Budget 2021 – Here’s What The Backdoor Government Does Not Want You To Know

Financial planning 101 say if you consistently spend more than you earn, it becomes the secret recipe of huge debt. In the case of (previous) Barisan Nasional government, not only did they spend lavishly beyond their ability to grow the economy, they also plundered and stole money from the national coffers. Everything looked rosy until an economic crisis arrived.

When an economic crisis hit, the high debt accumulated would cripple a government. The only workaround is to borrow more money (hence more debt).When a government spends more money than it earns during a fiscal year, it creates an imbalance called the“budget deficit”. The opposite of a budget deficit is a budget surplus. For obvious reason, a surplus is always better than a deficit.

From 2009 to 2020, neighbouring Singapore – except 2009 and 2020 – consistently registered budget surpluses in relation to GDP. That means out of 12 years, the country earned money in 10 years. Of course, the year 2009 saw its deficit due to 2008-09 global financial crises, also known as the Great Recession, which originated from the U.S. subprime mortgage crisis.

Singapore - Budget Balance In Relation to GDP - 2009-2021 - Chart
Malaysia - Budget Balance In Relation To GDP - 2009-2021 - Chart

Malaysia, on the other hand, proudly and consistently registered “budget deficits” from 2009 to 2020 in relation to GDP.That means in the entire 12 years, the country spent more money than it was able to earn. Former Prime Minister Najib Razak was fond of bragging that under his administration (2009-2018), the country did not plunge into a recession during the crisis. He lied, of course.

In 2008, Malaysia did plunge into recession after two straight quarters of contraction, before its economy expanded 4.8%. However, the rebound was primarily due to higher government spending. In fact, according to the central bank’s governor Zeti Akhtar Aziz, two stimulus packages amounting to RM67 billion or 9.9% of GDP were injected, in addition to lowering lending rates to benefit private consumption.

Do you also know that Petronas was forced to pay RM74 billion dividends in its financial year ended March 31, 2009 to help the corrupt Najib administration during the 2008 global financial crisis? As Asia’s third most trade-dependent economy, after Singapore and Hong Kong, Malaysia had been hurt by the global recession as overseas demand for its exports dropped like a rock.

Petronas Station - Petronas Twin Towers

To spend money that the country didn’t have, then-PM Najib had to borrow. So, Mr Najib moved the goal post by raising the country’s debt ceiling from 45% to 55% in July 2009. Although this is a self-imposed limit, the problem with such move is that once the debt ceiling is raised, a corrupt and incompetent government can never bring it down to the previous level again.

In August this year, like Najib, the clueless backdoor government of Muhyiddin Yassin again raised the debt ceiling from 55% to 60% as part of temporary measures to mitigate the effects of the Covid-19 pandemic. Taking a page from Najib’s playbook, not only Muhyiddin raised the debt ceiling, but also rolled out four stimulus packages totaling around RM305 billion – the largest ever.

On Friday, the Budget 2021 revealed by Muhyiddin’s administration saw the largest budget ever presented in history – an RM322.54 billion budget – RM25.54 billion more than the previous 2020 budget. Of course, 2021 will be another “budget deficit” year for Malaysia.But the most mind-boggling part of the Budget 2021 is the amount of money that the government has to borrow to enable it to spend.

This year’s total revenue is estimated at only RM227.3 billion, a 14% drop from 2019 (RM264.4 billion). The government has somehow been unrealistically optimistic that it could earn RM236.9 billion in 2021. Still, the country has to borrow close to RM100 billion (RM85.64 billion) to meet the ambitious gigantic expenditure of RM322.54 billion next year.

Hilariously, the 2021’s estimated revenue of RM236.9 billion is just enough to cover the operating expenditure, which amounts to RM236.5 billion (73.3% of the Budget 2021 allocation). This portion is to keep the government running, including paying 1.71 million civil servants on government payroll, not to mention the highly paid bloated Cabinet of 72 ministers and deputy ministers.

Interestingly, Muhyiddin government has a new category of expenditure – “Covid-19 Fund” with allocation of RM17 billion (5.3% of Budget 2021). The backdoor government should explain in details the components making up this Covid-19 funding, without which the allocation could be abused and leaked through corruption or kickbacks, as practiced during the Barisan Nasional regime.

Malaysia Budget 2021 - Muhyiddin Yassin

Essentially, the development expenditure of RM69 billion and Covid-19 expenditure (RM17 billion) – amounting to RM86 billion – are the expenses that the government does not have the money to spend and must beborrowed. It’s not rocket science that very soon, even the nation’s revenue will not be sufficient to pay for operating expenditure.

Finance Minister Zafrul Abdul Aziz was extremely optimistic in his budget presentation, claiming the economy will grow 6.5%-7.5% next year, the unemployment rate to drop to 3.3% from 4.2% this year, and domestic demand to rebound to 6.9% in 2021. All these do sound familiar. The current regime talks the same way Najib talked back in 2008-09. Muhyiddin appears to be like a copycat here.

In the first stimulus package during the 2008-09 global financial crises, the then-Najib government allowed employees to reduce their EPF contributions voluntarily from 11% to 8% for two years. Likewise, on Friday, Finance Minister Zafrul also said the employees’ EPF contribution rate will be reduced from 11% to 9% for a period of 12 months effective January 2021.

EPF KWSP - Retirement Savings Scheme - Building

But nowhere were workers allowed to withdraw from theirretirement fund in 2008. Now, after allowing EPF members withdraw from their Account 2 this year, the Budget 2021 says they can drain their Account 1 next year. Muhyiddin government was like saying – “Hey dudes, the government can’t help you, but don’t worry. If you have used up Account 2, you still can drain your Account 1.”

In his budget speech, Mr Zafrul justified that a withdrawal from Account 1 of up to RM6,000 for a period of 12 months (RM500 a month) beginning 2021 is aimed at fighting financial hardship faced by 600,000 EPF members. The government estimated withdrawal from the Account 1, consists of 70% of the workers’ salary contribution designed for retirement, will involve RM4 billion.

Malaysia chief statistician Dr Mohd Uzir Mahidin said last month that August 2020 unemployment rate remained at 4.7% or 741,600 jobless workers in a labour force of about 15.9 million people. But how does current 741,600 jobless workers co-relate to 600,000 EPF members targeted to withdraw from their Account 1?Is the government hiding the real unemployment rate?

Malaysian Workers

Can every EPF member withdraw from Account 1, or only for those who have lost their jobs due to Coronavirus? Before the pandemic, the country’s average unemployment rate was 3.3% – about 500,000 people, including unemployable graduates. Therefore, only 241,600 jobless workers affected by Covid-19, and not 600,000 people, could and would withdraw from Account 1.

To say 600,000 EPF contributors who got retrenched can apply to withdraw RM500 every month for 1 year from their Account 1 would mean an unemployment of 1.1 million (not 741,600). So which is which? In the same breath, if 600,000 workers are affected (either become unemployed or under-employed) it would mean lesspersonal income tax collection next year.

Yet, the finance minister told all and sundry in Parliament that the government expected collection of RM42.4 billion in personal income tax next year, compared with RM35.9 billion in 2020 and RM38.7 billion in 2019. Does it make sense that you can collect RM4 billion moreduring Coronavirus pandemic (when jobless skyrockets) than during a peaceful period?

Similarly, if you talk to business owners, tons of them will tell you they’re making losses every day but have to continue because of rental agreement. Therefore, it’s a wishful thinking for the backdoor government to say they could collect RM64.6 billion in corporate tax next year, more than the RM63.75 billion collected in 2019 (when there was no Coronavirus outbreak).

Sure, there are some goodies in the Budget 2021, but they are nowhere as huge as “dubious” allocations as listed below:

  • RM400 million to abolish Felda settlers’ interest debts – this is actually a bailout after the Malay settlers were screwed up by Najib and his gang members.
  • RM400 million for biodiversity protection – very little information is available for such huge expenditure.
  • RM100 million for NGOs involved in job creation – NGOs do not create jobs, hence this could be a gimmick to divert money to NGOs linked to Senior Minister Azmin Ali
  • RM2 billion to continue Green Technology Financing Scheme 3.0 – nobody has heard any local products which are based on “green technology” or “green economy”, despite having 3 versions of this dubious scheme.
  • RM15 billion allocated for transport infrastructure projects, including Pan Borneo Highway, Gemas-Johor Bahru project and Klang Valley Double Track project – the Pan Borneo Highway (2,083 kilometres) is a project which started as soon as the formation of Malaysia in 1963. Chances are this project can never be completed. It’s either for propaganda purpose or to facilitate corruptions – every year.
  • RM400 million for selected ministries to carry out Research and Development (R&D) – you run R&D to innovate and introduce new products or services. For a government that produces “Doraemon” Minister Rina Mohd Harun, “Warm Water” Health Minister Adham Baba and “TikTok” Higher Education Minister Noraini Ahmad, it’s a waste of money.
  • RM1 billion to encourage investments in technology, including R&D for the electronic and aerospace industries – this is obviously another dubious project.  The last aerospace project – “flying car” – was nothing but a scam cooked up by a half-past-six Entrepreneur Development Minister Redzuan Mohd Yusof.
  • RM3 billion to maintain military assets – should not this parked under Defence Ministry (which has been allocated RM16 billion) instead of outsource national security assets to third parties or cronies?
  • RM4 billion for Islamic Development Department Malaysia (Jakim) – Sultan Ibrahim of Johor previously raised his suspicion over how Jakim spent RM1 billion in annual allocations. But now the same agency that promotes hatred, extremism and racism is getting even more taxpayers’ money without any justification.
  • RMRM6 billion allocated to empower Bumiputera entrepreneurs – clarification as to the real meaning of “empowering” is needed to prevent wastage of money or fund being diverted to political parties like Muhyiddin’s own Bersatu (PPBM).
  • RM5 billion to provide access to quality education to Bumiputera institutions – does this mean education for Bumiputera has zero quality all along, so much so they need to be re-educated all over again?
  • RM1 billion for reskilling and upskilling programmes – back in June, RM2 billion was already allocated for the same programmes to reskilling and upskilling 200,000 youths and unemployed workers. What happens to those people and why repeat the process again?
  • RM7 billion for Skim Jaminan Penjanaan Pekerjaan (JanaKerja) to create jobs and improve skills – exactly what is the difference between improving skills and reskilling or upskilling that the same term is repeatedly re-used again and again to suck up billions of Ringgit of funds?
Doraemon Minister Rina Mohd Harun

The list above, which is just a fraction of expenditures announced during the Budget 2021, is already worthRM38.8 billion of dubious allocations. Drama queen Muhyiddin claimed his backdoor government’s budget was designed to protect people and to drive business and economic sectors. However, not many people were impressed with the budget.

People are questioning the huge allocation of RM81.5 million to the previously scrapped propaganda unit – Special Affairs Department (Jasa). Heck, even Muhyiddin’s biggest ally, UMNO, was shocked with the expenditure to engage and recruit government cyber troopers to bootlick the prime minister. Under the Barisan Nasional regime previously, Jasa was given only RM30 million.

After Barisan was defeated in the May 2018 General Election, the new government of Pakatan Harapan haddisbanded the propaganda department where 300 of its staffs were absorbed into various departments and ministries. But when Muhyiddin betrayed his own government and ganged up with Barisan and PAS Islamist party to form a new government, Jasa was revived.

UMNO Red Shirts Rally Charming Message - Eliminate Chinese SJKC Vernacular Education

In July, the propaganda unit was not only revived, but was enlarged to 500 staff. Jasa was part of the tools used to brainwash ethnic Malays and government servants to hate non-Malays, especially the Chinese, in a continuous effort to promote “Ketuanan Melayu”, the ideology of Malay supremacy espoused by the United Malays National Organization (UMNO).

On average, each of the 500 Jasa staff has an annual allocation of RM163,000. JASA’s former Director-General Puad Zarkashi was paid a monthly salary of RM20,592 – higher than the salary of a minister. In comparison, despite the contribution of frontliners – 100,000 medical staff – they were given a one-off payment of RM500 each for a total of only RM50 million.So much for a caring prime minister.

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