KUALA LUMPUR (Nov 11, 2009) : The economy faces a bumpy road in its recovery from the fourth quarter of 2009, Malaysian Institute of Economic Research (MIER) executive director Datuk Dr Mohamed Ariff said today.
"The road ahead is bumpy due to ongoing financial deleveraging, weak consumer and business sentiments and volatile commodity prices," he said at a presentation at the Malaysian 2010 Budget & Tax Planning Conference here.
Although Malaysia was recovering better than many other nations, including some developed ones, there was still room for improvement in government spending.
"Looking at the government expenditure for last year, the predominance of it went to emoluments, which accounted for 24% of operating expenses in the 2009 Budget," he said.
"There is a lot of wastage there, and there is reason to think that goods bought by the government under procurement without open tender are overpriced."
Mohamed said the increase in the 2010 Budget unveiled recently was due to an increased civil service.
"We may have more people that we actually need," he said.
However, he said the main problem was the procurement of supplies and services.
"A lot of money can be saved through an open tender system," he said.
Mohamed also criticised the decision to introduce the real property gains tax at 5% beginning 2010, saying it could have spillover effects by curtailing mortgages, which in turn could have a negative impact on wealth, consumption and Gross Domestic Produce(GDP).
He said the tax may deter foreign investors, who would consider Malaysia as "flip-flopping" in its economic policy, and it may not be effective in curbing asset bubbles in Asian economies.
"Most of the 2010 Budget measures are below the expectations of MIER. Notably, there are no rigorous tax reforms or concrete measures to cut budget deficit," he said.
Mohamed called on the government to consider educating the public in the implementation of Goods and Service Tax (GST), which he said would be a source of income for the government without burdening the people too much.
"Even new economies like Vietnam have GST," he said.
He called for the release of government controls over government-linked companies (GLCs), as it would enhance market liquidity and promote the financial sector," he said.
Quoting former finance minister Tun Tan Siew Sin, he said "the business of the government is not to be in business".
No comments:
Post a Comment