Comments on Budget 2023

1. The Budget is expansionary, which is not surprising given that there will be a global
slowdown. But the Budget is not as bold as one had expected it to be. There are no
significant measures to increase government revenue or to undertake fiscal
consolidation. From earlier announcements by the Prime Minister, one had
expected that the budget would tackle these issues and undertake more structural
fiscal reform. Neither is there any attempt to reduce debt.

2. I think the budget has a significant focus on two issues: a) SMEs and b) the
disadvantaged. There are numerous policy measures that are directed to these two
segments of the economy.

3. On the question of hardcore poverty, the Budget has announced two initiatives, STR
and IPR. These two initiatives are well-intentioned. STR and IPR are two good
initiatives to help those who are most disadvantaged. I don't know if they will help
to remove structural problems of inequality, but they will surely be helpful for those
who in the poverty categories. And it will give them some relief.

4. STR is based on cash assistance and it is not tied to any economic activity. while the
hardcore poor surely need assistance, it cannot be on the basis of cash assistance.
besides assistance of up to RM2,500 may have a tendency to make households
complacent. while the intention is good, STR may not be the best mechanism to
alleviate hard core poverty; it may not be sustainable.

5. IPR is an interesting scheme because it encourages the households to come out of

poverty. otherwise, there may be a tendency to be dependent on government aid.
but this initiative is based on employment subsidies and assistance for engagement
in economic activities. the other thing is that activities related to agriculture and
food sectors will receive special priority, which is very appropriate given the shortage
of vegetables and other items.

6. The Rahmah scheme is also an interesting programme. But I cannot see it as being a
sustainable programme to deal with the high cost of food out of home. It is not at a
scale were it can help the bulk of the population, neither does it solve underlying
problems related to the high cost of food items.

7. There are many schemes to assist SMEs. But the issue is in the implementation of
these schemes. Furthermore, SMEs were affected by Covid, and may now, again, be
affected by the global slowdown. So, I am not sure to what extent they will be able
to take advantage of the credit facilities.

8. The withdrawals from EPF have been a pressing problem, reducing the savings that
people will have for their post-retirement phase. However, this issue is not
addressed with the seriousness it deserves. Putting RM500 in their EPF account will
not help people tide through difficult times or make sure that they have enough in
their post-retirement period.