It is worrying that the Pahang state government owes RM1.388 billion to the federal government, which constitutes the highest debt among all states in Malaysia.
Based on the Auditor-General Report 2019: Federal Government Financial Statements, as of December 31, 2019, Pahang’s arrears to the Federal Government amounted to RM1.388 billion, with a default period ranging from 1 to 38 years.
Pahang’s debt is therefore the highest in the country, and Pahang is also one of the states with increased debt in year 2019.
Although the Auditor-General report did not specify the source of debt, according to official information and records in previous years, Pahang’s debt to the federal government was mainly for upgrading water supply equipment and implementing water supply restructuring plans.
Even though the Menteri Besar of Pahang repeatedly said that the state government’s financial situation is sound, its record in the past year shows otherwise.
In order to solve its financial problem, the state government has implemented a series of taxation measures, including a substantial increase in land taxes of business, industrial and agriculture.
Such extreme measures adopted by the Pahang state government that killed the goose that lays the golden eggs have severely increased the people’s burden.
Besides that, the Pahang state government also introduced drastic changes in the agricultural land policy in Cameron Highlands this year, by converting temporary operating licenses (TOL) for all agricultural land into land titles. The land titles are managed by Perbadanan Setiausaha Kerajaan (PSK), but are mortgaged to Pahang Corporation Sdn. Bhd. before the company leases the land to farmers. The annual rent for the new agricultural land is set at RM4,500 per acre, and by comparing the rent with the original TOL fee and the water supply fee of RM884 per acre, the fee has skyrocketed to about 500%!
Although all Pakatan Harapan state assemblypersons in Pahang used various channels and methods, including filing an application for judicial review in the court, to challenge the state government’s decision to raise land taxes, Pahang state government remained unmoved and refused to review the exorbitant land tax.
Such a huge increase in land tax rates severely impacted on many Pahang citizens who are already suffering from the spread of Covid-19 pandemic nationwide and the collapse of economy.
A series of measures to kill the goose that lays golden eggs has proved that the state government is feeling the pressure of its high debt.
Nevertheless, implementing severe tax measures to get out of debt does not solve the crux of the problem. In the long run, it is not only that the people’s wellbeing and interest will be jeopardised, but the future development opportunities of the state will also be affected.
The repeated outbreaks of Covid-19 pandemic and the series of movement control measures have severely impacted on the domestic economy, and the recovery of our economy remains to be seen due to uncertainties.
The Federal Government should actively intervene to negotiate with the Pahang state government on amortization of its debt. This will prevent the state government from directly transferring the repercussions of high debt to Pahang citizens in order to protect the interest of the people in the face of upcoming economic crisis due to the pandemic.
There are too many uncertainties in the postpandemic economic future. The burdening tax measures that kills the goose that lays the golden eggs only allow the state government to temporarily stop the bleeding.
Instead, it should engage in visionary planning that incorporates measures to drive the economic growth of the state in order to generate more long-term and sustainable income and profits to pay off the debt to the federal government.
Pahang is sparsely populated and has breathtaking tourist attractions. After the completion of the East Coast Railway Line (ECRL), it will enjoy the benefits generated from the expanding trades between Southeast Asia and China.
Apart from tourism planning, the state government should also develop high-tech industries and modern agriculture. The repercussions brought about by the pandemic did not only cause economic recession, but created many new development opportunities for us to explore.
Nevertheless, seizing the blood, sweats and tears from the people is definitely the worst option that a government should never consider.
I therefore call on the federal government to negotiate with the state government to solve its high debt problem. This will prevent the state government from hastily and arbitrarily transferring the burden of debt to its own people, which will bring about severe repercussions to the future generations.