Is Budget 2011 Najibonomics?

OCT 16 — I was tweeting along as Finance Minister Datuk Seri Najib Razak unfolded his second Budget speech yesterday, amidst the usual parliamentary “hecklings”. 

My tweets and interviews sparingly found its way into the mainstream media and as well the alternative Internet-based media portals.  

As I really have something to say rather than having to say something (that’s a minister’s job), it is perhaps best that I put it together in a piece. They say “you could only scratch your back best, yourselves.” 

Be that as it may, if fiscal prudence was what many might have been deluded to believe the FM was committed to do, on the back of 13 consecutive years of fiscal deficit, the Budget was everything except “fiscally prudent”. 

Clearly it was never his intention. Mention of reducing fiscal deficit to 5.4 per cent was relegated to the last minute. His mentioning of reducing it to 5.4 per cent of GDP compared with 5.6 per cent in 2010 (still suspect) was almost tongue in cheek. 

Yes, I understand the many vulgarities of global economic constraints and uncertainties. Yes, I understand that you can’t be cutting back the stimulus packages abruptly or you will slow the economy. Yes, Najib has to juggle and harmonise at times the many “mutually exclusive constraints and demands”. But that’s the defining criterion of a leader! 

“Strategic Approach” in a developmental programme, the budget being the most short-term one, is always top-down driven and not “bottom-up”. 

You listen to the heartbeat of the rakyat insofar as getting feedback about how they respond to your programmes, perhaps of their expectations and hopes, as you are supposed to manage these. 

But at the end of the day and in the final analysis, it’s your call, as the buck stops with you! You can’t blame the rakyat if it fails just because you consulted them and took their propositions. That’s Strategic Planning 101. Leaders lead and take calculated risks!  

Overall, it is a Budget crafted to appease as many a constituency as possible. On that score Najib has done extremely well. He has not forgotten to give adequate “goodies” to all, to inject the “feel-good factor” required to turn around the diminished confidence, especially of the lower-income groups at being short-changed and marginalised.  

There are promises for more money for JKKK, KAFA teachers, imams, Orang Asli, NGOs, youth and women  as well as moratorium on PLUS tolls for five years, and various other “carrots” dangled to the rakyat (read: voters). From that perspective, this conforms to an election budget. 

While it may bring in a lot of immediate “happiness”, the rakyat are quite oblivious of the longer term impact on their lives, of an irresponsibly crafted budget that will boomerang back to them when subsidies are reduced or eliminated to fund the “extravaganza” and the endless “leakages” in the delivery system.  

The last thing a politician should do is to try to appease everyone. Najib has a penchant for that and this Budget speaks volumes. After his admission that the era of “Government Knows Best” is over, his overly populist approach is, at times, very worrying as this had aggravated his predilection for flip-flopping. 

First things first. So where is the Government Transformation Programme (GTP), the Economic Transformation Programme (ETP), much less the New Economic Model (NEM)? If anything I could only see a few EPPs! But they are very big ones. 

Among large construction projects that will kick off under the 2011 Budget are the RM43 billion new KL MRT project; the RM5 billion 100-storey Warisan Merdeka tower; the RM26 billion KL International Financial district; the RM3 billion integrated eco-resort in Karambunai, Sabah; construction of multiple new highways; and the development of the 1,084-ha Malaysian Rubber Board land in Sungai Buloh.

The 2011 Budget was deemed a testimony of Najib’s commitment to reform. Quite sadly, the highlights appeared to be largely big-ticket construction projects rather than commitments to drastically restructure the economy by revamping efficiency, productivity and innovation.

I won’t deny the sprinkling of incentives in the other NKEAs like the Islamic capital market, oil and gas industry, and the advancing green technology. But allocation-wise, they are relatively modest.

So it is, after all, back essentially to “centrally-planned-pump-priming” megalomaniac pursuit of brick and mortar construction and in supposedly Public-Private Partnership initiatives, ending ostensibly and invariably in the government undertaking all the risks of non-delivery.

Analysts noted that the source of funding for mega-projects remained unclear and added that the market is weary of too many federally-guaranteed semi-government entities raising money from the market. So what is new?

Besides, the expectation of further liberalisation as espoused by the NEM of other sub-services, to improve competition while stimulating private-sector participation didn’t get a boost at all. 

The anticipation of the government selling down their stakes to raise revenue and create more liquidity and perhaps also avoiding the imminent “over-crowding” effect in the equity market to encourage more foreign investors also didn’t see the light of the day.  

On the contrary, the talk of Khazanah Nasional and the EPF launching a general offer for PLUS for over RM20 billion, is rife. While I may not be necessarily against it, if it is good for the rakyat, the conflicting and confusing signals Najibonomics is sending to the market is baffling at best and laughable at its worst.  

Little wonder that analysts’ reaction to this Budget is mixed.

The prime minister most ironically insisted that the Budget was designed to meet the aspirations of the public and that the government would not take the easy way out or sacrifice the nation’s long-term interest for short-term popularity.

“We are not dreamers,” he said in his budget speech today. “We are realists. Our success is not mere coincidence but the result of clear and careful planning as well as firm implementation.”

For all the admission of the decade of economic stagnation and the “middle-income trap” that we are stuck in, I honestly have serious problems digesting those last words. Is this budget a Najibonomics?

I rest my case!

* The views expressed here are the personal opinion of the columnist.