Now that most people whose opinions matter have said their piece, my own conclusions are as follows:
1.There is no restructuring of the economy to improve efficiency, productivity and innovation. There are minor tweakings to please some voters, such as the abolishing of duties for 300 consumer items eg. handbags, footwear, apparel etc. No more sales tax for handphones. Currently, many items such as watches and perfumes are duty-free already. Shopping paradise? I believe if I take my money to the US and shop at Wal-Mart, I will get much more value for money despite all the duties being abolished here. As it is, even though the US dollar has gone down tremendously against the ringgit, imported goods are still as expensive as ever.
2.By allowing 100% loan to those earning RM3,000 and below to buy their first home, the government is tacitly admitting that prices of homes are beyond the reach of most young people. And yet, nothing is done to address the fundamental problems ie. Low-income and sky-rocketing house prices. This and the waiver of 50% stamp duty for disposal of first houses are akin to bandages – short term measures that don’t go into the real issues. Not raising toll rates for the next 5 years seems like something to celebrate until you realize that the Government has to compensate PLUS for that. No prizes for guessing where the money for the compensation is going to come from.
3.The controversial RM5 bil 100-storey tower. Already attracting a lot of opposition, this tower is clearly a monument to the PM’s reign. Mahathir had the 88-storey Petronas Twin Towers, so the next tower must be taller. Suggestion: Why not make it 150-storey so that it’s the tallest in the world? Best of all, MCA head honcho, Datuk Seri Dr Chua, couldn’t help remarking: “Hopefully, it will not become a white elephant”.
4.Last year’s Budget has been described by some as uninspiring. This time, it manages to outdo itself by relying on super mega-projects in Greater KL to stimulate the economy. Super mega projects such as the RM43 bil new KL MRT project and the RM26 billion KL International Financial District are good as at least they add value to KL by making it a megalopolis. People do judge a country by the capital city after all. But, as some commentators noted, will there be transparency in the award of the projects? What about leakages that always accompany such mega projects – how will these be addressed? Analysts have also noted that the source of funding for these mega-projects remained unclear. Interestingly, his former Information Chief pointed out that these items should be in the Malaysia Plan and not the Budget.
5.There is no removal of tariffs and permits which prop up a distorted and uncompetitive economy. It basically maintains the status quo of ignoring the NEM, the 80% plunge in FDIs last year, leakages and wastage. There is no clear road map to transforming us into a high-income economy. Does anyone have a clear idea of how building a few mega projects will raise the income of everyone? Who are we bench-marking against? Laos? Myanmar? Cambodia? In some ways, we are even worse-off than aforementioned countries. We are the ASEAN country with the highest car prices and the highest alcohol prices.
6.There are no personal and corporate tax cuts. Measures to address property speculation and removal of withholding tax on real estate investment trusts for foreign investors were also not dealt with. Legal and regulatory reforms are more important than building hard infrastructure to attract investors. What most people want are less taxes, trained human resources, an efficient government, a fair judiciary, less corruption, safe and green environment, affordable housing and social safety nets. Instead, we now have to pay more for service tax for restaurants, hospitals and car rentals which will increase from 5% to 6%. We will also be levied service tax on paid television broadcasting services.
Salient Points of Budget 2011 (Total Spending: RM212 bil)
Toll highways and PPP projects
The government plans to build six highways Toll rates on four highways owned by PLUS Expressway Berhad will not be increased for the next five years. Greater KL MRT to be implemented from 2011. A new 100-storey landmark, Warisan Merdeka, to be completed in 2020.
Tax incentives/hike
Import duties for around 300 preferred consumer items to be abolished. Service tax to be imposed on paid television broadcasting services. Service tax for restaurants, hospitals and car rentals to be increased from 5% to 6% Sales tax will be exempted on all types of mobile phones.
Housing and Community
Stamp duty exemption of 50% for first time house buyers on a house priced less than RM350,000 RM350mil to implement various programmes to combat crime
Education
RM576mil allocated for scholarships for those wishing to further their studies. RM213mil allocated to enhance proficiency in Bahasa Malaysia and the English Language.
Health
RM15.2bil to build new hospitals and increase the number of doctors, nurses and supplies of medicines and equipment. Another 25 1Malaysia Clinics will be established, bringing the total to 76.
Environment and green tech
RM1.9bil to finance environmental preservation projects. To further encourage ownership of hybrid cars, import duty and excise duty exemption will be extended until Dec 31, 2011
