INTRODUCTION The government has played a crucial role in ensuring that the nation’s wealth is enjoyed by the citizens in a fair and equitable manner. Thus, it’s becomes the responsibility of the government to plan for the citizens. Due to the global economic crisis that affected our countries, it makes difficult for the government to plan wisely. However, today global economic crisis has showed a strong sign of recovery and this requires the government to plan the resources wisely. The resources are plan and present as a budget. Every year, Ministry of Finance is responsible for planning the budget for the citizen. Budget 2010 was presented by Minister of Finance or our Prime Minster, Dato’ Sri Mohd Najib Tun Razak on 23rd October 2009 at Dewan Rakyat. The theme of Budget 2010 is “1Malaysia, together we prosper. Budget 2010 is the last budget for 9th Malaysian Plan. It is the foundation of the development of new economic model and a precursor to the 10th Malaysian Plan. Malaysia has successful in transforming its economy form agriculture based to the industrial based. Now, Malaysia is moving to the new economic model. This new economic model is based on innovation, creativity and high-value added activities to remain competitive in the global economies. Innovation is an important agenda for Malaysia, as the government will transform Malaysia through comprehensive innovation process. The innovation includes private and public sector governance, societal, urban, rural, corporate, industrial, education, healthcare, transport, social safety net, and branding innovation. The government is serious in implementing those innovations to promote Malaysia to be in advanced economy.
Budget 2010 focuses on the well-being of the citizens and achievements of National Key Result Areas (NKRAs). This budget is also emphasize on advancing the role private sector as the driver of economic growth, developing high-skill human capital, and increase the efficiency of the public sector. There are three strategies that are focused by the government on this budget which are driving the nations toward a high income economy, ensuring holistic and sustainable development, focusing on the well-being of the citizens. There are so many programs that are implemented by the government to run those strategies such as strengthening ICT industry, PERMATA, advancing agriculture sector, and so on.
DEFINITION Innovation is a change in the thought process for doing something, or the useful application of new inventions or discoveries. It may refer to an emergent changes in thinking, products, processes, or organizations. The goal of innovation is positive change, to make someone or something better. Due to innovation it may leading to increasing in productivity which is the fundamental source of increasing wealth in an economy (www.businessdictionary.com). In the organizational context, innovation may be linked to performance and growth through improvements in efficiency, productivity, quality, competitive
positioning, market share, etc. All organizations can innovate, including for example hospitals, universities, and local governments. Each organization must constantly change with the current situation. If it is still a long notch with no change to excellence, then it would lose in competition. While innovation typically adds value, innovation may also have a negative or destructive effect as new developments clear away or change old organizational forms and practices. Innovation can be described as the result of some amount of time and effort into researching an idea, plus some larger amount of time and effort into developing this idea, plus some very large amount of time and effort into commercializing this idea into a market place with customers.
FEDERAL GOVERNMENT BUDGET 2010
The pie chart above shows the Malaysian Federal Government budget for 2010. The components of government budget comprises of planned revenue and expenditure of the government. The estimated revenue for the year 2010 was RM 189,499 million. This showed a decreased in government revenue as compared to year 2009. There are 6 sources of Malaysian government revenue which are from income tax, borrowing and use of government assets, export duties, import duties, non tax revenues and other taxes, and indirect taxes. The income tax was the largest sources of revenue which is 38.3% from total revenue. Non-tax revenue was 25.4% of the
total revenue where it comes from various sources such as licensing, registration payment, and permits, payment of services such as court, port, rental, and any others. The income that gained from indirect taxes was about 12.9%. The government borrowing and the use of government assets were about 21.7%. The other two revenues were import and export duties, 0.9% and 0.8% each. The second component of budget is the expenditure. The expenditure of Malaysian government was divided into two parts which are operating expenditure and development expenditure The operating expenditure is the expenses incurred by the government to finance the operation of the government. The estimates operating expenditure for year 2010 was RM138, 279 billion. It covered the emolument (RM 42.2 million), debt service charges (RM 15.9 million), supply and services (RM 20.8 million), pension and gratuities (RM 10.8 million), grants and transfer to state government (RM 4.9 million), subsidies (RM 20.8 million), and other expenditure (RM 22.7). In the other hand, for the development expenditure, the estimated expenditure for 2010 was RM 53,220 million. The development expenditure refers to the expenses incurred by the government to develop the country. The development expenditure is divided into four major sectors which are economic, social, security, and general administration. This development expenditure also includes government saving for the contingencies. For the year 2010, government had allocated RM 25.4 billion for economic sector that will cover infrastructure, industry, and agriculture development. For social sector, a sum of RM 20.3 billion was provided to improve the education, health, welfare, and community development. For security sector, RM 3.7 billion had been provided by the government to develop the security system such as defence and
internal security. For general administration, government had allocated RM 1.8 billion for the development of general administration of the country. Lastly, for the contingencies, government had allocated RM 2000 billion. The purpose of these contingencies is to prepare if something happen to our country.
INNOVATION STRATEGIES IN BUDGET 2010
Innovation in Public and Private Sector Governance
The essence of the 2010 Budget a lot written and implied. To ensure that all the three strategies it is achieved. First, to drive the country towards high-income economies. Second, to ensure a holistic and sustainable development and final, wellbeing of the people. In order to achieve the first and second strategy it requires the close cooperation of public and private sectors. The result is the well-being of the people. Two factors that should be considered to be achieved first and second strategy are to strengthen governance and boost innovation, creativity, productivity and value added in the two sectors. In the context of public services, innovation can be implemented in various aspects including customer management, work culture, strategic management and organizational leadership, human resources, finance and assets, information and communication technology (ICT), project management and development 4.1.1 Implementation of Privatisation Initiatives
This initiative where government will reduce involvement in economic activities in areas where it competes with private sector. This second wave of privatisation aim to enables companies to operate more efficiently as well as reduce their financial
dependence on government. For this government will privatise companies under Ministry Of Finance and other viable government agencies. Therefore, through this privatisation it will enable government to enhancing governance as it will lessen the burden of government as through privatization under Ministry of Finance, the GLC’s and other agencies did not fully independent in government like in the past when its end up to force government to help pay its debts receivables (bailouts), amounting to hundreds of millions of dollars. Thus government can focusing in providing a better services in others fields that is more important such as education and so on. 4.1.2 Combating Corruption
The efforts aim at enhancing confidence and public perception, eliminating corruption among enforcement and public officers as well as to ensure Government Procurement procedure are followed. First: Formulate a Whistle Blower Act to encourage informers to disclose corruption and other misconduct. Second: Establish 14 Special Corruption Sessions Court and 4 Special Corruption Appeal High Courts. Three: Enhance the image of Malaysian Anti- Corruption Commission and also organising International Conference on combating corruption, and also awareness campaign through mass media. 4.1.3 Intensifying Government Delivery System
In order to intensifying government delivery system, there are various innovation has been made. Firstly, PEMANDU was established to monitor the implementation of
Government Transformation Programme. It aims at enhancing the efficiency and transparency of government machinery. Secondly, government also will continue to strengthen public training institution to produce high quality and knowledgeable civil servants. On the ground of this INTAN Bukit Kiara will be upgraded to a school of government with autonomy power. Last but not least, the establishment of cross fertilisation program between government department and GLC’s that aim to provide exposure and understanding on roles and responsibilities between both parties. Through this program it will place the government officers in private companies and international agencies. 4.2 Education Innovation As in the second strategy of budget 2010 is to ensure holistic and sustainable development to enable the country to become a high-income economy, it requires a high quality human capital with suitable skills. Thus to produce a high quality human capital, innovation in education is important. In line with it, 4.2.1 Expanding access to quality and affordable education
Government will allocate RM 30 billion for primary and secondary education. The allocation includes emolument, student assistance and scholarship program, construction of 80 new schools as well as 1,100 additional blocks. In addition a sum of RM 1.1 billion is provided to renovate and upgrade schools nationwide, especially in Sabah and Sarawak. Through this 4 NKRA sub components will be given attention. First: Strengthening pre-school education, where government will
incorporate pre- school education as part of mainstream national education system by increase participation rate of children 5 and 6
years old. For this an allocation of RM48 million will be provided to renovate all facilities and pre school curriculum under KEMAS as well as provide training and courses to government and private pre school teachers. Second: Increase literacy and numeracy rate, this is where government aim to ensure that 100% of all normal school children will master basic literacy and numeracy after 3 years of schooling. The allocation of RM 32 million will be allocated to prepare special modules for student and teachers and special training program for teachers. Three: Creating High Performance School, government will identified schools as high performance school (SBT) to focus on academic excellence, overall student’s achievement, including discipline, cleanliness as well as curriculum. The government targets 20 schools as SBT with an allocation of RM 20 million. Fourth: Recognizing school principals and head teachers, where government will ensure that schools are managed and administered professionally by principal or head teachers. In line with this, New Deal or Bai’ah will be introducing as an appreciation of contribution and performance. The government will determine the performance targets that must be achieved and rewards in term of monetary and non-monetary as well as autonomy will be given if achieved the targets. 4.2.2 Expanding PERMATA program
This program will emphasise on early childcare and education in an integrated and organized. Government has provide allocation of RM100 million to implement the following : First: PERMATA Negara involves early childcare and education program for children under 5 years old. A guideline will b provided in coordinating curriculum, training and qualifications of trainers at children centres. Second: PERMATA Seni, which will provide training for talented students in performing arts implemented by Ministry of Information,
Communication and Culture. Third: PERMATA Pintar, to guide students with extraordinarily intelligence to excel. This will be implemented by UKM in collaboration with the university of Johns Hopkins US. The first intake will be on 2011. Fourth: PERMATA Insan, aims to educate students to understand, and practice the fundamental of Al-Quran. This program will be implemented by Universiti Sains Islam Malaysia for students between 9 to 12. 4.2.3 Strengthening Public Higher Education Institution
This is an effort to strengthen public higher education institution (IPTA) in order to become more competitive and improving in their world ranking. A greater autonomy will be given for them in managing finance, human resource, administration, student intake and income generation ie IPTA are allowed to establish subsidiaries to generate revenue. Government also will linnet the rules and regulation and give opportunity to IPTA to generate their own income. This also will reduce the financial dependence on government. But the income
generation activity by IPTA will be observed by government to ensure it not jeopardize their core business of producing quality human capital.
Economic Innovation In advancing towards a high-income economy, government will take an approach that based on innovation, creativity and high value added activities. This approach will increase the more than double per capita income of citizen in the next 10 years. 4.3.1 intensifying Foreign Direct Investment
Through this strategy, Khazanah Malaysia Berhad and Permodalan Nasional Berhad will enhance the collaboration with foreign investor. In line with this the government will intensify efforts to attract FDI by allowing equity ownership in companies and joint ventures in local project. Presently an aggressive step has been taken in order to attract investors from Middle East, China and India. Currently investor from Saudi Arabia has invested USD 1.5 billion in a high impact project in collaboration with 1 Malaysia Development Berhad (1MDB), a government-owned sovereign wealth fund. GLC’s and Private sector companies also must enhance their social responsibility. In line with this, 1MDB will establish fund total RM100million. 4.3.2 Advancing Agriculture Sector
This sector has significantly contributed to the income of people in rural area and to economic growth. This sector has the potential to generating income for citizen. Thus the transformation of this sector needs to be intensified from the cultivation to marketing the products. On the ground of this, this program were aimed at attracting
more young entrepreneurs, encourage best practices agriculture, and upgrade agriculture infrastructure. RM 6 billion will be allocating for this sector. the program that will be taken under this program are: First: Implement the incubator Program; this is to train and guide youths and graduates to be successful agro- entrepreneurs. Second: Modernize the aquaculture industry; this also will provide a training scheme for aquaculture breeders with focus on production of fish fry and ornamental fish Third: Develop basic infrastructure: This step will develop a basic infrastructure of livestock farm and establish supply chain for production of beef and mutton. Fourth: Upgrade and improve drainage and irrigation infrastructure in paddy fields involving 180,000 farmers with an allocation of RM137 million. In line with all the programs, efforts are being undertaken to establish Federal Land Development Authority (FELDA) will be as national food storehouse and settlement for large scale food production. FAMA will facilitate the marketing of these products. In addition to ensure agriculture products are marketed abroad effectively, the cargo Facilities will be upgraded, and MAScargo will upgrade air cargo facilities for export Of perishable agriculture products.
Enhancing Implementation of Public-Private Partnership Initiatives
Public- Private Collaboration will be enhanced to enable the private sector to spearhead economic growth. The high impact project will be taken jointly with the cooperation among private and public sector. The role of the government is in order to provide and facilitate the provision of basic infrastructure to ensure the project viability. The project that will be undertaken in 2010 is the development of an Integrated Immigration, Customs and Quarantine Complex (CIQ) in Bukit Kayu Hitam, construction of 6 UiTM Campuses and the development of MATRADE Centre. 4.4 Societal Innovation
The government is very serious towards the welfare of the citizens. This is the essential responsibility of the government towards the citizens. The government should gives priority to the citizens either in social or economic sector. 4.4.1 Expanding Public Health Facilities
The health problem becomes the important agenda of the government. That is why the government allocated RM 14, 783 billion on the public health. This allocation is to manage, build, and upgrade the hospital ad clinic in Malaysia. For year 2010, government had planned to construct and upgrade the hospitals in certain areas. The construction and upgrading the hospitals covered the area of Kluang, Bera, Shah Alam, Alor Gajah, and Tampoi. Besides that, Malaysian government will introduce community clinic service in the urban area known as 1Malaysia clinic. This community clinic service is similar with the “klinik desa” at the rural area. The 1Malaysia clinic is located at the housing area to enable the people to get basic health treatments.
Improving Public Transport Malaysian government also place the urban public transportation as one of the
NKRA to assist the public I their daily activities. This is because the effective and efficient public transportation can increased productivity and reduced the traffic congestion. Among the step taken by government in enhancing public transport is by speed up the establishment and operation of the “Suruhanjaya Pengangkutan Darat Awam (SPAD) as the authority to monitor and enforce service standards and planned for the long term urban public transportation. The SPAD is expected to operate in 2010. Besides that, government had set up new 8 Electric Multiple Unit (EMU) and upgrading the 9 EMU. This is done by the KTMB to increase the efficiency of the commuter service. Furthermore, “Syarikat Prasarana Negara Berhad will be responsible to acquire 35 units of Light Rail Transit (LRT) for Kelana Jaya-Taman Melati line. There are 4 units of train that have been delivered and currently operating, while 22 units will be delivered in 2010, and the remaining will be delivered in 2011. 4.4.3 Eradicate Hardcore Poverty The government is committed in eradicating hardcore poverty in Malaysia I the year 2010. In order to eradicate poverty, government had identified 50,000 units of hardcore poor households and 4,000 “Orang Asli” household that are registered under eKasih program. Government had provided the opportunities for skill training and income generating program to reduce hardcore poverty. Some of the measures taken by the government are distributing federal welfare assistance on the first day in every month starting on 1st September 2009 for peninsular Malaysia, and 1st January 2010 for Sabah and Sarawak. Besides that, government is also continuing “Skim Program Lonjakan Mega” in Batang Sadung and Batang Lupar, Sarawak. The
government has allocated RM 141 million for this program. This program will help 5,600 family from hardcore poverty.