared to the previous Sales and Services Tax, revenue increase more than twofold. This increase was due to the introduction of a tax model that allowed for a broader tax collection base, reducing loopholes through more accurate tax reporting and improved measures to combat tax evasion.

Secondly, the age-old subsidy model gradually evolved to allow better targeting of those who really needed them. Along with fuel subsidy restructuring, the government introduced numerous cash returns to the bottom 40 per cent household income group.

However, the impact of this additional government revenue was offset by the appreciation of the US dollar against the ringgit in 2015. It was clear that the nation was highly dependent on imports and the domestic economy, and higher value economies needed to be generated that spurred import substitution.

To add salt to the wound, the drastic drop in oil prices further offset government revenue.

It is therefore significant that a large portion of the 2018 Budget continues the allocation for long-term development goals, with key focus on digitalisation, Industry 4.0 and national transformation by 2050.

For example, RM46 billion, or 16 per cent of the budget, has been allocated for development expenditure. Education received RM61 billion, or 21  per cent, which is much higher compared with countries such as the United States, the United Kingdom and Germany, which ranges between two and 17.6 per cent. Ten per cent of the 2018 Budget goes to healthcare, examplifying our world-class public healthcare system.

Naturally, the benefits of the above do not manifest themselves immediately. It is also rare to be excited about benefits that will come in the future. Not many say they are excited about going to school, but know they must go in order to secure a future of high value. Long-term planning is never sexy. Yet, without it, our upward mobility and competitive edge would definitely be lost.

This year's budget will allow more development enhancement within the automotive industry, in line with Malaysia Automotive Institute's (MAI) four pillars - job creation, career enhancement, business opportunities and business enhancement.

Next year, MAI aims to create 5,000 semi-skilled jobs in line with Technical and Vocational Education and Training. Another 1,730 skilled jobs will be created through MAI's career enhancement programmes focusing on digital engineering, quality management and advanced process design.

More than 300 parts and components manufacturing will undergo enhancement in line with Industry 4.0 in key areas of product design, smart manufacturing and automation capabilities. Futhermore, 1,000 automotive workshops will be enhancement to boost the performance of the after-sales sector.

These programme and the continuation of the National Automotive Policy are geared towards further improving import substitution and exports. Next year, we are aiming to increase localisation to RM11 billion from RM9.5 billion this year, and exports of automotive products to RM13 billion from RM12 billion.

November is that time when businesses start detailing their internal budgets, and it is also when we look at ways to enhance our careers for next year. I invite you to speak to us on further enhancing ourselves to brave the new frontiers of 2018. Speak to us now, and we can get started immediately.

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