SINCE the Government is asking for feedback on our ministers’ first 100 days in office, I would like to offer my two sen worth while trusting the Government will take appropriate action.
Last Monday (Nov 1) – the first business day after the revelation of Budget 2022 – Bursa Malaysia took a beating. The FBM KLCI, which is a gauge of the 30 biggest companies on Bursa Malaysia dipped by 2.2%.
Some RM34 bil of market capitalisation was wiped off from the stock market with 996 stocks traded down, 178 stocks went up and 327 unchanged.
The following are the highlights of Budget 2022 themed Keluarga Malaysia, Makmur Sejahtera (A Prosperous Malaysian Family) which was tabled by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz in Parliament on Oct 31.
The Government has allocated a total of RM332.1 bil for Budget 2022, a higher value compared to Budget 2021 which was (already) described as “mother of all budgets (an allocation of RM322.5 bil)”.
Government revenue is expected to increase to RM234 bil in 2022. A total of RM233.5 bil is allocated for operating expenditure, RM75.6 bil for development expenditure and RM23 bil under the COVID-19 Fund.
In essence, an operating expenditure of RM233.5 bil is too much in comparison with our population and the development expenditure.
Bloated civil service
This prompted me to Google search the “number of civil servants in Malaysia”, of which Chief Secretary to the Government Datuk Seri Dr Ismail Bakar has revealed that the number of civil servants as of March this year stood at a whopping 1.71 million.
For the core service sectors, Ismail said, the armed forces are made up of 152,957 personnel; the police has 128,536; civil servants of various schemes (665,068); education (523,226) and health (240,745).
Our population is 32 million and we have 1.71 million civil servants, hence a ratio of 19 citizens to one civil servant.
Again, I Google searched “How many civil servants are there in the UK?” and I found the following from the UK’s Institute for Government website:
“As of the end of June 2021, there were 465,120 full-time equivalent (FTE) civil servants, excluding temporary census field staff. This is 11,530 (2.5%) more than in the previous quarter.
“Approximately 69.6% of civil servants work in the five largest departments, or their respective agencies and non-departmental bodies: the Department for Work and Pensions, Ministry of Justice, HM Revenue and Customs, the Ministry of Defence and the Home Office.”
Given that the UK population is 67.2 million people, it works out to one civil servant for 144 citizens which is a stark contrast to Malaysia’s ratio of one civil servant for 19 citizens.
‘Racist budget’
Moreover, Malaysia must be the only country in the world where the national budget is race -specific. According to official estimates, Budget 2022‘s allocation for the Bumiputera community comes up to RM11.4 bil while the amount for non-Bumiputera community is about RM300 mil or 2.6% equivalent.
This works out to about RM577 per Bumiputera, RM75 per Indian and RM15 per Chinese.
Above all else, the Government also proposed a one-off windfall tax called Cukai Makmur – in addition to a higher stamp duty for stock trading on Bursa Malaysia – to raise its revenue.
Under the Cukai Makmur (prosperity tax), companies that churn out more than RM100 mil in annual income will be taxed 33% in 2022 (from the current 24% tax rate). Additionally, the Government will remove the RM200 stamp duty cap while increasing the stamp duty rate to 0.15% from 0.1% for stock trading.
This Cukai Makmur is definitely not good for all investors including day traders, long term ordinary investors, institutional and foreign investors.
With negative growth for corporate earnings within sight in 2022, several research houses have slashed their forecasts on corporate earnings and the FBM KLCI performance.
“The biggest surprise for us in Budget 2022 was the introduction of the one-off special windfall tax,” CGS-CIMB Research’s head of research Ivy Ng had pointed out in a recent report.
I trust the Government will consider my comments seriously and take appropriate action. – Nov 7, 2021
Koon Yew Yin is a savvy investor and philanthropist.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
