by Dr Tan Seng Giaw, DAP National Vice-Chairman and MP for Kepong
in Kuala Lumpur
We urge the Malaysian Government to find out the true reasons why local investors are not investing more in this country. If there is more local investment, our economy can grow faster
On 20 September, 2002, the Prime Minister and Finance Minister Dato¡¯ Seri Dr Mahathir Mohamad said that total public investment increased from nearly RM32 billion in 1997 to RM49 billion in 2001, 24% rising to 31% GDP. In contrast, private investment declined sharply from RM90 billion to RM34.5 billion, 83% down to 59% GDP.
The Finance Minister provides incentives to increase domestic investment, such as reducing the cost of doing business, special rewards for the best national exporters, and managing the non-performing loans. We don¡¯t know whether these incentives will work.
Dr Mahathir believes that a prudent budget takes into account the forecast of revenue inflows that will determine the level of expenditure. He has changed the word belanjawan, the state of expenditure, in Bahasa Malaysia to bajet. He wants to balance expenditure with revenue. To create more revenue, there must be growth. Nevertheless, estimating at least 4% growth for this year is one thing, forecasting 6 to 6.5% growth for 2003 is optimistic. We hope this can be achieved.
The budget for 2003 is RM109.8 billion and the revenue estimate is RM897.93 billion with a deficit of RM about RM20 billion, 3.9% GDP. The 2002 deficit is 4.7% GDP. Dr Mahathir stresses surplus or balance budget, against continued expansionary policies. The Secretary-General, Finance Ministry, hopes that by 2005 we shall have a balanced budget.
Clearly, the world economy is uncertain next year. If we cannot achieve the 6% growth in 2003, then the revenue will not reach RM897.93 billion. Now, revenue from oil and gas is about 20% total revenue. We are watching the effects of the series of fiscal measures.
Why don¡¯t local investors go into components, refineries, machines, cranes, building materials, wood products, high quality furniture, food, paper and so forth? What do the consumers want?
The government thinks that 28% corporate tax is not high. The total effective taxes in other countries such as Thailand are higher. But, people still invest in Thailand. Is it because the Thai market is much bigger?
The Government must find out the real causes of the sluggish local investment. Factors such as declaring Malaysia an Islamic State, the bad attitude of some civil servants, corruption, and quota system continue to cause concern.