(The Selangor Chinese Assembly Hall, Wednesday): Prime Minister Datuk Seri Abdullah Ahmad Badawi’s 2007 Budget is called the People’s Budget because of the tax relief, reduction in corporate tax by 2% in 2008, increase in benefits and cancellation of exam fees and increases in development allocation by RM 11 billion or 31% from RM 35.5 billion to RM46.5 billion. All the tax relief and and reduction in corporate tax would cause the government to lose RM 1,138 million and after incur total net revenue losses of RM 973 million.

However the People’s Budget is one that increases the disposable income of ordinary Malaysians, especially for lower and middle-income groups. Instead the 2007 Budget has taken a different approach by increasing tax relief and reducing costs instead of increasing pay or disposable income. What is the use of giving tax relief when we do not earn enough to pay income tax? Having more income and paying more income tax is preferable to having not enough income to pay income tax.

The 2007 Budget should be termed as the Pre-Election Budget when its heavy spending in the construction sector is clearly designed to win support amongst UMNO members in his titanic struggle with his predecessor, Tun Dr Mahathir Mohamad. We still remember Mahathir exempting payment of income tax in 1999 after sacking Anwar Ibrahim as Deputy Prime Minister to win support amongst the people in the face of huge street demonstrations. Pak Lah appears to copy the same approach in facing the challenge from Mahathir until the 2007 has all the hallmarks of Mahathir buying support.

What is there for the ordinary wage-earner or small businessman. Unless one is a civil servant, there is nothing to look forward too. Bonuses of a minimum of RM 1,500 is not accompanied by pay rise. If it is the People’s Budget then the RM 159.4 billion should give value in cash and in government services of RM 6,000 for every 26 million Malaysian.

The RM 159.4 billion comprise 112.9 billion in operating expenditure (RM 4,342 each) and RM 46.5 bilion development expenditure(1,788 each). Do we get value for money from the services provided by government agencies commensurate with RM 4,342? Or direct benefits amounting to RM 1,788 in development expenditure. With the abuse of millions of ringgit of tsunami aid, shoddy construction work and poor government service in basic amenities, Malaysians are not happy.

Money could be better spent by increasing disposable income for Malaysians to deal with rising inflation and living costs, whether in the form of pay rise or government grants or distribution of Petronas profits. The government receives a total of RM 53,730 million or 40% of the estimated government revenue of RM 133,843 billion in 2007:

·        Petroleum income tax of RM 24,693 million;

·        export duties of crude oil of RM 2,643;

·        petroleum and gas royalties of RM 4,395 million; and

·        Petronas dividend of RM 22,000 million contribute from our production of oil.

Would not this money be better used if directly given to the people? Since Petronas was formed in 1974, its earnings have exceeded RM 500 billion as compared to Singapore which does not have a drop of oil. If a non-oil exporter like Singapore can give S$2.6 billion (RM 6 billion) cash under the 2006 Budget to all Singaporeans, especially the poor, why can’t the Malaysian government do so when Petronas has earned nearly RM 500 billion. Oil importer Singapore has given $10.675 billion  (RM 24 billion) directly to its people since 2000 as compared to Petronas which has not given a single cent.

This year its pre-tax profits hitting RM70.2 billion jumped 21 per cent compared to RM58 billion in the previous financial year ending 31 March 2006. Net profit rose to RM43.6 billion from RM35.6 billion. To get an idea of Petronas' size, the net profit of Malaysia's largest listed company, Malayan Banking, was just RM2.5 billion. This year alone, the oil company has paid the government a total of RM41.7 billion - equivalent to what it would take to build 23 Kuala Lumpur City Centre (KLCC) complexes, including the Petronas Twin Towers.

Instead of taxing Petronas, DAP suggests that the pre-tax profits be distributed to every Malaysian to a maximum of RM 2,000 each with the remainder given to Petronas for capital investment purposes. If an oil importer Singapore can give tens of billions to its citizens why can’t an oil exporter like Malaysia do so.

After distributing Petronas profits, the government should stop all fuel subsidies and other forms of subsidies. This will save tens of billions of ringgit. The government spent RM 18 billion this year subsidizing fuel and Petronas tens of billion in energy subsidies in TNB, Independent Power Producers(IPPS) and other social obligations. Savings from such subsidies will not only make up the profits distributed but also help to increase efficiency, competitiveness and productivity by having competitive pricing that freely and fairly reflects the true value.

UMNO Youth Deputy President, Prime Ministerial son-in-law and millionaire Khairy Jamaluddin has been severely criticised by former Prime Minister Tun Dr Mahathir Mohamad for abusing his powers and powerful connections. To distract attention and save himself politically, millionaire Khairy has decided to play the dangerous game of racial sentiments by:-

·        warning the Malays to unite or else the Chinese would take advantage of their weaknesses by making more demands; and

·        championing the plight of poor Malays and claiming that Penang Malays are marginalized and the failure to achieve the targeted NEP’s 30% bumi equity.

Millionaire Khairy is lying that the NEP has not achieved the 30% bumi equity. In fact bumi and Malay interests in the market capitalization of Bursa Malaysia (BM) exceeds 45%. With foreigners at 30%, this means that non-Malays only control 25% of BM’s market capitalization. Malaysians, especially poor Malays, should not be extending the NEP to attain the 30% bumi equity but seek to identify who are the rich Malays who control 45% or RM 325 billion of Bursa Malaysia’s market capitalization.

There is neither logic nor reason talking about Malays being marginalized in Penang with the lowest poverty rate in the country at 0.3%. What about poorer Malays living in the poorest states with the highest poverty rate of Sabah(23%), Kelantan (10.6%), Terengganu(15.4%), Kedah (7%) and Perlis (6.3%)? And what about other non-Malays who are poor? Not every Chinese, Indian Kadazan or Iban is a millionaire like Khairy.

Malaysia has the worst income inequality in South-East Asia. The share of income of the bottom 40% of the population declined from 14.5% in 1990 to 13.5% in 2004 whilst the share of the top 20% of the population increased from 50% in 1990 to 51.2% in 2004. The gini coefficient, a measure of income inequality, has worsened within the respective ethnic groups for the period 1999 to 2004.(9^th Malaysian Plan)

·        Malaysia:        0.452 to 0.462 (+0.10)

·        Bumiputera:   0.433 to 0.452 (+0.19)

·        Chinese:         0.434 to 0.446 (+0.12)

·        Indians:           0.413 to 0.425 (+0.12)

The income inequality between rich and poor bumis are the worst compared to other ethnic groups. That is why there are many poor Malays and non-Malays who neither own shares nor APs.

ASK NOT FOR THE NEP WHEN THE 30% MALAY CORPORATE EQUITY HAS BEEN ACHIEVED, BUT ASK WHO ARE THE MALAYS WHO OWN 45% OF THE MARKET CAPITALISATION OF BURSA MALAYSIA AT THE EXPENSE OF POOR MALAYSIANS, MALAYS AND NON-MALAYS.

(06/09/2006)